2012 (10) TMI 34 - HC - Central Excise

100% Export Oriented Unit - refund claim for the un-utilized Cenvat Credit of Service Tax which has been paid by them on input services. The claim was based on the ground that all their services were exported to their group companies located outside India Held that - There is no question of any procedural irregularity - These are in the nature of incentives given to the exporters to encourage them from getting the precious foreign exchange to the Country and also to see that the price which they keep in the international market is competitive - If these benefits to which they are legally entitled to and is conferred on them by the policies of the Government as well as the statutory provisions is not settled expeditiously, the very object of granting these benefits would be defeated and the enthusiasm on part of these exporters to carry on the business is seriously hampered. Therefore, it is of utmost importance that these refund claims are settled expeditiously - revisional authority directed to settle these refund claims

Summary

Issues:
1. Claim for CENVAT refund by the assessee.
2. Dispute regarding the eligibility of services for refund.
3. Tribunal's authority to interpret statutory provisions.
4. Proper consideration of evidence and nexus between input and output services.
5. Timely settlement of refund claims.

Analysis:
1. The assessee, a consulting engineering services provider, filed a CENVAT refund claim for services exported to group companies outside India. The claim was based on the unutilized CENVAT credit of Service Tax paid on input services. The claim was scrutinized, and a show-cause notice was issued due to missing documents. The assessee explained that all input services were used solely for exporting taxable services, relying on relevant case law.

2. The revisional authority partially allowed the refund claim, finding a lack of nexus between some services and exports. The Commissioner of Central Excise (Appeals-II) upheld the rejection of refund for services not directly related to exports but allowed it for services with a connection. The Tribunal consolidated similar appeals, setting aside the Appellate Commissioner's order and remanding the matter, maintaining the refund for five services.

3. The High Court criticized the Tribunal for lacking a common legal question in its decision. The Tribunal's interpretation of circulars and denial of benefits without statutory basis was deemed improper. It emphasized the need for a legal basis for decisions, especially considering amendments by the Parliament.

4. The Court found fault with the revisional and appellate authorities for inadequately considering evidence of the nexus between input and output services. Both authorities failed to justify their rejections based on the lack of evidence. The Tribunal's direction for thorough verification before granting refunds was deemed appropriate, leading to the affirmation of the remand order.

5. Emphasizing the importance of timely settlement of refund claims to support exporters and maintain competitiveness, the Court directed the revisional authority to decide on the claims within three months, disregarding the Tribunal's observations on circulars and focusing on statutory provisions. This directive aimed to uphold exporters' entitlement to benefits promptly.