2022 (7) TMI 981 - AT - Service Tax

Refund of the unutilized CENVAT credit - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE (NT) - non-fulfillment of the conditions as required under clause 2(g) and clause 2(h) of the said Notification - HELD THAT - As per clause 2(h)of the Notification, the assessee is required to debit the amount that is claimed as refund. The said issue as to whether refund claim can be rejected on the ground that the balance of credit at the end of the quarter is nil was discussed by the Tribunal in the case of SCRIBETECH INDIA HEALTHCARE PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU SOUTH COMMISSIONERATE 2020 (10) TMI 675 - CESTAT BANGALORE where it was held that the respondent while rejecting the refund claims has not properly appreciated the condition/limitation envisaged in paragraphs 2(g) and 2(h) in Notification No. 27/2012-C.E. (N.T.), dated 18-6-2012. The said paragraph only provides that the amount of refund claim shall not be more than the amount lies in the Cenvat credit account at the end of the quarter for which the claim is filed or at the time of filing of refund claim, whichever is less. This condition has been interpreted out of context by the respondent in the impugned order and the respondent has erred in not appreciating the facts as also the condition envisaged in Notification No. 27/2012. Thus, rejection of refund claim on this ground is not justified and requires to be set aside. The other ground for rejection of refund is that the invoice with regard to maintenance of cafeteria has been issued on unregistered premises - HELD THAT - The invoice issued with regard to rent paid for office has been rejected stating that the rent for the month of July 2016 has been paid in June 2016. When the rent has been paid in advance, the invoices will be issued in advance. This cannot be a reason for rejecting the credit. The rejection of refund is not justified. The impugned orders are set aside - Appeal allowed.

Summary

Issues involved:
Refund claim rejection under CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE (NT) for unutilized credit. Interpretation of clauses 2(g) and 2(h) of the Notification. Eligibility of credit availed on maintenance of cafeteria. Rejection of invoice for rent paid due to timing. Misinterpretation of clauses (g) and (h) in the second appeal.

Analysis:

1. Refund Claim Rejection and Interpretation of Clauses 2(g) and 2(h):
The appellant filed refund claims under Rule 5 of CENVAT Credit Rules, 2004, which were rejected by the original authority and upheld by the Commissioner (Appeals). The main issue was the interpretation of clauses 2(g) and 2(h) of Notification No. 27/2012-CE (NT). The appellant argued that both clauses should be read together, emphasizing that the amount claimed as refund must be debited before filing the claim. The Tribunal referred to a previous decision and held that rejection based on a 'nil' balance at the end of the quarter was incorrect. It was found that the appellant had debited the CENVAT credit account before filing the claim, as required. Consequently, the rejection on this ground was deemed unjustified and set aside.

2. Eligibility of Credit Availed on Maintenance of Cafeteria:
Another reason for rejecting the refund claim was the eligibility of credit availed on maintenance of cafeteria due to an invoice issued to an unregistered premises. The Tribunal cited a previous case where it was held that registration of premises is not a prerequisite for claiming CENVAT credit. Therefore, the rejection based on this reason was considered unfounded.

3. Rejection of Invoice for Rent Paid:
The rejection of an invoice for rent paid for the office was also challenged. The argument was that the rent was paid in advance, and hence, the invoices were issued accordingly. The rejection based on the timing of payment was deemed unreasonable, as advance payments necessitate issuing invoices in advance. This ground for rejection was also set aside.

4. Misinterpretation of Clauses in the Second Appeal:
In the second appeal, the issue revolved around the misinterpretation of clauses (g) and (h) as discussed earlier. The Tribunal reaffirmed its decision regarding the interpretation of these clauses and held in favor of the appellant. Consequently, the rejection of the refund in this appeal was deemed unjustified.

In conclusion, the Tribunal found the rejection of the refund unjustified on various grounds and set aside the impugned orders, allowing the appeals with consequential relief, if any. The judgment highlighted the importance of correctly interpreting the relevant clauses and ensuring that rejections are based on valid grounds in accordance with the law.

This detailed analysis provides a comprehensive overview of the issues involved in the legal judgment, the arguments presented by both parties, and the Tribunal's reasoning leading to the final decision.