2017 (8) TMI 1686 - AT - Service Tax

Rejection of refund claims - exporter of services under the category of Information Technology Software Services Design Services - rejection of refund claim only on the ground that appellant had not fulfilled condition No. 2(h) of Notification No. 27/2012-(NT) - HELD THAT - It is found from the records that lower authorities have categorically reduced the findings that the appellant had filed refund claims on 10.01.2014 and has subsequently reversed/made the debit entry for the quarters in question, on 28.07.2014 - the lower authorities have misdirected themselves while recording a finding that the conditions in notification are not met at the threshold. In the case in hand, when it is a fact that the appellant is an exporter of services and eligible to avail Cenvat credit and utilised the services, there is no scope for the appellant to utilise Cenvat Credit so availed for any DTA clearance of services. The mandatory condition of notification of 2(h) of Notification No. 27/2012-(NT) of reversal of cenvat credit in the cenvat account, is a rectifiable error which could be and can be verified by the authorities before sanctioning of the refund. In the case in hand, there are no findings that the appellant had availed ineligible cenvat credit and that he has not exported the services. Appellant had fulfilled the mandatory requirement/condition of para 2(h) of said Notification No. 27/2012-CE(NT), albeit belatedly, the said non-compliance cannot be treated as a non-rectifiable lapse or non-fulfillment of condition of notification - Having rectified by debiting the amount, the appellant is eligible for refund of the amount. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Rejection of refund claims under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2012-CE(NT).

Detailed Analysis:

Issue 1: Rejection of refund claims under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2012-CE(NT):
The appeal was against the rejection of refund claims filed by the appellant. The appellant, an exporter of services in the category of "Information Technology Software Services & Design Services," had availed Cenvat credit of Service Tax paid by various service providers for rendering output services. The lower authorities rejected the refund claims based on the appellant's alleged failure to fulfill condition No. 2(h) of Notification No. 27/2012-(NT), which required the claimant to debit the claimed refund amount from the Cenvat Credit account at the time of making the claim. However, it was found that the appellant had indeed filed refund claims and subsequently reversed/made debit entries for the quarters in question. The Member (J) noted that the lower authorities misdirected themselves by concluding that the conditions of the notification were not met initially. The appellant, being an eligible exporter of services, had utilized the Cenvat credit for rendering services and was not supposed to use it for any DTA clearance of services. The Member (J) considered the mandatory condition of reversal of Cenvat credit in the Cenvat account as a rectifiable error, which could be verified by authorities before sanctioning the refund. Since there were no findings that the appellant had availed ineligible Cenvat credit or not exported services, the non-compliance with condition 2(h) of the notification was considered rectifiable. Therefore, the appellant was deemed eligible for the refund, and the appeal was allowed, setting aside the impugned order.

This detailed analysis of the judgment highlights the issues involved, the relevant legal provisions, the arguments presented, and the reasoning behind the decision, providing a comprehensive understanding of the case.