2012 (1) TMI 68 - HC - Service Tax

Simplified procedure for sanction of refund/rebate of unutilised credit/rebate claims in cases of export - denial of benefit of sanction of 80% of the rebate amount within 15 days as per Board s Circular No. 828/5/2006-CX dated 20.4.2006 on the ground that an offence has been booked against the company - show cause notice dated 21.10.2011 issued for payment of the Service Tax on Intellectual Property Services received from foreign companies Held that - At this stage we are not required to go into merits of the validity of the show cause notice as proceedings of adjudication are still pending. Company has not been denied the rebate it has only been disentitled to the benefit of the Board s Circular dated 20.4.2006. Rebate claims of the company will be processed or sanctioned as per provision of Section 11-B of the Central Excise Act 1944. - Decided against the assessee.

Summary

Issues:
1. Denial of benefit of rebate claim as per Board's Circular dated 20.4.2006 due to a show cause notice issued against the petitioner-company.
2. Validity of the show cause notice dated 21.10.2011 for payment of Service Tax on 'Intellectual Property Services' received from foreign companies.
3. Interpretation of Circular No. 828/5/2006-CX dated 20.4.2006 regarding the simplified procedure for sanction of refund/rebate claims in cases of export.

Analysis:
1. The petitioner-company challenged the denial of the rebate benefit under the Board's Circular dated 20.4.2006 by the Deputy Commissioner of Central Excise, citing a show cause notice issued against them on 21.10.2011. The Deputy Commissioner justified the denial based on the pending offence case against the petitioner. The Court noted that the petitioner was not entitled to the rebate under the simplified procedure outlined in the Circular due to the pending adjudication of the show cause notice. The Court refrained from delving into the validity of the notice, emphasizing that the adjudication process was ongoing, and the petitioner was not outright denied the rebate, but rather excluded from the Circular's benefit.

2. The show cause notice dated 21.10.2011 pertained to the payment of Service Tax on 'Intellectual Property Services' received from foreign companies by the petitioner. The services included technical know-how, engineering professional services, and consultation services, for which the petitioner had made payments during the reported period. The petitioner contended that the notice was issued illegally and in a malafide manner, highlighting discrepancies in the audit objection forming the basis of the notice. The Court acknowledged that the issue was subject to adjudication, with the petitioner having raised preliminary objections to the notice.

3. The Circular No. 828/5/2006-CX dated 20.4.2006 outlined a simplified procedure for sanctioning refund/rebate claims in cases of export. The procedure required immediate scrutiny of the claims by the Assistant Commissioner or Deputy Commissioner of Central Excise, with 80% of the rebate claim to be sanctioned within 15 days of filing. However, the procedure was applicable only to manufacturers with no offence case booked in the preceding three years or pending recovery of short levy. In the present case, the pendency of the show cause notice rendered the petitioner ineligible for the rebate under the simplified procedure, as clarified by the Court's interpretation of the Circular.

In conclusion, the Court dismissed the writ petition, finding no sufficient grounds to interfere in the matter at that stage, given the ongoing adjudication process and the exclusion of the petitioner from the Circular's benefit due to the pending show cause notice.