2014 (6) TMI 391 - AT - Service Tax

Tribunal Validates Refund Claim for Exported Services Under Cenvat Credit Rules

The Tribunal clarified that the appellant's refund claim for accumulated Cenvat Credit for exported taxable services was valid under Rule 5 of the Cenvat ... Denial of Refund claim - Export of services - CENAVAT Credit - Notification No.5/06-CE(NT) dt. 14.03.06 - Non compliance with procedure prescribed under Notification No. 12/05-ST - Held that:- Refund claim, in question, is for refund of accumulated Cenvat Credit terms of Rule 5 of the Cenvat Credit Rules, 2004 for which the Notification No. 5/06-CE(NT), issued under this rule, prescribes the condition to be fulfilled and the procedure to be followed. The Notification No. 12/05-ST issued under Rule 5 of the Export of service Rules 2005, prescribes the conditions to be fulfill and procedure to be followed for claiming rebate in respect of export of services. The two schemes are totally different and the procedure prescribed and the conditions to be fulfilled for claim of cash refund of accumulated Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004 and for claiming rebate in respect of export of services in term of Rule 5 of the Export of Service Rules, are totally different. The lower Authorities mixed up the two issues. In this case it was required to be seen as to whether the procedure prescribed under Notification No. 5/06-CE(NT), issued under Rule 5 of Cenvat Credit Rules, 2004 has been followed and the conditions prescribed in this Notification have been fulfilled. Notification No. 12/05-ST issued under Rule 5 of the Export of Service Rules, 2005, which prescribes the conditions to be fulfilled and the procedure to be followed for claiming rebate in respect of export of services, has no application. The impugned order is, therefore, set aside and the matter is remanded to the Assistant Commissioner for examining the refund claim under Rule 5 of the Cenvat Credit Rules, 2004 on the basis of the conditions and the procedure prescribed, in this regard in the Notification No.5/06-CE(NT) dt. 14.03.06 which is the correct Notification applicable to this case - Decided in favour of assessee. Issues:1. Refund of accumulated Cenvat Credit for exported taxable services.2. Interpretation of Notification No. 5/06-CE(NT) and Notification No. 12/05-ST.3. Correct procedure and conditions for claiming cash refund.Analysis:Issue 1: Refund of accumulated Cenvat Credit for exported taxable servicesThe appellant, engaged in providing taxable services exported between April '07 to Sept. '07, claimed Cenvat Credit of Rs.11,20,486 for input services used in the export. They sought a cash refund as they couldn't use this credit for domestic service tax payment. The Jurisdictional Assistant Commissioner rejected the refund application for non-compliance with Notification No. 12/05-ST under the export of service rules 2005. The Commissioner (Appeals) upheld this decision, leading to the current appeal.Issue 2: Interpretation of Notification No. 5/06-CE(NT) and Notification No. 12/05-STThe advocates for the appellant argued that the refund application was filed under Rule 5 of the Cenvat Credit Rules, 2004, along with Notification No. 5/06-CE(NT), which outlines conditions and procedures for cash refund of accumulated Cenvat Credit. They contended that Notification No. 12/05-ST, related to claiming rebate for export of services, was inapplicable to this case. The impugned order was criticized for incorrectly rejecting the refund based on conditions from the wrong notification.Issue 3: Correct procedure and conditions for claiming cash refundThe Tribunal found that the refund claim was indeed under Rule 5 of the Cenvat Credit Rules, 2004, governed by Notification No. 5/06-CE(NT). It clarified that the procedures and conditions for cash refund of accumulated Cenvat Credit and claiming rebate for export of services were distinct. The lower authorities erred in mixing up the two schemes. Consequently, the Tribunal set aside the impugned order, remanding the matter to the Assistant Commissioner for reassessment based on the correct Notification No. 5/06-CE(NT) provisions. This decision clarified the applicable rules and procedures for claiming the cash refund of accumulated Cenvat Credit for exported services.This comprehensive analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision, ensuring a detailed understanding of the legal aspects involved.