Tribunal allows refund of service tax for 100% EOU exporting stone products

The Tribunal found in favor of the appellant, a 100% EOU processing Sand Stone into Slate and Tiles, in a dispute over the refund of service tax paid for transporting stone to its factory. The Commissioner (Appeals) had denied the refund, arguing that since no duty was levied on the final products, the appellant could not claim credit of the service tax paid. However, the Tribunal held that Rule 5 of Cenvat Credit Rules allows for the refund of input service tax for exports, regardless of duty liability on final products, and overturned the Commissioner's decision, allowing the appeal.

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Issues:
1. Refund of service tax paid for transport of sand stone to factory.
2. Claiming refund under Rule 5 of Cenvat Credit Rules for export of slate and tiles.
3. Dispute regarding dutiability of slate and tiles in relation to service tax refund.
4. Interpretation of Rule 5 of Cenvat Credit Rules for refund eligibility.
5. Legality of Commissioner (Appeals) findings in contrast to the rule.

Analysis:
1. The appellant, a 100% EOU processing Sand Stone into Slate and Tiles, paid service tax for transporting the stone to its factory. Upon exporting the slate and tiles, it claimed and obtained a refund of the service tax under Rule 5 of Cenvat Credit Rules.

2. The Commissioner of Central Excise, Jaipur contended that the refund allowed by the Asstt. Commissioner was not payable, as no duty was levied on the slate and stone after processing. The Commissioner (Appeals) upheld this view, stating that since no duty was payable on the final products, the appellant could not claim credit of the service tax paid and subsequently seek a refund upon export.

3. The Tribunal, during the stay application stage, waived the requirement for pre-deposit of the refund amount and proceeded with the appeal, deeming it necessary to dispose of the appeal itself.

4. Rule 5 of Cenvat Credit Rules allows for the refund of input service tax concerning exports, irrespective of whether the input material or service is used in the manufacture of the exported goods or in intermediate products cleared for export. The rule emphasizes that the manufacture of an excisable item during the process is not a prerequisite for refund eligibility.

5. The Tribunal found the Commissioner (Appeals) findings to be illegal as they contradicted the terms of Rule 5. The original authority's order aligned with the rule, leading to the setting aside of the impugned order and allowing the appeal.

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