2015 (11) TMI 237 - AT - Service Tax

Refund - Cenvat credit - Export of services before seeking service tax registration - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006, dated 14-3-2006 - Held that - In all cases where there has been evasion of service tax or central excise duty or there has been short-levy for whatever reason, the Tribunal and the Courts have taken consistent view that Cenvat credit would be admissible when the duty payment is made, provided assessee has all the documents and is able to show that input or input service has been received and utilized for the purpose specified in the Rules. That being the position, it cannot be said that just because the assessee was not registered, Cenvat credit could not have been taken. Once the credit was taken if it is admissible and when it accumulates and cannot be utilised, when the Rule provided for refund, such refund cannot be rejected. In any case, I have already taken a view that Paragraph 3(b) cannot be considered as a condition to avail Cenvat credit or to claim refund holding that the prerequisite would be export from the registered premises. - appellant is eligible for the refund. However, for the purpose of verification of correctness of the amount claimed and scrutiny which has not been done earlier or which has not been considered to have been done in my order can be considered and the admissibility of refund decided in accordance with law without ignoring the observation in this order. - impugned orders are set aside - Decided in favour of assessee.

Summary

Issues involved:
Refund claim rejection based on non-registration during credit utilization and export; Applicability of Notification No. 5/2006 conditions; Interpretation of conditions for refund eligibility; Relevance of Cenvat Credit Rules and Export of Service Rules; Procedural aspects in lower authorities' decisions.

Analysis:
The appellant, engaged in business support and IT services, filed a refund claim for unutilized Cenvat credit for input services used in exporting output services. The claim was rejected citing non-registration during credit utilization and export. The Commissioner noted that export should occur from registered premises, which was not the case here. The appellant argued citing a High Court decision, while the respondent emphasized strict adherence to Notification conditions and a Supreme Court ruling on conditions compliance.

The Tribunal analyzed the Notification's relevant clause and concluded it was not a condition for export to happen from registered premises. It highlighted that the Cenvat Credit Rules do not mandate registration for credit availment. The Tribunal also noted past cases where credit was allowed despite non-registration. It dismissed the argument that registration was a prerequisite for refund eligibility, emphasizing the Notification exceeding Rule provisions. The Tribunal also considered the possibility that registration at the time of claim filing could suffice.

Regarding the Notification's other provisions raised by the respondent, the Tribunal found no relevance or consideration by lower authorities. It also rejected the argument based on an explanation to Rule 5, emphasizing that the door for Revenue's argument was closed due to prior authorities' omissions. Ultimately, the Tribunal ruled in favor of the appellant, remanding the matter for further verification and adherence to legal procedures.

In conclusion, the Tribunal set aside the impugned orders, emphasizing the appellant's eligibility for refund and the need for proper scrutiny and compliance with legal requirements in the adjudication process.