2014 (7) TMI 158 - AT - Service Tax

Denial of refind claim - Availment of CENVAT Credit - Exemption claim under Notification 18/2009 - Reveresal of CENVAT Credit - On application of refund claim Notification number written wrongly - Held that - Refund claim was filed under Notification no. 17/2009-ST dated 7.7.2009. The appellants are admitting their mistake by stating that the correct notification should have been notfn. no. 18/2009-ST dated 7.7.2009. I note that before rejecting the refund claim, no show-cause notice was issued to the appellants. Similarly, no personal hearing was also granted so that the appellants could have rectified the mistake. Even before the Commissioner (Appeals) the appellants have stated about the correct notification. However, the Commissioner (Appeals) rejected the appeals on the ground that initially the claim was not under the correct notification. Keeping in view the facts mentioned above, the order of the Commissioner (Appeals) as also the order of the Asstt. Commissioner are set aside and the matter is remanded back to the original authority to examine the claim under Notification no. 18/2009-ST dated 7.7.2009. The original authority will consider the claim as if the claim under Notification no. 18/2009-ST dated 7.7.2009 was filed at the initial stage. If the appellants are eligible for refund under Notification no. 18/2009-ST dtd. 7.7.2009 and satisfy the conditions, the refund will be granted - However, appellants have not claimed the refund under notification, they will not be eligible for any interest for the intervening period - Decided partly in favour of assessee.

Summary

Issues:
1. Incorrect notification mentioned in refund claim.
2. Rejection of refund claim without issuing show-cause notice or granting a personal hearing.
3. Applicability of Notification no. 18/2009-ST dated 7.7.2009 for service tax exemption.

Analysis:
1. The case involved exporters availing services of Commission Agents abroad and paying service tax on a reverse charge basis. An audit suggested reversing CENVAT credit and claiming exemption under Notification no. 18/2009-ST dated 7.7.2009. However, the refund claim mistakenly cited Notification no. 17/2009-ST instead of the correct one. The claim was rejected without issuing a show-cause notice or granting a personal hearing, leading to confusion over the correct notification for the claim.

2. The Tribunal noted the appellants' admission of the error in citing the incorrect notification and the lack of opportunity to rectify the mistake before rejection of the claim. Both the Commissioner (Appeals) and the Asstt. Commissioner's orders were set aside due to the failure to provide a fair chance for the appellants to correct the error. The matter was remanded back to the original authority to re-examine the claim under the correct Notification no. 18/2009-ST dated 7.7.2009.

3. The Tribunal emphasized that the original authority should reconsider the claim as if it was initially filed under Notification no. 18/2009-ST dated 7.7.2009. If the appellants meet the conditions for refund under this notification, the refund should be granted. However, due to the initial error in claiming under the wrong notification, the appellants were deemed ineligible for any interest for the intervening period. The appeals were disposed of with these directives to ensure a fair review of the refund claim under the appropriate notification.