2024 (11) TMI 983 - AT - Central Excise

Refund claim under Rule 5 of Cenvat credit rules - input services - Rule 5 of Cenvat credit rules 2004 - it is alleged that input service involved in the refund claim has no nexus with the manufacture of export goods - HELD THAT - It is found that it is undisputed that at any stage the revenue has not issued any show cause notice or adjudicated thereupon the issue of admissibility of input service in terms of rule 14 of Cenvat Credit Rules, 2004 therefore the allowance of the credit on the input service in question attained finality and when this be so then by filing the appeal against the sanctioned order of the refund dispute about admissibility of the service for purpose of allowing the Cenvat credit cannot be raised. The learned Commissioner (Appeals) on this very ground rejected the appeal of the revenue. From the findings of the Commissioner (Appeals) it can be seen that the Commissioner (Appeals) rejected the appeal of the revenue on the threshold point that the department has not taken any action under rule 14 for disputing the admissibility of input service in question. The findings of the learned commissioner (Appeals) based on various judgments. Therefore, this issue is no longer res-integra. Without prejudice, it is also found that all the service which were questioned by revenue are admissible input service as held in various judgment as cited by the appellant in their synopsis. It is further found that though the revenue in the appeal before the Commissioner (Appeals) as well as before this tribunal reiterated that the input services involved in present case have no nexus with the manufacture of the export goods, however, no reasoning is given that why these services are not essential in or relation to the manufacture of exports goods. For this reason also the revenue s appeal is hollow and without any basis. As per the above discussion, there are no infirmity in both the orders passed by authorities below. The impugned order is upheld - Revenue s appeal is dismissed.

Summary

Issues:
1. Admissibility of Cenvat credit on input services for export goods.

Analysis:

The appeal before the Appellate Tribunal CESTAT AHMEDABAD was filed by the revenue against the order passed by the Commissioner (Appeals) rejecting the revenue's appeal filed against an order-in-original sanctioning the respondent's refund claim under Rule 5 of Cenvat credit rules. The revenue contended that the services on which Cenvat credit was availed did not have a nexus with the final product exported. However, the Commissioner (Appeals) rejected the appeal on the ground that no proceedings under rule 14 of Cenvat Credit Rules, 2004 had been initiated to decide the inadmissibility of the Cenvat credit, and thus, the issue of nexus could not be raised at the refund dispute stage. The Tribunal noted that the revenue had not issued any show cause notice or adjudicated upon the admissibility of input services, and the allowance of credit had attained finality. The Tribunal upheld the Commissioner (Appeals) decision based on various judgments, concluding that the issue was no longer res-integra.

The revenue argued that the refund claim was sanctioned without examining the admissibility of input services, and therefore, the sanction was not legally correct. On the other hand, the respondent contended that the adjudicating authority had considered the nature of services and their use in the manufacture of goods before sanctioning the refund claim. The respondent emphasized that since no show cause notice regarding the admissibility of Cenvat credit had been raised, the issue could not be raised at the review stage. The Tribunal found that the revenue failed to provide reasoning as to why the services were not essential or related to the manufacture of export goods, rendering their appeal baseless. The Tribunal upheld the impugned order, dismissing the revenue's appeal.

In conclusion, the Appellate Tribunal CESTAT AHMEDABAD upheld the decision of the Commissioner (Appeals) to reject the revenue's appeal regarding the admissibility of Cenvat credit on input services for export goods. The Tribunal emphasized that without invoking Rule 14 for demand and recovery, the admissibility of Cenvat credit could not be denied at the refund claim stage. The Tribunal found no basis for the revenue's appeal and dismissed it, affirming the impugned order.