2018 (1) TMI 203 - AT - Central Excise

Scope of SCN - Refund claim - the entire case has been examined with respect of provisions of Rule 5B whereas SCN only raises issue relating to Rule 5 of CCR 2004 - Held that - As it is seen that the Order-in-Original in para 1 of the discussion and finding also holds that the issue is not to be examined with reference to Rule 5B but with reference to Rule 5. It is seen that the last sub-para of para 3 mentions that the appellants have contended that they have not sought refund under Rule 5B but under Rule 5 of Cenvat Credit Rules. If that argument of the appellants is to be accepted, the matter should have been remanded to the original adjudicating authority and due notice should have been given to the appellants on the ground of rejection - appeal allowed by way of remand.

Summary

Issues:
Appeal against rejection of refund claim under Rule 5 of the Cenvat Credit Rules.

Analysis:
The appellant, engaged in manufacturing and exporting non-excisable products, utilized CHA and Warehouse services during the export process and paid service tax on manpower service under reverse charge mechanism. The show-cause notice raised grounds for rejecting the refund claim, including non-clearance of products for export under bond, manufacturing nil-rate excisable goods without providing taxable output services, failure to avail and record cenvat credit, and not debiting the claimed refund amount from the cenvat credit account. The Order-in-Original confirmed the notice, leading to an appeal before the Commissioner (Appeals).

The Commissioner (Appeals) upheld the order on the grounds of whether the appellant, paying service tax under reverse charge mechanism, could be considered an output service provider and whether a manufacturer of goods with a nil tariff rate of duty was eligible for CENVAT credit. The appellant argued that as they pay service tax under reverse charge, they are also service providers, citing precedents from Bombay High Court and Himachal Pradesh High Court supporting cenvat credit availability for input/input services used in manufacturing exempted goods for export under Rule 6(6)(v) of the Cenvat Credit Rules.

The impugned order focused on Rule 5B of the CCR, 2004, despite the show-cause notice being under Rule 5. The Order-in-Original clarified that the refund claim was filed under Rule 5, not Rule 5B, and the Commissioner (Appeals) should have considered the rejection grounds based on Rule 5. As the impugned order exceeded the issues raised earlier, it was set aside, and the matter was remanded to the Commissioner (Appeals) for fresh adjudication based on the original rejection grounds.

In conclusion, the appeals were allowed for remand to the Commissioner (Appeals) for reconsideration in line with the issues raised in the show-cause notice and the Order-in-Original, ensuring compliance with the relevant provisions of the Cenvat Credit Rules.