2018 (3) TMI 1723 - CGOVT - Service Tax

Rebate claim - export of goods - inspection services not used beyond the place of removal of goods for export of goods - N/N. 41/2012-S.T., dated 29-6-2012 - Held that - The applicant has not claimed anywhere that the inspection services were used in respect of the exported goods beyond factory and instead it has been unambiguously accepted in grounds of application at Sl. No. (B) that the inspection services are rendered after the manufacture of the goods but before the removal of the same from the factory from which it is explicit that the inspection service was used within the factory only and not beyond the factory. As a result, it is not a specified service in terms of Notification No. 41/2012-S.T. for the purpose of getting rebate of service tax paid on the specified services - rebate cannot be granted. Liability of interest on erroneously granted rebate - Held that - The Government does not find any fault in the order of the Commissioner (Appeals) as under Section 73(3), read with Explanation 1, interest under Section 75 on erroneously refunded Service Tax is payable - demand of interest upheld. Revision application rejected.

Summary

Issues involved:
1. Admissibility of rebate claim for Service Tax paid on various services used for export of goods.
2. Interpretation of Notification No. 41/2012-S.T. regarding specified services.
3. Applicability of interest on erroneously granted rebate.

Analysis:
1. The Revision Application was filed by M/s. Mortex (India) against the Order-in-Appeal rejecting part of their rebate claim for Service Tax paid on services used for exporting goods. The original adjudicating authority had sanctioned a portion of the claim but rejected the rest. The department appealed, arguing that certain inspection services were not used beyond the place of removal of goods for export, thus not qualifying for rebate under Notification No. 41/2012-S.T.

2. The applicant contended that an amendment to Notification No. 41/2012-S.T. with retrospective effect from 1-7-2012 expanded the definition of specified services to include those used beyond the factory for export of goods. However, the Government found that even after the amendment, specified services related to export of excisable goods are those used beyond the factory or place of manufacturing, such as transportation, cargo handling, port services, and CHA services. The inspection services used within the factory for exported goods did not fall under the specified services category.

3. The Government noted that the applicant's reliance on certain CESTAT decisions was misplaced, as those cases involved services used beyond the factory, unlike the inspection services in question. Regarding the liability of interest on the erroneously granted rebate, it was held that under Section 73(3) with Explanation 1, interest on erroneously refunded Service Tax is payable. Consequently, the Revision Application by M/s. Mortex (India) was rejected based on the above analysis and findings.