2014 (6) TMI 593 - AT - Service Tax

Refund claim - Export of services - period of limitation - Rule 5 of the Cenvat Credit Rules, 2004 - Notification No.5/2006 CE(NT) - period fo limitation to be computed from the date of invoice / export or from the date of receipt in convertible foreign exchange - Held that - Of course, if payment for export of service is to be obtained in rupees or non-convertible foreign exchange, then it will not be treated as export of service. Further, reading of Rule 4 of the Export of Service Rules indicates that any taxable service may be exported without payment of service tax. If rule 3(2) is to be read as export will take place only after receipt of payment in convertible foreign exchange then except in case of advance payment no service can be exported without payment of service tax. Thus a harmonious reading of sub-rule (2) to Rule 3 and Rule 4 would indicate that the services are exported when (i) these are provided from India and used outside India and (ii) payment terms are in convertible foreign exchange. In the present case, the appellants are providing business auxiliary service and management consultancy services. Thus the export of service takes place at the time or issuing invoice. The payment condition is only to ensure that the service provider receives the payment in convertible foreign exchange so as to get the benefit of service tax. The date of receipt of such payment is not relevant for determining the time of export. In view of the above analysis, I hold that the relevant date for determining the period of limitation will be the date of export of services or the date when the invoices are raised. Regarding various input services on which refund was rejected on the ground of no nexus with the output service, various input services was found as allowable and some of them are not eligible - adjudicating authority to allow the refund as per the order - Decided partly in favour of assessee.

Issues Involved:
1. Time limit for filing a refund claim under Rule 5 of the Cenvat Credit Rules, 2004.
2. Nexus of Cenvat Credit with the output service exported.
3. Specific refund claims disallowed by the original authority.

Detailed Analysis:

1. Time Limit for Filing a Refund Claim:
The appellants filed a refund claim under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No.5/2006 CE(NT) dated 14.3.2006. The primary contention was that Notification No.5/2006 CE(NT) does not specify the relevant date for computing the time limit prescribed under Sec. 11B of the Central Excise Act. The appellants argued that the time limit should be computed from the date of receipt of money for the export of services or from the last day of the quarter for which the refund pertains. They cited several case laws supporting the view that there is no time limit for filing the refund claim under Rule 5 of the Cenvat Credit Rules.

The respondent countered that the Notification clearly prescribes that the refund claim is to be filed before the expiry of the period specified in Section 11B of the Central Excise Act. The relevant date for computing the one-year period should be the date of export of the service. The Hon'ble Madras High Court in the case of CCE, Coimbatore vs GTN Engineering (I) Ltd. - 2012 (281) ELT 185 (Mad.) supported this view, stating that the period of limitation of one year is to be enforced, and the relevant date will be from the date of export.

The Tribunal concluded that a combined and harmonious reading of Rule 5, Section 11B, and Notification 5/06-CE(NT) indicates that the period of one year is to be computed from the date of export of the service. The Tribunal also noted the latest judgment of the Hon'ble Madras High Court, which upheld the one-year limitation period.

2. Nexus of Cenvat Credit with the Output Service Exported:
The original authority disallowed part of the refund claim, amounting to Rs. 1,58,371/-, on the grounds that certain Cenvat Credit taken had no nexus with the output service exported. The Tribunal examined specific services for which the refund was claimed:

- Custom House Agent Services: The appellants explained that these services were used for clearing import consignments, which were used for rendering services. The Tribunal allowed the refund.
- Meal Coupons: The appellants argued that these services were used in relation to business and cited the Bombay High Court's judgment in the case of CCE vs Ultratech Cement Ltd - 2010 (20) STR 577 (Bom). The Tribunal allowed the refund.
- Air Travel Agent Services: The appellants stated that overseas travel was necessary for their business and to procure export orders. The Tribunal allowed the refund.
- Courier Services: The appellants used courier services for delivering backup CDs to overseas clients. The Tribunal allowed the refund.
- Photocopying Charges: The appellants used their Xerox machine for business related to the export of software services or business auxiliary services. The Tribunal allowed the refund.
- Transport Charges: The appellants explained that part of the amount was recovered from their employees. The Tribunal directed the original authority to grant a refund corresponding to the actual expenditure incurred by the appellants.

3. Specific Refund Claims Disallowed by the Original Authority:
The original authority sanctioned a refund of Rs. 4,96,794/- but disallowed certain amounts due to lack of nexus or other reasons. The Tribunal reviewed each disallowed claim and provided specific directions:

- Custom House Agent Services: Refund allowed.
- Meal Coupons: Refund allowed.
- Air Travel Agent Services: Refund allowed.
- Courier Services: Refund allowed.
- Photocopying Charges: Refund allowed.
- Transport Charges: Refund to be granted based on actual expenditure.

Conclusion:
The appeal was allowed, with the Tribunal directing the original authority to grant the refunds as per the detailed analysis above. The period of limitation for filing the refund claim was upheld as one year from the date of export of the service. The Tribunal emphasized the need for a harmonious reading of relevant rules and notifications to determine the time limit and eligibility for refunds.

← Previous Next →