2018 (1) TMI 269 - AT - Service Tax

Refund claim - denial on the ground of invoices without address and missing invoices and input services on which credit taken are ineligible input service since they did not have any nexus with output services exported - Held that - the processing of refunds after the amendment to Rule 15 w.e.f 1.4.2012 is required to be done on a more liberal basis without insisting for one to one correlation. That however will not mean that the input service can also be one which is specifically barred by Rule 2(l) of the CCR 2004 - Even after the amendment to Rule 2(l) w.e.f. 1.4.2011, it has been consistently held that so long as a particular input service is not specifically barred by Rule 2(l) or is not used for the personal consumption of an employee etc. that would very much an eligible input service - refund allowed. In the instant case, appellants have waived their right to show cause notice. However in case, sanctioning authority finds that any particular credit amounts are liable for rejection for the reason that they fall foul of the Rule 2(l), a SCN should have been issued to the appellant. This is certainly was not done. For the limited purpose of providing an opportunity to the appellant to produce necessary documents in respect of credits availed without STC code, missing invoices etc., the matter is remanded to the original authority concerned. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Rejection of refund claims under Rule 5 of the Cenvat Credit Rules, 2004.
2. Dispute over the eligibility of input services for refund.
3. Interpretation of the changes made in Rule 5 of the CCR 2004 post the Union Budget of 2012.
4. Rejection of cenvat credit on certain documents without STC code, missing invoices, etc.

Issue 1: The appellants filed refund claims under Rule 5 of the Cenvat Credit Rules, 2004, for the period between October 2012 and June 2013. The original authorities rejected part of the refund claims citing reasons like invoices without address, missing invoices, and input services lacking nexus with the exported output services. The Commissioner (Appeals) upheld the rejection, leading to the appeals before the tribunal.

Issue 2: During the hearing, the appellant's representative argued that the input services, including air travel charges, business consultancy services, training services, and recruitment agency services, were essential for their business and eligible for credit. The appellant also highlighted the changes brought about in Rule 5 of the CCR 2004 post the Union Budget of 2012, emphasizing a more liberal approach to refunds without strict correlation requirements between exports and input services.

Issue 3: The tribunal analyzed the changes in Rule 5 of the CCR 2004 post the Union Budget of 2012, which aimed to simplify refunds without stringent documentation requirements. The tribunal noted that the amendments were made to facilitate refund claims without the need for direct correlation between exports and input services. The tribunal emphasized that while there is no longer a strict one-to-one correlation required, the input services claimed must still fall within the eligibility criteria of Rule 2(l) of the CCR 2004.

Issue 4: The tribunal found merit in the argument presented by the department's representative regarding the eligibility of input services under Rule 2(l) of the CCR 2004. However, the tribunal emphasized that before rejecting any credit based on Rule 2(l), a show cause notice must be issued to the claimant, as per the precedent set in a Tribunal decision. The tribunal observed that the rejection of certain input services like management maintenance, accommodation charges, and airfare without issuing a show cause notice was not justified. Consequently, the tribunal set aside the impugned order and allowed the refund of credits for eligible input services.

In conclusion, the tribunal partly allowed the appeal, remanding the matter concerning inadmissible cenvat credit on certain documents without STC code, missing invoices, etc., back to the original authority for further review and provided an opportunity for the appellant to produce necessary documentation.