2017 (8) TMI 1002 - AT - Service Tax

100% EOU - Refund claim - CENVAT credit - refund denied on the ground that credit is not admissible - Held that - it is an admitted fact that no notice or show cause notice within the meaning of Rule 14 of CCR, 2004 read with Section 73 (D) of the Finance Act was issued. In such circumstances, it is not permissible to deny Cenvat credit, already availed - the disallowance of Cenvat credit and consequent disallowance of refund in part, is bad without issue of any notice under Section 7 (1) of Finance Act, read with Rule 14 of CCR, 2004 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disallowance of Cenvat credit without issuing a show cause notice under Rule 14 of Cenvat Credit Rules.

Analysis:
The appeals were filed against orders disallowing Cenvat credit resulting in part rejection of refund claims without issuing any notice under Rule 14 of Cenvat Credit Rules. The appellant, a 100% EOU providing offshore-BPO services, filed refund claims due to inability to utilize the credit. The Tribunal noted that no show cause notice was issued for proposed disallowance, questioning the denial of Cenvat credit already availed. Citing relevant case law, the Tribunal emphasized that without a show cause notice, disallowance of Cenvat credit is impermissible. The Tribunal referred to past judgments to support its decision, emphasizing the necessity of following procedural requirements before disallowing Cenvat credit.

The Tribunal found that the disallowance of Cenvat credit and subsequent denial of refund without issuing a notice under Rule 14 of Cenvat Credit Rules was unjustified. Relying on legal precedents, the Tribunal held that the revenue's opinion of inadmissibility does not suffice to disallow Cenvat credit without a proper show cause notice. The Tribunal directed the original authority to grant the balance refund along with interest within 60 days from the date of the order, overturning the earlier decisions that denied the Cenvat credit refund to the appellant.

In conclusion, the Tribunal allowed all appeals, setting aside the orders that denied Cenvat credit refund to the appellant. The Tribunal emphasized the importance of following procedural requirements, specifically the issuance of a show cause notice under Rule 14 of Cenvat Credit Rules before disallowing Cenvat credit. The decision was based on established legal principles and previous judgments, ensuring fair treatment and adherence to procedural norms in matters concerning Cenvat credit disallowance and refund claims.