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of <h1>Manufacturers eligible for CENVAT credit refund under reverse charge mechanism and for exported exempted goods under Rule 5B</h1> <h3>M/s Royal Foodstuffs Private Ltd. Versus Commissioner of Central Excise, Customs & Service Tax, Kolhapur</h3> M/s Royal Foodstuffs Private Ltd. Versus Commissioner of Central Excise, Customs & Service Tax, Kolhapur - TMI Issues Involved:1. Eligibility of the appellant to be considered as an 'output service provider' under reverse charge mechanism.2. Eligibility for CENVAT credit for a manufacturer of goods with 'nil' tariff rate of duty.Summary:Issue 1: Eligibility as 'Output Service Provider' under Reverse Charge MechanismThe appellants, M/s Royal Foodstuffs Private Limited, registered for service tax on taxable services received under the Reverse Charge Mechanism (RCM) as per Rule 2(d) of the Service Tax Rules, 1994, claimed refunds of accumulated Cenvat credit under Rule 5B of Cenvat Credit Rules (CCR), 2004 read with Notification No.12/2014-C.E. (N.T.) dated 03.03.2014. The Commissioner (Appeals) upheld the rejection of these claims, concluding that Section 68(2) of the Finance Act, 1994, merely shifts the liability to pay tax to the taxpayer and does not qualify the appellant as an 'output service provider'. However, the Tribunal found that the appellants, having discharged service tax liability under reverse charge mechanism, are entitled to refunds under Rule 5B, as supported by previous Tribunal decisions and legal provisions.Issue 2: Eligibility for CENVAT Credit for Nil Tariff Rated GoodsThe Commissioner (Appeals) denied Cenvat credit on the ground that the appellants, being manufacturers of goods with a 'nil' tariff rate of duty, were not eligible for credit. However, the Tribunal referenced Rule 6(6)(v) of the Cenvat Credit Rules, 2004, which allows Cenvat credit for goods cleared for export without payment of duty. The Tribunal also cited the Bombay High Court judgment in Union of India Vs. Sharp Menthol India Limited and the Supreme Court decision in Commissioner of Central Excise, Chandigarh Vs. Drish Shoes Ltd., confirming that manufacturers exporting goods under bond are eligible for Cenvat credit.Conclusion:The Tribunal concluded that the appellants are eligible for a total refund of CENVAT credit amounting to Rs. 12,65,459/-. The impugned order dated 29.09.2015 was set aside, and the appeal was allowed in favor of the appellants with consequential relief.(Order pronounced in open court on 22.04.2024)
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