2016 (3) TMI 786 - AT - Service Tax

Eligibility for exemption or refund claim for July 2008 to September 2008 - Notification No. 41/2007-ST dated 06/10/2007 - Manufacture & export of carton yarn - Paid Service tax on various services received by them and used for export of goods manufactured by them - Held that - services on which refund is claimed are in the nature of Port Services and any procedural infirmity in documentation should not be held against a substantial benefit, if otherwise eligible, to the appellant. Therefore, after relying on various decided cases the appellant is eligible for refund claim. - Decided in favour of appellant with consequential relief

Summary

Issues:
Claim for refund of service tax under Notification No. 41/2007-ST for specific services used in export - Correct classification of services under Port Services for eligibility of refund.

Analysis:
The appeal was against the order of the Commissioner (Appeals-I), Jaipur, regarding a claim for refund of service tax under Notification No. 41/2007-ST for the period July 2008 to September 2008. The appellants, engaged in manufacturing and exporting carton yarn, claimed refund for services used in exporting goods. The Original Authority allowed a partial refund, rejecting a portion of the claim. On appeal, the Commissioner (Appeals) upheld the rejection, leading to the present appeal.

The main contention was the eligibility of the appellants for exemptions/refund of service tax paid concerning the export of goods and the correct classification of the services received. The dispute centered around whether the services fell under the category of Port Services as required for the refund under the notification. The appellant argued that certain charges, like Terminal Handling Charges, were indeed Port Charges covered under Port Services, making them eligible for a refund.

The Revenue argued that if the services did not fall under the categories specified in the notification, the exemption and refund could not be granted. However, the Circular clarified that exporters could claim refund for taxable services used in exports without verifying the registration of the service provider, separate from any procedural violations by the provider.

The Tribunal, after examining the records and relevant precedents, found that the services claimed for refund were akin to Port Services and any procedural lapses should not hinder a valid refund claim. Citing previous judgments, including SRF Ltd. vs. CCE, the Tribunal held in favor of the appellant, emphasizing that the nature of services, if related to Port Services, warranted the refund. The Tribunal also referenced decisions by the Gujarat High Court and other Tribunal cases supporting the entitlement of refund claims under similar circumstances.

In conclusion, the Tribunal found the rejection of the refund unsustainable and allowed the appeal with consequential relief, emphasizing that the services in question were indeed eligible for a refund under the notification.