2023 (1) TMI 145 - AT - Central Excise

Seeking refund of service tax paid on ocean freight services availed - Cenvat Credit - duty paying documents - self service tax paid challans - denial of refund invoking Rule 9(1)(bb) of the Cenvat Credit Rules - HELD THAT - The issue regarding admissibility of credit under Rule 9(1)(bb) has nothing to do with the CGST Act and therefore, the reference made to the larger bench in the case of M/S. BOSCH ELECTRICAL DRIVE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF G.S.T. AND CENTRAL EXCISE, CHENNAI 2021 (10) TMI 1345 - CESTAT CHENNAI has no relevance in the instant case. The instant case is solely based on the admissibility of credit under Rule 9(1)(bb). It is apparent that the claim of the appellant to avail credit on the strength of Challan of Service Tax paid by them in the capacity of service recipient cannot be denied under Rule 9(1)(bb). Moreover, there is no evidence on record to show that the appellants have engaged in any mis-declaration, suppression etc. especially in view of the fact that the levy of service tax on Ocean Freight itself was held ultravirus by Hon ble High Court of Gujarat in case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA 2019 (9) TMI 1315 - GUJARAT HIGH COURT . It is held that the appellants are entitled to take credit of cenvat credit paid on ocean freight. The impugned order is set aside and matter is remanded to the original adjudicating authority for fresh consideration - Appeal allowed by way of remand.

Summary

Issues:
1. Entitlement to cenvat credit for service tax paid on reverse charge basis.
2. Denial of refund under Rule 9(1)(bb) of Cenvat Credit Rules.
3. Applicability of Rule 9(1)(bb) to credit availed on self-challan.
4. Reference to Larger Bench regarding refund claim under Section 142(3) of GST Act.

Entitlement to Cenvat Credit:
The appellant, a company, paid service tax on reverse charge basis for ocean freight services. Despite no show cause notice for suppression or misdeclaration, the impugned order denied refund under Rule 9(1)(bb) of Cenvat Credit Rules. The counsel argued that the credit was availed on their own challan, not a provider's invoice, citing a Tribunal decision supporting their claim. The Authorized Representative referred to a Tribunal decision regarding keeping refund claims under Section 142(3) in abeyance. The Member (Technical) noted that the issue of credit admissibility under Rule 9(1)(bb) was distinct from the CGST Act, making the reference to a Larger Bench irrelevant. The Tribunal's decision in a similar case emphasized the eligibility of credit based on Rule 9(1)(e) for payment evidence under reverse charge mechanism, overturning the impugned order and remanding the matter for fresh consideration.

Denial of Refund under Rule 9(1)(bb):
The impugned order initially denied cenvat credit to the appellant under Rule 9(1)(bb) of the Cenvat Credit Rules, leading to the refusal of the refund claimed by the appellant. The Member clarified that the issue of credit admissibility under Rule 9(1)(bb) was not related to the CGST Act, distinguishing it from the matter referred to the Larger Bench. The Tribunal's decision in a similar case highlighted that the appellant's claim to credit based on the challan of service tax payment as a service recipient could not be denied under Rule 9(1)(bb). The absence of evidence indicating misdeclaration or suppression, especially considering the High Court's ruling on the ultravirus levy of service tax on ocean freight, led to setting aside the impugned order and remanding the case for reconsideration.

Applicability of Rule 9(1)(bb) to Credit Availed on Self-Challan:
The counsel argued that Rule 9(1)(bb) applied only when credit was taken based on a provider's supplementary invoice, bill, or challan, not on self-challans like in the appellant's case. Citing a Tribunal decision supporting their stance, the appellant contended they were entitled to cenvat credit, challenging the denial of refund based on Rule 9(1)(bb). The Tribunal's observation in a similar case emphasized that the appellant's eligibility for credit was rooted in Rule 9(1)(e) for challans serving as evidence of service tax payment under the reverse charge mechanism, leading to the reversal of the impugned order and a directive for fresh consideration.

Reference to Larger Bench Regarding Refund Claim under Section 142(3) of GST Act:
The Authorized Representative referenced a Tribunal decision regarding keeping matters related to refund claims under Section 142(3) of the GST Act in abeyance, suggesting a similar approach for the present case. However, the Member clarified that the issue of credit admissibility under Rule 9(1)(bb) was distinct from the CGST Act, rendering the Larger Bench reference irrelevant. Consequently, the Tribunal's decision in a comparable case, emphasizing the appellant's entitlement to credit under Rule 9(1)(e) and the absence of evidence supporting misdeclaration or suppression, led to setting aside the impugned order and remanding the case for fresh consideration.