2017 (9) TMI 1559 - AT - Service Tax

100% EOU - Refund of unutilised Credit - rejection on the ground of nexus and time limitation - Held that - In the present case the appellant is a 100% EOU and exporting their entire service and there is no domestic sale of the service. In such case the entire Cenvat Credit which is availed is eligible for refund to the appellant - the refund claim cannot be denied on merit. Time Limitation - Held that - the input received during the period 16/05/2008 to 31/03/2010 for which the refund claim was filed on 24/04/2012 - refund is admissible only for a period for one year prior to 24/04/2012 attributed to export made during that period - the appellants are entitled for the refund claim of accumulated Cenvat Credit attributed to the export made during the last one year from the date of file, i.e. 24/04/2012, Cenvat Credit relatable to the export prior to one year is time barred. The adjudicating authority should re-quantify the refund - appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of Rule 5 of Cenvat Credit Rules, 2004 for refund claim.
2. Time bar for filing refund claim under Section 11B of the Central Excise Act.

Analysis:

Issue 1: Interpretation of Rule 5 of Cenvat Credit Rules, 2004 for refund claim:
The appellants filed a refund claim for accumulated credit of service tax paid on taxable input services for providing export output services. The Revenue challenged the grant of refund on grounds of merit and time bar. The Ld. Commissioner (Appeals) directed the appellants to pay a certain amount along with interest. The appellant argued that no one-to-one correlation is required between input and export services for refund under Rule 5. They cited relevant judgments and a Board's Circular to support their claim. The Tribunal agreed that no strict correlation is needed for refund, especially for a 100% Export Oriented Unit (EOU). The Tribunal held that the refund claim cannot be denied on merit, but noted that the appellants should have filed the claim periodically or at least once a year.

Issue 2: Time bar for filing refund claim under Section 11B of the Central Excise Act:
The Revenue contended that the refund claim was time-barred as it was filed after one year from the relevant period. They argued that the Cenvat Credit related to input services received during a specific period, but the refund claim was made later. The Tribunal agreed that the claim was filed beyond the stipulated time period, making it time-barred. The Tribunal emphasized the importance of filing refunds within one year from the date of export, especially for regular exporters. They differentiated the present case from the judgments cited by the appellant, highlighting the unique circumstances and timing of the refund claims in each case.

In conclusion, the Tribunal held that the appellants were entitled to a refund of accumulated Cenvat Credit attributed to exports made within the last one year from the filing date. Any credit related to exports beyond that one-year period was deemed time-barred. The Tribunal directed the adjudicating authority to re-quantify the refund accordingly and dispose of the matter in accordance with the law.