2016 (6) TMI 619 - AT - Service Tax

Refund - Cenvat Credit - Export of services - Scope of Rule 2(l) - input service - The Commissioner has rejected the refund of works contract service on the ground that the said services was excluded from the definition of the input service under Rule 2(l) of Cenvat Credit Rules 2004 - Claim of interest on delayed refund. Held that - Works Contract Services are excluded only when it is used for construction service whereas in the present case input services were used for maintenance of office equipment and building therefore this particular works contract service does not fall under the exclusion category in the definition of input service therefore works contract service in the present case is input service and eligible of refund under Rule 5. - Decided in favor of assessee. Interest on delayed refund - Held that - irrespective of any circumstances whatsoever if there is delay beyond three months from the filing of refund the department is duty bound to grant the interest for the delayed period in sanctioning the refund. - Decided in favor of assessee.

Summary

Issues:
1. Refund claim rejection on Works Contract Services and Short Term Accommodation Services.
2. Entitlement for Cenvat Credit and refund under Rule 5 for Works Contract Services.
3. Entitlement for interest on delayed sanctioned refund claim.

Analysis:
1. The appellant, engaged in providing export services, filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004. The Adjudicating authority partially rejected the claim, specifically on Works Contract Services and Short Term Accommodation Services. The Commissioner further partly allowed the refund but rejected it on the mentioned services, citing reasons such as exclusion from the definition of input service under Rule 2(l) for Works Contract Services and the nature of accommodation for employees for Short Term Accommodation Services. The appellant appealed the decision, leading to the current case.

2. The appellant's representative conceded the withdrawal of the refund claim for short term accommodation and a specific invoice related to Benchmark Engineering Pvt Ltd. Regarding Works Contract Services, the appellant argued that the exclusion under Rule 2(l) applies only to services used for construction, not maintenance of office equipment and building. The appellant also claimed interest on the delayed sanctioning of the refund, citing Section 11BB of the Central Excise Act and referring to a relevant judgment.

3. The Assistant Commissioner representing the Revenue supported the findings of the impugned order. The Tribunal carefully considered both sides' submissions and the records. The Tribunal found that the Works Contract Services in question, used for maintenance, did not fall under the exclusion category in the definition of input service, making them eligible for refund under Rule 5. As the appellant withdrew the refund claim for short term accommodation and a specific invoice, the rejection of refund on those services was upheld. Regarding interest on delayed refund, the Tribunal held that the department is obligated to grant interest if there is a delay beyond three months from the refund filing, as per Section 11BB of the Central Excise Act. The Tribunal relied on the judgment cited by the appellant's counsel and directed the grant of interest on the delayed refund sanction.

In conclusion, the Tribunal partially allowed the appeals, granting the appellant the refund for Works Contract Services and interest on the delayed refund sanction, while upholding the rejection on Short Term Accommodation Services and the specific invoice.