2019 (4) TMI 1597 - AT - Service Tax

Refund of unutilized CENVAT Credit - export of output services - fulfilment of conditions of Rule 5 of Export of Services Rules, 2005 read with Notification No. 11/2005-ST dated 19.04.2005 - HELD THAT - Since, appellant had no scope to use accumulated input Service Tax credits as output services are exported, it availed Rule 5 of Export of Services Rules, 2005 read with Notification No. 11/2005-ST dated 19.04.2005. This being the factual backdrop, the appellant is entitled to get rebate since application was considered to be in proper order and only the conditionality of Export of Services Rules were to be verified. Payment of interest on delayed refund - Since it was held by the Hon'ble Supreme Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT OF INDIA that explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or by the Court, then for the purpose of this Section, the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-Section (2) of Section 11B of the Act. Therefore, no irregularity can be noticed in the order passed by the Commissioner (Appeals). Appeal dismissed.

Summary

Issues Involved:
Grant of interest by Commissioner (Appeals) on delayed payment against refund claimed for unutilized CENVAT credit accumulated against export of services.

Analysis:
1. The Respondent filed a claim for rebate under Rule 5 of Export of Services Rules, 2005 and Notification No. 11/2005-ST for a specific amount. The claim was initially rejected by the Deputy Commissioner of Service Tax, citing overvaluation of services and ineligibility of certain CENVAT credits. However, the Commissioner of CGST & Central Excise partially allowed the appeal, directing verification of documents by the Assistant Commissioner/Deputy Commissioner and granting interest on the refund if found eligible.

2. The Department appealed against the grant of interest to the Appellant, arguing that the remand for document verification and the grant of interest should not be simultaneous as it may influence the decision. The Department contended that interest should not be mentioned until the eligibility for refund is determined. However, the Appellant's counsel argued that interest is payable only when an amount is sanctioned against the rebate claim, as per Section 11BB of the Central Excise Act.

3. The Tribunal considered the arguments from both sides and reviewed the case records. It was established that the Appellant had exported services and accumulated CENVAT credits, except for the disputed input services. The Commissioner's decision to grant interest was supported by the Supreme Court's ruling in Ranbaxy Laboratories Limited case, which clarified the deeming fiction under the Proviso to Section 11BB. Therefore, the Tribunal upheld the Commissioner's order, confirming the grant of rebate subject to document verification along with interest.

4. The Tribunal dismissed the Department's appeal and confirmed the order passed by the Commissioner of CGST & Central Excise, granting rebate and interest, subject to verification of documents. The decision was based on the Appellant's eligibility for refund under the Export of Services Rules and the legal provisions outlined in the Central Excise Act.