2024 (9) TMI 1495 - AT - Service Tax

100% EOU - Rejection of refund of CENVAT credit - barred by time under section 11B of the Central Excise Act, 1944 - HELD THAT - The SCN alleges that the documents submitted by the appellant are not sufficient to determine the nature of the service provided and that the input services were not used for output services . The Assistant Commissioner found as a fact that the appellant had produced all the relevant documents, because it is for this reason that the claim of Rs. 21,901/- was sanctioned to the appellant. The remaining amount would also have been sanctioned, but for the fact that it was found that the claim was made beyond the time prescribed and was, therefore, barred by time. Thus, it follows that the claim has been rejected on a ground not stated in the show cause notice. The Assistant Commissioner has rejected the refund claim filed by the appellant by calculating the time limit of one year from the date of invoice of the input services procured by the appellant. It has been repeatedly held that the relevant date under section 11B of the Central Excise Act for calculating the time limit of one year is the date of receipt of payment for export of services. The Notification dated 14.03.2006, under which the refund was claimed by the appellant, also prescribes that the refund application should not be filed more than once for every quarter in a calendar year. A larger bench of the Tribunal in Span Infotech 2018 (2) TMI 946 - CESTAT BANGALORE examined the issue of limitation in the content of export of service and held that it has to be calculated from the last date of quarter in which the FIRC s are received. The Commissioner (Appeals), however, upheld the view taken by the Assistant Commissioner that the time limit of the one year has to be calculated from the date of invoice when the input services were procured by the appellant - In view of the decision of the larger bench of the Tribunal in Span Infotech, it will not be possible to sustain this view. The impugned order dated 09.08.2012 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside - Appeal allowed.

Issues Involved:
1. Whether the refund claim of CENVAT credit of Rs. 21,82,843/- was barred by time.
2. Whether the refund claim was rejected on grounds not mentioned in the show cause notice.
3. Determination of the relevant date for calculating the time limit for filing a refund claim under section 11B of the Central Excise Act.

Issue-wise Detailed Analysis:

1. Whether the refund claim of CENVAT credit of Rs. 21,82,843/- was barred by time:
The Assistant Commissioner rejected the refund claim of Rs. 21,82,843/- as it was filed beyond the one-year time limit prescribed under section 11B of the Central Excise Act. The Commissioner (Appeals) upheld this decision, stating that the relevant date for calculating the time limit should be the date of export of services. The Tribunal, however, referred to the decision in Span Infotech, which held that the time limit should be calculated from the end of the quarter in which the Foreign Inward Remittance Certificates (FIRCs) are received. Consequently, the Tribunal found that the rejection of the refund claim on the basis of time bar was not justified.

2. Whether the refund claim was rejected on grounds not mentioned in the show cause notice:
The show cause notice issued to the appellant did not mention the ground of limitation for rejecting the refund claim. Instead, it proposed rejection on the basis that the documents were insufficient to determine the nature of services provided and that the input services were not used for output services. The Assistant Commissioner, however, found that the appellant had produced all relevant documents and sanctioned a partial refund of Rs. 21,901/-. The remaining amount was rejected solely on the ground of being time-barred, which was not stated in the show cause notice. The Tribunal agreed with the appellant that the rejection on a new ground not mentioned in the show cause notice was not permissible.

3. Determination of the relevant date for calculating the time limit for filing a refund claim under section 11B of the Central Excise Act:
The Tribunal emphasized that the relevant date for calculating the time limit under section 11B should be the date of receipt of payment for export of services, as held in Span Infotech. The Notification dated 14.03.2006 also prescribes that a refund application should not be filed more than once for every quarter in a calendar year. Thus, the time limit should be calculated from the end of the quarter in which the FIRCs are received, rather than the date of the invoice of input services.

Conclusion:
The Tribunal set aside the order dated 09.08.2012 passed by the Commissioner (Appeals) and allowed the appeal with consequential relief, holding that the refund claim was wrongly rejected on the ground of being time-barred and that the correct relevant date for calculating the time limit should be the end of the quarter in which the FIRCs are received. The Tribunal's decision was pronounced on 25.09.2024.

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