2017 (3) TMI 869 - AT - Service Tax

100% EOU - refund claim - encashment of unutilized Cenvat Credit of input services used in the manufacture of the final product which was exported during the period 10.09.2004-31.03.2005 - Held that - rule 5 itself provides for the utilisation 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 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Claim for refund of unutilized Cenvat Credit on input services used in manufacturing final product for export under 100% EOU scheme.

Analysis:
The appeals were filed against the rejection of refund claims for unutilized Cenvat Credit of input services used in manufacturing final products exported during 10.09.2004-31.03.2005. The appellant contended that the refund was rejected under Rule 5 of the Cenvat Credit Rules 2004, citing notification no. 5/2006 issued on 14.03.2006, which provided machinery for claiming such refunds. The appellant relied on notification no. 23/04-CE(NT) dated 10.09.2004, amending Rule 5 to allow refunds on input services used in final products cleared for export. The appellant also referenced a Tribunal decision permitting similar refunds for the same period. The respondent opposed, arguing that notification no. 5/2006 did not have retrospective effect, citing judicial precedents. The lower authorities had denied the refunds based on this reasoning.

The Tribunal analyzed the legal provisions and held that Rule 5 of the Cenvat Credit Rules, effective from 10.09.2004, allowed refunds for input services used in exported goods. Despite the absence of a specific notification at that time, the rule itself provided for such refunds. The Tribunal emphasized that the subsequent notification no. 5/2006 merely extended the existing rule's applicability and did not create new provisions. Refunds were permissible under Rule 5 even before the issuance of notification no. 5/2006. Considering the appellant's arguments and the precedent set by previous Tribunal decisions, the impugned order was set aside, and the appeals were allowed with consequential relief. The Tribunal's decision was based on the interpretation of the legal provisions and the applicability of notifications in granting refunds for unutilized Cenvat Credit on input services used in manufacturing final products cleared for export.