2011 (1) TMI 692 - AT - Service Tax

Refund - Circular No. 120/1/2010 dated 19 th January, 2010 - Circular deals with the procedure, which the authorities have to follow while ascertaining the quantum of credit availed, while deciding the issue regarding refund claim - It is settled law that in cases where judicial or quasi-judicial authorities have to decide any dispute referred to it for its decision, it has to peruse the entire material placed before it before arriving at the final decision on the dispute - The decision cannot be arrived at by observing that the authority would peruse certain materials subsequent to the decision. The perusal and analysis of the entire materials required for the purpose of appropriate decision on the dispute has to precede the actual decision - Appeal is allowed by way of remand to Commissioner (Appeals)

Summary

Issues:
Refund of input services under Rule 5 of Cenvat Credit Rules, 2004; Interpretation of Circular No. 120/1/2010 dated 19th January, 2010; Relationship between input services and output services for refund eligibility.

Analysis:
The appeal stemmed from an Order by the Commissioner (Appeals) modifying the Assistant Commissioner's decision on a refund claim. The Assistant Commissioner had allowed a partial refund while rejecting a portion of the claim. The Commissioner (Appeals) set aside the rejection and allowed the refund subject to conditions outlined in Circular No. 120/1/2010 dated 19th January, 2010. The dispute primarily revolved around the eligibility of refund under Rule 5 of Cenvat Credit Rules, 2004, concerning the input services utilized by the appellant for Consulting Engineer services.

The Assistant Commissioner had specified various input services for which the refund was claimed, emphasizing the necessity of a direct connection between the services used and the output service provided. The Commissioner (Appeals) considered the appellant's status as a 100% EOU exporting Consulting Engineering Service, leading to credit accumulation on input services. The Commissioner's decision was influenced by the recent Board's circular, allowing refund for most input services except a few deemed non-essential. This decision was also subject to the submission of a certificate from Chartered Accountants as per the circular.

However, the Tribunal found fault with the Commissioner (Appeals) for not addressing the lack of relationship between the rejected services and the Consulting Engineer service. The Tribunal emphasized the need for coherence between input and output services for refund eligibility. The Circular dated 19th January, 2010 outlined a simplified procedure for refund claims, requiring self-certification by exporters or their Chartered Accountants regarding the nexus between inputs/services and exports. The Tribunal stressed the importance of thorough scrutiny of documents before sanctioning refunds.

Ultimately, the Tribunal set aside the Commissioner (Appeals) decision and remanded the matter for a fresh decision, emphasizing adherence to legal provisions and a comprehensive review of all relevant materials. The judgment highlighted the necessity for a robust analysis of input-output service correlation and proper consideration of all aspects before granting or refusing refund claims.