2010 (10) TMI 368 - AT - Service Tax

Refund of Cenvat credit - Input services - Whether the appellant is falling within the clauses indicated in Notification No. 5/2006-C.E. (N.T.) for refund of such input services - The appellant is a 100% EOU and is not providing any services in India - Notification 5/2006-C.E. (N.T.) has been retrospectively amended by the Finance Act, 2010, which would indicate that the assesses are eligible for refund of the Cenvat credit of input or output services, which are used for providing output service - The appellant had filed all the required documents as directed in the show-cause notice but, the adjudicating authority has gone beyond the show-cause notice and has rejected the refund claim on the ground of time bar and also invoking the provisions of sub-rule (1) of Rule 4A. Held that the issue needs to be considered by appreciating factual matrix and the retrospective amendment carried out to Notification 5/2006-C.E. (N.T.), without expressing any opinion on the merits of the case, set aside the orders of both the lower authorities and remand the matter back to the adjudicating authority to re-consider the issue afresh after following the Principles of Natural Justice.

Summary

Issues:
Refund claim rejection based on limitation and non-production of evidences.

Analysis:
The appellant, a 100% EOU engaged in Scientific Testing and Consultancy Services, filed a refund claim of unutilized Cenvat credit of Service Tax paid on input services under Rule 5 read with Notification No. 05/2006-C.E. The adjudicating authority rejected the claim citing limitation and non-production of evidences. The Commissioner (Appeals) upheld the rejection, leading to this appeal.

The appellant argued that all required documents were submitted as per the show-cause notice, but the authorities went beyond the notice's scope by rejecting the claim on additional grounds. They contended that retrospective amendments to Notification No. 5/2006-C.E. should apply, ensuring eligibility for the Cenvat credit. Various case laws were cited to support their position.

The JCDR countered, stating that the lower authorities correctly rejected the claim. Emphasizing the need to establish the eligibility for Cenvat credit before refund consideration, they referenced relevant case laws. The Tribunal's decision in KBACE Tech Pvt. Ltd. v. CCE & ST, Bangalore was highlighted as applicable.

The Tribunal focused on determining the appellant's eligibility for the Cenvat credit refund on input services. It noted that the retrospective amendment to Notification 5/2006-C.E. allowed refunds for services used in providing exported output services. The lower authorities failed to consider this amendment and strayed beyond the show-cause notice's scope. The Tribunal stressed that quasi-judicial authorities must base findings on the notice's allegations and the defense presented.

Regarding evidences, the Tribunal found that the appellant had provided substantial proof of services received and taxes paid. It directed a fresh consideration by the adjudicating authority, emphasizing adherence to Natural Justice principles and the retrospective amendment. Without delving into the case's merits, the Tribunal set aside the lower authorities' orders and remanded the matter for reevaluation. The appeal was disposed of accordingly.