2012 (9) TMI 52 - AT - Service Tax

Appellants granted remand to pursue refund claims under CENVAT Credit Rules

The appellants sought a refund under Rule 5 of the CENVAT Credit Rules, 2004 for technical testing services. Their refund claims were initially rejected ... Refund of service tax paid on specified services - appellants in this case had not claimed refund under the Notification No. 41/2007 in the first instance and only at the instance of the Department they have subsequently filed the refund claims under the said notification which has been disallowed on the ground of time bar and non-fulfilment of conditions under the said Notification – Held that:- Notification issued under Section 93 of the Finance Act, 1994, or a condition incorporated in such a notification cannot put a bar on credit allowed or refund of unutilized credit allowed under the Rules made under a different enactment that is, the Central Excise Act, 1944, and a different provision namely Section 94 of the Finance Act, 1994 - there is no restriction placed under the said Rules, the appellant cannot be prevented from claiming refund of unutilized CENVAT credit in respect of any input or input services, if such refund is otherwise due - appeals are allowed by way of remand to the original authority Issues:Refund under Rule 5 of CENVAT Credit Rules, 2004 for technical testing and analysis service; Rejection of refund claims under Notification No. 41/2007; Time bar and non-compliance with conditions; Scope of refunds under Rule 5; Powers to make rules under Central Excise Act, 1944 and Finance Act, 1994; Restriction on refunds under CENVAT Credit Rules, 2004.Analysis:The case involves the appellants seeking a refund under Rule 5 of the CENVAT Credit Rules, 2004 for utilizing Technical Testing and Analysis Service in their EOU for manufacturing final products mostly exported. The appellants initially claimed refunds amounting to Rs. 6,56,008/- and Rs. 1,63,887/- in two cases, within time, but subsequent refund claims under Notification No. 41/2007 were rejected for being time-barred and non-compliant with conditions. The appellants argued eligibility for refund under Rule 5 and requested remand to the original authority for consideration based on fulfillment of conditions under Rule 5 and Notification No. 5/2006.The Department objected to the refund, stating that no refund can be granted under Rule 5 for technical testing and analysis service as a separate scheme exists under Notification No. 41/2007, prohibiting refunds except under that notification. After considering both sides, the judge found that the condition restricting refunds to Notification No. 41/2007 was not present in Rule 5 itself. The judge highlighted that the power to make rules for granting CENVAT credit and refund lies under the Central Excise Act, 1944, and Finance Act, 1994, while Notification No. 41/2007 was issued under a different provision. The absence of a restriction under the CENVAT Credit Rules, 2004 meant the appellants could claim refunds if due, irrespective of specific services.The judgment emphasized that any restriction on refunds must be explicitly stated in the rules or an independent provision under the CENVAT Credit Rules, 2004. Since no such restriction existed, the appellants were allowed a remand to the original authority for reconsideration of their refund claims for unutilized credit of technical testing and analysis service, ensuring compliance with the relevant provisions. The appellants were granted an opportunity to demonstrate fulfillment of necessary conditions under the CENVAT Credit Rules, 2004, and Notification No. 5/2006. The impugned orders were set aside, and both appeals were allowed for remand in accordance with the judgment.