2017 (8) TMI 218 - AT - Service Tax

Refund claim - Rule 5 of CCR, 2004 - rejection on the ground that the appellants have not debited cenvat amount in their cenvat account before filing the refund claim - Held that - it is not under dispute that the appellants on 29.01.2016 intimated to the department after debiting the said amount - if the condition is complied with before disposal of the refund claim, there was no reason for rejecting the claim only on the ground that the amount debited subsequently to the filing of the refund claim. The accumulated cenvat credit for which the refund was sought for was very much lying unutilized in the cenvat account. Belated debit cannot come in the ways of sanctioning the refund claim - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection under Rule 5 of Cenvat Credit Rules, 2004 and notification 27/12-C.E.(NT) dated 18.06.2012 for not debiting the refund claim from the cenvat account at the time of filing.

Analysis:
The appellants filed a refund claim under Rule 5, which was rejected by the adjudicating authority and upheld by the Commissioner (Appeals) due to non-compliance with condition (h) of para 2 of the notification. The main contention was that the appellants did not reverse the cenvat credit at the time of filing the refund claim. However, the appellants later reversed the credit and informed the sanctioning authority. The Tribunal noted that compliance before the disposal of the claim should suffice, and belated debiting should not be a reason for rejection. The Tribunal referenced a similar case involving Sandoz Pvt. Ltd., where the refund was granted despite debiting the amount at a later date. The Tribunal emphasized that failure to issue a show-cause notice regarding any deficiency in the refund claim violated principles of natural justice. Thus, the impugned order was set aside, and the appeals were allowed.

In conclusion, the Tribunal held that compliance with conditions before the refund claim's disposal is crucial, and belated debiting should not hinder the refund process. The Tribunal emphasized the importance of adhering to principles of natural justice by issuing show-cause notices in case of deficiencies. The decision in Sandoz Pvt. Ltd. was relied upon to support the appellants' case, highlighting the significance of timely compliance with conditions for refund claims under Rule 5 of the Cenvat Credit Rules, 2004 and relevant notifications. The Tribunal's ruling favored the appellants, emphasizing procedural fairness and timely compliance with statutory requirements for refund claims.