2020 (5) TMI 449 - AT - Service Tax

Refund of the CENVAT Credit - time limitation as provided in section 11B of CEA - part of the refund rejected on the ground that the claims were filed beyond the period of limitation specified in Section 11B - relevant date is the date of realisation of foreign exchange or not - HELD THAT - There is no case in which Section 11B mandates that the date of invoice must be considered as the relevant date. The residual category under section11B is the date of payment of duty. In this case there is no payment of duty at all. If this residual category is considered, the relevant date will never begin. If the department s argument has to be accepted, the refund can be claimed at any time. In order to avoid such absurd conclusions, the Tribunal has considered as to what constitutes an export of service under the Export of Service Rules and concluded that the date of realisation of foreign exchange must be the relevant date. If the export is not complete, the exporter of services is not entitled to claim refund under Rule 5 of CCR 2004. Harmoniously reading the Export of Services Rules and Section 11B of Central Excise Act, 1944, the Tribunal has held a view that in case of export of services, the relevant date must be the date of realisation of foreign exchange. We find that CBEC has also subsequently come to the same conclusion and issued Notification No. 14/2016-CE(NT), dated 01.03.2016, removing the lacuna in the initial Notification No. 25/2012-CE, dt. 18.06.2012 and bringing it in harmony with the decisions of the Tribunal. The Commissioner (Appeals) has only followed the orders of the Tribunal - the CBEC has also modified their notification subsequently harmonising it with the decision of the Tribunal - there are no difference on the facts of the case law relied upon by the Commissioner (Appeals) in the present case and - there is nothing in Section 11B to reckon the date of invoices as the relevant date as prayed for in this appeal by the Revenue. Appeal dismissed.

Summary

Issues:
1. Interpretation of relevant date for claiming refund of CENVAT Credit for export of services.
2. Application of Section 11B of the Central Excise Act, 1944 in the context of export of services.
3. Impact of Notification No. 14/2016-CE(NT) on the relevant date for refund claims.

Analysis:
1. The appeal addressed the interpretation of the relevant date for claiming refund of CENVAT Credit for export of services. The Tribunal examined the conditions under Rule 5 of the CENVAT Credit Rules, 2004, particularly focusing on Notification No. 27/2012-CE (NT) and para 3(b) which required the application for refund to be filed before the expiry of the period specified in Section 11B of the Central Excise Act, 1944. The Tribunal established that for export of services, the relevant date is the date of realization of foreign exchange, as per Rule 3(2)(b) of the Export of Services Rules, 2005. This was crucial as the completion of export is contingent upon foreign exchange realization.

2. Regarding the application of Section 11B of the Central Excise Act, 1944 in the context of export of services, the Tribunal noted that while Section 11B specifies the procedure for claiming refund of Central Excise duty within one year from the relevant date, it did not explicitly define the relevant date for export of services. The Tribunal, through a series of decisions, established that the relevant date for export of services is the date of realization of foreign exchange, aligning with the Export of Services Rules. This interpretation was further supported by Notification No. 14/2016-CE(NT), which clarified the relevant date for service providers.

3. The impact of Notification No. 14/2016-CE(NT) on the relevant date for refund claims was a crucial aspect of the appeal. The Tribunal highlighted that the exports in question predated the 2016 amendment, and the lower authority had considered the date of export invoice as the relevant date. However, following the precedent set by the Tribunal and the clarification provided in the notification, the first appellate authority correctly determined the date of realization of foreign exchange as the relevant date for refund claims related to export of services. The Tribunal emphasized the importance of harmonizing the Export of Services Rules with Section 11B to ensure consistency and adherence to legal provisions.

In conclusion, the Tribunal dismissed the appeal by the Revenue, emphasizing that the first appellate authority had rightly followed the Tribunal's orders and that the appeal lacked merit. The Tribunal underscored the importance of judicial discipline and consistency in interpreting legal provisions, ultimately upholding the relevance of the date of realization of foreign exchange as the pivotal factor for refund claims related to export of services.