2016 (12) TMI 599 - AT - Service Tax

Unjust enrichment - refund claim - refund on account of service tax paid on full value of freight on GTA service, whereas the appellant was liable to pay only 25% of the same - Held that - I find that the appellant had initially paid the excess service tax and took the credit of the same. An assessee is entitled to take the credit of service tax so paid by it and it is not understood as to why the said cenvat credit so availed was held inadmissible to the assessee and whey the assessee was directed to reverse the same. As regards, unjust enrichment, it is the fact that the documents placed before the original adjudicating authority were not considered and scrutinized by him. The appellant has also placed reliance on cost accounting standard issued by Institute of Cost & Works Accountants of India and have made references to the circular F.No.137/29/2000/16 as also various decisions of the Tribunal. The said factors, as regards unjust enrichment are required to be examined by the original adjudicating authority, for which purpose, I set aside the impugned order and remand the matter for doing the needful. The appellant s claim of availability of cenvat credit of the excess service tax paid by them would also be reconsidered - appeal allowed by way of remand.

Issues:
1. Excess payment of service tax on inward freight.
2. Admissibility of Cenvat credit.
3. Unjust enrichment.
4. Refund claim under Section 11B of the Central Excise Act, 1944.

Excess Payment of Service Tax on Inward Freight:
The appellant, engaged in manufacturing, filed a refund claim due to overpayment of service tax on GTA services for inward freight. The appellant paid tax on the full value of freight instead of the correct 25% as per Notification No.13/2008. This resulted in an excess payment of &8377;38,55,348. After an internal audit, the Cenvat credit taken for the excess tax was reversed. The appellant then applied for a refund. However, it was contended that the freight was part of the final product's costing like an input, leading to a Show Cause Notice being issued.

Admissibility of Cenvat Credit:
The Tribunal found that the appellant initially paid excess service tax, took credit for it, and reversed the Cenvat credit as advised. The Tribunal questioned why the availed credit was deemed inadmissible and why the appellant was directed to reverse it. The issue of unjust enrichment was raised, highlighting that documents supporting the claim were not adequately considered by the adjudicating authority. The appellant cited cost accounting standards and relevant circulars and decisions, emphasizing the need for a thorough examination of unjust enrichment aspects. Consequently, the Tribunal set aside the previous order and remanded the matter for further scrutiny, including the reassessment of the availability of Cenvat credit for the excess service tax paid.

Unjust Enrichment:
The appellant's argument regarding unjust enrichment was pivotal in the decision. The Tribunal emphasized the necessity for a detailed review of the factors related to unjust enrichment, considering the appellant's submissions and supporting documentation. The Tribunal directed the original adjudicating authority to reevaluate the unjust enrichment aspect along with the availability of Cenvat credit, underscoring the importance of a comprehensive assessment in determining the admissibility of the refund claim.

Refund Claim under Section 11B of the Central Excise Act, 1944:
Ultimately, the Tribunal allowed the appeal by remanding the case for further examination. The decision highlighted the need for a thorough review of the unjust enrichment issue and the reconsideration of the appellant's entitlement to Cenvat credit for the excess service tax paid. The judgment aimed at ensuring a fair and comprehensive assessment of the refund claim under Section 11B of the Central Excise Act, 1944, emphasizing the importance of proper scrutiny and consideration of all relevant factors in such cases.

This detailed analysis of the judgment comprehensively covers the issues of excess payment of service tax on inward freight, the admissibility of Cenvat credit, the concept of unjust enrichment, and the refund claim under Section 11B of the Central Excise Act, 1944 as addressed in the appellate tribunal's decision.

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