2021 (7) TMI 22 - AT - Service Tax

Refund of service tax and cesses paid - failure to distribute credit to their SEZ and DTA units in the manner prescribed under Rule 7 of Cenvat Credit Rules, 2004 - failure to pay the vendors for the invoices on which refund is claimed - failure to prove claim of cenvat credit - violation of condition at para 3(III)(a), 3(III)(d) and Rule 5 of SEZ Notification No.12/2013-ST dt. 01/07/2013 - HELD THAT - The appellant has SEZ units as well as DTA units and had centralized Service Tax registration at Bangalore. The present refund application pertains to only SEZ units and is not connected with DTA units whereas the Commissioner(Appeals) in the impugned order has wrongly come to the finding that the appellant has filed refund claim application for input services which have also been used in DTA units. Further it is found that the impugned services involved in the present case for which refund has been denied, fall in the approved list of input services issued by the Development Commissioner and the appellant has produced on record the instruction issued by the Government of India, Ministry of Commerce and Industries, SEZ unit, where it is found that these services have been specifically covered as input services. For each violation alleged by the Revenue, appellant have produced documentary proof in the form of invoices, bank statements and other records but the same has not been considered by the authorities below. Appellant has produced all those documentary proof along with the appeal paper book and some of the documents have also been produced along with written submissions at the time of hearing of these appeals. Since those documents and statements have not been considered in the impugned order by the learned Commissioner(Appeals) and the Commissioner(Appeals) has come to the finding which is not based on verification of the documents. The matter needs to be remanded to the original authority with a direction to consider the statements, invoices and documents produced by the appellant in support of his claim and thereafter decide the refund application by passing a reasoned order - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Distribution of credit under Rule 7 of Cenvat Credit Rules, 2004.
2. Proof of payment to vendors for invoices on which refund is claimed.
3. Proof of non-claiming of Cenvat credit where refund is claimed.

Detailed Analysis:

1. Distribution of Credit under Rule 7 of Cenvat Credit Rules, 2004:
The appellant argued that the impugned order is unsustainable as it incorrectly assumed that the specified services were used for both SEZ and DTA units. The appellant clarified that the refund application was filed solely concerning the SEZ units. The appellant emphasized that all invoices for specified services were addressed to the SEZ unit, indicating usage solely for authorized SEZ operations. The appellant also contended that the conditions under para 3(III)(d) of the SEZ Notification were not violated, as the services were not used for DTA operations, making Rule 7 of the Cenvat Credit Rules inapplicable. The Tribunal found merit in the appellant’s argument and noted that the Commissioner(Appeals) did not properly verify the documents before concluding that the services were used for DTA units.

2. Proof of Payment to Vendors for Invoices on which Refund is Claimed:
The appellant submitted that the Commissioner(Appeals) wrongly concluded that there was no correlation between the bank statements and the invoices. The appellant provided bank statements and a correlation of each payment with the vendor invoices. The Tribunal observed that the appellant had indeed submitted bank statements and other relevant documents which were not considered by the Commissioner(Appeals). The Tribunal directed the original authority to verify these documents and consider them while deciding the refund application.

3. Proof of Non-claiming of Cenvat Credit where Refund is Claimed:
The appellant asserted that they had not claimed Cenvat credit on the specified services for which the refund was sought. The appellant provided invoice-wise details distinguishing the invoices against which credit was availed in ST3 returns and those against which the refund was claimed. The Tribunal noted that the appellant had produced documentary proof in the form of invoices, bank statements, and other records, which were not considered by the authorities below. The Tribunal directed the original authority to examine these documents and decide the refund application afresh.

Conclusion:
The Tribunal found that the Commissioner(Appeals) rejected the refund claims without properly verifying the documents and based on incorrect assumptions. The Tribunal set aside the impugned order and remanded the matter to the original authority to consider the statements, invoices, and documents produced by the appellant and decide the refund application afresh following the principles of natural justice. The original authority was also directed to consider the fact that in the appellant’s own case for an earlier period, the refund was granted for the same services. All three appeals were disposed of by way of remand.