2016 (5) TMI 1002 - AT - Service Tax

Period of limitation - Entitlement of refund claim - Cenvat credit on input Service tax paid prior to its registration - no time limit prescribed by Rule 5 of Cenvat Credit Rules, 2004 to refund the un-utilized cenvatable credit - Held that - so far as the grant of Cenvat credit which pertains to the pre-registration period is concerned, Hon ble High court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd. Vs. CST, Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT has laid the law. Therefore, Respondent may not be denied such credit subject to scrutiny of genuiness thereof. The Hon ble High Court in its judgment has held that the registration is not mandatory to fulfil the statutory grant in absence of any provisions to the contrary. In so far as the conditions of grant of refund is concerned, Rule 5 prescribes certain conditions which are safeguard in nature. We have no difference to state that the Notification No. 5/2006-CE (NT) dated 14.03.2006 as amended by Notification No. 13/2007 -CE (NT) dated 01.03.2007 shall be applicable to the case of Respondent. The condition prescribed by 3(b) in the appendix of Notification is necessarily to be fulfilled along with other conditions prescribed therein. Therefore, the Ld. adjudicating authority upon remanded of this matter shall carry out scrutiny of refund claim on above terms as well the conditions prescribed by Notification concerned. - Matter remanded back

Summary

Issues:
1. Entitlement to Cenvat credit of input service tax paid prior to registration.
2. Time limit for refund of un-utilized cenvatable credit under Rule 5 of Cenvat Credit Rules, 2004.
3. Applicability of conditions for grant of refund under Notification No. 5/2006-CE (NT) dated 14/03/2006.
4. Compliance with conditions for refund eligibility, quantum determination, and foreign exchange realization.
5. Applicability of limitation under Rule 5 for refund claim.
6. Precedents set by the Hon'ble High Courts of Karnataka and Madras regarding Cenvat credit entitlement and registration requirements.

Analysis:
1. The Revenue appealed against the order allowing the respondent's entitlement to Cenvat credit of input service tax paid before registration, arguing that the refund should adhere to statutory provisions like Section 11 B of the Central Excise Act, as established in previous cases.
2. The Revenue emphasized that conditions under Notification No. 5/2006-CE (NT) are mandatory for refund under Rule 5 of Cenvat Credit Rules, requiring scrutiny of eligibility, quantum determination, and compliance with safeguard measures, which the Appellate Authority allegedly overlooked.
3. The respondent claimed entitlement to pre-registration Cenvat credit based on legal advice and precedents like the Hon'ble High Court of Karnataka's decision, seeking a refund under Rule 5 of Cenvat Credit Rules, 2004, and disputing the existence of a time limit for the refund claim.
4. The Tribunal noted that statutory grants must follow the provisions and rules, with the limitation for refund under Rule 5 starting from the date of export of service, as established in the case law. The High Courts of Karnataka and Madras set precedents regarding Cenvat credit entitlement and registration requirements, ensuring genuine scrutiny of claims.
5. The Tribunal remanded the matter to the Adjudicating Authority for a fair hearing, emphasizing compliance with conditions for refund eligibility, including those specified in the relevant notifications, to expedite the refund process for the exporting sector earning foreign exchange.