2012 (8) TMI 470 - AT - Service Tax

Rejection of refund claim in terms of Notification No.41/2007-ST dated 6.10.2007 - on challenge Commissioner (Appeals remanded the matter to the lower authority - Held that - Considering the amended Section 35A w.e.f. 11-5-2001 under the Finance Act, 1994 Commissioner (Appeals) is not empowered to remand the matter and he has to decide the matter by himself, therefore the order of Commissioner (Appeals) remanding the case to the lower authority, is not sustainable. Thus the Commissioner (Appeals) is certainly entitled to set aside order passed by the Adjudicating Authority and thereupon pass an appropriate order on merits by himself but not to remand the matter. Being so, Commissioner (Appeals) dealing with the appeals in relation to the service tax also is not empowered to remand the matter but he has to decide the matter by himself - remand the matter to the lower adjudicating authority making such further inquiry as may be necessary.

Summary

Issues:
1. Power of remand by Commissioner (Appeals) under Section 35A of Finance Act, 1994.
2. Interpretation of Section 85(4) of Finance Act, 1994.
3. Refund claim of service tax for export of goods.
4. Correlation of input invoices with export documents for refund.

Analysis:
1. The main issue in this case revolves around the power of remand by the Commissioner (Appeals) under Section 35A of the Finance Act, 1994. The Revenue contended that the power of remand has been taken away by the amended Section 35A, citing a Supreme Court judgment and arguing that the Commissioner (Appeals) lacks jurisdiction to remand the matter to the Adjudicating Authority. The Respondents, on the other hand, argued that Section 35A(3) is not covered under Section 83 of the Finance Act, 1994, and that the Commissioner (Appeals) has the power to remand the case. The Tribunal analyzed the legal provisions and held that the power of remand was explicitly provided under the unamended sub-section (3) of Section 35A, but was removed by the amendment, thus agreeing with the findings of the Commissioner (Appeals) but remanding the matter to the lower adjudicating authority for a fresh decision.

2. Another issue raised was the interpretation of Section 85(4) of the Finance Act, 1994, in comparison to Section 35A(3) of the Central Excise Act, 1944. The Tribunal examined the changes brought about by the amendment in 2001 and concluded that the power of remand by the Commissioner (Appeals) has been curtailed post-amendment. The judgment highlighted that the Commissioner (Appeals) lacks the authority to remand the matter and must decide on the case independently.

3. The case also involved a refund claim of service tax amounting to Rs.11,92,703 for services used in the export of goods, where only a partial amount was sanctioned by the lower authority. The Respondents challenged the rejection of the remaining refund claim before the Commissioner (Appeals), leading to the remand of the case. The Tribunal analyzed the contentions of both parties and emphasized the need for a re-examination of the issues by the lower adjudicating authority to ensure a just and proper decision.

4. Furthermore, the issue of correlating input invoices with export documents for the refund claim was discussed in detail. The Tribunal reviewed the arguments presented by the Respondents regarding the practical difficulties in linking input invoices with export documents, especially in cases involving bulk cargo export like iron ore. The judgment highlighted relevant case laws and circulars to support the contention that denial of refund on technical grounds without disputing the actual exportation of goods is not justified. The Tribunal ultimately remanded the case for a fresh order after considering the cited case laws and providing an opportunity for a personal hearing to the appellant.