2013 (8) TMI 855 - AT - Service Tax

Export of Goods - Credit of Input Services - Refund Claim Benefit of Notification No. 41/2007-S.T. - The appellants were manufacturers of excisable goods and also exported goods manufactured by them and take benefit of credit of input services - Revenue rejected the claim - Held that - The appellants were eligible for refunds of the credit - The amounts were refundable to them as per provisions of the Notification No. 41/2007-S.T. - Government had amended by Finance Act, 2010 the definitions in Section 65(105)(zn) to cover any service rendered in port area which shows the intention of the Government in this regard - While such amendments may operate only prospectively to cause liabilities to assessees, in the case of a beneficial Notification like 41/2007-S.T. for granting refund of tax incidence on goods exported, the matter needed to be interpreted more liberally. Revenue cannot be allowed to approbate and reprobate on the same issue though with reference to different parties - The first argument that classification of service cannot be changed in the hands of the recipient by itself was good enough to allow the appeal - there was no reference to the classification in the notification - This appears to be a serious lacuna - But such missing words cannot be supplied by anyone interpreting the provisions - The expression port services was known to the persons drafting the notification because such expression was used in taxable entry Decided in favour of Assessees.

Summary

Issues:
Refund of service tax credit for specific charges under Notification 41/2007-S.T.

Analysis:
The appellants, manufacturers of excisable goods exporting their products, filed a refund claim for input credit on services used for export. The claim was partially rejected for charges like Inland Haulage, Terminal Handling, Bill of Lading, etc. The appeals challenge the rejection of refunds amounting to Rs. 65020/- and Rs. 3738/- for different quarters.

The appellant argued that the impugned services were provided by a registered company for Port Services, and the service classification should not change at the recipient's end. They contended that the notification exempts taxable services received by exporters for exporting goods, without specifying the classification under Column (2) of the Table. The services used for exported goods should fit the description in Column (3).

The appellant further relied on a Tribunal decision stating that all services within the port area are considered port services under Section 65(105)(zn), making them eligible for the refund. However, the Revenue Authority argued that refunds are only applicable to services classified under Section 65(105)(zn) specified in the Table. They claimed that the impugned services did not fall under this classification.

The judge considered both arguments and noted that the notification lacked reference to the classification in Column (2) of the Table. The description required for refund was "Services provided for export of said goods," not specifically "port services." The judge highlighted the Government's amendment to include any service rendered in the port area under Section 65(105)(zn), indicating a liberal interpretation for beneficial notifications like 41/2007-S.T. The judge also pointed out the Revenue's contradictory stance on similar issues in different cases.

Conclusively, the judge held that the appellants are eligible for refunds of the disputed credit, allowing the appeals.