2016 (5) TMI 678 - AT - Service Tax

Refund of Cenvat credit - Rule 5 of CENVAT Credit Rules - Appellant not registered with the Service tax department during the relevant period - Held that - the issue relating to registration is no more res integra and settled by the Hon ble Karnataka High Court decision in the case of Mportal India Wireless Solutions Pvt Ltd Vs CST Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT , therefore, no merits found in the objection raised by the Revenue. Refund of Cenvat credit - Rule 5 of CENVAT Credit Rules - Certain services do not have nexus with the output services - Appellant contended that almost 24 services were involved and the Commissioner (Appeals) has discussed only about 11 services and has not given any finding on the balance services. Also there are various decisions of the Tribunal wherein disputed services have been held to be CENVATTABLE input services having nexus with the output services. Held that - the issue of input-output nexus can only be examined and verified at the level of the adjudicating authority. Inasmuch as the matter already stands remanded to the original adjudicating authority, we deem it fit to remand the entire proceedings to him for fresh examination in the light of declaration of law by the Tribunal in various decisions, which the appellant would place before the original adjudicating authority. However we make it clear that as we have already held that the objection of the assessee not being registered with the Revenue is not available to the department, the same would not be considered as a bar for examining the assessee s refund claim. - Appeals disposed of

Summary

Issues:
Refund of CENVAT credit under Rule 5 of CENVAT Credit Rules for the period May 2008 to September 2008. Registration issue and nexus of input services with output services. Power of Commissioner (Appeals) to remand the matter for quantification. Accumulated CENVAT credit usage by the appellants. Eligibility of 100% EOU for refund under Rule 5.

Refund of CENVAT Credit under Rule 5:
The judgment addresses the issue of refund of CENVAT credit for the period from May 2008 to September 2008. The lower authorities had rejected the refund claim due to the appellant not being registered with the service tax department during that period. However, the Commissioner (Appeals) allowed the refund for certain services with a direct nexus to output services but rejected it for others. The Tribunal found that the registration issue had been settled by the Karnataka High Court's decision in a previous case. Therefore, the objection raised by the Revenue regarding registration was dismissed.

Nexus of Input Services with Output Services:
The appellant contended that the Commissioner (Appeals) had only discussed 11 out of almost 24 services involved in the refund claim. The appellant's counsel cited Tribunal decisions where disputed services were considered CENVATable input services with a nexus to output services. The Tribunal held that the issue of input-output nexus should be examined by the adjudicating authority. As the matter was already remanded to the original adjudicating authority, the entire proceedings were remanded for fresh examination based on relevant Tribunal decisions provided by the appellant.

Power to Remand the Matter:
The Revenue objected to the Commissioner (Appeals) remanding the matter for quantification, arguing that he lacked the authority to do so. The Tribunal did not delve into the Commissioner's power to remand but emphasized that the input-output nexus issue should be verified at the adjudicating authority level. As a result, the Tribunal remanded the proceedings for a fresh examination based on applicable Tribunal decisions, without considering the objection raised by the Revenue regarding the lack of registration with the Revenue.

Accumulated CENVAT Credit Usage:
The Revenue contended that the appellants had not demonstrated their inability to use the accumulated CENVAT credit. In response, the appellants, being a 100% Export Oriented Unit (EOU), argued that they were entitled to claim the refund under Rule 5. The Tribunal did not address the accumulated credit usage issue but focused on the eligibility of 100% EOU for the refund under Rule 5, stating that the objection of non-registration with the Revenue department was not a valid bar to examining the refund claim.

In conclusion, the judgment of the Appellate Tribunal CESTAT Bangalore dealt with the issues of refund of CENVAT credit under Rule 5, the nexus of input services with output services, the power of the Commissioner (Appeals) to remand the matter, accumulated CENVAT credit usage, and the eligibility of 100% EOU for a refund. The Tribunal dismissed the objection regarding registration, remanded the proceedings for a fresh examination based on relevant Tribunal decisions, and clarified that non-registration with the Revenue department would not hinder the assessment of the refund claim.