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2025 (2) TMI 626 - AT - Service TaxRefund of unutilized CENVAT credit paid on input services used for the services exported - non-submission of relevant documents as prescribed under Notification No.05/2006 CE (NT) dated 14.03.2006 - hit by limitation of time in terms of Section 11B of the Central Excise Act 1944 read with section 83 of the Finance Act 1994 - violation of principles of natural justice - HELD THAT - The original refund claim filed on 31.12.2010 continues to languish 14 years later. It is found that the Original Authority in denovo proceedings at para 5.7 of his order dated 15.05.2020 had as per the appellate directions proceeded to examine as to whether the input services are eligible for availment of CENVAT credit and found that the eligible credit worked out to Rs 18, 30, 182/- as against Rs 19, 39, 818/- claimed. He only rejected the same for non-submission of documents which he had not specified or called for and which was against the principles of natural justice. No purpose will be served in sending the matter back and the ends of justice would require that the appellant be allowed to succeed in his appeal to this extent. The impugned order is set aside and the appeal is allowed for the monetary refund of eligible credit worked out as Rs 18, 30, 182/- by the Original Authority.
The present appeal before the Appellate Tribunal, CESTAT Bangalore, arises from a dispute regarding a refund claim filed by the appellant, a provider of Information Technology Software Services and Business Auxiliary Services. The appellant sought a refund of Rs.1,05,64,228/- on unutilized CENVAT credit for input services used in services exported during April 2010 to June 2010. The Commissioner of Central Tax (Appeals - II), Bangalore, initially sanctioned Rs.86,24,409/- but rejected Rs.19,39,819/-, stating that the input services lacked a nexus with the exported output services. The appellant appealed this rejection, leading to a series of proceedings culminating in the present appeal.**Issues Presented and Considered:**1. Whether the appellant's refund claim was rightly rejected for lack of nexus between input and output services.2. Whether the refund claim was time-barred under Section 11B of the Central Excise Act, 1944.3. Whether the lower authorities violated principles of natural justice in rejecting the refund claim.**Issue-Wise Detailed Analysis:****1. Nexus Between Input and Output Services:**- The First Appellate Authority directed a denovo consideration of the refund claim, emphasizing the need to establish a nexus between input and output services.- The Ld. Original Authority erred by rejecting the claim for non-submission of relevant documents without specifying the required documents or providing an opportunity to rectify the alleged defects.- The appellant argued that all necessary documents were submitted during the initial claim and that the rejection lacked cogent reasons and violated principles of natural justice.- The Tribunal found that the rejection was unjustified and allowed the appeal for a monetary refund of Rs 18,30,182/-, the eligible credit amount determined by the Original Authority.**2. Time-Barred Refund Claim:**- The appellant contended that the refund claim was not time-barred as the denovo proceedings were initiated due to delays in the appellate process.- The Ld. Original Authority erroneously considered the appellant's letter requesting a refund as the claim date, leading to the claim being deemed time-barred.- The Tribunal held that the delay in processing the claim was attributable to the authorities and not the appellant, thus rejecting the time-barred argument and allowing the refund claim.**3. Violation of Natural Justice:**- The appellant raised concerns about the lower authority's failure to provide a list of missing documents before rejecting the claim, thus depriving them of an opportunity to rectify any deficiencies.- The Tribunal emphasized the importance of following principles of natural justice and ensuring that appellants are informed of deficiencies before rejecting claims.- The Tribunal concluded that the rejection without specific document requests violated natural justice principles and allowed the appeal for the eligible credit amount.**Significant Holdings:**- The Tribunal set aside the impugned order and allowed the appeal for a refund of Rs 18,30,182/-, finding the rejection of the claim unjustified and in violation of natural justice principles.- The Tribunal emphasized the importance of establishing a nexus between input and output services in refund claims and ensuring timely processing of appeals to avoid undue delays for appellants.In conclusion, the Tribunal's decision in this case highlights the significance of adhering to principles of natural justice, establishing nexus between input and output services in refund claims, and ensuring timely processing of appeals to uphold the rights of appellants.
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