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2015 (3) TMI 346 - AT - Service TaxCenvat Credit - Refund under Rule 5 - nexus and its correctness - Norms for determination of nexus - period of limitation u/s 11B - Notification No.05/2006-Central Excise (N.T.) - Whether refund under Rule 5 of CENVAT Credit Rules would be admissible when there was no notification issued prescribing safeguards, conditions and limitation to be fulfilled by issue of a notification by the Government. - Held that - this issue is not required to be dealt with by us because Notification No. 5/2006-CE (NT) dated 14.03.2006 was retrospectively amended by the Government and instead of words 'used in' the words 'used for' were replaced. Therefore wherever the refund claims have been rejected on the ground that the notification provides the benefit of refund when the inputs have been used in providing the output services will have to be set aside and will have to be reexamined in the light of amendment carried out with retrospective effect by the Government in Finance Act 2010. - Matter remanded back. Place of removal which has been a subject matter of dispute in several cases - Held that - the place of removal has to be considered as port/airport/land customs station. Therefore once place of removal is taken as port/airport/land customs station all the services utilized up to the stage would become eligible for refund under Rule 5 of the balance of CENVAT credit. Whether CENVAT credit can be refunded under Rule 5 when there was no notification prior to 14.03.2006. - Held that - refunds cannot be rejected on the ground that earlier Notification No. 11/2002-Cus. (NT) dated 01.03.2002 did not allow refund of credit available in respect of input services but limited only to inputs in view of the fact that during that time the rule itself did not provide for refund of credit in respect of input services. Nexus between the input services and the output services. - Held that - the matter should be remanded to enable the appellant to establish integral connection between the service and the business of manufacture of final product, it is nobody's case that there is no need to establish the relation between the input services and the business of manufacture. Foreign Inward Remittance Certificate. - Held that - what is required to be established by an exporter is that in respect of invoices raised by him, consideration in foreign currency has been received. This is what is required to be established. It is definitely possible for the proper officer considering the refund claim to verify the documents produced and come to the conclusion whether foreign remittances in respect of exports made have been received or not. If there is difficulty, they can definitely seek clarification. If it is found that claimant is misleading the department, Investigations can be taken up. If there is misdeclaration or mala fide, proceedings can be initiated. Rejection of refund claim on the ground that output service is not taxable. - Held that - Hon'ble High Court in Repro India Ltd. 2007 (12) TMI 209 - BOMBAY HIGH COURT took a view that even if export is not made under Bond or Letter of Undertaking, refund is admissible. Subsequently, amendment was carried out but during the period prior to such amendment, the decision would be applicable in any of the cases before us if export has taken place prior to amendment. Therefore, decisions in cases where credit has been denied or refund has been denied on the ground that export is not made under Bond or Letter of Undertaking cannot be sustained. Relevant date for filing refund claim. - Held that - Section 83 of the Finance Act, 1994 makes provisions of Section 11B applicable for the purpose of service tax matters also. When Section 11B is applicable to service tax matters, we have to replace words 'excisable goods' used under Section 118 as 'services'. Therefore, for the purpose of refund, in view of the specific provisions of Section 83 and notification under Rule 5, it is necessary to substitute service in place of goods. We are not able to agree with the submission that this cannot be done. Therefore, provisions of Section 11B for the purpose of limitation would be applicable. Method for calculation of relevant date. - Held that - After considering the decision of Hon'ble High Court of Madras in the case of C.C.E. vs. GTN Engineering (I) Ltd 2011 (8) TMI 960 - MADRAS HIGH COURT this Tribunal had taken a view that for the purpose of calculating limitation in respect of claim for refund of tax paid on input service, the relevant date should be the date on which the consideration has been received where the claimant is service provider and consideration paid where the claimant is service receiver. This decision was rendered in the case of Hyundai Motor India Engineering (P) Ltd. vs. C.C.E. Hyderabad 2014 (7) TMI 329 - CESTAT BANGALORE . Therefore in our opinion, this decision can be followed.
