2012 (8) TMI 287 - AT - Service Tax

Refund of unutilized CENVAT credit of service tax paid on certain taxable services which were claimed to be input services availed for export of output services. - whether the necessary nexus existed between the input services and the output service for the purpose of refund of the CENVAT credit taken on the input services. - power of remand by the Commissioner (Appeals) - held that - The learned Commissioner (Appeals) did not have the power of remand when the order was passed. - At the same time, the reason found by the learned Commissioner (Appeals) for de novo adjudication of the refund claim has to be appreciated. - To enable the original authority to do so, we set aside the impugned order and allow this appeal by way of remand.

Summary

Issues:
1. Refund claim of unutilized CENVAT credit for service tax paid on input services.
2. Jurisdiction of the appellate authority to pass orders involving remand.
3. Requirement of Chartered Accountant's certificate for refund claims exceeding Rs.5 crores.

Issue 1: Refund claim of unutilized CENVAT credit:
The respondent filed refund claims for unutilized CENVAT credit of service tax paid on certain taxable services used for exporting output services. A portion of the claimed amount was sanctioned, but the rest was rejected. The appellate authority emphasized the need to establish a nexus between input and output services for refund, requiring a Chartered Accountant's certificate based on Board circular No.120/1/2010.

Issue 2: Jurisdiction of the appellate authority:
The Revenue challenged the appellate order, arguing that the Commissioner (Appeals) lacked the power of remand as per the Supreme Court's judgment in MIL India Ltd. vs. CCE, Nodia. The appellant contended that the order was passed without jurisdiction. The Tribunal agreed, stating that the Commissioner (Appeals) did not possess the authority to remand the case, leading to the order being set aside solely on this ground.

Issue 3: Chartered Accountant's certificate requirement:
Despite setting aside the order, the Tribunal acknowledged the necessity of a Chartered Accountant's certificate for refund claims exceeding Rs.5 crores, as per the Board's circular. The certificate is crucial to establish the nexus between input and output services and determine the correct refund amount. The Tribunal directed the original authority to re-adjudicate the claim in compliance with the circular, emphasizing the claimant's right to produce the certificate and be heard. The appeal was allowed by way of remand to facilitate this process.

In conclusion, the judgment addressed the refund claim of unutilized CENVAT credit, clarified the jurisdictional limitations of the appellate authority, and emphasized the mandatory requirement of a Chartered Accountant's certificate for large refund claims to ensure compliance with the prescribed procedures.