2019 (3) TMI 418 - AT - Service Tax

Refund claim - rejection on the ground that export invoices against which FIRC received during the quarters April 2012 to September 2012 had already been considered in allowing the refund claims filed for the earlier period i.e. October 2011 to March 2012 - Held that - The refund claims based on the invoice value under the old provisions, if not claimed, could be claimed within one year from the relevant date even after 1.4.2012 but not twice for the same invoices, once while raising the invoices and second time while receiving the proceeds of the invoice. Both proceedings operate in different spheres which would be clear if the proviso to Rule 5(2) of Cenvat Credit Rules, 2004 is read along with the amended definition of export turnover services . Once the export turnover of services is reduced automatically, the total turnover gets reduced. This fact needs to be ascertained by applying the formula in the proper perspective. The appeal is allowed by way of remand to the adjudicating authority to recalculate the refund amount based on the formula prescribed under the amended Rule 5 of Cenvat Credit Rules, 2004 taking into consideration the correct export turnover of services as well as total turnover.

Summary

Issues:
Appeal against rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004 based on export turnover calculation.

Analysis:
The appeal involved a dispute regarding the refund claims made by the respondent for two quarterly periods. The respondent's refund claims were partially rejected by the adjudicating authority, citing that the export invoices considered for the refund claims in the later period were already accounted for in the earlier refund claims. The Commissioner (Appeals) allowed the respondent's appeal, leading to the Revenue filing the present appeal.

The Revenue argued that an amendment to Rule 5 of Cenvat Credit Rules, 2004 changed the calculation method for export turnover services. The new rule considered the export proceeds received in a specific quarter for calculating the refund amount, unlike the previous method that factored in the invoice value. The Revenue contended that the Commissioner (Appeals) erred in not acknowledging this change in law while allowing the refund claim.

On the other hand, the respondent's advocate argued that although the invoices issued before the rule amendment were mistakenly included in the later refund claims, the net refund amount remained unaffected. The advocate proposed that any reduction in export turnover should correspondingly reduce the total turnover for accurate refund calculations.

The Tribunal found that the core issue revolved around whether the respondent claimed cenvat credit refund twice for the same input services used for export services in different quarters. The adjudicating authority had reduced the export turnover of services under the amended rule, stating that the amount claimed by the respondent was already considered in earlier refund calculations. The Commissioner (Appeals) allowed the appeal without clarifying the incorrect calculation by the adjudicating authority, citing that claims made earlier could be reasserted within a year. However, the Tribunal disagreed with this reasoning, emphasizing that claims based on invoice value under the old provisions could be made within a year from the relevant date, but not twice for the same invoices. The Tribunal highlighted the distinction between raising invoices and receiving proceeds, stressing that both actions operate differently.

Ultimately, the Tribunal set aside the impugned order and allowed the appeal by remanding the case to the adjudicating authority for recalculating the refund amount based on the correct formula under the amended Rule 5. The correct export turnover of services and total turnover should be considered for accurate calculations in line with the legal provisions.

The Revenue's appeal was allowed by way of remand, and the decision was pronounced in court.