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2022 (4) TMI 1300 - AT - Service TaxRefund of CENVAT Credit - input services - Business Support Services - Health Insurance - Event Management Services - Rental Charges on accommodation provided to employees - Rent of cafeteria - out of pocket expenses incurred on Chartered Accountant Service - Management Business Consultant Service - denial on the ground of nexus can be discussed at the stage of refund, or not - power of the departmental officers to traverse beyond the directions in the remand order. Whether the issue of nexus cannot be discussed at the stage of refund? - Business Support Services - Health Insurance - Event Management Services - Rental Charges on accommodation provided to employees - rent of cafeteria was denied - out of pocket expenses incurred on Chartered Accountant Service - Management Business Consultant Service - denial on account of nexus - HELD THAT - The appellants have a prima facie case in their favour inasmuch as the issue of nexus cannot be raised at the point of grant of refund. Nexus cannot be discussed and credit cannot be denied while deciding refund under Rule 5 of CENVAT Credit Rules - except for Health Insurance, the nexus of other services to the output services have been decided. Therefore, the appellants are eligible for the credit and consequential benefit of refund. Health Insurance Service - HELD THAT - It is found that the Authorized Representative has submitted that w.e.f. 1st April, 2011, Health/ Medical Insurance has been specifically excluded from the definition of Input Service in CENVAT Credit Rules, 2004 and the same has been upheld in the cases of BHARAT FRITZ WERNER LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH WEST COMMISSIONERATE 2019 (6) TMI 67 - CESTAT BANGALORE . Therefore, the credit of ₹ 2,38,404/- availed by the appellants is not admissible to them. Also, the appellants have wrongly availed CENVAT credit even when the invoices were not available with them. Learned Counsel for the appellants has fairly conceded that this credit of ₹ 4,65,712/- availed by them and claimed for refund is not admissible to them. Hence, the appellants are not entitle to the refund of ₹ 4,65,712/-. Also, the appellants have availed CENVAT credit of ₹ 11,354/- on the strength of invoices which are not addressed to the company. During the course of argument, learned Counsel for the appellants submits that the refund of this amount was not granted on the ground that the invoice was not on the name of the registered premises of the company but was in the name of the company. However, no evidence to this effect has been produced by the learned Counsel. Hence, this credit is also not admissible to the appellants. The appellants have also submitted that a refund of ₹ 200/- was denied on no specific grounds and there appear to be a calculation error. In the result, I hold that refund of a total of ₹ 7,15,470/- (₹ 2,38,404 ₹ 4,65,712 ₹ 11354) is not admissible to the appellants. Refund of CENVAT credit in terms of N/N.27/2012 - HELD THAT - The appellants have relied upon the cases of COMMR. OF C. EX., MYSORE VERSUS CHAMUNDI TEXTILES (SILK MILLS) LTD. 2010 (4) TMI 450 - CESTAT, BANGALORE , FINE CARE BIO-SYSTEMS VERSUS COMMISSIONER OF C. EX., AHMEDABAD 2010 (6) TMI 231 - CESTAT, AHMEDABAD , AMDOCS BUSINESS SERVICES PVT. LTD. VERSUS COMMISSIONER OF C. EX., PUNE 2013 (9) TMI 31 - CESTAT MUMBAI . However, it is found that the impugned case is factually different from the above cases - In the above cases, the refunds under question were under Notification No.05/2006 whereas the refund in the impugned case is as per Notification No.27/2012. The appellant claimed that initially, they have filed refund claim under Notification No.5/2006 however on the insistence of the Department they have filed the same under Notification No.27/2012. Scope of remand order - HELD THAT - In the facts of the present case, it is found that in the second round of litigation, the original authority has traversed beyond the scope of the remand order, which they are not entitled to - the original authority could not have decided the other way as no appeal was filed against the said OIA No.36 40/2017 dated 13.01.2017 by the Department - there is force in the argument of the appellants. To this extent, the impugned orders are not sustainable as both the OIAs in the first round attained finality as the Department has not appealed against the same. It is not free for the original authority to traverse beyond the remand order and to reject the refunds. It is not correct on the part of the appellate authority such blatantly wrong and perverse orders. Without going into the merits, the appellants succeed on this count alone. Accordingly, the appellants are eligible for refund on this count. Appeal allowed in part.
Issues Involved:
1. Rejection of refund claims filed under Rule 5 of CENVAT Credit Rules, 2004. 2. Nexus between the input service on which credit is availed and the output service provided. Issue-wise Detailed Analysis: 1. Rejection of Refund Claims under Rule 5 of CENVAT Credit Rules, 2004: The appellants, M/s Methode Electronics (India) Private Limited, filed appeals against the rejection of their refund claims under Rule 5 of CENVAT Credit Rules, 2004, following Notification No.27/2012 and the amendment of Rule 5. The appellants argued that the credit of Krishi Kalyan Cess was denied due to its absence on invoices despite being paid. Credits on input services such as Business Support Services, Health Insurance, Event Management Services, Rental Charges for employee accommodation, and cafeteria rent were also denied. Additionally, out-of-pocket expenses for Chartered Accountant Service and Management Business Consultant Service were rejected. In Appeal No. ST/20676/2021, the counsel cited precedents (CC Vs Convergys (India) Pvt. Ltd., 2009 and Sentinin Technologies Pvt. Ltd. Vs CCE & ST, 2021) to argue that the nexus issue should not be considered at the refund stage. For Appeal No. ST/20677/2021, the counsel highlighted that the refund application for ?41,31,073/- was partially accepted for ?6,73,315/- by the Adjudicating Authority, which was upheld by the OIA. The Commissioner had previously clarified that the appellant, being a 100% EOU, was entitled to avail credit without restriction to the quarter of export, as per Board Circular No.120/01/2010. The counsel also referenced several cases supporting the claim that credit from prior quarters can be refunded in the quarter of export, including Commissioner of Central Excise, Mysore Vs Chamundi Textiles (Silk Mills) Ltd., 2010; Fine care Bio-systems Vs Commissioner of Central Excise, Ahmedabad, 2010; and Amdocs Business Services Pvt. Ltd. Vs Commissioner of Central Excise, Pune, 2013. In Appeal No. ST/20678/2021, the counsel pointed out that the Commissioner had previously allowed the appeal, setting aside OIA No.173/2017, and established that the relevant date for examining the time limit should be the last date of the last month of the quarter. 2. Nexus Between Input Service and Output Service: The appellants argued that the issue of nexus should not be raised at the refund stage. They claimed credit on various input services, which they argued were related to their output services. The Tribunal found that except for Health Insurance, the nexus of other services to output services had been established. Consequently, the appellants were deemed eligible for the credit and the consequential refund. However, the credit for Health Insurance was found inadmissible due to its specific exclusion from the definition of Input Service in the CENVAT Credit Rules, 2004, effective from April 1, 2011, as upheld in Bharat Fritz Werner Ltd Vs CCT, Bengaluru North Commissionerate, 2019 and Rittal India Pvt. Ltd. Vs CCT, Bengaluru North Commissionerate, 2019. Additionally, credits for invoices not available or not addressed to the company were also deemed inadmissible. Conclusion: The Tribunal held that the appellants were not eligible for a refund of ?7,15,470/- out of the total claimed amount. However, the Tribunal found that the original authority had exceeded the scope of the remand order by denying the refunds, which were previously upheld by unappealed OIAs. Therefore, the appellants were found eligible for the remaining refund claims. The appeals were partly allowed in these terms. (Order pronounced in the open court on 27/04/2022)
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