2008 (6) TMI 348 - AT - Service Tax

Cenvat Credit - The assessee-EOU filed refund claim under Rule 5 read with Notification No. 5/2006-C.E. dated 14.03.2006 in respect of unutilized input service credit relating to export prior to 14.03.2006. Revenue rejected refund claim on ground that said notification was effective from date of issue and would not have retrospective effect. Held that - since refund claim had been filed in July, 2006, possibility of some amount being time barred was not to be ruled out and, therefore, matter was to be remanded to original authority to arrive at quantum of refund and limitation period as per provisions of section 11B.

Summary

Issues:
Refund claim under rule 5 of the Cenvat Credit Rules, 2002 for unutilized input service credit in case of export services provider. Compliance with Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 for refund claim filing on a monthly basis. Time limitation for filing refund claims under section 11B.

Analysis:
The case involved a refund claim filed by M/s. Sandoz Private Limited for Rs. 43,28,000 under rule 5 of the Cenvat Credit Rules, 2002, related to unutilized input service credit on exports of finished goods. The dispute arose as to whether the refund could be granted for exports made prior to 14-3-2006, considering the changes in rules and notifications. The revenue contended that the refund provision was extended only to manufacturers and service providers post 14-3-2006, not to export service providers. A show-cause notice was issued, alleging non-compliance with the filing requirements of monthly refund claims as per Notification No. 5/2006-C.E. (N.T.). The Assistant Commissioner and Commissioner (Appeals) rejected the refund claim based on these grounds.

The appellants argued that the denial was incorrect as the refund claim satisfied all requirements of rule 5 and the related notification. They cited a Tribunal decision in a similar case to support their position that there was no condition specifying that refunds applied only to exports post 14-3-2006. They also contended that the wording of "may" in the notification regarding monthly filing implied a choice for exporters, not a mandatory requirement. The revenue reiterated the rejection based on mandatory monthly filing requirements and raised concerns about potential time-barred claims.

The Tribunal held that the refund claim could not be rejected solely based on exports made before 14-3-2006, as there was no such condition in the rules or notifications. Regarding monthly filing, the Tribunal agreed with the appellants that "may" indicated a choice, not an obligation, and as long as the refund claim was within the time limit under section 11B, it could not be denied for procedural reasons. However, the Tribunal noted the possibility of some claims being time-barred and remanded the matter back to the original authority to determine the quantum of refund and address any time limitation issues as per section 11B. The remand was specifically for examining the time-bar issue without focusing on the monthly basis filing requirement.