2010 (6) TMI 231 - AT - Service Tax

Refund Cenvat Credit - The appellant is a 100 / EOU engaged in manufacture of laboratory equipments, parts and accessories falling under Chapter 90 of the schedule to the Central Excise Tariff Act, 1985. The appellant was taken the cenvat credit on raw material. The appellant applied for refund. Refund claim was rejected on the ground that appellants should have applied for the accumulated credit in the months in which export is made. Held that no restriction for making refund claim and availability or availment of input credit what required

Summary

Issues:
Refund of Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 for an EOU engaged in the manufacture of laboratory equipment; Rejection of refund claims by the Deputy Commissioner of Central Excise; Appeals filed before the Commissioner (Appeals) and Tribunal against the rejection; Discrepancy in refund claims related to specific months without exports; Refund claims sanctioned for some services but rejected for others; Commissioner's decision on the refund claim for Customs House Agent Service and Air Freight Services.

Analysis:
The judgment involves the issue of refunding Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 for an EOU engaged in manufacturing laboratory equipment falling under Chapter 90. The appellant, an EOU, applied for a refund of Cenvat credit as they had no opportunity to utilize the credit due to exporting all their production. The Deputy Commissioner issued show cause notices questioning the refund claims, which were subsequently rejected on various grounds.

The appellant then filed appeals before the Commissioner (Appeals), who rejected the appeals. The matter was taken to the Tribunal, which remanded it back to the Original Adjudicating Authority for reconsideration. The lower adjudicating authority rejected the refund claims for specific months without exports but sanctioned claims for other services, excluding input credit related to Custom House Agent's Service and Air Freight Services.

On appeal, the Commissioner allowed the refund claim for service tax on Customs House Agent Service but rejected it for other services. The Tribunal analyzed the issue of refund claims related to specific months without exports, citing a previous case where it was held that the time lag between input receipt, usage, and export date is irrelevant. The critical aspect is whether input services were used in manufacturing export goods, making the amount refundable under Rule 5.

Regarding the Commissioner's decision on Customs House Agent Service and Air Freight Services, the Tribunal disagreed with the rejection of the refund claim for Air Freight Services. The Tribunal found that the service tax liability incurred for air freight services was related to activities until goods were loaded onto the aircraft for export, aligning with the principle applied for Customs House Agent Service. Consequently, the appeals were allowed with benefits to the appellant.

In conclusion, the judgment addresses the intricacies of refunding Cenvat credit for an EOU, scrutinizing specific refund claims, and clarifying the eligibility criteria under Rule 5. The Tribunal's analysis emphasizes the relevance of input service usage in manufacturing export goods and challenges the Commissioner's decision on refund claims for different services, ultimately providing relief to the appellant.