2022 (3) TMI 984 - AT - Service Tax

Refund of CENVAT Credit - rejection on the ground of time limitation - rejection of few input service without issue of notice under Rule 14 of Cenvat Credit Rules is justified or not - HELD THAT - In their own case M/S. RMS RISK MANAGEMENT SOLUTIONS INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, NOIDAS 2019 (3) TMI 1962 - CESTAT ALLAHABAD , wherein the Allahabad Bench under similar facts and circumstances have taken notice that by subsequent amendment Notification No. 14/2016-CE (NT) dated 01.03.2016, the Notification No. 27/2012-CE was amended to the effect that the time limit fixed one year for claiming such refund of accumulated cenvat credit shall be calculated from the date of receipt of payment in convertible foreign exchange - the Court below have erred in rejecting the part of refund on the ground of limitation. Accordingly, this ground is decided in favour of the appellant. CENVAT Credit - photocopy charges - vehicle parking charges - rent-a-cab service - HELD THAT - The Court below have not followed the prescribed procedure i.e. issue of notice under Section 14 of Cenvat Credit Rules for rejection of cenvat credit taken - rejection of cenvat credit in part is bad and accordingly the same is set aside and this ground is decided in favour of the appellant. The appellant is held entitled to grant of refund of ₹ 16,14,152/-. The Adjudicating Authority is directed to grant the balance amount of refund with interest as per rules within a period of 45 days from the date of receipt of a copy of this order, with interest under Section 11BB of the Central Excise Act - the appeal is allowed.

Summary

Issues:
1. Calculation of limitation for refund under Rule 5 of Cenvat Credit Rules.
2. Justification for rejection of certain input services without issuing notice under Rule 14 of Cenvat Credit Rules.

Analysis:
1. Calculation of Limitation for Refund:
The appellant, a provider of Information Technology Software Service, filed refund applications for the period July 2013 to June 2015, claiming a total refund of ?42,22,829. The dispute arose as part of the refund was rejected on grounds of limitation exceeding one year from the date of invoice for export services. The Adjudicating Authority held that the application, along with documents, should be filed before the expiry of the period specified in Section 11B of the Central Excise Act. The appellant argued that limitation should be calculated from the end of the quarter when the right to file a refund claim crystallizes. The Tribunal agreed with the appellant, citing Rule 3(2) of Export of Service Rules, 2005, stating that the relevant date for limitation calculation should start from the date of receipt of payment in convertible foreign exchange. The Tribunal also referred to a previous ruling where the time limit for claiming refund of accumulated cenvat credit was amended to be calculated from the date of receipt of payment in convertible foreign exchange. The Tribunal held in favor of the appellant on this issue.

2. Rejection of Input Services without Notice:
The second issue pertained to the rejection of input services such as vehicle parking charges, photocopy charges, and rent-a-cab services without issuing a notice under Section 14 of Cenvat Credit Rules. The Tribunal found that the Court below did not follow the prescribed procedure for rejecting cenvat credit taken by the appellant. As per the Tribunal, the rejection of cenvat credit in part was unjustified, and the same was set aside in favor of the appellant. The Tribunal directed the Adjudicating Authority to grant the balance amount of refund with interest within 45 days from the date of receipt of the order, under Section 11BB of the Central Excise Act.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order regarding the rejection of part of the refund claim. The appellant was held entitled to a refund of ?16,14,152. The decision highlighted the importance of correctly calculating limitations for refund claims and following due procedure for rejecting cenvat credit on input services.