2009 (4) TMI 346 - AT - Service Tax

Cenvat Credit- Notification No. 5/2006-CE(NT) -Assessee, a 100 percent EOU, engaged in manufacture and export of readymade garments, filed a refund claim for relevant period for refund of unutilized Cenvat Credit of service tax paid for the period of April 2005 to march 2006. Said refund claim was rejected by adjudicating authority on ground that refund of service tax paid on input service was admissible only from 14.3.2006 as provided under Notification No. 5/2006-CE(NT) and not for period prior to it. Commissioner (Appeals) upheld the order. In the light of the decision of Fibres & Fabrics International (P.) Ltd. v. Commissioner of Customs (Appeals) 2009 -TMI - 33501 - CESTAT BANGLORE, in which held that on 1.9.2004 rule 5 itself for utilization of input credit and where such input service credit or input credit cannot be utilized, then same can be given as refund and just because notification has not been issued at that time one cannot deny benefit provided in rule, held that- appeal is allowed.

Summary

Issues:
Refund claim rejection based on the period prior to 14-3-2006 under Cenvat Credit Rules, 2004.

Analysis:
The appeal was filed against Order-in-Appeal No. 141/2007 passed by the Commissioner of Customs (Appeals) Bangalore. The appellant, a 100% EOU engaged in the manufacture and export of Readymade garments, filed a refund claim for Rs. 16,29,850 for the period from April 2005 to March 2006 under rule 5 of the Cenvat Credit Rules, 2004 for the refund of unutilized Cenvat credit of Service Tax paid. The claim was rejected on the grounds that refund of Service Tax paid on the input service is admissible only from 14-3-2006 as per Notification No. 5/2006-CE(NT). The Commissioner (Appeals) upheld the order of the Assistant Commissioner, leading the appellants to approach the Tribunal for relief.

During the personal hearing, it was noted that the issue was covered by various decisions, such as Fibres & Fabrics International (P.) Ltd. v. Commissioner of Customs (Appeals), CCE v. Himalaya Granites Ltd., Bisazza India (P.) Ltd. v. CCE, and Caliber Point Business Solutions Ltd. v. CCE. After careful consideration, the Tribunal found that the issue was already addressed in the case of Fibres & Fabrics International (P.) Ltd. In that case, the Tribunal held that the refund claim pertaining to the period prior to 14-3-2006 could not be denied based on the provision in rule 5 of the Cenvat Credit Rules, 2004. The Tribunal emphasized that the notification dated 14-3-2006 would be applicable even to the period before it, as per the rule position at that time. As the issue was squarely covered by the previous decision, the Tribunal allowed the appeal with consequential relief, setting aside the impugned order.