2018 (8) TMI 1278 - AT - Service Tax

Refund of unutilized CENVAT credit availed - ITSS used in providing output service which are said to have been exported without payment of service tax - refund was rejected on technical grounds - Held that - There is no infirmity in allowing the refund by the original authority as the appellant has substantially satisfied the requirements prescribed under Rule 4(7) and Rule 9 of CCRs - The Commissioner(Appeals) has rejected the refund on mere technicalities after accepting that the appellants are eligible for refund. The substantive benefit cannot be denied on mere procedural infractions - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of erroneously sanctioned amount - Recovery along with interest.

Analysis:
The appeal was against the Commissioner (Appeals) order where the refund of ?2,48,383/- was sanctioned by the lower authority but later deemed erroneous and liable for recovery with interest. The appellant, registered under ITSS, filed a refund claim of ?9,34,287/- under Rule 5 of CENVAT Credit Rules, 2004 for unutilized CENVAT credit on exported ITSS without service tax payment. The original authority sanctioned ?8,00,134/- but rejected ?1,34,154/-. The Department challenged the refund of ?2,24,743/- and ?23,640/- related to specific invoices.

The appellant argued that the impugned order was legally unsustainable, rejecting the refund on technical grounds. They claimed eligibility for ?2,43,383/- CENVAT credit refunded under Rule 5 of CCR. The appellant contended that credit is available after payment under Rule 4(7) and Rule 9 of CCR, citing challan payments as valid documents. The Commissioner (Appeals) accepted eligibility for one invoice but limited it to the payment quarter, which the appellant challenged citing Rule 9 and Rule 4(7). The appellant argued that denial based on technicalities was improper, citing legal precedents.

The AR defended the impugned order, but the Tribunal found no fault in the original authority's refund decision. The Tribunal held that the appellant met Rule 4(7) and Rule 9 requirements, criticizing the Commissioner (Appeals) for rejecting the refund on technicalities despite acknowledging eligibility. Relying on legal precedents, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential reliefs. The operative portion of the order was pronounced on 09/05/2018.