2015 (7) TMI 351 - AT - Service Tax

Denial of refund claim - refund of unutilized the accumulated credit available - Notification No. 5/2006-CE N.T dated 1.3.2006 - bar of limitation - Revenue while allowing the refund of only 1 invoice took a view that claim has to be calculated by treating the number of days available in November as the difference between the date of invoice and the last date of the month - Commissioner allowed full refund - Held that - Refund should be limited to 3 days period as done by the original authority has no support from the statute. Accordingly, the appeal deserves to be rejected and is rejected. - Decided against Revenue.

Summary

Issues:
Refund claims under Notification No. 5/2006-CE N.T dated 1.3.2006; Time limitation for filing refund claims; Calculation of refund amount based on export turnover; Admissibility of full refund amount; Cross objection filed by the respondents; Limiting refund by applying a wrong formula.

Analysis:
The case involved refund claims by the respondents under Notification No. 5/2006-CE N.T dated 1.3.2006 due to unutilized accumulated credit. The original authority had initially considered the refund claim for two invoices as time-barred but allowed it for one invoice within the prescribed period under Section 11B of the Central Excise Act, 1994. However, the original authority limited the refund amount by calculating the claim based on the number of days available in November, resulting in only 10% of the total claimed amount for an invoice dated 27.11.2007. On appeal, the Commissioner (A) held that the full amount of credit should be refunded, disagreeing with the original authority's calculation method.

The main issue discussed was the calculation of the refund amount based on the export turnover ratio. The relevant notification stated that the refund of unutilized input service credit should be restricted to the ratio of export turnover to the total turnover for the given period. The Commissioner (A) emphasized that there was no requirement for the appellants to prove that services were rendered only during a specific period. The Tribunal concurred with this view, rejecting the Revenue's argument that the refund should be limited to a specific number of days, as it lacked statutory support.

Regarding the cross objection filed by the respondents, the Tribunal noted that it was filed after a considerable delay of six years and could not be considered valid. Additionally, the counsel for the assessee raised concerns about the original adjudicating authority potentially applying a wrong formula to limit the refund. However, the Tribunal clarified that such issues were not within its purview to address, as it could only rule on the matters directly involved in the appeal.

Ultimately, the Tribunal rejected the appeal filed by the Revenue, upholding the decision that the appellants were eligible for the entire refund amount without any limitations based on specific days. The judgment emphasized adherence to statutory provisions and the correct interpretation of the relevant notification in determining the refund entitlement based on the export turnover ratio.

(Order pronounced in open court)