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TMI Blog2024 (4) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants own case COMMISSIONER OF CE SERVICE TAX, KOLHAPUR VERSUS ROYAL FOODSTUFF PVT. LTD. [ 2018 (8) TMI 601 - CESTAT MUMBAI] , the Tribunal has held that they are eligible to refund of CENVAT credit under Rule 5B ibid and distinguished the other cases where the Tribunal had ordered for dismissal of the appeals filed by the appellants. Eligibility to CENVAT credit to a manufacturer of goods having nil tariff rate of duty - HELD THAT:- The provisions under Sub-rule (6)(v) to Rule 6 clearly provide that the restriction or denial for non-availability of Cenvat credit under various sub-rules of Rule 6 shall not be applicable for manufacture of exempted goods which are cleared for export. Thus, the findings of the learned Commissioner (Appeals) in denial of Cenvat credit on the ground that the appellants being manufacturer of Nil rated goods, would stand covered by the restriction under Rule 6(1) ibid is incorrect and is not legally sustainable. Furthermore, the above issue is no more res integra in view of the judgement delivered by the Hon ble High Court of Bombay in the case of UNION OF INDIA VERSUS SHARP MENTHOL INDIA LTD. [ 2011 (4) TMI 27 - BOMBAY HIGH COURT] where it was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of such accumulated credit, the appellants have filed three refund claims under Rule 5B of Cenvat Credit Rules (CCR), 2004 read with Notification No.12/2014-C.E. (N.T.) dated 03.03.2014 in the prescribed form. On scrutiny of the refund applications, the department felt there were certain discrepancies by which the appellants are not eligible for refunds and accordingly issue show cause notices, denying the claim for refund. These refund applications were adjudicated by the Original authority in rejecting the refund applications. The details of three refund applications filed by the appellants and the respective Order-in-Original are given in brief as below: Sl. No Impugned common Order-in- Appeal No. Order-in-Original No. and Date ST Registration ref. Period of Demand Amount of refund involved (in Rs.) 1. KLHEXCUS- 000-APP- 097to099 - 2015-16 dated 29.09.2015 Satara/28/Adj/2015-16 dated 28.02.2015 AAGCR2434QSD001 01.10.2013 to 31.03.2014 (2,69,604) *1,74,292 2. Satara/29/Adj/2015-16 dated 28.02.2015 AAGCR2434QSD002 01.10.2013 to 31.03.2014 5,00,591 3. Satara/30/Adj/2015-16 dated 28.02.2015 AAGCR2434QSD001 01.04.2014 to 30.09.2014 5,90,576 Total amount of refund 12,65,459 *Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On issue (ii) he concluded that it is clear that the appellant manufacturing goods, having nil rate of duty, were not eligible for credit at all . Thus, he dismissed the appeals filed by the appellants. 7.1 It is an admitted fact on record that the appellants are registered with the department for payment of service tax on the taxable services received by it and had discharged the service tax liability on reverse charge mechanism, as provided under sub-section (2) of Section 68 of the Finance Act, 1994. The relevant legal provisions are extracted and given below for ease of reference: Charge of service tax on and after Finance Act, 2012. 66B. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Payment of service tax. 68. (1) Every person providing taxable service to any person shall pay service tax at the rate specified in section 66B in such manner and within such period as may be prescribed. (2) Notwithstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax in respect of services notified under Section 68(2) ibid. The relevant legal provision is extracted and given below: RULE 5B. Refund of CENVAT credit to service providers providing services taxed on reverse charge basis. A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette. Notification No.30/2012-Service Tax dated 20.06.2012 has been issued specifying the taxable services for which the provisions of Section 68(2) ibid would apply and have mentioned in table attached to the said notification the prescribed percentage of service tax that is payable by such other persons notified therein. Out of the 12 services described in the table, except in respect of works contract service, 100% of the service tax is required to be paid by such other person, and not by the provider of service. CENVAT credit scheme w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 Party s appeal dismissed - - A/86969 dt. 08.05.2018 Party s appeal allowed. Earlier order of the Tribunal distinguished and it does not have any binding precedent for deciding this issue A/85649 dt. 05.03.2020 Matter remanded to Commissioner (A) Order-in-Appeal dt. 17.10.2018 Appellant party found eligible for refund Further, it is also found that the above issue is no more open to dispute as in the appellants own case, the Tribunal has held that they are eligible to refund of CENVAT credit under Rule 5B ibid and distinguished the other cases where the Tribunal had ordered for dismissal of the appeals filed by the appellants. The relevant paragraph of the Final Order No. A/86969/2018 dated 08.05.2018 is extracted as follows: 6. It is an admitted fact on record that the respondent does not provide any taxable service and is also not registered with the Service Tax department for providing any taxable service. However, the respondent is registered with the department for payment of service tax on the taxable services received by it and discharged the service tax liability on reverse charge mechanism, as provided under sub-section (2) of Section 68 of the Finance Act, 1994. