2018 (12) TMI 731 - AT - Service Tax

Refund of CENVAT Credit - rejection on the ground of limitation - Section 11B of CEA - Held that - Admittedly, refund claim was made on 30.07.2015 for the period ending March 2014 and in view of clause (f) of Explanation B to Section 11B of the Central Excise Act 1994, date of payment is to be taken into consideration for computation of one year period to file the refund application. In its order dated 19.02.2016, the original adjudicating authority has given his clear finding under para 5 that provision of Rule 6(3) of the Service Tax Rules, 1994 deals with such a situation and the same is fully applicable to the present refund claim. It is an admitted fact that appellant was not put to notice before the rejection of its claim except being asked to submit copies of documents like invoices, GAR-7, cenvat claim certificate, copy of purchase order, work order, work sheet etc. and there is no noting available in the order-in-original as to if alternative plea for availment of cenvat credit was made before the adjudicating authority or not - There is no denying of the fact that adjudication of tax dispute being made by quasi judicial authorities, all provisions of the Code of Civil Procedure is not directly applicable to it. But when there is no express provision made to meet such a contingency which is not contemplated in the procedure prescribed for such adjudication of tax disputes, spirit of provision of civil procedure may be brought into service for effective adjudication. The appeal is allowed in part entitling the appellant to avail cenvat credit for the refused refund claim of ₹ 28,18,361/- and the period of availment of such credit shall commence after the statutory appeal period of appeal is over - appeal allowed in part.

Summary

Issues:
Eligibility to avail cenvat credit for the amount claimed in the refund application rejected on grounds of limitation.

Analysis:
The appeal concerned the eligibility of a company to avail cenvat credit for a refund claim amounting to ?28,18,361/- that was rejected due to being filed after the stipulated time limit. The appellant had executed maintenance, repairing, and construction work for two firms, and upon renegotiation, raised credit notes for the differential rate in the value of services provided and service tax component. The adjudicating authority rejected the refund claim under Section 11B on the basis of time limitation. The appellant argued that it was eligible to avail cenvat credit as per Rule 6(3) of the Service Tax Rules, 1994 for the amount claimed as a refund that was refused.

During the appeal, the appellant cited various CESTAT decisions to support its claim for cenvat credit. The department supported the order passed by the Commissioner (Appeals) but suggested a remand for examining the eligibility of the appellant to avail cenvat credit under Rule 6(3) of the Cenvat Credit Rules. The original adjudicating authority had found that Rule 6(3) of the Service Tax Rules, 1994 was applicable to the refund claim and noted that the service tax was paid in both cash and adjusted against cenvat credit. The Commissioner (Appeals) also noted the reduction in the rate by one of the firms and the appellant's failure to follow the procedure for excess payment under the law.

The Commissioner (Appeals) did not grant the appellant's request for adjustment of excess payment as it was not the subject matter of appeal. However, it was observed that the Commissioner (Appeals) should make further inquiries as necessary and act as an adjudicating authority, as per Section 35A(3) of the Central Excise Act. The judgment highlighted that the spirit of civil procedure could be invoked in tax disputes for effective adjudication, citing relevant legal precedents.

Ultimately, the appeal was allowed in part, entitling the appellant to avail cenvat credit for the refused refund claim amount. The period for availing such credit was to commence after the statutory appeal period had passed, and the order of the Commissioner (Appeals) was accordingly modified.