2024 (7) TMI 931 - AT - Service Tax

Refund of unutilized balance of Cenvat Credit and Service tax on services utilized for export of goods - period prior to the introduction of the N/N. 05/2006-CE(NT) dated 14.03.2006 - HELD THAT - N/N. 11/2002-CE issued under Rule 5 of the Cenvat Credit Rules, 2004 allowed refund of CENVAT Credit of specified duty only in respect of inputs used in or in relation to the manufacture of final products which are cleared form export under bond. After 14.03.2006, as per N/N. 05/2006-CE (NT), such refund of CENVAT credit was allowed both in respect of the input or input services used in the manufacture of the final products which is cleared for export under bond or letter of undertaking; as well as input or input services used in providing output service which has been exported without payment of Service tax. In the present disputed matter as per the revenue benefit of input services used in manufacture of final products exported was started to be admissible from the said date i.e 14.03.2006, the date of issuance of Notification No. 05/2006-CE (NT) and as per the revenue the provisions of Notification No. 5/2006-CE (NT) will not apply to cases prior to 14.03.2006. The disputed issue is no more res integra as the Division Bench of the Tribunal in the case of WNS GLOBAL SERVICES (P) LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI 2008 (1) TMI 94 - CESTAT, MUMBAI held that substituted Rule 5 will be applicable for the export of services prior to 14-3-2006. In the present case, revenue found that an amount of Rs. 55,88,459/- pertained to the period prior to 14.03.2006 i.e. the introduction of Notification No. 5/2006-CE and as such refund of the same would not be admissible. The only reason given in the adjudication for rejection of the claim is that it pertains to the year prior to 14-3-2006. In view of the decision of the Mumbai Bench this objection cannot be sustained. The impugned order has no merits, the same is set aside - Appeal allowed.

Summary

Issues:
1. Refund claims under Cenvat Credit Rules, 2004 and Service tax on services utilized for export of goods.
2. Rejection of refund claims by adjudicating authority, appeal to Ld. Commissioner (Appeals), and subsequent appeals.
3. Sanction of refund claim by Assistant Commissioner, challenge by department, and issuance of protective show cause notice.
4. Decision by CESTAT ruling in favor of assessee but remanding one issue back to Original Adjudication Authority.
5. Rejection of refund claim by Assistant Commissioner for amount pertaining to period prior to introduction of Notification No. 5/2006-CE (NT).
6. Adjudication of show cause notice for recovery of sanctioned refund by Ld. Commissioner (Appeals).

Analysis:

1. The case involved refund claims under the Cenvat Credit Rules, 2004 and Service tax on services used for exporting goods. The appellant's refund claims were initially rejected, leading to appeals and remand by various authorities. The matter was taken up by CESTAT, which ruled in favor of the assessee on most issues but remanded one issue back to the Original Adjudication Authority.

2. The Assistant Commissioner sanctioned a refund claim, which was challenged by the department. A protective show cause notice was issued for recovery of the sanctioned refund. The CESTAT decision was accepted by the department, but one issue related to the effective date of Notification No. 5/2006-CE (NT) was remanded back for adjudication.

3. The Assistant Commissioner, in a subsequent order, rejected a refund claim for an amount pertaining to the period before the introduction of Notification No. 5/2006-CE (NT). The appellant appealed this decision before the Ld. Commissioner (Appeals), which was pending at the time of the judgment.

4. The Ld. Commissioner adjudicated a show cause notice for recovery of a sanctioned refund. The Ld. Commissioner held that a specific amount needed to be recovered from the appellant based on previous orders. The appellant filed an appeal against this decision before the Tribunal.

5. The appellant argued that the refund should not be denied as the goods were exported, and they had a right to obtain the refund. They cited relevant judgments to support their claim. The revenue reiterated the findings of the impugned order.

6. The Tribunal analyzed the applicable rules and notifications regarding refund claims and exports. They referred to a previous decision and held that the refund could not be denied based on the period to which it pertained. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.