Issues Involved:
1. Limitation for the purpose of grant of refund under Section 11B of Central Excise Act. 2. Denial of CENVAT Credit on the basis of nexus and its correctness; Norms for determination of nexus. 3. Conditions required to be fulfilled as per the Notification and their classification as substantive and non-substantive. 4. Eligibility of input service and preparation of relevant statements. 5. Eligibility for the benefit of refund under Rule 5 of CENVAT Credit Rules before Notification was issued. 6. Defects in documents. 7. Place of removal in the context of exports. 8. Refund claims for 100% EOUs. 9. Proof of payment of service tax. 10. Consideration of clearance to a 100% EOU as export. 11. Rejection of refund claim on the ground that output service is not taxable. 12. Condonation of omissions in documents as per Rule 9 of Cenvat Credit Rules, 2004. 13. Relevant date for filing refund claim. 14. Method for calculation of relevant date. 15. Taxability of output and admissibility of Cenvat credit. 16. Cenvat credit without registration. Detailed Analysis: Issue No. 1: Limitation for the purpose of grant of refund under Section 11B of Central Excise Act. The Tribunal considered whether refunds under Rule 5 of CENVAT Credit Rules are admissible without a notification prescribing safeguards, conditions, and limitations. It was determined that the retrospective amendment of Notification No. 5/2006-CE (NT) dated 14.03.2006, which replaced "used in" with "used for," necessitates reconsideration of refund claims previously rejected on this ground. The Tribunal referenced the detailed order in CE Gloves and decisions in mPortal India Wireless Solutions (P) Ltd. and CCE, Bangalore v. Stanzen Toyotetsu India (P) Ltd. to support this conclusion. Issue No. 2: Denial of CENVAT Credit on the basis of nexus and its correctness; Norms for determination of nexus. The Tribunal addressed the place of removal in export cases, noting that services up to the port/airport/land customs station should be eligible for refund under Rule 5 if exports are on an FOB basis. This aligns with several Tribunal decisions post-2006. Issue No. 3: Conditions required to be fulfilled as per the Notification and their classification as substantive and non-substantive. The Tribunal held that refunds cannot be denied based on the absence of a notification before 14.03.2006, as several decisions, including CST, Mumbai v. WNS Global Service (P) Ltd., support the admissibility of refunds for exports made prior to the notification. Issue No. 4: Eligibility of input service and preparation of relevant statements. The Tribunal clarified that after 10.09.2004, CENVAT credit is available to 100% EOUs, and refunds cannot be rejected on this ground. This is supported by Circular No. 54/2004-Cus. Issue No. 5: Eligibility for the benefit of refund under Rule 5 of CENVAT Credit Rules before Notification was issued. The Tribunal noted that the Board's Circular No. 111/5/2009-ST clarified that services rendered in India for principals abroad can be considered exports if the benefits accrue outside India, aligning with the destination-based nature of service tax. Issue No. 6: Defects in documents. The Tribunal emphasized the inclusive definition of "input service" and referenced the KPMG decision, which supports the eligibility of services used in relation to the business of manufacture. The Tribunal also cited the Ultratech Cement decision, which aligns with this interpretation. Issue No. 7: Place of removal in the context of exports. The Tribunal addressed the requirement for a Foreign Inward Remittance Certificate (FIRC), noting that a consolidated FIRC with a self-certified statement is sufficient, as per Circular No. 112/6/2009. Issue No. 8: Refund claims for 100% EOUs. The Tribunal referenced decisions in NBM Industries and Shilpa Copper Wire Industries, confirming that clearances to a 100% EOU can be considered exports. Issue No. 9: Proof of payment of service tax. The Tribunal clarified that proof of payment of service tax by the service provider is not a requirement for refund claims, and invoices need not be issued in terms of Rule 4A of Service Tax Rules by foreign service providers. Issue No. 10: Consideration of clearance to a 100% EOU as export. The Tribunal noted that registration is not a prerequisite for claiming CENVAT credit, referencing the mPortal India Wireless Solutions P. Ltd. decision. Issue No. 11: Rejection of refund claim on the ground that output service is not taxable. The Tribunal emphasized the need to consider Rule 9(2) of CENVAT Credit Rules for condoning omissions in documents and advised assessees to request consideration under this rule. Issue No. 12: Condonation of omissions in documents as per Rule 9 of Cenvat Credit Rules, 2004. The Tribunal held that refunds cannot be denied on the ground that the output service is not taxable, referencing decisions in mPortal India Wireless Solutions P. Ltd. and Repro India Ltd. v. Union of India. Issue No. 13: Relevant date for filing refund claim. The Tribunal confirmed that CENVAT credit is admissible even without registration, as per the mPortal India Wireless Solutions P. Ltd. decision. Issue No. 14: Method for calculation of relevant date. The Tribunal clarified that Rule 5 of CENVAT Credit Rules does not require output services to be taxable for refunds to be admissible, referencing the KPIT Cummins Infosystems Ltd. decision. Issue No. 15: Taxability of output and admissibility of Cenvat credit. The Tribunal addressed the relevant date for filing refund claims, confirming that Section 11B of the Central Excise Act applies, and the relevant date is the date of export of goods or services. Issue No. 16: Cenvat credit without registration. The Tribunal concluded that the date of export of goods or services is the relevant date for calculating the limitation period for refund claims, as per the GTN Engineering (I) Ltd. decision.
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