2013 (3) TMI 157 - AT - Service Tax

Refund of unutilized CENVAT credit taken on certain input services which were claimed to have been used for export of their output service - appellate authority wanted the lower authority to reexamine the nexus between the exported service and the input services on the basis of Chartered Accountant s certificate to be produced by the party in terms of Board s Circular No.120/1/2010 dt. 19.1.2010. Held that - though a connection was found by the appellate authority between the exported output service and the input services in question for the purpose of refund under Rule 5 of the CENVAT Credit Rules, a final decision was, nevertheless, left to the lower authority on the nexus issue. Obviously, the learned Commissioner (Appeals) erred in assuming that the nexus issue required to be examined on the basis of Chartered Accountant s certificate to be produced by the party in terms of the Board s Circular ibid. He overlooked the fact that the certificate of Chartered Accountant was intended to enable the original authority to quantify the amount for refund. Matter remanded back for quantification of the amount for refund on the basis of Chartered Accountant s certificate to be produced by the party in terms of the Board s Circular, the nexus issue having been settled by the Commissioner (Appeals)

Summary

Issues:
Claim for refund of unutilized CENVAT credit for input services used in export of output service. Power of remand of Commissioner (Appeals) in light of Supreme Court and Tribunal judgments.

Analysis:
The case involved an appeal seeking a stay of the impugned order, ultimately leading to the disposal of the appeal itself. The respondent had claimed a refund of unutilized CENVAT credit for certain input services used in exporting their output service. The original authority granted partial relief, leading to an appeal to the Commissioner (Appeals). The Commissioner held that the input services were used wholly in relation to the export of taxable service but wanted a reexamination of the nexus between the exported service and the input services based on a Chartered Accountant's certificate. This decision was challenged in the department's appeal.

The main ground of appeal was the power of remand of the Commissioner (Appeals). The Deputy Commissioner argued that the Commissioner did not have the power of remand, citing the Supreme Court's judgment in MIL India Ltd. vs. CCE, Noida and a Tribunal judgment in CCE, Noida vs. Orient Crafts Ltd. After considering the submissions, the Tribunal set aside the impugned order due to the Commissioner's error in assuming the nexus issue needed examination based on the Chartered Accountant's certificate. The Tribunal clarified that the certificate was for quantifying the refund amount, not for determining the nexus. The matter was sent back to the original authority for quantification based on the Chartered Accountant's certificate, as per the Board's Circular, as the procedure was not available to the original authority initially.

In conclusion, the appeal of the Revenue was disposed of, with the Tribunal emphasizing the correct procedure for quantifying the refund amount based on the Chartered Accountant's certificate, while affirming the settlement of the nexus issue by the Commissioner (Appeals).