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2023 (6) TMI 11 - AT - Service TaxPartial rejection of claim of refund of unutilized input service tax credit - export of services - Time limitation - relevant date - date of the export invoice or the date of receipt of consideration in convertible foreign currency i.e., the date of FIRCs? - rejection on the ground of being time-barred in terms of Section 11B of the Central Excise Act, 1944 - quarter April 2012 to June 2012 on 27.03.2013. Whether the value of export for which invoices have been raised prior to the period of one year but in respect of which consideration has been realized during the relevant quarter within the period of one year, can be added to the export turnover for computation of the eligible refund under Rule 5 of the CENVAT Credit Rules, 2004? - HELD THAT - Section 11B of the Central Excise Act, 1944 has been drafted to prescribe a procedure for claiming of refund of Central Excise Duty under various circumstances within one year from the relevant date. The relevant date has been defined in the explanation to this Section for various purposes. As far as the export of services is concerned, no relevant date was prescribed in this Section because this was meant for refund of duty of excise and not for export of services. Since the Notification No. 27/2012-C.E.(N.T.) dated 18.06.2012 required the claim to be made before the expiry of a period specified under Section 11B and this Section does not specify what is the relevant date in case of export of services, the Tribunal has, in a series of decisions, held that relevant date in case of export of services is the date of realization of the foreign exchange. The reason for this is the export of services is not complete unless the foreign exchange is realized as per Rule 3(2)(b) of Export of Services Rules, 2005. Therefore, unless the foreign exchange is realized, the export is not complete and therefore the relevant date must be the date of realization of foreign exchange. In the present case, the exports were made and refund claims were filed before the issuance of the above notification. The lower adjudicating authority, reckoning the date of export invoice as the relevant date, rejected these refund claims as time barred. There is no ground that Section 11B mandates that the date of invoice must be considered as the relevant date. The residual category under Section 11B is the date of payment of duty. In case of export of services, as in these appeals, there is no payment of duty. As such, in various cases, the Tribunal has considered as to what constitutes an export of service under the Export of Service Rules and concluded that the date of realization of foreign exchange is the relevant date. If the export is not complete, the exporter of services is not entitled to claim refund under Rule 5 of the CENVAT Credit Rules, 2004. Therefore, harmoniously reading the Export of Service Rules and Section 11B of Central Excise Act, 1944, the Tribunal has taken a view that in case of export of services, the relevant date must be the date of realization of foreign exchange. For this reason only, an amending Notification No. 14/2016-C.E.(N.T.) dated 01.03.2016 was issued to remove the lacuna in the initial Notification No.27/2012-C.E.(N.T.) dated 18.06.2012. The issue is resolved by the Larger Bench decision of the CESTAT in the case of Commissioner of Central Excise, Customs Service Tax, Bengaluru v. CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. 2018 (2) TMI 946 - CESTAT BANGALORE wherein it was held that relevant date for refund of unutilized CENVAT Credit in case of export of services to be taken as the end of the quarter in which the FIRC is received since the prescribed procedure states that the refund claims are to be filed for every quarter. Claim of interest on the amount already debited from the CENVAT credit register - refund was not sanctioned and credit was taken back - HELD THAT - The procedure prescribes debiting the CENVAT Credit account before filing the refund claim and it also provides for taking back of the credit into their CENVAT Credit account of the amount not considered for sanction or where the refund claims are partially sanctioned - the provisions are very clear as to debiting or crediting of the CENVAT Credit maintained by an assessee prior to applying for refund or its sanction or otherwise. It has to be noted that accumulated CENVAT Credit lying unutilized does not carry any interest. The procedure prescribed for filing refund claims for unutilized CENVAT Credit in case of export of services under Rule 5 of the CENVAT Credit Rules, 2004 clearly lays down that the assessee is free to take back the credit of not sanctioned / partially sanctioned refunds. As such, payment of interest in the circumstances of these appeals is not provided for. The impugned order set aside - appeal allowed.
Issues Involved:
1. Change in appellant's name and amendment of cause-title. 2. Interpretation of time-bar under Section 11B of the Central Excise Act, 1944. 3. Relevant date for refund claims of unutilized CENVAT Credit in case of export of services. 4. Payment of interest on rejected refund claims. Summary of the Judgment: 1. Change in appellant's name and amendment of cause-title: The appellant requested a change in the cause-title from "Ad2pro Media Solutions Private Limited" to "Ad2pro Global Creative Solutions Private Limited." The Tribunal acceded to this request and allowed the petitions for amending the cause-title. 2. Interpretation of time-bar under Section 11B of the Central Excise Act, 1944: The appeals involved the partial sanction and rejection of refund claims based on the interpretation of the time-bar under Section 11B. The refund sanctioning authorities treated export invoices realized during the quarter but dated more than one year as time-barred, leading to partial rejection of the refund claims. The Commissioner of Service Tax (Appeals) upheld this partial rejection. 3. Relevant date for refund claims of unutilized CENVAT Credit in case of export of services: The core issue was determining the 'relevant date' under Section 11B for refund claims of unutilized CENVAT Credit in case of export of services. The Tribunal referenced the Larger Bench decision in Commissioner of Central Excise, Customs & Service Tax, Bengaluru v. M/s. Span Infotech (India) Pvt. Ltd., which held that the relevant date is the date of receipt of consideration (FIRC). The Tribunal concluded that the relevant date for filing refund claims should be the end of the quarter in which the FIRC is received. 4. Payment of interest on rejected refund claims: The appellant requested interest on the rejected refund claims. However, the Tribunal noted that the procedure for refund claims under Notification No. 27/2012-C.E.(N.T.) allows for the re-crediting of the amount not sanctioned. Since accumulated unutilized CENVAT Credit does not carry interest, the Tribunal found no provision for payment of interest in these circumstances. Conclusion: The Tribunal set aside the impugned orders and allowed the appeals, confirming that the relevant date for refund claims is the end of the quarter in which the FIRC is received, and no interest is payable on rejected refund claims.
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