2009 (6) TMI 170 - AT - Service Tax

Refund of unutilized CENVAT credit taken on input services which were claimed to have been utilised in or in relation to the manufacture/clearance of final products which were cleared for export - It is on record that the refund claims were filed on a quarterly basis. It is also not in dispute that the claims were filed after the final products, cleared for export, were shipped. - the relevant date for the purpose of computation of period of limitation is the date on which the ship leaves India. The Revenue has not been able to show that the relevant show-cause notices pleaded limitation against the relevant refund claims with reference to the above date. Assessee has submitted that all the refund claims were filed within one year from the last date of the respective quarters - In the nature of this dispute, I am of the view that the original authority will have to carefully address the limitation issue with reference, and proper application of mind, to the provisions of Section 11B further, original authority shall be bound to examine the question whether these services were used in or in relation to the manufacture or clearance of the export goods, in terms of the definition of input service matter remanded

Summary

Issues:
Appeal against grant of refunds by lower appellate authority, rejection of refund claims by original authority, verification of original documents, denial of refund on various grounds, time-barred refund claims, non-cenvatable services, lack of documentary evidence, remand to original authority for limitation issue, examination of services for refund eligibility, direction for disposal of refund claims within three months.

Analysis:
The appeals filed by the department challenge the lower appellate authority's decision to grant refunds to the respondent. The respondent had filed six refund claims for unutilized CENVAT credit on input services used in manufacturing products cleared for export. The department issued show-cause notices proposing to reject the refund claims citing various grounds, including time-barred claims, non-cenvatable services, and lack of documentary evidence. The original authority rejected the claims, leading to the respondent appealing to the Commissioner (Appeals), who allowed the appeals. The department's current appeals are against the Commissioner (Appeals) orders.

The original authority later sanctioned refunds after verifying original documents produced by the claimant. The department, through the learned SDR, argued that the refunds were allowed without proper verification of original documents. They claimed the respondent failed to prove the services were used in manufacturing or clearing final products. The respondent, however, argued that all refund claims were within the time limit and referenced a precedent to support their case. The Tribunal found a need for remand to the original authority to address the limitation issue properly.

The party conceded non-refundability of CENVAT credit on certain services before the refund-sanctioning authority. The Tribunal directed the original authority to examine whether the remaining services were used in manufacturing or clearing export goods as per the Cenvat Credit Rules. The original documents available to the refund-sanctioning authority must be reexamined. The Tribunal emphasized the importance of giving the party a reasonable opportunity to be heard.

Ultimately, the orders of the original and appellate authorities were set aside, and the appeals of the Revenue were allowed by way of remand to the original authority. The original authority was directed to dispose of the refund claims on merits, following the law and principles of natural justice, within three months from the date of the order. The adjudicating authority was instructed to act promptly in resolving the cases.