2021 (11) TMI 119 - AT - Service Tax

Tribunal overturns denial of Service Tax rebate, directs re-examination of refund claim under Rule 5.

M/s. Jakhau Salt Company Private Limited, M/s. Bharat Salt Refineries Limited Versus The Commissioner of G.S.T. and Central Excise Chennai South Commissionerate

M/s. Jakhau Salt Company Private Limited, M/s. Bharat Salt Refineries Limited Versus The Commissioner of G.S.T. and Central Excise Chennai South ... Issues:Denial of rebate of Service Tax paid on services used in the export of salt.Analysis:Issue 1: Denial of rebate of Service TaxThe only issue in this case is the denial of rebate of Service Tax paid on services used in the export of salt. The appellants claimed rebate under Notification No. 41/2012-S.T. The Adjudicating Authority denied the rebate stating that the conditions of the Notification were not fulfilled. The First Appellate Authority partially confirmed the denial and remanded the issue for re-adjudication. The appellants argued that the objective is to exempt exports from taxes, and they had exported goods, used services for exports, and paid applicable Service Tax. They relied on various decisions to support their claim. However, the lower authorities found that the conditions were not met, and the appellants did not participate effectively in the adjudication process.Issue 2: Interpretation of beneficial NotificationsThe Tribunal referred to the Supreme Court decision in Commissioner of Cus. (Import), Mumbai v. Dilip Kumar & Company, emphasizing that beneficial Notifications must be strictly interpreted. Unless the claimant satisfies the conditions of such Notifications, they are not eligible for the benefits. The Tribunal noted that the appellants failed to provide necessary evidence or participate adequately in the proceedings, leading to the denial of the rebate.Issue 3: Refund of CENVAT CreditThe appellants argued that if not eligible for the Notification benefit, they should receive a refund of CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004. The Tribunal acknowledged that legal grounds can be raised at any time, but due to the appellants' non-participation, the lower authorities did not examine the refund claim under Rule 5. Therefore, the issue was remanded to the Adjudicating Authority for further examination. The appellants were directed to cooperate and assist in the process within a specified timeframe.Conclusion:The Tribunal set aside the impugned orders and remanded the cases to the Adjudicating Authority for re-examination of the refund claim under Rule 5 of the CENVAT Credit Rules. The appellants were instructed to participate fully in the process. The appeals were disposed of accordingly.---