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TMI Blog2024 (11) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... f accumulated Cenvat credit availed on export of services - appellant had failed to provide supporting documents in relation to the payment received during the relevant period, hence the refund claim was being rejected - whether the appellant has fulfilled the conditions of the Notification No. 27/2012-CE (NT) dt 18.06.012 as amended by Not. No. 14/2016-CE (NT) dated 1.03.2016? - HELD THAT:- In Mangalore Chemicals and Fertilizers Ltd [ 1991 (8) TMI 83 - SUPREME COURT] held that the procedural infraction of Notification, Circulars etc., are to be condoned, if exports have already taken place and the law is settled now that substantive benefit cannot be denied for procedural lapse. Similarly, in the decision in the case of Agio Pharmaceuticals Limited [ 2013 (6) TMI 686 - GOVERNMENT OF INDIA] the Government held that there is no dispute of duty or export of duty of goods registered in warehouse under Rule 9 of Central Excise Rules, 2002. Goods were cleared from factory under Central Excise supervision and ARE-1 signed by both partners endorsed by Customs and the Central Excise authorities stated that the goods exported, shipping bills and substantial conditions of Notification No. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. As such sports rights were for live broadcast of matches in the territories outside India i.e., for USA and Canada etc. Thus, the place of provision of service was outside India in terms of Rule 3 of Place of Provision of Service Rules, 2012 read with Rule 6A of Service Tax Rules, 1994. Hence, the appellant is exclusively engaged in export of services. As the appellant was exclusively engaged in export of services outside India, he filed a refund claim of CENVAT Credit for the period in dispute i.e. April 2016 to June 2016 totalling to Rs. 3,99,12,617/- in terms of Rule 5 of Cenvat Credit Rules, 2004 [CCR, 2004] read with Notification no. 27/2012-CE (NT) dated 18.06.2012. On scrutiny of the refund claim filed by the appellant for the abovementioned period, the Department issued a show cause notice dated 08.04.2019 as to why the claim should not be rejected. The Adjudicating Authority vide order dated 14.11.2019, rejected the refund claim amounting to Rs. 3,85,36,320/- under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012-CE (NT) dated 18.06.2012. Aggrieved by the said order, the appellant preferred an appeal before Commissioner (Appeals) who in turn, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omestic services. The learned counsel submitted that since the appellant is a 100% exporter, the application of the formula would not result in any advantage to the Department, as the appellant was eligible to claim a full refund of the tax paid on input services. The Department's application of the formula is erroneous and leads to illogical outcomes, including the denial of rightful refunds to the appellant in quarters where no export receipts are collected. This interpretation not only defies the legislative intent behind the formula but also undermines the principle of refund eligibility for exporters. The refusal to grant CENVAT credit to service exporters would frustrate the underlying objective of the government's export policies, which aims to incentivize and support exports. 3.2 Learned Counsel also stated that even if the export turnover is calculated to be nil under Rule 5(1)(D) of the CENVAT Credit Rules, 2004, the appellant was still entitled to a refund of Rs. 3,99,12,617/- for the subsequent quarter (July-September 2016). He submitted that this entitlement arises from the provisions of Rule 5 of the CENVAT Credit Rules, 2004 read in conjunction with Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the appellant had contended that export sale proceeds in respect of services exported during the quarter, had been received in subsequent quarters but within one year from the date of invoice i.e. within the time allowed under the Rules. In this regard, according to Appellant, they could file claim within one year from the date of realisation, as per amended notification. However, learned AR contended that the appellant has not explained as to why then the claim was filed in that particular quarter. The adjudicating authority has followed the provisions laid down in terms of clause (e) of paragraph 2 of Notification No.27/2012-CE(NT) dated 18-06-2012. As per the rules, the export turnover of service is restricted to only that value which relates to receipt of payment and appellant has not received any advance, as reported in the impugned order. Thus, only the services for which payments were received are covered by export turnover. 4.1 Learned Authorized Representative further submitted that for arriving at the export turnover, the adjudicating authority had not considered such invoices whose export proceeds were not realised in that particular quarter. The appellant in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary particulars have not been stated in the show cause notice, it could not be a valid ground for quashing the notice, because it is open to the petitioner to seek further particulars, if any, that may be necessary for it to show cause if the same is deficient. Therefore, we hold that there is no legal infirmity in the issuance of addendum in this regard. 6. We now consider the core issue as to whether the appellant has fulfilled the conditions of the Notification No. 27/2012-CE (NT) dt 18.06.012 as amended by Not. No. 14/2016-CE (NT) dated 1.03.2016 while filing the refund of accumulated Cenvat credit availed on export of services. The provisions are reproduced hereinafter: Refund of CENVAT Credit A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette: Refund amount = (Export turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 .-For the purposes of this rule, the value of services, shall be determined in the same manner as the value for the purposes of sub-rule (3) and (3A) of rule 6 is determined. 6.1 The Notification No: 27/2102-CE(NT) is reproduced herein after. Notification No. 27 /2012-CE (N.T.) New Delhi the, 18th June, 2012 G. S. R-(E). - In exercise of the powers conferred by rule 5 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules ), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No 5/2006 Central Excise (N.T), dated the 14th March, 2006, published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 156(E), dated the 14th March, 2006, the Central Board of Excise and Customs hereby directs that refund of CENVAT credit shall be allowed subject to the procedure, safeguards, conditions and limitations as specified below, namely:-. 2.0 Safeguards, conditions and limitations. - Refund of CENVAT Credit under rule 5 of the said rules, shall be subjected to the following safeguards, conditions and limitations, namely:- (a) the manufacturer or provider of output ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted is situated. 1 [(b) The application in the Form A along with the documents specified therein and enclosures relating to the quarter for which refund is being claimed shall be filed as under: (i) in case of manufacturer, before the expiry of the period specified in section 11B of the Central Excise Act, 1944 (1 of 1944); (ii) in case of service provider, before the expiry of one year from the date of (a) receipt of payment in convertible foreign exchange, where provision of service had been completed prior to receipt of such payment; or (b) issue of invoice, where payment for the service had been received in advance prior to the date of issue of the invoice.] (c) The application for the refund should be signed by- (i) the individual or the proprietor in the case of proprietary firm or karta in case of Hindu Undivided Family as the case may be; (ii) any partner in case of a partnership firm; (iii) a person authorized by the Board of Directors in case of a limited company; (iv) in other cases, a person authorized to sign the refund application by the entity. (d) The applicant shall file the refund claim along with the copies of bank realization certificate in respect of the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input services. The Department's application of the formula is erroneous and has led to denial of rightful refunds to the appellant in quarters where no export receipts are collected. Ld AR has countered this submission stating that there is a difference between Total Turnover and Export Turnover. In this context, we note that the original authority has noted that the appellant did not provide supporting documents in relation to the payment received during the relevant period. It is also admitted that the appellant had satisfied all the other conditions of the said notification. We also note that the submissions made by the Ld Counsel that it cannot be sole reason for rejection by the department, as long as the claim is substantively valid and compliant with all relevant rules and regulations, the department cannot deny it solely on the ground of early submission. We agree with the submissions of the Ld Counsel. In this context, we note that it is settled law that substantive benefit cannot be denied for procedural infractions. We note that procedure has been prescribed to facilitate verification of substantive requirement. As long as a fundamental requirement is met, other pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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