2018 (1) TMI 217 - HC - Service Tax

Whether the CESTAT was correct in allowing the refund of Cenvat credit pertaining to the period prior to the registration of the respondent? - Held that - Admittedly, in the case at hand, respondent was duly registered under the Cenvat Credit Rules at the time of making the application for refund under Rule 5 of the Rules - the CESTAT has not been committed any error of law in allowing the refund of the Cenvat credit pertaining to the period prior to the registration of the respondent with the department as registration is not a condition precedent for seeking refund except that party should be registered at the time of making application - appeal dismissed.

Summary

Issues:
Refund of Cenvat credit prior to registration of the respondent.

Analysis:
The appeal before the High Court was against the order of the Customs, Excise & Services Tax Appellate Tribunal (CESTAT) allowing the refund on the Cenvat credit to the respondent under Rule 5 of the Cenvat Credit Rules, 2004. The appellant argued that the Tribunal erred in allowing the refund on the Cenvat credit pertaining to the period before the respondent's registration. The key issue for consideration was whether CESTAT was correct in permitting the refund of Cenvat credit related to the period before the respondent's registration.

The High Court referred to previous judgments to address the issue. In Central Excise Appeal No. 125 of 2016, the Court held that the party seeking refund of Cenvat credit must be a registered provider at the time of making the application, not necessarily at the time of credit accrual. Similarly, in Commissioner of Service Tax, Noida v. Atrenta India Pvt. Ltd., it was established that registration is not a prerequisite for claiming a refund under the Cenvat Credit Rules, 2004. In the present case, the respondent was registered under the Cenvat Credit Rules when applying for the refund under Rule 5 of the Rules.

Based on the precedents and the respondent's registration status at the time of the refund application, the High Court concluded that the CESTAT did not err in allowing the refund of the Cenvat credit pertaining to the period before the respondent's registration with the department. The judgment highlighted that registration is not a condition precedent for seeking a refund, except that the party must be registered at the time of making the application. Consequently, the appeal was dismissed, affirming the decision in favor of the respondent.

In summary, the High Court upheld the CESTAT's decision to grant the refund of Cenvat credit to the respondent even for the period before their registration, emphasizing that registration at the time of the refund application is the key requirement, not at the time of credit accrual. The judgment clarified that registration is not a mandatory condition for eligibility to claim a refund under the Cenvat Credit Rules, 2004.