2017 (11) TMI 940 - AT - Service Tax

Refund claim - input services - export of jewellery - whether appellant are entitled to refund of input service tax on banking services claim to be utilised for the purpose of export? - Held that - it is an admitted fact that the appellant has got only one manufacturing unit at 179, NSEZ, Noida and another unit of appellant was working as Head office at 2705, Besement, Banki Street, Karol Bagh, New Delhi - It is further admitted fact that there is no separate business activity in their Head office other than the business of manufacture and export of jewellery - the Bank Officers have certified that the services provided to the appellant, the invoice of which addressed to the Head office are actually provided to the factory located at Noida. The substantial benefit cannot be denied for mere technical or venial breach of the procedural law. Refund allowed - appeal allowed - decided in favor of appellant.

Issues:
Entitlement to refund of input service tax on banking services for the purpose of export.

Analysis:
The appellant, a manufacturer and exporter of jewellery, filed a refund claim for input service tax on banking services utilized for export. The dispute arose as the appellant had two registered premises with different service tax registration codes. The show cause notice alleged that the refund claim documents did not pertain to the factory premises registered with the Central Excise office at Noida but to the premises in Delhi. The Original authority and Commissioner (Appeals) rejected the refund claim. The appellant contended that they only had one manufacturing unit at NSEZ, Noida, and the separate registration number at the Delhi premises was obtained under wrong advice. They cited a similar refund allowed for a different period. The Assistant Commissioner noted the unit at Noida and the administrative office in Delhi, where service tax registration numbers were taken, and allowed the refund. The appellant also provided clarifications from bank managers regarding loan facilities for the Noida unit. The Tribunal observed that the appellant's business activity was solely manufacturing and exporting jewellery, and services provided to the Head office were actually for the factory in Noida. The Tribunal held that the benefit could not be denied for procedural lapses and allowed the appeal, directing the refund to be granted within 30 days with interest.

This judgment addresses the issue of entitlement to refund of input service tax on banking services for export purposes. The appellant, a jewellery manufacturer and exporter, faced a challenge due to having two registered premises with different service tax registration codes. The dispute centered on the mismatch between the refund claim documents and the factory premises registered with the Central Excise office at Noida. The Tribunal considered the appellant's argument that the separate registration number at the Delhi premises was obtained under wrong advice and that they only had one manufacturing unit at NSEZ, Noida. The Tribunal noted the practice of taking loan and banking facilities near the Head office for administrative convenience. The Tribunal emphasized that services provided to the Head office were actually for the factory in Noida, and procedural lapses should not deny substantial benefits. As a result, the Tribunal set aside the rejection of the refund claim, allowing the appeal and directing the concerned authority to grant the refund with interest within 30 days.

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