2012 (5) TMI 242 - AT - Service Tax

Stay - refund of unutilised CENVAT Credit taken on input services availed in relation to export of output services claim was rejected in toto by the original authority and that of the other respondent was partly allowed - original authority held that no nexus was established between the input services and the output services - ground raised by the Department against the orders of the Commissioner (Appeals) is that the latter did not have the power of remand for sending the case back to the original authority Held that - definite reason was found for remand of the case by the ld. Commissioner (Appeals). He was apparently of the view that proper nexus between input services and output services was not established by the parties before the lower authority and that Chartered Accountant s certificates (as per the Board s Circular) would go a long way to establish such nexus. Appeals allowed by way of remand with a direction to the original authority to pass fresh orders in accordance with law. Stay applications also stand disposed of

Summary

Issues:
1. Stay of operation of impugned orders passed by the Commissioner (Appeals) sought by the Revenue.
2. Rejection of refund claim of unutilised CENVAT Credit by the original authority.
3. Power of remand by the Commissioner (Appeals) questioned by the Department.
4. Consideration of Chartered Accountant's certificate as conclusive evidence by the Commissioner (Appeals).

Issue 1:
The applications filed by the Revenue sought a stay of the operation of the impugned orders passed by the Commissioner (Appeals). The Appellate Tribunal found that the appeals filed by the Revenue needed to be finally disposed of at that stage itself. The Tribunal dismissed the stay applications and proceeded to deal with the appeals.

Issue 2:
The respondents in the appeals had claimed a refund of unutilised CENVAT Credit taken on input services related to the export of output services. The original authority rejected one respondent's claim entirely and partly allowed the other respondent's claim. The original authority held that no nexus was established between the input services and the output services. The Commissioner (Appeals) remanded the cases to the lower authority for grant of refund subject to the production of Chartered Accountant's certificate in support of the declaration filed with the refund claims.

Issue 3:
The Department raised the ground that the Commissioner (Appeals) did not have the power of remand for sending the case back to the original authority. The Department relied on a Supreme Court judgment stating that the power of remand by the Commissioner (Appeals) had been taken away by Parliament. The Tribunal noted that the Commissioner (Appeals) did not have the power to order remand but found a valid reason for remand due to the lack of nexus between input and output services.

Issue 4:
The Commissioner (Appeals) considered Chartered Accountant's certificate as conclusive evidence in support of the plea of nexus between input and output services. The Tribunal acknowledged that the Board's Circular requiring the production of Chartered Accountant's certificates was not in force when the original authority passed the orders. The Tribunal found that the remand by the Commissioner (Appeals) was justified to establish the required nexus between input and output services. The Tribunal allowed the appeals by way of remand, directing the original authority to pass fresh orders in accordance with the law.

This detailed analysis of the judgment addresses the issues of stay applications, rejection of refund claims, power of remand by the Commissioner (Appeals), and the consideration of Chartered Accountant's certificate as conclusive evidence in support of the plea of nexus between input and output services.