2015 (11) TMI 232 - AT - Service Tax

Denial of refund claim - CHA Service - Section 11B - CENVAT Credit - Held that - The order dated 24.12.2009 was passed in adjudication proceedings initiated by a show cause notice alleging illegal availment of cenvat credit and for recovery of the same along with interest and penalties. These proceedings culminated in the order dated 24.12.2009 whereunder the finding is recorded that the appellant was disentitled to avail cenvat credit, but the proceedings were dropped since the appellant had already reversed the cenvat credit and had remitted interest thereon, in cash vide TR-06 challan. The order dated 24.12.2009 however imposed penalty under Rule 15 of Cenvat Credit Rules, 2004 on the appellant for having unauthorizedly availed cenvat credit. This proceeding has become final. - appellant cannot be heard to contend that cenvat credit on CHA input service availed by it was valid and legitimately availed. The adjudication order dated 24.8.2009 and the conclusion thereon that the appellant irregularly availed cenvat credit estopps the appellant for canvassing such a contention. The conclusion of the authorities below that the appellant was disentitled to refund of ₹ 12,48,993/- is therefore impeccable and warrants no appellate intervention. - Decided against assessee.

Issues:
1. Denial of refund claim for cenvat credit availed on CHA and other post factory input services.
2. Legitimacy of cenvat credit availed by the appellant.
3. Reversal of cenvat credit and remittance of interest under protest.
4. Imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004.
5. Rejection of claim for refund under Section 11B of the Central Excise Act, 1944.

Issue 1: Denial of refund claim for cenvat credit availed on CHA and other post factory input services:
The appellant, a manufacturer of textile articles, availed cenvat credit on input services utilized up to the port of export for its manufactured goods. Despite reversing the cenvat credit and remitting interest under protest, the Revenue initiated proceedings proposing denial of cenvat credit and recovery of the same along with penalties. The adjudication order rejected the refund claim, stating that the cenvat credit reversal was illegal and imposed a penalty under Rule 15 of the Cenvat Credit Rules, 2004. The appellant appealed against this decision, arguing that the denial of the refund claim was unsustainable due to the utilization of CHA services for facilitating clearance of exported goods.

Issue 2: Legitimacy of cenvat credit availed by the appellant:
The order dated 24.12.2009 concluded that the appellant was disentitled to avail cenvat credit on CHA services, leading to the imposition of a penalty for unauthorized availment of cenvat credit. The appellant's argument that the credit availed was valid was dismissed based on the findings of the adjudication order. The authorities held that the appellant's irregular availing of cenvat credit precluded them from claiming legitimacy in retrospect. Consequently, the rejection of the refund claim amounting to &8377; 12,48,993/- was deemed appropriate, and the appeal was dismissed.

Issue 3: Reversal of cenvat credit and remittance of interest under protest:
Despite the appellant's reversal of cenvat credit and remittance of interest under protest, the Revenue proceeded with show cause notices and imposed penalties. The appellant's contention that the reversal was done under protest and their right to seek refund and recourse to legal measures was preserved, did not sway the authorities. The order imposing penalties was upheld, and the claim for refund was rejected based on the illegitimacy of the cenvat credit availed.

Issue 4: Imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004:
The penalty under Rule 15 of the Cenvat Credit Rules, 2004 was imposed on the appellant for irregularly availing cenvat credit despite reversing the credit and remitting interest under protest. The penalty was upheld in the adjudication order, and the appellant's subsequent claim for refund was denied on the grounds of the illegality of the credit availed.

Issue 5: Rejection of claim for refund under Section 11B of the Central Excise Act, 1944:
The claim for refund under Section 11B of the Central Excise Act, 1944 was rejected by the adjudicating authority, citing the illegality of the cenvat credit availed by the appellant and the penalty imposed under Rule 15 of the Cenvat Credit Rules, 2004. The rejection was affirmed in subsequent appeals, leading to the dismissal of the appellant's claim for refund.

This comprehensive analysis of the judgment highlights the key issues involved, the arguments presented by the appellant, and the reasons behind the rejection of the refund claim for cenvat credit availed on CHA and other input services.

← Previous Next →