2017 (8) TMI 553 - AT - Service Tax

Refund of CENVAT credit - re-credit of amount - N/N. 27/12-CE(NT) dated 18.06.2012 - Held that - for the purpose of refund, the net cenvat credit means the total cenvat credit availed on inputs and input services by the manufacturer or output service provider reduced by the amount reversed in terms of sub-rule 5(c) of Rule 3, during the relevant period - In the facts of the present case, there is no dispute that the credit of ₹ 231,688/- was availed by the appellants during the relevant period April 2013 to June 2013 under the authority of clause (i) of para 2 of notification 27/12-CE(NT). Therefore this amount of ₹ 231,688/- is nothing but the credit availed during the relevant quarter. Therefore, this amount must be taken into total amount of net cenvat credit availed. It is also pertinent to note that the appellant is a 100% EOU, so whatever cenvat credit has been availed on the input service, entire amount is refundable. In this case no one to one correlation is required. As regards the amount of ₹ 12,084/- the appellants have conceded that they are not contesting the same. Therefore rejection of refund claim for ₹ 12,084/- is upheld. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Refund claim under Rule 5 of Cenvat Credit Rules, 2004 for accumulated cenvat credit against export of output service.
2. Rejection of refund amount of ?2,43,772/- due to recredit and inadmissible credit on capital goods.
3. Interpretation of notification 27/12-CE(NT) dated 18.06.2012 for recrediting cenvat credit.
4. Application of Rule 5 for calculating refund amount based on net cenvat credit.

Analysis:
1. The appellants claimed a refund of ?5,43,054/- for the period April 2013 to June 2013 under Rule 5 of Cenvat Credit Rules, 2004. The adjudicating authority sanctioned a refund of ?2,96,582/- but rejected ?2,43,772/- due to recrediting an earlier rejected amount and inadmissible credit on capital goods. The Commissioner (Appeals) upheld the rejection, citing that a previously rejected refund cannot be claimed again in a subsequent quarter.

2. The appellants argued that the recredit of ?2,31,688/- was legitimate under clause (i) of notification 27/12-CE(NT) dated 18.06.2012, allowing them to claim the amount in the subsequent quarter. They contended that being a 100% export-oriented unit, all input services are used for export, justifying the refund. The revenue authority reiterated the findings of the impugned order.

3. The judge examined the notification's clause allowing recrediting of unrefunded amounts and found that the appellants were entitled to recredit the amount not sanctioned as a refund. The judge emphasized that the appellants' cenvat credit availed during the relevant quarter should be considered for the refund, regardless of prior rejection due to time bar. The judge also highlighted the provisions of Rule 5 for calculating the refund amount based on net cenvat credit availed.

4. Considering the arguments and provisions, the judge concluded that the appellants were entitled to the refund of ?2,31,688/-, as the recredited amount was valid under the notification. The judge partially allowed the appeal, upholding the rejection of refund for the inadmissible credit on capital goods but granting the refund for the legitimate recredited amount.