2023 (3) TMI 741 - AT - Service Tax

Refund of Krishi Kalyan Cess paid on services received for manufacture of goods - transportation of goods - Manpower supply-recruitment - maintenance and repair service - technical testing analysis service - CENVAT Credit of input services received for manufacture of goods namely transportation of goods, man power supply recruitment, goods maintenance and repair service, etc. - HELD THAT - The amount of refund for KKC Rs. 5,46,759/- rejected, following the ruling of larger bench in the case of Gauri Plastic Culture Pvt Ltd. 2019 (6) TMI 820 - BOMBAY HIGH COURT wherein it was held that a non-utilised portion of Cenvat credit cannot be claimed as refund in cash, distinguishing the ruling in Union of India vs. Slovok India Trading Company, as not a declaration of law under Article 141 of the Constitution. Credit have been admittedly taken after one year from the date of invoice/ bill of entry on Rs. 4,15,012/- - HELD THAT - The rejection of the same is upheld as admittedly credit was taken beyond a period of 12 months from the date of invoice/bill of entry. So far the balance amount of refund is concerned, the appellant have rightly taken credit in view of Rule 2(l) of CCR which entitles a manufacturer to claim Cenvat credit on input services utilise in manufacture of dutiable taxable goods - there is no bar in cross utilisation of Cenvat credit once taken, either for payment of Central Excise duty or service tax, in view of the provisions of Rule 3 or 4 of CCR. The Adjudicating Authority is directed to grant refund of the balance amount of Rs. 15,37,886/- - appeal allowed in part.

Summary

Issues involved:
The rejection of refund claims related to Krishi Kalyan Cess, service tax on input services, and credit taken on imported goods forms the crux of the appeal.

Refund Claim A: Krishi Kalyan Cess (KKC) on services for manufacture of goods:
The appellant's claim for refund of KKC was denied as the credit of KKC was meant for payment of KKC on output taxable service, not for refund. The court held that the appellant is not entitled to transmit the amount of KKC to the GST regime.

Refund Claim B: Service tax on input services for manufacture of goods:
The appellant was denied the refund claim for service tax paid on input services as they were not providing any taxable output service and were only a manufacturer paying excise duty. The credit availed was considered irregular as it could not be utilized for the discharge of Central Excise duty.

Refund Claim C: Credit on imported goods and services:
The appellant missed claiming credit on imported goods and services in the ER-1 Return for June 2017. The court held that there is no remedy under the law to utilize such credit for refund. It was noted that under the Central Excise Law, the appellant could have utilized the credit.

Legal Arguments:
The appellant argued that under Rule 3(1) of CCR, cross-utilization of Cenvat credit is permissible, citing precedents supporting this view. They also contended that incremental credit as per the revised return could be claimed as a refund under Section 142(9)(b) of the CGST Act.

Revenue's Position:
The Revenue argued that the disallowance of certain credits was justified as they were taken beyond the permissible time limit. They also suggested that instead of claiming a refund, the appellant could have availed transitional credit as per recent directives from the Supreme Court and the Board.

Judgment:
The Tribunal rejected the refund claim for KKC but upheld the refund for the balance amount, citing the appellant's right to claim Cenvat credit on input services used in manufacturing taxable goods. Cross-utilization of Cenvat credit for Central Excise duty or service tax payment was deemed permissible under the relevant rules.

Decision and Order:
The appeal was allowed in part, directing the Adjudicating Authority to grant a refund of the balance amount to the appellant within 60 days, along with applicable interest.