2018 (5) TMI 1292 - AT - Service Tax

Appellant wins refund on courier services over timely filing and CENVAT credit eligibility

Leitz Tooling Systems India Pvt Ltd Versus Commissioner Of Central Tax, Bangalore North West Commissionerate

The Tribunal ruled in favor of the appellant, granting the refund of excess payment on courier services with interest. The rejection of the refund claim ... Refund of credit reversed in excess erroneously - credit reversed at the instance of Audit party - credit of service tax paid on courier services - rejection on the ground that the appellant has voluntarily paid the said amount without protest. Held that: - Since the appellant has filed the refund claim within the period of limitation as prescribed u/s 11B of the CEA 1944 and therefore the rejection of the refund claim is not sustainable in law and therefore the appellants are entitled for refund of the excess amount paid on courier services along with interest which the appellant has paid towards that service. For the purpose of verification of the record regarding the payment of service tax and interest, the matter is remanded to the original authority - appeal allowed by way of refund. Issues:Refund claim rejection based on finality of issue and voluntary payment without protest.Analysis:The appeal challenged the rejection of a refund claim by the Commissioner(Appeals) concerning erroneous payment of CENVAT credit on courier services. The appellant, engaged in manufacturing wood working tools, paid an amount of Rs. 5,70,511/- during an audit, realizing later that the payment was incorrect. The Deputy Commissioner rejected the refund claim, citing courier services not qualifying as input service and the voluntary payment without protest. The Commissioner(Appeals upheld this decision, stating the issue had attained finality. The appellant contended that the rejection was contrary to legal precedent and misinterpreted the definition of input service. The appellant filed the refund claim within the one-year limitation period from the payment date, as per Section 11B of the Central Excise Act.The appellant argued that the rejection was unsustainable as the refund claim was timely and the courier service qualified as an input service. The Department contended that the voluntary payment without protest closed the issue, barring the appellant from claiming a refund. The Tribunal found the refund claim filed within the statutory limitation and clarified that the eligibility of CENVAT credit on courier services was undisputed. The rejection was deemed unsound as the appellant was entitled to the refund of excess payment on courier services with interest. The appellant waived the refund of penalty, seeking only the refund of service tax and interest. The Tribunal allowed the appeal, remanding the matter to the original authority for verification and subsequent refund of service tax and interest, excluding the penalty.In conclusion, the Tribunal ruled in favor of the appellant, granting the refund of excess payment on courier services with interest, as the rejection of the refund claim was found legally unsustainable due to the timely filing within the statutory limitation period and the undisputed eligibility of CENVAT credit on courier services.