2018 (4) TMI 1016 - AT - Central Excise

Refund of accumulated CENVAT credit - outward transportation of finished goods upto 31.03.2008 - rejection on the ground that the appellant being not able to produce sales invoice or purchase order - validity of SCN - Held that - Revenue authorities were aware that the refund of ₹ 89,965/- is in respect of service tax paid on outward transportation charges. It is also on record that the appellant had produced the original GAR-7 challans under which service tax was paid by them before the Superintendent of Central Excise for verification. The finding recorded by the lower authorities that the appellant has not produced the sales invoice and purchase order to show that the service tax liability has been paid in respect of outward transportation does not hold good as the show-cause notice itself proceed on a premise that the appellant had availed ineligible CENVAT Credit on the service tax paid on GTA service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on lack of documentation.

Analysis:
The appellant, a manufacturer of instruments & equipments, filed a refund claim of &8377; 89,965/- due to mistakenly reversing CENVAT Credit of service tax paid on outward transportation services from January 2005 to March 2008. The adjudicating authority rejected the refund claim for the appellant's failure to produce sales invoices or purchase orders. The first appellate authority upheld this decision citing lack of documentation as the reason for rejection.

The appellant argued that during the relevant period, service tax liability on outward transportation charges was under reverse charge mechanism, and they had paid the service tax and availed CENVAT Credit. Referring to legal precedents, the appellant asserted that CENVAT Credit could be availed on service tax paid for outward transportation services until March 31, 2008, as per judgments from the Hon'ble Apex Court.

The Departmental Representative contended that the appellant did not provide the necessary documents to prove that the claimed refund was related to transportation of finished goods, despite being requested to do so. However, upon careful consideration, it was found that the appellant was indeed eligible to avail CENVAT Credit on service tax paid for outward transportation of finished goods until March 31, 2008. The show-cause notice acknowledged that the refund amount was in connection with service tax paid on outward transportation charges. The appellant had also submitted original GAR-7 challans to verify the payment of service tax to the Government. Therefore, the lower authorities' finding that the appellant did not produce sales invoices and purchase orders was deemed invalid, as the show-cause notice itself proceeded on the basis that the appellant had availed ineligible CENVAT Credit.

Consequently, the impugned order rejecting the refund claim was deemed unsustainable and set aside. The appeal was allowed with any consequential relief deemed appropriate.