2021 (10) TMI 704 - AT - Service Tax

Refund of unutilized CENVAT Credit - rejection on the ground that the appellant did not debit the amount of refund claimed at the time of fling the refund claim, but have debited such amount subsequent to the filing of the refund claim but before adjudication - Rule 5 of Cenvat Credit Rules read with N/N. 27/2012-CE (NT) - HELD THAT - The debit of the amount of refund claim in the cenvat credit account suo moto before the adjudication, is sufficient compliance Condition No.2(h) of the Notification No.27/2012-CE. Further relying on the ruling of the Hon ble Supreme Court in the case of CCE VERSUS M/S HARI CHAND SHRI GOPAL 2010 (11) TMI 13 - SUPREME COURT it is further held that the Commissioner (Appeals) have mis-conceived and mis-directed himself by ignoring the ruling of the Hon ble Supreme Court, which is both judicial indiscipline and also in violation of Article 141 of the Constitution of India. The Adjudicating Authority is directed to grant refund within a period of 45 days from the date of receipt of this order along with interest as per Rules (starting from the end of 3 months from the date of filing of the refund claim till the date of grant of refund claim) - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection under Rule 5 of Cenvat Credit Rules with Notification No.27/2012-CE (NT) due to failure to debit the claimed amount at the time of filing.

Analysis:
1. The appellant, an exporter of taxable services, filed refund claims under Rule 5 of CCR with Notification No.27/2012-CE. The appellant paid tax on input services but could not utilize the cenvat credit due to non-taxable exports.
2. Show cause notices were issued as the appellant did not debit the refund claim amount at the time of filing, leading to rejection of the claims. The appellant argued that they debited the amount before adjudication, complying with the condition.
3. The appellant contended that for procedural errors, substantial benefit should not be denied. They had debited the cenvat credit account before the show cause notice, showing substantial compliance.
4. The Commissioner (Appeals) rejected the appeal, citing lack of debit at the time of claim filing. The appellant referenced the doctrine of substantial compliance and previous tribunal rulings to support their case.
5. The Tribunal held that debiting the refund amount before adjudication fulfills Condition No.2(h) of the notification. Referring to the Supreme Court ruling, the Commissioner's decision was deemed erroneous.
6. Both appeals were allowed, and the impugned orders were set aside. The Adjudicating Authority was directed to grant the refund with interest within 45 days from the order date.

This judgment clarifies the importance of substantial compliance in fulfilling statutory requirements and emphasizes the significance of timely actions in refund claims under Cenvat Credit Rules.