2016 (2) TMI 849 - AT - Service Tax

Refund of such accumulated unutilized Cenvat credit - Rule 5 of CCR - Export of services some of which taxable and some non-taxable. - Nexus between input service and output services - period of limitation - relevant date - Held that - such nexus can be examined only at the level of the original adjudicating authority. - Matter remanded back on this ground. Regarding period of limitation - Held that - the relevant date was held to be the date on which the consideration was received by the service provider. However with effect from 1.4.2011, the law has been changed for the purpose of payment of service tax and it has been held to be the date on which date invoice was raised. Accordingly, the relevant date which has been held as receipt of consideration received, in the decision in the case of Hyndai Motor India Engg (P) Ltd. should be shifted as date of raising of invoice. We note that the period in the present appeal is prior to 1.4.2011 and as such, this is not one of the issues to be decided in the present case. Accordingly, the same is kept open. We find no merits in the appellant s contention on the point of limitation. Accordingly, we uphold a part of the impugned order vide which he has held that a part of the demand is barred by limitation. Inasmuch as the appeal stands remanded to the original adjudicating authority for the purpose of examination of nexus, he would decide the quantum of refund falling for the period within the limitation, based upon the date of consideration received by the appellant - Decided partly in favor of assessee.

Issues Involved:
1. Entitlement to refund of accumulated unutilized Cenvat credit.
2. Power of Commissioner (Appeals) to remand the matter.
3. Applicability of time-bar under Section 11B of the Central Excise Act, 1944 for refund claims.

Detailed Analysis:

1. Entitlement to Refund of Accumulated Unutilized Cenvat Credit:
The appellant-assessee, engaged in the export of services (both taxable and non-taxable), availed Cenvat credit on various input services. For the period April 2007 to March 2008, the appellant filed a refund claim of around Rs. 21.94 crores for the accumulated unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The original adjudicating authority rejected the claim on grounds of nexus and time-bar. However, on appeal, the Commissioner (Appeals) remanded the matter to the original adjudicating authority for examining the nexus between input and output services.

2. Power of Commissioner (Appeals) to Remand the Matter:
The Revenue contended that the Commissioner (Appeals) has no power to remand. The Tribunal, however, found that it has the power to remand matters. Since the examination of the nexus between input and output services can only be conducted at the level of the original adjudicating authority, the Tribunal remanded the matter for this purpose. The appeal filed by the Revenue was disposed of on these terms.

3. Applicability of Time-Bar under Section 11B of the Central Excise Act, 1944:
The appellant argued that no time limit applies to refund claims of unutilized credit under Rule 5 of the Cenvat Credit Rules, 2004, as the relevant date is not defined in Section 11B of the Central Excise Act, 1944. The learned advocate cited decisions supporting this view. Conversely, the learned Commissioner (A.R.) argued that the time limit prescribed under Section 11B applies, as supported by decisions from the Madras High Court and the Tribunal.

The Tribunal considered various decisions and concluded that the limitation prescribed under Section 11B is relevant for refund claims under Rule 5. The Tribunal referred to the Madras High Court's decision in the case of GTN Engineering (I) Ltd., which held that the relevant date for refund claims should be the date on which the export of goods was made. For the export of services, the relevant date is when the consideration for the services is received from foreign buyers, as per the Tribunal's decision in Hyundai Motor India Engg. (P) Ltd.

The Tribunal upheld the Commissioner (Appeals)'s decision that part of the demand is barred by limitation. The original adjudicating authority was directed to determine the quantum of refund within the limitation period, based on the date of consideration received by the appellant.

Conclusion:
The Tribunal remanded the matter to the original adjudicating authority to examine the nexus between input and output services and upheld the time-bar for part of the refund claim. The relevant date for calculating the limitation period for refund claims in the case of export of services is the date on which the consideration is received. Both appeals were disposed of accordingly.

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