2023 (12) TMI 179 - AT - Service Tax

Refund of service tax paid on the input services - Export of services - appellant did not produce the copy of invoices for examination by the learned Commissioner (Appeals) - The appellant has assailed the impugned order on the ground that the authorities below cannot question the manner of availment of CENVAT credit. - HELD THAT - Rule 3 ibid is the enabling provision, which entitles a manufacturer or a service provider to avail CENVAT credit of Central Excise duty paid on the inputs and service tax paid on the input services. The manner of availment and utilization of CENVAT credit is contained in the CENVAT statute. If availment or utilization of the credit is not in conformity with the CENVAT statute, then Rule 14 ibid provides that such irregularly availed or utilized CENVAT credit can be recovered from the assessee and for effecting such recovery, the provisions of Section 11A of the Central Excise Act, 1944 or Section 73 of the Finance Act, 1994 shall apply mutantismutandis - Since, Rule 5 ibid is a self-contained rule, which provides for grant of refund of accumulated CENVAT credit in case of exportation of the services, while dealing with such provision, the department cannot take recourse to the other provisions in the statute to say that availment of credit or utilization of credit is not in conformity with the statutory provisions. Rule 5 refund is permissible in case of observance of the formula laid down therein, which the appellant in this case has complied with. Since, the output services were exported by the appellant, the un-utilized CENVAT credit availed on the input services should be available to the appellant. There are no merits in the impugned order, insofar as it has denied the refund benefit to the appellants - appeal allowed in favour of appellant.

Summary

Issues:
The issues involved in the judgment are the denial of refund benefit to the appellant by the authorities based on the contention that the disputed service was not used in the provision of the output service, and the appellant's challenge against the authorities questioning the manner of availment of CENVAT credit.

Issue 1: Denial of Refund Benefit
The appellant, engaged in providing taxable services, exported all output services during the disputed period and filed refund applications for service tax paid on input services. The original authority partly allowed refund benefits, citing that the disputed service was not used in the output service provision. The Commissioner (Appeals) allowed refund in some cases but denied in others due to lack of invoice copies. The appellant argued that authorities cannot question the manner of credit availment, emphasizing the statutory right to credit utilization for exported goods/services.

Issue 2: Challenge on Credit Availment
The appellant contended that the issue raised is settled based on previous judgments supporting refund benefits under Rule 5. The Revenue argued for remand due to lack of invoice copies for verification. The Tribunal examined Rule 3 enabling credit availment and Rule 14 for irregular credit recovery, noting no proceedings against the appellant's credit utilization. Refund under Rule 5 is self-contained, requiring verification of compliance only. The Tribunal cited precedents to support the appellant's entitlement to unutilized credit on exported services.

The Tribunal found that the denial of refund benefits lacked merit, as the appellant complied with Rule 5 for accumulated CENVAT credit refund. Citing previous judgments and the self-contained nature of Rule 5, the Tribunal allowed the appeals in favor of the appellant, setting aside the impugned order that denied the refund benefit.