2016 (6) TMI 150 - AT - Service Tax

Claim of rebate / Refund in cash - rebate claim sanctioned by way of credit to Cenvat account - Export of Services Rules, 2005 - providing and exporting Consulting Engineering Service - Held that - appellant was correct in emphasizing that the rebate claim should be paid in cash. It is settled law that the debit of an amount in Cenvat account is considered as discharged of tax liability. Our views are fortified by the judgments of Hon ble High Court of Uttarakhand in the case of Apco Pharma Ltd. 2011 (10) TMI 38 - UTTARAKHAND HIGH COURT . The impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues:
- Whether the rebate claim should be paid in cash or by way of credit to Cenvat account?
- Interpretation of Export Services Rules, 2005 regarding rebate claims for exported services.
- Applicability of settled law on the utilization of Cenvat credit for exports.

Analysis:
The appeal in this case was against Order-in-Appeal No. PIII/VM/84/2011 dated 26/04/2011. The appellant, engaged in providing Consulting Engineering Service, exported the service and filed a rebate claim under Export Services Rules, 2005. The lower authority sanctioned the rebate claim by crediting the Cenvat account of the appellant. However, the appellant contended that the rebate claim should be paid in cash as the service exports exceeded domestic clearances. The Tribunal considered the submissions and records. The appellant argued that Cenvat credit cannot be utilized for exports, and the rebate should be in cash.

Upon careful consideration, the Tribunal agreed with the appellant's contention that the rebate claim should be paid in cash. The Tribunal referenced the settled law that the debit of an amount in the Cenvat account signifies the discharge of tax liability. Citing the judgment of the Hon'ble High Court of Uttarakhand in the case of Apco Pharma Ltd., the Tribunal highlighted the importance of the refund being in cash when the assessee is unable to utilize the credit. The Tribunal emphasized that if the assessee cannot use the credit, the basis of the refund is defeated. Referring to the case law of Commr. of Cen. Ex. Vs. Ashok Arc, the Tribunal reiterated the entitlement of the assessee for cash refund in such situations.

In conclusion, considering the facts and circumstances of the case and the legal precedents cited, the Tribunal set aside the impugned order and allowed the appeal with consequential relief. The operative order was pronounced in court, emphasizing the decision to pay the rebate claim in cash rather than by way of credit to the Cenvat account.