2019 (7) TMI 1775 - AT - Service Tax

Doctrine of merger - Refund of CENVAT Credit - case of appellant is that in the second round under the scope of remand the order-in-original passed is hit by the doctrine of merger as the issue is already decided by the Commissioner could not have been opened by the adjudicating authority in the second round - HELD THAT - In the order-in-appeal in the first round passed by the Commissioner (Appeals) it is crystal clear that the scope of remand was limited to reconciliation of FIRC with the bills of export of service. Accordingly the order of the court below in the second round is hit by the doctrine of merger and accordingly the same is set aside to the extent it have disallowed the appeal for the period from September 2007 onwards for the financial year 2007-08 - 2008-09. Further in view of the finding recorded in the first and second round it is evident that there is no further dispute with regard to reconciliation of FIRC in view of the categorical finding recorded in para 11 of the impugned order - the appellant is held entitled to refund for the period 2007-08 to 2008-09 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of cenvat credit under Rule 5 of Cenvat Credit Rule read with Notification No. 5/2006-CE (NT) rightly refused to the appellant.

Analysis:
The appeal centered around the question of whether the refund of cenvat credit under Rule 5 of Cenvat Credit Rule, along with Notification No. 5/2006-CE (NT), was rightfully denied to the appellant. The matter had already undergone one round of litigation before the Commissioner (Appeals), where various parameters were examined, including the timely filing of refund claims, the nature of services rendered, qualification as export under the Export of Service Rules, utilization of input services for output services, and the receipt of payment in convertible foreign exchange. The Commissioner (Appeals) had ruled in favor of the appellant on all these issues and remanded the case to the adjudicating authority for further review.

In the subsequent round of litigation, the adjudicating authority found that the appellant met the conditions under the Export of Service Rules for the period January to March 2007. However, for the period from September 2007 to March 2009, the claim was rejected due to the closure of the appellant's registered premises by the Municipal Corporation, leading to doubts about the rendering of output services. The Commissioner (Appeals) upheld this decision, stating that services could not have been provided after the premises were locked. The appellant contested this, arguing that the issue had already been decided in the first round of litigation and was thus hit by the doctrine of merger.

Upon review, the Tribunal found that the scope of remand in the first round was limited to the reconciliation of FIRC with the export service bills. Consequently, the Tribunal held that the second-round order was affected by the doctrine of merger and set it aside for disallowing the appeal from September 2007 onwards for the financial years 2007-08 to 2008-09. The Tribunal concluded that there was no dispute regarding the reconciliation of FIRC, and thus, the appellant was entitled to the refund for the specified period. The adjudicating authority was directed to disburse the refund within 45 days along with applicable interest.

In summary, the Tribunal's decision favored the appellant, overturning the second-round order due to the application of the doctrine of merger and affirming the entitlement to the refund for the specified period based on the findings from the first and second rounds of litigation.