2018 (5) TMI 1710 - AT - Central Excise

Refund of unutilized CENVAT credit - accumulated CENVAT credit of service tax paid on input service said to have been used for manufacture and export of final products - rejection of refund on the ground that there was no export of final products during the given period and thereby the eligibility for refund of input service credit was zero - Held that - Since in the present case it is an admitted fact that the export has not happened during the quarter for which the refund has been claimed, in view of the Board clarification dt. 19/01/2010, the appellant has not complied with the conditions of the said N/N. 5/2006 dt. 14/03/2006 - refund not allowed. Refund claim - input services - renting of immovable property service - adjudicating authority has also observed that the refund claims for the earlier period have already been made and hence the claim is more than once for any quarters - Held that - Renting of immovable property is an input service in view of the decision in the case of Indian Additives Ltd. Vs. CCE 2016 (7) TMI 1220 - CESTAT CHENNAI - also, there is no bar for the appellant to file refund claim for more than one quarter - the rejection of the refund claim by the impugned order on the ground that there was no export during the quarter for which the refund is claimed is sustainable and the same is upheld - refund not allowed. Appeal dismissed - decided against appellant.

Summary

Issues:
Refund claim rejection based on lack of export during the claimed quarter, eligibility for refund of input service credit, validity of filing one refund claim for multiple quarters, renting of immovable property as an input service.

Analysis:
The appeal challenged the rejection of a refund claim by the Commissioner(Appeals) based on the absence of export during the claimed quarter. The appellants, a 100% EOU, sought a refund of accumulated CENVAT credit of service tax paid on input services used for manufacturing and exporting 'Readymade Garments.' The jurisdictional Range Officer initially denied the refund claim, leading to a show-cause notice proposing rejection. The Order-in-Original rejected the claim, citing no export during the period as the reason. The appellant argued that the service tax paid on rent for the factory was fully utilized for export, supported by a tabulation of export and rent paid. However, the Commissioner(Appeals) upheld the rejection.

The appellant contended that the impugned order failed to appreciate the facts and law, citing precedents where renting of immovable property service qualified as an input service. The appellant also argued that there was no restriction on filing one refund claim for multiple quarters, referencing a relevant decision. Additionally, the appellant asserted that the utilisation, not the availment, of input service was crucial for claiming the refund. The appellant highlighted that although there was no export in the claimed quarter, unutilized CENVAT credit could still be refunded, supported by legal precedents.

On the contrary, the Revenue defended the rejection, emphasizing the absence of export during the claimed quarter, which was a mandatory condition for the refund under the relevant notification. The Revenue pointed out that the Board's clarification supported the requirement of export during the quarter for claiming the refund. The Revenue distinguished the appellant's cited cases where subsequent exports fulfilled the conditions, unlike the present case with no exports during the claimed quarter.

In the final judgment, the Tribunal upheld the rejection of the refund claim due to the lack of export during the claimed quarter, as mandated by the notification. The Tribunal found the appellant non-compliant with the conditions for the refund. Regarding the objection on renting of immovable property as an input service and the validity of filing one refund claim for multiple quarters, the Tribunal ruled in favor of the appellant, deeming the objections unsustainable. Consequently, the Tribunal dismissed the appeal and upheld the impugned order, emphasizing the necessity of export during the claimed quarter for refund eligibility.