2017 (1) TMI 1696 - AT - Service Tax

Refund of service tax - input services used for such export of goods in terms of Rule 5 of CCR - refund rejected by the authorities below on the ground that the appellant is not a manufacturer of excisable goods, and thus, is not permitted to avail or utilize the Cenvat credit - rejection also on the ground that that as per the requirement of Central Excise Statute, requisite bond and letter of undertaking were not executed by the appellant before exportation of the goods - HELD THAT - Sandstone is not classified as an excisable commodity in the Central Excise Tariff Act, 1985. Thus, the requirement of taking registration, and availment of Cenvat credit by the appellant on the inputs and input services does not arise. Hence, in absence of any statutory provisions, entitling the appellant herein to avail the Cenvat credit, the question of refund under Rule 5 ibid does not arise. Since, for claiming refund, one of the requisite conditions in Rule 5 ibid is for execution of bond/undertaking, which admittedly in this case, has not been complied with by the appellant, the refund claim on such ground is also not maintainable. Refund cannot be allowed - appeal dismissed - decided against appellant.

Summary

Issues:
Rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004 for service tax paid on input services used for export of goods.

Analysis:
The appellant, a manufacturer-exporter, filed a refund claim for service tax paid on input services used for exporting goods under Rule 5 of Cenvat Credit Rules, 2004. The claim was rejected by the authorities citing that the appellant is not a manufacturer of excisable goods and thus not eligible to avail or utilize Cenvat credit. Additionally, it was noted that the appellant did not fulfill the requirement of executing a bond and letter of undertaking before exporting the goods as per Central Excise Statute, which is necessary for claiming a refund of accumulated Cenvat credit. Despite notice, no one appeared for the appellant during the proceedings. The Tribunal observed that sandstone, the product in question, is not classified as an excisable commodity under the Central Excise Tariff Act, 1985, which negates the need for registration and availing of Cenvat credit. Since the appellant was not registered with Central Excise authorities, the execution of a bond/letter of undertaking was not required. As per Rule 5 of Cenvat Credit Rules, the execution of a bond/undertaking is a necessary condition for claiming a refund, which the appellant failed to comply with. Consequently, the Tribunal upheld the decision of the Commissioner (Appeals) to dismiss the appeal, as there was no legal basis for the appellant to claim a refund under Rule 5 of the Cenvat Credit Rules, 2004.