2023 (4) TMI 214 - AT - Service Tax

100% EOU - Refund of unutilized Cenvat Credit - export of services - appeal filed beyond the period of one year from the dates of export invoices or not - time limitation - non-reversal of credit as required under Notification No. 27/2012-CE (NT) dated 18.06.2012 - certain portion of the credit has been disallowed for the reasons of non-registration of the premises, missing invoices, excess credit wrongly taken, service provider s registration number not available. Whether the refund claims filed by the appellants are time barred or not, in terms of the provisions of Section 11 B of the Central Excise Act, 1944 read with Notification No. 27/2012 CE (NT) dated 18.06.2012? - HELD THAT - Section 11B of the CEA, 1944 has been drafted to prescribe a procedure for claiming of refund of central excise duty under various circumstances within one year from the relevant date. The relevant date has been defined in the explanation to this Section for various purposes. As far as the export of services is concerned, no relevant date was prescribed in this Section because this was meant for refund of duty of excise and not for export of services. Since the Notification No. 27/2012 CE (NT) dated 18.06.2012 required the claim to be made before the expiry of a period specified under Section 11 B and this Section does not specify what is the relevant date in case of export of services, the Tribunal has, in a series of decisions, held that relevant date in case of export of services is the date of realization of the foreign exchange. The reason for this is the export of services is not complete unless the foreign exchange is realized as per Rule 3 (2) (b) of export of services Rules, 2005. Therefore, unless the foreign exchange is realized, the export is not complete and therefore the relevant date must be the date of realization of foreign exchange. In the present case, the exports were made and refund claims filed before the issuance of the above notification. The lower adjudicating authority reckoning the date of export invoice as the relevant date, rejected these refund claims as time barred - there is no ground that Section 11 B mandates that the date of invoice must be considered as the relevant date. The residual category under Section 11 B is the date of payment of duty. In case of export of services as in these appeals there is no payment of duty at all. Rejection of a portion of the refund claims for the reason that they are not eligible for availment of Cenvat credit under Cenvat Credit Rules, 2004, on account of missing invoices, excess credit wrongly taken, Not being related to output service, non-mentioning of service provider s registration number on the input/input service invoices etc. - HELD THAT - In the grounds of appeal the appellants have admitted that certain excess credit was wrongly taken by them amounting to Rs.7,819/- and a few invoices involving a credit of Rs. 1,91,935/- were not submitted which were categorized as missing. The appellant is required to reverse this input tax credit as admitted by them. The denial of refund claims filed is not in accordance with law - Appeal allowed.

Summary

Issues Involved:

1. Whether the refund claims filed by the appellants are time-barred.
2. Non-reversal of credit while filing refund claims.
3. Rejection of refund claims due to non-registration of premises, missing invoices, excess credit wrongly taken, and non-mentioning of service provider's registration number.

Issue-wise Comprehensive Details:

1. Time-barred Refund Claims:

The main issue was whether the refund claims filed by the appellants were time-barred under Section 11 B of the Central Excise Act, 1944 read with Notification No. 27/2012-CE dated 18.06.2012. The appellants contended that the relevant date for filing refund claims should be the date of realization of invoice in foreign currency, as clarified by Notification No. 14/2016-CE (NT) dated 01.03.2016. The Tribunal, referencing the Larger Bench decision in the case of Span Infotech Pvt. Ltd. and other precedents, concluded that the relevant date for export of services is the date of realization of foreign exchange. Therefore, the refund claims were not time-barred.

2. Non-reversal of Credit:

The appellants admitted that they did not reverse the credit at the time of filing refund claims but did so in the ST-3 returns. It was argued that non-reversal of credit was not a ground for rejection in the Show Cause Notices, and hence, the adjudicating authority's denial on this ground was not legally sustainable. The Tribunal found merit in this argument, noting that the eligibility of Cenvat credit should be examined by the Proper Officer under Rule 14 of CCR, 2004 read with Section 73 of the Finance Act, 1994, rather than during the refund claim process.

3. Rejection of Refund Claims:

The lower adjudicating authority rejected portions of the refund claims for reasons including non-registration of premises, missing invoices, excess credit wrongly taken, and non-mentioning of the service provider's registration number. The appellants provided the missing invoices and argued that the proper way to address ineligible credit is through Rule 14 of CCR read with Section 73 of the Finance Act. The Tribunal agreed, noting that the rejection of refund claims on these grounds was not justified. However, the appellants admitted to certain errors, including excess credit wrongly taken amounting to Rs. 7,819 and missing invoices involving a credit of Rs. 1,91,935, which they were required to reverse.

Conclusion:

The Tribunal set aside the impugned order, allowing all eight appeals with consequential relief as per law, concluding that the denial of refund claims was not in accordance with the law.

(Order pronounced in the Open Court on 03.04.2023)