2023 (10) TMI 434 - AT - Service Tax

Rejection in cash of unutilized cenvat credit - requirement to reconsider the formula for prorating the cenvat credit pertaining to domestic turnover - rejection of credit taken on input services availed in the unregistered premises - input services - clearing and forwarding services - event management service - gardening services - tour operator services - packaging services - reversal of cenvat credit in respect of the refund rejected is beyond the jurisdiction - time limitation. HELD THAT - The original authority has directed the respondent to debit / reverse the cenvat account to the tune of which has not been sanctioned. The respondent has already debited the amount in their cenvat account before filing the refund claim. The original authority ought not to have directed the respondent to reverse the credit again for the mere reason that the refund has not been sanctioned in cash. The Commissioner (Appeals) has correctly understood the matter - it can be seen that by the impugned order, the Commissioner (Appeals) has not sanctioned any amount as refund in cash. The respondent has been allowed to take recredit of the amount which has not been sanctioned to them as cash. This being so, the appeal filed by department alleging that credit availed by the respondent is ineligible for the reason that the premises is not registered and that the input services have no nexus with the output services is without any substance. The Hon ble High Court in the case of COMMISSIONER OF SERVICE TAX-III, CHENNAI VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, CHENNAI M/S. SCIOINSPIRE CONSULTING SERVICES (INDIA) PVT LTD, CHENNAI 2017 (4) TMI 943 - MADRAS HIGH COURT had held that cenvat credit cannot be denied on the ground that premises is not registered. In the case of K LINE SHIP MANAGEMENT (INDIA) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI 2017 (7) TMI 412 - CESTAT MUMBAI it was held that eligibility of cenvat credit cannot be questioned or determined at the time of granting refund of cenvat credit. Since the order passed by the Commissioner (Appeals) is only to avail recredit the contention of the Revenue with regard to limitation is also of no consequence. There are no merits in the appeals filed by the department. The appeals are dismissed.

Summary

Issues involved:
The issue involved in this case is the refund of unutilized cenvat credit for different periods between February 2008 and March 2009, contested by the department before the Appellate Tribunal CESTAT CHENNAI.

Refund Claims and Appeals:
The respondent, a private limited company engaged in exporting IT and software services, filed refund claims for unutilized cenvat credit. The original authority partly allowed the claims, directing the respondent to reverse the credit not refunded. The Commissioner (Appeals) allowed the appeals, leading the department to appeal to the Tribunal.

Department's Grounds:
The department argued on four main grounds before the Tribunal:
1. Correct application of the formula for prorating cenvat credit.
2. Rejection of credit for input services from unregistered premises.
3. Eligibility of various input services for credit.
4. Jurisdictional issue regarding reversing cenvat credit.

Respondent's Defense:
The respondent argued that the registration with the department is not mandatory for claiming cenvat credit. They contested the rejection of refund and the direction to reverse credit not refunded, stating they had already reversed it before filing the claim.

Legal Arguments:
The respondent cited legal precedents to support their position, emphasizing that the eligibility of cenvat credit cannot be questioned during refund adjudication. They sought recredit for the amount not refunded, which the Commissioner (Appeals) allowed.

Commissioner's Decision:
The Commissioner (Appeals) held that the direction to reverse unrefunded credit was improper and ordered recredit. The Tribunal found no merit in the department's appeals, dismissing them based on legal principles and precedents.

Conclusion:
The Tribunal upheld the Commissioner's decision, emphasizing the eligibility of cenvat credit regardless of premises registration and the inapplicability of the limitation argument due to the recredit granted. The appeals filed by the department were dismissed.