2024 (1) TMI 333 - AT - Service Tax

Refund of accumulated Cenvat credit - input services or not - scope of Rule 5 of CENVAT Credit Rules, 2004 - time limitation - proceedings in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994 not initiated - HELD THAT - It is observed that impugned orders have gone beyond the scope of Rule 5 of CENVAT Credit Rules, 2004, which provide for the refund of the accumulated credit in respect of export of the goods and services. This rule do not provide for denial of any credit while examining the refund claim filed under this Rule. If any credit was to be denied it could have been done in an appropriate proceedings that were to be initiated under Rule 14 of the CENVAT Credit Rules, 2004 - there are no proceedings initiated against the appellant in terms of the denial of the credit held as in admissible under the said Rule 14. Tribunal/ Courts have constantly held that denial of refund claim mad in terms of Rule 5 without initiating any proceedings under Rule 14 is no tenable. Suffice to say that without initiating the proceedings in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994, CENVAT credit cannot be denied during the refund proceedings under Rule 5 ibid. Applicability of Rule 5 of CCR - HELD THAT - Even if the contention of the revenue was to be accepted then also the credit should have been denied by initiating the proceedings under Rule 14 and not in proceedings of refund under Rule 5 of CENVAT Credit Rules, 2004. There are no merits in the impugned order to the extent it has sought to disallow the CENVAT Credit to the extent of Rs.4088/- Rs.1,09,63,679/- Rs.6,60562/- Rs.54,20,341/- Rs.1,70,48,670/- for determining the Net Cenvat Credit , in the formula prescribed under Rule 5 of the CENVAT Credit Rules, 2004. Thus the Net Cenvat Credit for the application of this formula should have been Rs.3,82,73,665/- and eligibility to refund determined ACCORDINGLY. The difference of the amount allowed as refund and the amount debited from the CENVAT Account on 19.02.2013 should be allowed as credit in the account books of the appellant. Adjudicating authority should have allowed back the credit of entire amount of refund denied, to the appellant by his order and the appellant could have utilized the same for his domestic clearances. Having not done so adjudicating authority has gone beyond the provisions of CENVAT Credit Rules and Notification No.27/2012-CE (NT) dated 18.06.2012. As the law exists now the entire amount which was debited by the appellant at the time of filing this refund claim should be allowed as cash refund to the appellant in terms of the above provisions of CGST Act, 2017. Appeal allowed.

Summary

Issues Involved:
1. Rejection of refund claim of Rs. 1,78,50,247.
2. Sanction of refund claim of Rs. 2,04,23,418.
3. Appropriation of the sanctioned refund against existing demand.
4. Denial of refund on various grounds including improper address, inadmissible input services, unregistered premises, time-barred claims, and domestic turnover.

Summary:

Issue 1: Rejection of Refund Claim of Rs. 1,78,50,247
The Tribunal upheld the rejection of the refund claim for Rs. 1,78,50,247 based on several grounds:
- Improper Address: Invoices consigned to an incorrect address were deemed inadmissible.
- Inadmissible Input Services: Services such as charges for Pantry Boys were considered unrelated to the provision of output services.
- Unregistered Premises: Invoices for rent of unregistered premises were disallowed.
- Time-Barred Claims: Claims for invoices paid prior to one year before the refund claim were rejected as time-barred.
- Lack of Address on Invoices: Invoices without the address of the premises for renting services were deemed inadmissible.
- Domestic Turnover: The refund calculation included domestic turnover, which the appellants disputed.

Issue 2: Sanction of Refund Claim of Rs. 2,04,23,418
The Tribunal found that the refund claim of Rs. 2,04,23,418 was correctly sanctioned by the original authority, as there was no appeal filed by the revenue against this amount.

Issue 3: Appropriation of Sanctioned Refund Against Existing Demand
The Tribunal noted that the amount of Rs. 2,04,23,418 sanctioned was appropriated against an existing demand confirmed by an earlier order, which was later set aside by the Hon'ble CESTAT.

Issue 4: Denial of Refund on Various Grounds
- Improper Address: The Tribunal agreed with the adjudicating authority that invoices not addressed to the registered premises were inadmissible.
- Inadmissible Input Services: The Tribunal upheld the rejection of the refund claim for services like Pantry Boys, considering them for personal use.
- Unregistered Premises: The Tribunal found that the credit for rent of unregistered premises was rightly disallowed.
- Time-Barred Claims: The Tribunal concurred that claims for invoices paid more than a year before the refund application were time-barred.
- Domestic Turnover: The Tribunal found the calculation of refund considering domestic turnover to be correct.

Conclusion:
The Tribunal allowed the appeal in part, determining that the denial of CENVAT credit during refund proceedings without initiating appropriate proceedings under Rule 14 was not tenable. The Tribunal directed that the difference between the amount debited and the refund allowed should be credited back to the appellant's CENVAT account. Furthermore, with the introduction of the GST regime, the Tribunal ordered that the entire amount debited at the time of filing the refund claim should be refunded in cash to the appellant as per Section 142 of the CGST Act, 2017. The appeal was thus allowed in these terms.