2017 (11) TMI 834 - AT - Service Tax

Rebate Claim - Section 85(4) of the Finance Act, 1994 - Held that - the Commissioner(Appeals) vide her order dt. 24/08/2016 has allowed the rebate along with interest and for quantification, she has remanded the case back to the original adjudicating authority as per Section 85(4) of the Finance Act, 1994. Thereafter after three months, the Commissioner(Appeals) on her own has issued a corrigendum whereby she has deleted the interest granted by the earlier order without any basis and without any application made by any party. The Commissioner(Appeals) has legally passed the order dt. 24/08/2016 and there was no justification in issuing the corrigendum deleting the interest relief to the appellant. Therefore, the corrigendum dt. 17/01/2017 issued by the Commissioner(Appeals) is not sustainable in law. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order remanding cases for verification of rebate quantum under Section 85(4) of Finance Act, 1994. Appellant's claim under Notification No.11/2005-ST rejected by adjudicating authority. Appeal before Commissioner(Appeals) resulted in remand for verification of CENVAT credit utilization for service tax payment on exported services. Corrigendum issued deleting interest relief from original order. Appellants challenging corrigendum order.

Analysis:
The appellant, an EOU engaged in exporting software development and BPO services, filed rebate claims under Notification No.11/2005-ST for April-Sept 2010, amounting to ?50,51,374. The claim was rejected by the adjudicating authority beyond the notification's provisions. The Commissioner(Appeals) remanded the cases for verification of rebate quantum under Section 85(4) of the Finance Act, 1994, directing the appellant to produce documents establishing CENVAT credit utilization for service tax payment on exported services. The Commissioner(Appeals) ordered interest payment as per law and set a 3-month deadline for the adjudicating authority to pass an order.

The corrigendum issued later deleted the interest relief portion from the original order. The appellant contended that the corrigendum lacked legal basis, issued after the 3-month period from the original order, and without any application from either party. The appellant argued that the Commissioner(Appeals) had initially found the eligibility of the rebate claim and ordered interest payment in accordance with the law. The appellant challenged the corrigendum, emphasizing the lack of justification for deleting the interest relief.

In the hearing, the appellant's consultant argued against the corrigendum, citing the Supreme Court decision in Ranbaxy Laboratory Ltd. Vs. UOI, which clarified the payment of interest on delayed refunds under Section 11BB of the Central Excise Act, 1944. The consultant highlighted that interest becomes payable after three months from the date of the refund application, not the order date, as per the law. The consultant emphasized the legal obligation to pay interest on delayed refunds.

After reviewing the submissions and the legal aspects, the Tribunal found that the corrigendum deleting the interest relief lacked legal standing. The Tribunal referred to the Supreme Court decision in Ranbaxy Laboratory Ltd., emphasizing the obligation to pay interest on delayed refunds under Section 11BB of the Central Excise Act, 1944. Consequently, the Tribunal set aside the corrigendum and allowed all six appeals of the appellant with any consequential relief.

In conclusion, the Tribunal upheld the original order of the Commissioner(Appeals) allowing the rebate claim with interest payment and invalidated the corrigendum that deleted the interest relief, emphasizing the legal obligation to pay interest on delayed refunds as per the relevant legal provisions.