2017 (7) TMI 134 - AT - Service Tax

Refund of accumulated CENVAT credit - Rule 5 of CCR, 2004 read with N/N. 5/2006-CE(NT) dated 14.03.2006 - denial on the ground that the appellant have not submitted relevant invoices and also in some cases nexus of input services with output services was not established - Held that - there is no such allegation in the show-cause notice but we are of the view that for processing any refund claim documents which are required for processing refund claim are indeed required and even there is no demand in the show-cause notice for such documents, it should be placed before the sanctioning authority. From the case records it is not clearly established that all the relevant invoices were submitted before the sanctioning authority or before the Commissioner (Appeals) - this issue needs to be verified and if at all required the assessee-appellant shall provide the invoices to the sanctioning authority - matter on remand. Refund claim - rejected on the ground that the assessee-appellant have debited an amount of ₹ 33,91,087/- but the same is not debited towards the sale of service in the domestic market - Held that - The reversal of ₹ 33,91,087/- was made by the assessee-appellant against the excess CENVAT credit availed in the period which is prior to the relevant period for this refund. If this was the reversal of CENVAT credit of earlier period that too not related to any sale of service in the relevant period, it will not affect the net CENVAT credit availed during the relevant period. Therefore the same should not have been reduced from the total claim amount of the refund in the relevant period. If the above fact on the claim of the appellant is found correct the assessee-appellant is entitled for the refund of this amount - refund allowed. Appeal allowed by way of remand.

Summary

Issues involved: Refund of accumulated CENVAT credit under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE(NT) dated 14.03.2006; Rejection of refund claims due to lack of submitted invoices and nexus of input services with output services.

Detailed Analysis:

1. Refund Rejection based on Lack of Invoices:
The appellant provided taxable output services under 'Business Auxiliary Service' and 'Maintenance & Repair Services,' availing CENVAT credit on service tax paid for various input services. The Commissioner (Appeals) rejected some refund claims citing lack of submitted invoices. The appellant argued that the rejection solely on this ground was incorrect as there was no proposal in the show-cause notice or demand for invoices. The Tribunal noted the necessity of relevant documents for processing refund claims and directed the appellant to verify and provide invoices if required.

2. Debit of CENVAT Credit and Refund Rejection:
An amount of ?33,91,087 was debited from the CENVAT account by the appellant. The Revenue contended that this amount reduced the total CENVAT credit availed during the relevant period, justifying the denial of refund. However, the Tribunal found that this debit was unrelated to the sale of services domestically and should not impact the export turnover or refund calculation. The reversal of this amount was due to excess CENVAT credit availed in a prior period, not affecting the net CENVAT credit for the relevant period.

3. Maintainability of Revenue's Appeals:
The Revenue filed 17 appeals, including some involving amounts less than ?10 lakhs. The appellant argued that these appeals were not maintainable per the Government's litigation policy. The Tribunal agreed, dismissing the appeals falling below the specified threshold.

4. Nexus of Input Services with Output Services:
The Revenue disputed the nexus between input services and output services in 15 appeals. The Commissioner (Appeals) had allowed the refund after detailed examination, determining the services' relevance to output services. The appellant contended that all disputed services were utilized in providing exported output services, supported by a precedent case. The Tribunal concurred, stating that without a show-cause notice disputing input service admissibility, the refund claims could not be rejected based on this ground. The department's appeals challenging the nexus were deemed not maintainable.

5. Judicial Members' Views:
Both the Judicial and Technical Members concurred on remanding certain appeals for fresh adjudication based on the observations made. The Technical Member emphasized that Revenue must follow proper procedures to dispute the admissibility of CENVAT credit, requiring specific notices under the Cenvat Credit Rules.

6. Final Decision:
The Tribunal allowed certain appeals for remand, dismissed Revenue's appeals, and disposed of Cross Objections accordingly. The judgment emphasized the importance of proper procedures and documentation in processing refund claims and highlighted the need for clear nexus between input and output services for refund eligibility.

This detailed analysis covers the key issues and arguments presented in the judgment, providing a comprehensive overview of the case.