2016 (10) TMI 917 - HC - Service Tax

Refund of service tax - export of goods - Notification No. 41 of 2007 dated 6th October, 2007 - assessee is merchant exporter and not manufacturer exporter - the claim pertains to the warehousing charges paid for storage of export goods - Held that - There was insurance cover taken. Therefore, it is not a claim based on no material or a claim which does not fulfill the conditions under the notification. It does not mean that the tribunal s order every time mandates the Department to produce the proof in negative and blindly relies on the version of the assessee. It is in the above circumstances that the tribunal faulted the Revenue for not being able to produce a contrary evidence. Secondly, we do not think that the Revenue in this case can raise a plea that the merchant exporter was not entitled to seek refund. - Decided against the revenue - Appeal dismissed

Summary

Issues:
1. Whether the CESTAT was correct in allowing the refund claim without considering specific conditions from Notification No. 41 of 2007?
2. Whether the CESTAT was correct in shifting the burden of proof to the Revenue without confirming that the assessee provided tangible evidence?
3. Whether the CESTAT was correct in granting a refund of unutilized input service credit to a "merchant exporter" instead of a "manufacturer exporter"?

Analysis:
1. The appeal involved the question of whether the CESTAT correctly allowed a refund claim without assessing compliance with the conditions of Notification No. 41 of 2007. The High Court noted that the assessee, an exporter, sought a refund based on warehousing charges paid for storing export goods. The tribunal found that the goods were indeed exported, and thus, the storage charges were eligible for a refund. The High Court agreed with this assessment, emphasizing that the tribunal had considered the factual circumstances and the law. The Revenue's failure to produce contrary evidence was highlighted, leading to the dismissal of the appeal as it did not raise any substantial legal question.

2. The second issue pertained to whether the burden of proof was correctly shifted to the Revenue by the CESTAT without confirmation of the assessee providing tangible evidence. The High Court, after reviewing the arguments, found that the tribunal had appropriately considered the evidence presented by the assessee regarding the export of goods and the payment of service tax on warehousing services. The court clarified that the tribunal's decision was based on factual circumstances and within legal boundaries, leading to the dismissal of the appeal.

3. Lastly, the question arose regarding whether the CESTAT erred in granting a refund of unutilized input service credit to a "merchant exporter" instead of a "manufacturer exporter." The High Court pointed out that the Revenue had not raised this specific objection during the tribunal proceedings. As a result, introducing this argument as a substantial question of law at the appeal stage was deemed inappropriate. The court clarified that the tribunal's decision was focused on the factual aspects of the case and did not warrant further legal scrutiny on this ground. Therefore, the appeal was dismissed without delving into the issue of the exporter's entitlement to seek a refund as a merchant exporter.