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2019 (12) TMI 339 - AT - Service TaxRight to claim interest of delayed sanction of Refund of unutilised Cenvat Credit - Applicability of Section 11BB where refund is granted under Rule 5 of Cenvat Credit Rules r.w.s 11B of central excise - HELD THAT - Apparently and admittedly, the refund claim of unutilised Cenvat Credit is neither the refund of excise duty nor of the service tax paid. Applicability of Section 11BB of the Act is, therefore, opined to be not available to the refund of unutilised Cenvat Credit. Further perusal of Rule 5 of Cenvat Credit Rules, 2004, classified it to be silent about any entitlement of the assessee to the interest in case of delay in sanction. Otherwise also unutilised Cenvat Credit is an amount which is lying with the assessee itself as contrary to the excise duty or service tax paid to the department - To my opinion, this could have been the reason for Rule 5 to be silent about any scope of providing interest while refund of unutilised Cenvat Credit. In the decision of High Court of Bombay titled as AFFINITY EXPRESS INDIA PVT. LTD. VERSUS COMMISSIONER 2016 (2) TMI 1265 - BOMBAY HIGH COURT it was held that export of services is not, specifically, covered by any of the sub-clauses of Clause (B) of explanation of Section 11B of Central Excise Act, 1944, as applicable to service tax vide section 83 of Finance Act. Appeal dismissed - decided against appellant.
Issues:
1. Refund claim of unutilised Cenvat Credit. 2. Eligibility of certain services for refund. 3. Entitlement to claim interest on the sanctioned amount. Issue 1: Refund claim of unutilised Cenvat Credit The appellant filed a refund claim of unutilised Cenvat Credit amounting to ?23,12,37,136 under notification No. 27/2017 for the period from January to March 2017. The Order-in-Original sanctioned a major part of the claim but rejected ?8,96,230. The Commissioner (Appeals) modified the order, allowing refund for certain services but denying it for legal and travel-related services. The appellant appealed further, arguing for the eligibility of these services as input services under the Cenvat Credit Rules, 2004. Issue 2: Eligibility of certain services for refund The appellant contended that legal and professional services, along with travel-related services, should be eligible for refund as input services. However, it was noted that these services were not provided by the appellant but by external entities. The Commissioner (Appeals) denied the refund for these services, stating that they were not directly used by the appellant for providing output services. The judgment upheld this decision, citing precedents and the definition of input services under the Cenvat Credit Rules, 2004. Issue 3: Entitlement to claim interest on the sanctioned amount The appellant raised a concern regarding the entitlement to claim interest on the sanctioned amount, citing a delay in crediting the amount to their account. The judgment clarified that the refund claim of unutilised Cenvat Credit falls under Rule 5 of the Cenvat Credit Rules, 2004, distinct from excise duty or service tax refunds. It was highlighted that Section 11BB of the Central Excise Act, which deals with interest on delayed refunds, is not applicable to unutilised Cenvat Credit refunds. The judgment referenced a High Court decision to support this interpretation and concluded that no interest was payable on the delayed sanction of the refund amount. In conclusion, the judgment upheld the order under challenge, dismissing the appeal. The decision was based on the specific provisions of the Cenvat Credit Rules, 2004, and the inapplicability of certain sections of the Central Excise Act to the refund of unutilised Cenvat Credit.
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