2017 (2) TMI 970 - AT - Central Excise

100% EOU - refund claim - rejection on the ground that the refund of service tax credit taken on input services used in the manufacturing of goods which are cleared for export under bond or letter of undertaking is admissible only w.e.f. 14.03.2006 when N/N. 05/2006-CE(NT) was issued - whether the refund claims of input service can be allowed u/r 5 of CCR, when the procedure for the same had not been notified? Held that - all the refund claim pertains to period prior to 14-3-2006. However, as on 10-9-2004 itself, we have already given the reproduction of Rule 5, the rule itself provides the utilization of the input credit and input service credit and where such input service credit or input credit cannot be utilized, then the same can be given as refund. So, there is indeed a provision. Just because the notification has not been issued at that time; we cannot deny the benefit provided in the Rule. It is also seen that the Board Circular No. 702/18/2003-CX dated 13.03.2003 also supports the view that the refund being a substantive right may not be denied merely because a notification prescribing the procedure for claiming was issued subsequently. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claims of input service under Rule 5 of Cenvat Credit Rules - Retrospective application of Notification - Barred by limitation.

Analysis:
The appeal pertains to M/s Anand NVH Products Pvt. Ltd., a 100% EOU engaged in manufacturing Rubber & Rubber Metal Bonded Parts, challenging the rejection of three refund claims for service tax paid on input services accumulated during January 2005 to February 2006. The dispute revolves around whether the refund claims can be allowed under Rule 5 of Cenvat Credit Rules when the procedure had not been notified at the time of filing. The department contended that the refund of service tax credit on input services used in manufacturing goods cleared for export was admissible only from 14.03.2006 as per Notification No. 05/2006-CE(NT). The Assistant Commissioner rejected the refund claims, upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

The appellant's advocate argued that despite the absence of a notification at the time of filing, Rule 5 of Cenvat Credit Rules, 2004 allowed refunds, supported by Circular No. 702/18/2003-CX. Reference was made to a Tribunal judgment in Fibres & Fabrics International P. Ltd. case, emphasizing the substantive right to refund even without a specific notification. On the other hand, the Revenue's representative maintained that the Notification could not be retrospectively applied and raised concerns regarding the limitation period for the refund claim.

After hearing both parties and reviewing the records, the Tribunal addressed the core issue of whether refund claims could be granted under Rule 5 without a notified procedure. The Commissioner (Appeals) had rejected the claims citing the non-retrospective effect of the relevant Notification. However, the Tribunal referred to a previous judgment involving another 100% EOU, where it was held that the provision in Rule 5 allowed for refund even without a specific notification. The Tribunal emphasized that the refund being a substantive right could not be denied based on the timing of the notification. Additionally, the issue of limitation was not raised in the show cause notice or considered by the lower authorities.

Consequently, the Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeals filed by the appellants, granting consequential relief if applicable. The decision highlighted the importance of substantive rights to refunds and the applicability of relevant rules even in the absence of specific notifications, ensuring a fair outcome for the appellant in this case.