2019 (3) TMI 1962 - AT - Service Tax

Refund of unutilized Cenvat credit - Time limitation - Section 11B of Central Excise Act 1944 - rejection also on the ground that the services are not eligible input services - HELD THAT - On perusal of relevant date under section 11B I did not find any clause covering the issue related to filing claim of unutilized Cenvat credit under Rule 5. Under the heading relevant date under Section 11B of Central Excise Act 1944 the residuary clause is in any other case the date of payment of duty . In the present case the question of payment of duty does not arise since refund is in respect of the accumulated Cenvat credit - the lacuna in Notification No.27/2012-CE(NT) which provides procedure for filing application for refund of unutilized Cenvat credit was identified by authorities and through Notification No.14/2016-CE(NT) dated 01.03.2016 and the said Notification No.27/2012 was amended to the effect that time limit was fixed for one year for claiming such refund of accumulated Cenvat credit from the date of receipt of payment in convertible foreign exchange - the finding by Revenue that said refund was hit by limitation under section 11B is not sustainable. CENVAT Credit - denial of refund on the ground that the said services were not eligible as input services - HELD THAT - As on the date of filing of refund applications the said credit was available on record and was not denied to be admissible to the appellant. Therefore as per provisions of Rule 5 of Cenvat Credit Rules it was accumulated Cenvat credit and as such subsequently it could not be denied to the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues: Refund of unutilized Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004; Refusal of refund of accumulated Cenvat credit; Denial of Cenvat credit for specific services.

Refusal of Refund of Accumulated Cenvat Credit:
The first issue pertains to the refusal of a refund of accumulated Cenvat credit amounting to ?8.04 Lakhs. The Revenue contended that the claim was time-barred under Section 11B of the Central Excise Act, 1944. However, the presiding member noted that there was no specific clause under Section 11B covering the filing of claims for unutilized Cenvat credit under Rule 5. The relevant date mentioned in Section 11B as "in any other case the date of payment of duty" does not apply in this scenario as the refund is related to accumulated Cenvat credit, not duty payment. It was highlighted that a lacuna in Notification No.27/2012-CE(NT) was identified, leading to an amendment through Notification No.14/2016-CE(NT) to fix a one-year time limit for claiming such refunds from the date of receipt of payment in foreign exchange. Consequently, the finding by the Revenue that the refund was time-barred under Section 11B was deemed unsustainable, and the claim was upheld.

Denial of Cenvat Credit for Specific Services:
The second issue involved the denial of Cenvat credit totaling around ?30,000/-, ?4.14 Lakhs, and ?32,000/- on the grounds that the services in question were deemed ineligible as input services. Upon examination of the records, it was observed that at the time of filing the refund applications, the credits were available and not disputed as admissible to the appellant. As per Rule 5 of the Cenvat Credit Rules, once a credit is accumulated and recorded, it cannot be subsequently denied to the appellant. Therefore, the presiding member set aside the order regarding the denial of these specific claims, emphasizing the admissibility of the credits.

In conclusion, the impugned order was overturned, and the appeal was allowed in favor of the appellant. The judgment provided clarity on the interpretation of Section 11B concerning the refund of accumulated Cenvat credit and upheld the principle that once a credit is recorded and available, it cannot be arbitrarily denied to the taxpayer.