2018 (2) TMI 1322 - AT - Service Tax

Court allows refund claim including subcontracted goods value under Cenvat Credit Rules

M/s. Angelique International Ltd. Versus Commissioner of Service Tax, Delhi

The court upheld the appellant's refund claim, ruling in favor of including the value of sub-contracted goods in the calculation. The interpretation of ... CENVAT credit - whether the appellant has availed proportionate cenvat credit attributable to their composite contract, on inputs as well as input service, and has not availed any cenvat credit on inputs and common cenvat credit attributable to input service for supply contract executed by them? Held that: - matter needs examination for verification of the facts and then to allow refund. CENVAT credit - CHA and CFA services - denial on the ground that input service has been availed by the appellant on the basis of invoices which were not issued in the name of their registered premises - Held that: - in earlier round of litigation, the learned Commissioner (Appeals) has held in favour of the appellant. Therefore, in remand proceedings, contradictory view cannot be taken for the authorities below as the order in earlier round of litigation has attained finality. Therefore, on the said ground refund claim cannot be rejected. Refund claim of Cenvat credit on the basis of input which was not issued in their registered office - Held that: - issue has been settled by the various judicial pronouncement namely in the case of National Engineering Ltd. vs CCE [2013 (305) ELT 551] wherein it has been held that as not in dispute the appellant has received the service and used for export of goods, therefore, the refund claim cannot be denied - refund cannot be denied. Appeal allowed by way of remand. Issues:1. Refund claim reduced due to inclusion of sub contract value.2. Interpretation of Rule 5 of Cenvat Credit Rules, 2004 for refund claim calculation.3. Applicability of earlier Commissioner's order on refund claims.4. Denial of cenvat credit on CHA and CFA services.5. Eligibility of refund claim based on input not issued in registered office.Issue 1: Refund claim reduced due to inclusion of sub contract valueThe appellant contested the reduction of their refund claim due to the inclusion of the value of sub contract of goods in the calculation. The authorities held that supplies made by the appellant, for which they did not avail proportional cenvat credit on input service, should be considered while calculating the refund claim. The appellant argued that a subsequent order by the Commissioner in a similar situation favored them, leading to the sanction of their refund claim. The matter was examined, and the appellant's claim was upheld based on the interpretation of Rule 5 of Cenvat Credit Rules, 2004.Issue 2: Interpretation of Rule 5 of Cenvat Credit Rules, 2004 for refund claim calculationThe judgment analyzed the application of Rule 5 and Rule 6 of Cenvat Credit Rules, 2004 to determine the eligibility of the appellant's refund claim. The appellant was found to have correctly proportioned the credit of common input services and claimed a refund for input services used exclusively in exported services. The judgment emphasized that the method of computation adopted by the appellant was in line with the rules, allowing credit for input services utilized in providing exported output services.Issue 3: Applicability of earlier Commissioner's order on refund claimsThe judgment referred to an earlier order by the Commissioner that supported the appellant's refund claim, emphasizing that contradictory views cannot be taken in subsequent proceedings. The appellant's entitlement to the refund claim was upheld based on the finality of the earlier Commissioner's decision.Issue 4: Denial of cenvat credit on CHA and CFA servicesThe denial of cenvat credit on CHA and CFA services was challenged by the appellant, citing various judicial pronouncements. The judgment highlighted that the denial of refund claim based on services not issued in the registered office was settled in previous cases, supporting the appellant's position.Issue 5: Eligibility of refund claim based on input not issued in registered officeThe judgment reiterated the settlement of the issue regarding the eligibility of a refund claim based on input services not issued in the registered office, citing relevant judicial pronouncements. The appellant's position was supported, and the denial of the refund claim on this ground was rejected.In conclusion, the judgment allowed the appeals by way of remand, directing the matter to be verified by the adjudicating authority. The appellants were granted a reasonable opportunity to defend their case before the authority, emphasizing the importance of verifying all facts before making a decision.