2017 (9) TMI 406 - AT - Central Excise

Rebate claim - export of goods - reverse charge mechanism - rejection of rebate on the ground that the said case does not come under the purview of the provisions of Export of Service Rules, 2005 nor under Rule 18 of Central Excise Rules, 2004 - Held that - there is no dispute that the said amount of ₹ 8,84,750/- was paid by the appellant as Service Tax on the input service and they were eligible for availment of Cenvat credit of the same. Therefore, it is apparent that they were eligible for refund of said claim of ₹ 8,84,750/- under Rule 5 of CCR, 2004 and that the defects in the said application dated 23/08/2007 which continued even through the written submission dated 25/01/2008 cannot debar the appellant from the substantial benefit allowed by the law - rebate allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for refund under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
The appeal was against Order-in-Appeal No. 200-CE/GZB/2008 passed by the Commissioner of Central Excise (Appeals), Ghaziabad. The appellants, engaged in manufacturing Hand Pump Sets & Accessories, paid Service Tax on commission to foreign parties under the reverse charge mechanism. They filed a rebate claim of ?8,84,750 for export goods. The Original Authority rejected the claim, stating it did not fall under Export of Service Rules, 2005 or Rule 18 of Central Excise Rules, 2004. The Commissioner (Appeals) upheld the rejection. The appellant argued that they were entitled to a refund under Rule 5 of Cenvat Credit Rules, 2004 due to paying Service Tax as a recipient of service. They claimed the application was mistakenly titled as a rebate claim instead of a Cenvat Credit claim. The Tribunal found the appellants eligible for the refund as they paid Service Tax on input service and were entitled to Cenvat credit. The defects in the application did not bar them from the benefit allowed by law. Consequently, the Tribunal set aside the impugned orders and directed the Original Authority to grant the refund within 30 days.

This judgment primarily dealt with the issue of the appellants' eligibility for a refund under Rule 5 of Cenvat Credit Rules, 2004. The Tribunal noted that the appellants paid Service Tax on input service under the reverse charge mechanism and were entitled to Cenvat credit. Despite the application being mistakenly titled as a rebate claim, the Tribunal held that the appellants were eligible for the refund of ?8,84,750. The defects in the application did not prevent them from receiving the refund as allowed by law. Therefore, the Tribunal set aside the previous orders and directed the Original Authority to grant the refund within 30 days.

This judgment highlights the importance of correctly categorizing claims under the appropriate rules and mechanisms. The appellants' error in titling their application as a rebate claim instead of a Cenvat Credit claim initially led to the rejection of their refund claim. However, the Tribunal recognized that the substance of the claim was valid, emphasizing that procedural defects should not obstruct legitimate entitlements under the law. The decision underscores the principle that technical errors in applications should not deprive parties of their substantive rights, especially when they fulfill the criteria for refunds or credits under the relevant legal provisions.