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant for the exemption under Notification cited above as a recipient of service. A plain reading of Section 66A brings out the legal obligation of the recipient of service in certain situations. The said Section stipulates that taxable service shall be treated as if provided by the recipient of service in India and accordingly, all the provisions of Chapter V shall apply. We find that the tax liability is put on the appellant on such legal fiction. It is not legally tenable to hold that such legal fiction will have limited application only for payment of service tax and not with reference to any concession available to such service tax. No such implication can be read from the provisions of Section 66A. Further, we also note that the conditions mentioned in the Notification 13/2010 have been fulfilled and there is no dispute on that score. When the provider of service is put to liability to discharge service tax as per provisions of Section 66A all the provisions of Chapter V shall have full force for charge and collection of service tax. The exemption now claimed is part and parcel of the provisions of service tax as the Notification 4 ST/58841/2013-ST [DB] has been issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995, number G.S.R. 602(E), dated the 28th August, 1995; or (iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of Notification No. 12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012]; or (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or .. The above legal provisions under Sub-rule (6)(v) to Rule 6 clearly provide that the restriction or denial for non-availability of Cenvat credit under various sub-rules of Rule 6 shall not be applicable for manufacture of exempted goods which are cleared for export. Thus, the findings of the learned Commissioner (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture of dutiable final product are maintained. However, Rule 6(6) of 2004 Rules provides that the provisions contained in Rule 6(1) to 6(4) of 2004 Rules shall not apply in certain specified cases, where the excisable goods are cleared without payment of duty. Clause (v) of Rule 6(6) of the 2004 Rules provides that where the exempted goods are cleared for export without payment of duty under Central Excise Rules, 2002, then the provisions contained in Rule 6(1) to 6(4) of 2004 Rules shall not apply. Thus, Rule 6(6) of 2004 Rules carves out an exception to the applicability of the provisions contained in Rule 6(1) to 6(4) in certain specified cases. 23. In the present case, admittedly, the exempted menthol crystals have been cleared for exports under bond without payment of duty and, therefore, the case of the assessee would be covered under Rule 6(6)(v) of 2004 Rules and consequently Rule 6(1) to 6(4) of 2004 Rules would not be applicable to the facts of the present case. In other words, in the present case, the credit of duty paid on menthol used in the manufacture of exempted menthol crystals is allowable, because, exempted menthol crystals have been exported under bond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d menthol and utilize that credit for paying duty on clearance of peppermint oil. Since peppermint oil was exported on payment of duty, the assessee was entitled to claim rebate of duty paid on exported peppermint oil under Rule 18 of the Central Excise Rules, 2002. 28. In the result, we hold that in the facts of the present case, since the exempted menthol crystals as well as dutiable peppermint oil manufactured out of duty paid menthol have been exported by the assessee, the provisions of Rule 6(1) to 6(4) of the 2004 Rules are not applicable and as per Rule 5 of 2004 Rules, the assessee was entitled to avail the Cenvat credit of duty paid on menthol used in the manufacture of exempted menthol crystals and utilize the said credit for payment of duty on clearance of peppermint oil either for home consumption or for export. In the present case, since the peppermint oil has been exported on payment of duty, the assessee was entitled to claim rebate of the duty paid on peppermint oil. The above judgement of the Hon ble High Court of Bombay was relied upon by the Hon ble Supreme Court while deciding similar issue in the case of Commissioner of Central Excise, Chandigarh Vs. Drish shoe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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