2011 (2) TMI 503 - HC - Service Tax

Refund - Rule 5 of the Cenvat Credit Rules, 2004 - Notification No. 4/2006, dated 14-3-2006 - There is no dispute that the assessee fulfills all other requirements of Rule 5 - as per the substituted Rule 5 refund of unutilized cenvat credit in respect of exports effected in the past is available to the manufacturer as well as provider of output service - it is evident that refund of unutilized credit is allowable not only to manufacturers but also available to providers of out put service - Decided in favor of the assessee

Summary

Issues:
Interpretation of Rule 5 of the Cenvat Credit Rules, 2004 regarding refund of unutilized credit for exports made prior to an amendment on 14-3-2006.

Analysis:
The main issue in this case revolves around the interpretation of Rule 5 of the Cenvat Credit Rules, 2004 concerning the entitlement to a refund of unutilized credit for exports made before the amendment on 14-3-2006. The appellant sought a refund of credit for exports made prior to the substitution of Rule 5, arguing that the credit could not be utilized. The respondent fulfilled all requirements of Rule 5 except for the dispute raised by the revenue regarding the eligibility of a provider of output service for the refund.

The CESTAT rejected the revenue's contention, stating that the substituted Rule 5 did not specify that it only applied to exports made after 14-3-2006. The court concurred with this decision, emphasizing that the substituted Rule 5 did not differentiate between exports made before or after the amendment. The court highlighted that the proviso to Rule 5, before the amendment, allowed for a refund of unutilized credit for both manufacturers and providers of output service, subject to specified conditions.

The court dismissed the revenue's argument that Rule 5 only permitted a refund for manufacturers, stating it lacked merit. The judgment concluded by disposing of the appeal in favor of the assessee, ruling that the refund of unutilized credit was available not only to manufacturers but also to providers of output service under Rule 5. The decision was made without costs, affirming the entitlement of the assessee to the refund based on the interpretation of the rule.

This judgment clarifies the applicability of Rule 5 of the Cenvat Credit Rules, 2004 to both manufacturers and providers of output service for claiming a refund of unutilized credit for exports made prior to a specific amendment date, ensuring a comprehensive understanding of the rule's provisions and entitlements.