2019 (9) TMI 1592 - AT - Service Tax

Refund of accumulated credit - refund sought on the ground that the credit stands not utilised by the appellant for export of services - denial of refund on the ground that the input services has no nexus with the output services or the credit stands availed on the basis of the irrelevant invoices etc. - HELD THAT - It is seen that no objection was raised by the revenue at the time of availing of credit. Rule 5 allows refund of accumulated credit and at the time of grant of refund, the Revenue is not permitted to examine the availability of the CENVAT credit. Such an exercise was required to be adopted by the Revenue at the time of availment of credit, by way of initiation of separate proceedings. Having not done that, it is not permissible to raise the objection at the time of grant of refund in terms of the said rule - The reliance by the Learned Advocate to the Circular no. 120/01/2010-ST dated 19.01.2010 clarifying the issue that by observing that there cannot be different yardstick for establishing nexus for taking of credit and for refund of credit, is appropriate. The issue stands decided by the many decisions of the Tribunal. One such reference can be made to the Tribunal decision in the case of M/S BARCLAYS GLOBAL SERVICE CENTRE PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX (VICE-VERSA) 2019 (6) TMI 902 - CESTAT ALLAHABAD . It stands held in the said decision that as no objection was raised by the Revenue at the time of availing the credit, such objection cannot be raised at the time of deciding the refund claim in terms of provision of Rule 5. There are no merits in the stand of the Revenue - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of accumulated credit for export of services under Rule 5 of CENVAT Credit Rules, 2004.

Analysis:
The appellant, engaged in exporting services, sought a refund of accumulated credit of duty and service tax paid on inputs and input services not utilized for export. The lower authorities rejected the refund claims totaling ?16,81,468, citing lack of nexus between input and output services or availing credit based on irrelevant invoices. However, Rule 5 allows such refunds, and the Revenue cannot question credit availability at the refund stage if no objection was raised during credit availing. The Tribunal referenced Circular no. 120/01/2010-ST and past decisions, including Barclay Global Service Centre Pvt. Ltd. & Ors. v. Commissioner of Central Excise & Service tax, Noida, holding that objections not raised during credit availing cannot be raised during refund processing under Rule 5. Consequently, the appeals were allowed, granting relief to the appellants.

This judgment clarifies the procedural aspect of refunding accumulated credit under Rule 5 of the CENVAT Credit Rules, emphasizing that objections to credit availability must be raised during credit availing and cannot be raised during refund processing. The Tribunal's reliance on Circular no. 120/01/2010-ST and past decisions establishes a consistent approach to the issue of nexus between credit availing and refund processing. By allowing the appeals and providing consequential relief, the Tribunal upholds the principle that objections not raised in a timely manner cannot be used to deny legitimate refund claims, ensuring fairness and adherence to procedural requirements.

In conclusion, the judgment highlights the importance of procedural compliance in refund claims under the CENVAT Credit Rules, safeguarding the rights of taxpayers and ensuring consistency in the application of rules. By disallowing objections raised belatedly during refund processing and emphasizing the need for timely objection during credit availing, the Tribunal promotes transparency and fairness in the administration of tax laws related to credit refunds for exported services.