2015 (5) TMI 256 - AT - Service Tax

Denial of refund claim - Use of input services in export goods -fulfillment of conditions stipulated in the Notification No. 41/2007-ST dated 06/10/2007 and Notification No. 17/2009-ST dated 07/07/2009 - Held that - In the case of CHA and clearing and forwarding services, the conditions stipulated that the reference of shipping bill should appear in the service invoice. In some of the invoices the said reference is not mentioned but there are other documents like bill of lading, export invoice, etc. on the basis of which the correlation of services with the export of good is established. - exercise carried out by the adjudicating authority on that basis cannot be faulted. As regard the agreement between the appellant and foreign buyer regarding technical testing and analysis, it is a fact that such agreement has not been entered into. Therefore, it is beyond the control of the appellant to produce such agreement. Even as per para 2(f)(iii) of Notification 41/2007-ST it is clearly mentioned that such agreement can be produced wherever applicable. Similarly, in respect of courier service also invoice of service provider indicates the airway bill number, name and address of the recipient, destination of courier delivered, weight and number of pieces and the amount charged for service. Therefore, the correlation is clearly established. - even though 100% compliance of the conditions were not made by the appellant, but when the correlation of service with the export goods is established on the basis of other appropriate documents, even if any deficiency in fulfilling the condition exist, on that basis refund cannot be denied. Therefore, the Commissioner (Appeals) order, which is only on the basis of certain conditions stipulated in the Notification was not complied with but ignoring the fact that non-compliance of such condition was compensated with other corroborative documents, cannot be sustained and the same is set aside. - Decided in favour of assessee.

Summary

Issues:
Refund claim processing and rejection based on non-compliance with conditions stipulated in Notifications 41/2007-ST and 17/2009-ST.

Analysis:
The appeal challenged the Order-in-Appeal by the Commissioner of Central Excise & Service Tax, which allowed the Revenue's appeals against the refund claims made by the appellant. The appellant filed refund applications for service tax, which were later restricted in amount by the adjudicating authority. The Revenue appealed against the sanctioned refunds, leading to the Commissioner's decision in their favor. The appellant did not appeal the rejected refund amounts. The appellant contended that all required documents were submitted, and any deficiencies were addressed by the adjudicating authority. The Commissioner (Appeals) based the rejection on non-fulfillment of conditions in the relevant Notifications. The appellant argued that certain agreements and documents were not mandatory as per the Notifications, and the adjudicating authority's detailed examination justified the sanctioned refunds.

The appellant's representative emphasized that the adjudicating authority meticulously reviewed each refund claim, rejecting where necessary conditions were not met but sanctioning where correlation with export services was established through other documents. The Commissioner (Appeals' decision was criticized for lacking detailed reasoning and not acknowledging the adjudicating authority's thorough assessment. The Revenue's representative supported the Commissioner (Appeals)'s findings.

The Member (Judicial) analyzed the submissions and found that the adjudicating authority's approach was appropriate. Deficiencies in meeting Notification conditions were compensated by establishing correlation through corroborative documents. The Member agreed with the adjudicating authority's method of processing and approving refund claims. Specifically, in cases of CHA and clearing and forwarding services, and courier services, the correlation was established through alternative documents, justifying the sanctioned refunds. The Member concluded that even if full compliance with conditions was not met, as long as correlation with export goods was established, refunds could not be denied solely based on technical non-compliance. Therefore, the Commissioner (Appeals)'s decision was set aside, and the appeals were allowed.

This judgment highlights the importance of thorough scrutiny of refund claims, consideration of alternative documents to establish correlation, and the principle that technical non-compliance should not bar refunds if correlation with export services is demonstrated through other evidence.