2015 (12) TMI 1405 - AT - Service Tax

Denial of refund claim - Notification No.17/2009-ST dated 7.7.2009 - claim for refund on transportation/freight - Held that - Board Circular seeks to explain the scope of Section 154 of the Customs Act. This provision enables correction of arithmetical mistake in any decision or order passed by the Central Government, Board or any officer under the Customs Act, 1962. The corrigendum dated 14.8.2012 was however explicitly issued in exercise of powers under Section 74 of the Finance Act, 1994. Section 74 authorizes rectification of any mistake apparent from the record. It is axiomatic and this is also not contested by the respondent/Revenue that appellant was entitled to refund of service tax on transportation/freight charges incurred on transportation of exported goods from the place of clearance to the port of export though not on transportation of empty containers. A clarification dated 19.7.2012 addressed by the appellant, in response to the departmental notice dated 24 21.6.2012 contains the clear assertion that transportation and freight charges were not incurred on empty containers. - appellant is entitled to succeed. - Decided in favour of assessee.

Summary

Issues:
1. Validity of the corrigendum dated 14.8.2012 issued by the Assistant Commissioner.
2. Interpretation of powers under Section 74 of the Finance Act, 1994.
3. Contradiction between the Board's Circular and the corrigendum.
4. Entitlement of the appellant to refund of service tax on transportation/freight charges.

Analysis:

1. The appellant filed a refund claim for service tax remitted on input services for export. The Assistant Commissioner initially rejected part of the claim presuming it pertained to transportation of empty containers. However, after receiving clarification from the appellant, the primary adjudication order was revised on 14.8.2012 to allow the refund claim in full. The corrigendum was reviewed, and an appeal was preferred by Revenue against it, leading to the impugned order by the Commissioner (Appeals) quashing the corrigendum on the grounds of being contrary to a Board's Circular.

2. The corrigendum dated 14.8.2012 was issued under the powers conferred by Section 74 of the Finance Act, 1994, allowing rectification of any mistake apparent from the record. The appellant's clarification regarding transportation and freight charges, which clearly stated that no charges were incurred on empty containers, was part of the adjudication record when the corrigendum was issued. Therefore, the corrigendum was well within the scope of rectification under Section 74, despite the Commissioner's conclusion based on the Board's Circular being fundamentally misconceived.

3. The Board's Circular cited by the Commissioner explains the scope of Section 154 of the Customs Act, which allows correction of arithmetical mistakes. However, the corrigendum in question was issued under Section 74 of the Finance Act, 1994, which authorizes rectification of mistakes apparent from the record. The two provisions serve different purposes, and the corrigendum was correctly issued within the powers granted by Section 74.

4. The appellant was entitled to the refund of service tax on transportation/freight charges for exported goods, excluding charges related to empty containers. The clarification provided by the appellant clearly stated this distinction, and the corrigendum rectifying the adjudication order to allow the full refund was in line with the facts presented. Consequently, the impugned order was invalidated, and the appeal was allowed in favor of the appellant without costs.