2023 (6) TMI 311 - AT - Service Tax

Tribunal clarifies Cenvat credit rules for refund eligibility, overturns rejection orders

The Tribunal allowed the appellant's refund claim for accumulated Cenvat credit on input services under Rule 5, emphasizing that denial of credit can only ... Refund of Cenvat credit - Business Support Services - export of output service - denial of refund on the ground that Rule 14 of Cenvat Credit Rules, 2004 has not been invoked while rejecting the refund claim - HELD THAT:- In the matter of BNP Paribas India Solution Pvt. Ltd. [2021 (12) TMI 676 - CESTAT MUMBAI] this Tribunal while allowing the appeal of the assessee therein allowed the refund claim u/s. 5 ibid by holding that since the provisions of Rule 14 ibid has not been invoked, the refund of Cenvat credit as claimed by the Appellant under Rule 5 ibid cannot be denied. It is settled legal position that in absence of any notice for recovery as provided by Rule 14 ibid the refund claimed by the assessee under Rule 5 cannot be denied. The decision of the Tribunal in the matter of Qualcomm India Pvt. Ltd. [2019 (8) TMI 1645 - CESTAT HYDERABAD] has been affirmed by the Hon’ble High Court of Hyderabad in [2021 (11) TMI 72 - TELANGANA HIGH COURT] by dismissing the appeals filed by the revenue against the aforesaid decision of Tribunal. The authorities below have erred in rejecting the refund claim of the appellant. Accordingly the impugned orders are set aside and the appeals filed by the appellant are allowed. Issues Involved:The issue involves challenging Orders-in-Appeal regarding the refund of Cenvat credit, specifically whether refund can be denied under Rule 5 without invoking Rule 14 of the Cenvat Credit Rules, 2004.Comprehensive Details:The appellant, engaged in providing Business Support Service exported outside India, filed refund claims for accumulated Cenvat credit on input services. The Adjudicating Authority partially allowed the claims but rejected a portion. The Commissioner (Appeals) upheld the rejection for some services, leading to the current appeals.The appellant argued that Rule 14 was not invoked while rejecting the refund claim, citing relevant case law. The Tribunal, in a similar case, allowed the refund claim under Rule 5, emphasizing that denial of Cenvat credit can only be done through Rule 14, not Rule 5. The Tribunal clarified that Rule 5, post-amendment, does not require establishing nexus between input and output services for refund eligibility.The Tribunal further highlighted that without invoking Rule 14, denying the refund under Rule 5 is impermissible. The High Court affirmed a similar Tribunal decision, reinforcing the legal position. Consequently, the Tribunal set aside the impugned orders, allowing the appeals and granting relief to the appellant in accordance with the law.