2020 (10) TMI 675 - AT - Service Tax

Tribunal grants refund to medical transcription company for CENVAT credit, with interest

The Tribunal set aside the impugned order rejecting refund claims, allowing the appeals of a private limited company engaged in medical transcription ... 100% EOU - Rejection of refund of Service Tax - rejection only ground on which the refund has been rejected is that the closing balance of cenvat credit at the end of the quarter as per ST-3 return was ‘nil’ which was less than the refund amount for respective quarter - HELD THAT:- The objection of the Department that the appellant has not debited the cenvat credit account before filing the refund claim is not factually correct, in fact the appellants have debited the cenvat credit account before filing the refund claim and the same is clearly shown in the ST-3 returns also - Further, the respondent while rejecting the refund claims has not properly appreciated the condition/limitation envisaged in paragraphs 2(g) and 2(h) in Notification No.27/2012-CE(NT) dt. 18/06/2012. The said paragraph only provides that the amount of refund claim shall not be more than the amount lies in the cenvat credit account at the end of the quarter for which the claim is filed or at the time of filing of refund claim, whichever is less. This condition has been interpreted out of context by the respondent in the impugned order and the respondent has erred in not appreciating the facts as also the condition envisaged in Notification No.27/2012. Interest on delayed refund - HELD THAT:- Reliance placed in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT], wherein the Hon’ble Supreme Court has held that interest on delayed refund is payable under Section 11BB of Central Excise Act, 1944 on the expiry of period of three months from the date of receipt of application under Section 11B(1) ibid and not from the date of order of refund or Appellate Order allowing such refund - the appellant is entitled for the interest as per the Apex Court decision in Ranbaxy Laboratories Ltd. Appeal allowed - decided in favor of appellant. Issues involved:- Rejection of refund claims by the Commissioner(Appeals)- Interpretation of Notification No.27/2012-CE(NT)- Debiting of CENVAT credit account before filing refund claim- Claim for interest on delayed refundAnalysis:1. The appellant filed two appeals against the common impugned order rejecting their refund claims. The appellant, a private limited company registered as 100% EOU, provides medical transcription services for hospitals outside India under Business Auxiliary Service category. They availed cenvat credit on input services for export of services during the disputed period. The Assistant Commissioner rejected the refund claims, upheld by the Commissioner(Appeals).2. The appellant argued that the impugned order failed to appreciate Cenvat Credit Rules and Notification No.27/2012. They contended they fulfilled conditions for refund under the Notification, debiting the claimed amount from CENVAT credit as required. They cited relevant judgments and claimed interest on delayed refund.3. The AR supported the impugned order's findings, stating the appellant did not meet conditions 2(g) and 2(h) of the Notification. They cited judgments to support their stance.4. The Tribunal examined whether the rejection of refund claims was legally sustainable. It noted no dispute on service export and foreign exchange receipt. The main ground for rejection was the 'nil' cenvat credit balance at the quarter end, less than the refund amount. The Tribunal found the appellant correctly debited the cenvat credit account before filing the claim. The respondent's misinterpretation of Notification conditions led to the rejection.5. The Tribunal set aside the impugned order, allowing the appeals. It held the appellant entitled to interest on delayed refund per the Supreme Court decision in Ranbaxy Laboratories Ltd., payable after three months from the application receipt under Section 11B(1) of the Central Excise Act, 1944.6. Consequently, both appeals were allowed, and the operative portion of the Order was pronounced on 13/10/2020.