2015 (11) TMI 905 - AT - Service Tax

Refund of CENVAT Credit - determination of amount to be refunded for export of services for the relevant period - amount of CENVAT credit restricted as per service tax return for the quarter - input invoices were not available for verification - Notification No. 5/2006C.E. (N.T.) dated 14/3/2006 - Held that - CENVAT credit cannot be restricted to the amount availed & as shown in the ST-3 returns for a quarter. It is refundable to the extent of accumulated credit lying at the end of the period for which the refund relates. This will include the amount of brought forward credit as well from the earlier quarter(s). So far the issue of address on the invoices being not that of the registered premises, I hold that the claim rejected on this ground is bad. I direct to verify to the extent, if the services have been received in any of the offices of the appellant and duly accounted for in the books of accounts, the credit is allowable. So far issue of missing invoices is concerned, the appellant is given opportunity to produce the invoices which shall be considered, as per Rules, at the time of hearing in the remand proceedings. The appellant during the course of hearing have also produced a copy of ST-3 return, filed on 23.07.09 relating to the period under consideration. - adjudicating authority shall peruse his records as well as the documents produced in support of the balance refund claim - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Refund of accumulated CENVAT credit for exported services under Rule 5 of the CENVAT credit rules.
2. Interpretation of conditions and limitations for obtaining refund under Notification No. 5/2006C.E. (N.T.).
3. Challenges faced by exporters in obtaining refunds and the issuance of Circular No. 120/01/2010ST.
4. Disallowance of part refund by the Commissioner (Appeals) based on the credit availed as per ST-3 returns.

Analysis:
1. The appellant, a service provider registered under service tax for Business Auxiliary Services and listed under the STPI scheme, exports 100% of its output services. The issue revolves around the refund of accumulated CENVAT credit for exported services under Rule 5 of the CENVAT credit rules. The appellant seeks refund as per Notification No. 5/2006C.E. (N.T.), which outlines conditions and limitations for obtaining such refunds. The appellant contends that the refund should not be restricted to the amount availed in a particular quarter but should include accumulated credit from earlier periods.

2. The notification requires the submission of refund claims quarterly, with specific documentation like shipping bills, invoices, and bank certificates. The Board issued Circular No. 120/01/2010ST to address difficulties faced by exporters in obtaining refunds. The Circular clarified that input services used in providing exported services should be eligible for refund. It emphasized the need for a harmonious interpretation of different rules and phrases under the CENVAT Credit Rules to facilitate refunds for exporters.

3. The appellant challenges the rejection of part refunds by the Commissioner (Appeals) based on credit availed as per ST-3 returns. The appellant argues that the refund should be based on accumulated CENVAT credit available at the end of the relevant period, not limited to the credit availed in a specific quarter. The appellant also raises concerns about missing invoices and the rejection of refunds without proper consideration, urging a fresh decision in compliance with the law and CBEC instructions.

4. The Tribunal, after considering the contentions of both parties, allows the appeal by remanding the matter for reconsideration. It directs the adjudicating authority to review the refund claim based on accumulated credit, allowing the appellant to produce missing invoices during remand proceedings. The Tribunal emphasizes that CENVAT credit cannot be restricted to the credit availed in a quarter and instructs the adjudicating authority to pass a reasoned order on the balance refund within three months. The appellant is granted an opportunity for a hearing before the concerned authority during this process.