2024 (1) TMI 522 - AT - Service Tax

Rejection of partial refund claim - rejection primarily on the ground of no direct nexus between input and output service - HELD THAT - In the Appellant s own case for the prior and subsequent period, all these disputed credit were held to be admissible by this Tribunal. On the ground on which it was held to be admissible remained unshakeable as in the parallel proceeding initiated under Rule 14 of the CENVAT Credit Rules, 2004, the said demand that was conformed up to the Commissioner (Appeals) s level was set aside by this Tribunal and the same do cover the present disputed period. Therefore, in furtherance to the Judicial precedent set by this Tribunal and in order to ensure consistency and predictability to the order passed by it, the following order is passed. The order passed by the Commissioner (Appeals) to the extent of rejection of CENVAT Credit to the Appellant is hereby set aside - Appeal allowed.

Summary

Issues involved: Rejection of partial refund claim due to lack of nexus between input and output service, challenge to the rejection order by the Assessee Appellant, interpretation of Rule 5 of the CENVAT Credit Rules, 2004, and application of judicial precedent.

Summary:
1. The Assessee Appellant sought a refund for accumulated credit against export of service, but the Refund Sanctioning Authority rejected a portion of the refund amount due to the alleged lack of nexus between inputs received and exports made. The Commissioner (Appeals) upheld this rejection partially. The Assessee challenged the rejection of credit before the Appellate Tribunal CESTAT MUMBAI.

2. The Assessee argued that a similar issue had been decided in their favor by the Tribunal in a previous case, emphasizing that unless recovery proceedings under Rule 14 of the CENVAT Credit Rules, 2004 were initiated, a refund under Rule 5 could not be rejected. The Assessee also referred to Circular No. 120/1/2010S.T. to support their argument for setting aside the rejection order.

3. The Authorized Representative for the Respondent defended the reasoning behind the rejection of the refund claim and did not seek any intervention from the Tribunal.

4. After reviewing the submissions and case laws, the Tribunal noted that in the Assessee's previous and subsequent cases, the disputed credits were held to be admissible. The Tribunal emphasized the importance of consistency and predictability in its orders based on judicial precedent and set aside the rejection order passed by the Commissioner (Appeals).

Judgement: The appeal was allowed, and the order rejecting the CENVAT Credit to the Appellant was set aside. The Appellant was entitled to a refund of Rs.6,78,829/- with applicable interest, to be paid by the Respondent-Department within 3 months of the order.