2018 (10) TMI 1253 - AT - Service Tax

Rebate/Refund of service tax - N/N. 41/2012 dated 29.06.2012 - Amendment in notification - effect of amendment - Service Tax deposited on input service procured for exporting their manufactured yarn during the period July, 2012 to September, 2012 - Held that - It is observed that the adjudicating authority has rejected the application based on two reasons; one, that the rebate claim is not maintainable under Notification No.32/2011 continued upto 30th June, 2012 as the same being superseded by another Notification No.41/2012-ST dated 29.06.2012. Secondly, that even Notification No.41 permits rebate only on such services as were procured beyond the place of removal, which is the port of export in the present case. Since the services procured herein were prior to reaching port of export the Authority has rejected the claim. In view of the Notifications as have been brought to my notice as on day and have simultaneously being conceded by the Department, it is held that all these Notifications were not available to the adjudicating authorities below - The perusal of all the said amended notification makes it clear that the exporters were made entitled for rebate for procuring services by shifting their manufactured product from the factory for being exported to the port. The services herein admittedly are the services for the said purpose. The appellant becomes entitled to claim the rebate thereof, retrospective effect being given to the said amendment. Relying upon the case of 20 Microns Limited vs. CCE & ST, Vadodara 2016 (9) TMI 95 - CESTAT AHMEDABAD that in view of retrospective amendment in the impugned Notification, refund in respect of the services beyond factory to the port is permissible - the appellant entitled to the benefit of rebate. Though in the circumstances available before the adjudicating authorities, the order had no infirmity but in view of the subsequent amendments, which have been given the retrospective effect entitling the appellant for the rebate, the order in hand is hereby set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of rebate claim under Notification No.41/2012 for Service Tax on input services for export.
- Interpretation of Notification No.41/2012 and subsequent amendment Notification No.1/2016.
- Applicability of retrospective effect of the amendment on rebate claims.

Analysis:
1. Rejection of Rebate Claim: The appellant, engaged in manufacturing cotton yarn, filed a rebate claim of Service Tax under Notification No.41/2012 for input services used for exporting yarn. The Department issued a Show Cause Notice proposing rejection, confirmed by the original adjudicating authority and upheld by the Commissioner (Appeals). The primary reason for rejection was that the services were not considered beyond the place of removal, i.e., the port of export.

2. Interpretation of Notifications: The Tribunal observed that the services were procured while transporting the yarn from the factory to the port of export. The appellant argued for the benefit of the subsequent amendment Notification No.1/2016, which clarified the scope of specified services to include those used beyond the factory for export. The Tribunal noted the retrospective effect of this amendment from 1st July, 2012, and cited a relevant case in support of allowing rebate for services beyond the factory to the port of export.

3. Applicability of Retrospective Amendment: The Tribunal considered the amendment in Notification No.1/2016 and the clarification by the Department of Revenue, Ministry of Finance, providing retrospective effect to the rebate on services used beyond the factory for export. Relying on the case law and the retrospective nature of the amendment, the Tribunal held the appellant entitled to the benefit of the rebate, setting aside the previous order and allowing the appeal. The consequential relief was directed to follow in favor of the appellant.