2010 (8) TMI 468 - AT - Service Tax

Refund claim - Limitation - The respondents is a 100 per cent E.O.U. and claimed refund of service tax amount paid by them in respect of services utilised in the final product, namely, cellular phones , which were exported - The Tribunal in the case of Swagat Synthetics Ltd. 2007 -TMI - 69484 - CESTAT, AHMEDABAD ,it was held that credit lying in RG-23A account accumulated arising out of the export is akin to credit in the PLA and the time-limit shall not apply - Therefore, the finding of the original authority that the claim is hit by time bar is erroneous - Hence, the appeal by the department is rejected - Decided in favour of assessee.

Summary

Issues:
Claim for refund of service tax paid by a 100% E.O.U. in relation to services used in exported final products. Interpretation of time-limit for claiming refund under Rule 5 of the CENVAT Credit Rules, 2004.

Analysis:
The appeal before the Appellate Tribunal CESTAT, CHENNAI involved a dispute regarding the refund of service tax paid by a 100% E.O.U. on services utilized in the export of 'cellular phones'. The respondent claimed a refund for the CENVAT credit utilized during a specific period. The original authority rejected the claim, citing a time-bar due to a delay in submission of additional documents beyond the prescribed 60 days. The Commissioner (Appeals) reversed this decision and allowed the refund claim.

The department argued that the refund of unutilized credit under Rule 5 of the CENVAT Credit Rules, 2004 is governed by specific notifications and guidelines. They highlighted Circular No. 120/1/2010-ST, emphasizing the importance of satisfying that the refund pertains to duty credit linked to inputs used in exported products. The respondent's advocate contended that there was no dispute regarding the eligibility of credit on input services for export products and the absence of a time-limit for claiming refunds under Rule 5. Reference was made to the Tribunal's decision in Swagat Synthetics Ltd. v. CCE, supported by a High Court ruling, to support this position.

The Tribunal, after considering arguments from both sides, analyzed the applicability of the time-limit under section 11B for refund claims under Rule 5. It referenced the precedent set in the case of Swagat Synthetics Ltd., where it was established that the time-limit did not apply to credit accumulated from exports. Upholding the High Court's decision, the Tribunal concluded that the original authority's time-bar ruling was incorrect. Consequently, the Commissioner (Appeals) decision to set aside the original order and grant relief to the party was deemed appropriate, leading to the rejection of the department's appeal.

In conclusion, the judgment clarified the interpretation of the time-limit for claiming refunds under Rule 5 of the CENVAT Credit Rules, emphasizing the relevance of specific guidelines and legal precedents in determining the eligibility of refund claims related to exported products.