2021 (12) TMI 901 - AT - Central Excise

CENVAT Credit - Import of services - Service tax under RCM after audit objections - import of raw material and paid the price for the same by way of Cost Insurance Freight (CIF) - appellant received the goods and has shown the receipt in their books of accounts and also other records when the goods are received during the period - HELD THAT - Neither there is any case of issue of supplementary invoices nor there is any case of fraud, collusion, mis-statement, etc. Under such facts and circumstances, it is held that the appellant is entitled to cenvat credit of service tax of ₹ 1,00,003/- paid under reverse charge mechanism in October, 2018. Further, the appellant is entitled to refund of this amount in terms of Section 142(6) read with 143(3) of the CGST Act. The appellant is entitled to refund of ₹ 1,00,003/-. The Adjudicating Authority is directed to pay the refund within a period of 45 days from the date of receipt of this order alongwith interest as per Section 11BB of the Central Excise Act - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Applicability of service tax under reverse charge mechanism on imported goods
2. Entitlement to cenvat credit and refund under GST regime
3. Rejection of refund claim based on Rule 9(1)(b) of Cenvat Credit Rules

Analysis:

Issue 1: Applicability of service tax under reverse charge mechanism on imported goods
The issue in this appeal revolved around whether the appellant, a manufacturer of chemical products, was liable to pay service tax under reverse charge mechanism for services related to the transportation of goods by vessel from a non-taxable territory to a taxable territory. The audit pointed out amendments in the Service tax Rules, specifically Notification No. 30/2012-ST and Notification No. 15/2017-ST, which mandated the importer to pay service tax under reverse charge mechanism. The appellant imported raw materials on a CIF basis and subsequently paid the input service tax upon audit objection. The Revenue contended that the appellant had not paid the input service tax as required by the amended provisions, leading to a deposit of the tax along with interest.

Issue 2: Entitlement to cenvat credit and refund under GST regime
The appellant, in response to the audit objection, deposited the service tax amount but later applied for a refund of the same under the GST regime. The appellant argued that they were entitled to cenvat credit under Rule 3 of Cenvat Credit Rule, and as per Section 142(6a) of the CGST Act, they were eligible for a refund of the cenvat credit. The appellant's claim for a refund was rejected based on Rule 9(1)(b) of the Cenvat Credit Rules, which disallows credit where a supplementary invoice is raised and tax was not paid earlier due to specific reasons like fraud or collusion. The Assistant Commissioner and the Commissioner (Appeals) upheld the rejection of the refund claim, leading the appellant to appeal before the Tribunal.

Issue 3: Rejection of refund claim based on Rule 9(1)(b) of Cenvat Credit Rules
The appellant contended that no supplementary invoices were raised by the service provider, and they had paid the service tax upon audit objection, making them eligible for cenvat credit and refund under the transitional provisions of the CGST Act. The Tribunal, after considering the contentions of both parties, held that there was no evidence of supplementary invoices or any fraudulent activities. Consequently, the Tribunal allowed the appeal, stating that the appellant was entitled to cenvat credit and a refund of the service tax amount paid under reverse charge mechanism. The Adjudicating Authority was directed to process the refund within 45 days along with applicable interest as per the Central Excise Act.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and granting them the refund of the service tax amount paid under reverse charge mechanism, emphasizing their entitlement to cenvat credit and refund under the GST regime.