2024 (8) TMI 1203 - AT - Central Excise

EOU wins Rs 48 lakh CENVAT credit refund as technical invoice lapses cannot deny substantive benefits

Commissioner of Central Excise-Delhi-III Versus Hollister Medical India Pvt Ltd

CESTAT Chandigarh dismissed Revenue's appeal against 100% EOU's refund claim of Rs.48,38,722 accumulated CENVAT credit. Revenue challenged refund ... 100% EOU - refund of accumulated CENVAT Credit - refund claim rejected because the Respondent has not complied with the conditions prescribed in Notification No. 5/2006-CE(NT) dated 14.03.2006 issued under Rule 5 of Cenvat Credit Rules, 2004 - Applicability of National Litigation Policy - HELD THAT:- As per the submission of the learned Counsel for the Respondent, the amount of refund involved in the present appeal is totally amounting to Rs.48,38,722/- is below the monetary limit as prescribed under instructions dated 22.08.2019 issued by the CBIC; whereas the submission of the learned AR for the Revenue is that the Department has challenged the entire impugned order and therefore, the case is not covered under National Litigation Policy. After considering the submissions of both the parties, it is decided to decide the present appeal against the impugned order in its entirety without going into the question of National Litigation Policy. The terms of ‘input service’ as defined under Rule 2(l) of the Cenvat Credit Rules, 2004 uses terms ‘means’ and ‘includes’ in the definition. First leg of the definition i.e. the 'means' portion would cover every service used directly or indirectly, in or in relation to manufacture of final products and clearance of final products from the place of removal and the 'inclusive’ part is illustrative and certainly is not exhaustive. Each of the input service involved in the present case has been held to be ‘input service’ in view of the various decisions relied upon by the Respondent - the eligibility of Cenvat Credit cannot be questioned in refund proceedings in view of the decision in the case of COMMISSIONER, SERVICE TAX COMMISSIONERATE VERSUS M/S HCL COMNET SYSTEM & SERVICES LTD., NOIDA [2017 (12) TMI 1661 - ALLAHABAD HIGH COURT]. As regards the refund in respect of the invoices addressed to the corporate office at Gurgaon instead of manufacturing premises, it is found that it is only a technical lapse and substantive benefits cannot be denied for procedural irregularities. There is no infirmity in the impugned, the same is upheld - appeal of Revenue dismissed. Issues Involved:1. Sustainability of the impugned order.2. Compliance with Notification No. 5/2006-CE(NT) dated 14.03.2006.3. Filing of refund claims for the appropriate period.4. Utilization of accumulated Cenvat Credit.5. Eligibility for Cenvat Credit on input services.6. Address on invoices for input services.7. Applicability of National Litigation Policy.8. Admissibility of Cenvat Credit on various input services.9. Interpretation of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004.10. Relevance of prior judgments and principles of res judicata.11. Procedural irregularities in addressing invoices.Issue-Wise Detailed Analysis:1. Sustainability of the Impugned Order:The Revenue contended that the impugned order was not sustainable as it was passed without properly appreciating the facts and the law. However, the Tribunal found no infirmity in the impugned order and upheld it by dismissing the Revenue's appeal.2. Compliance with Notification No. 5/2006-CE(NT) dated 14.03.2006:The Revenue argued that the refund claim was rightly rejected because the Respondent did not comply with the conditions prescribed in the said notification. The Tribunal, however, did not find merit in this argument and upheld the Respondent's compliance with the notification.3. Filing of Refund Claims for the Appropriate Period:The Revenue submitted that the Respondent filed the refund claim for eleven months instead of each calendar month as required. The Tribunal did not find this argument sufficient to overturn the impugned order.4. Utilization of Accumulated Cenvat Credit:The Revenue argued that the Respondent was required to utilize the accumulated Cenvat Credit for home consumption or for export on payment of duty. The Tribunal found that the Respondent was entitled to a refund under Rule 5 of the Cenvat Credit Rules, 2004.5. Eligibility for Cenvat Credit on Input Services:The Revenue contended that the Respondent was not entitled to take Cenvat Credit on various input services as they were not used directly or indirectly in the manufacture of the final product. The Tribunal found that the input services in question fell within the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004.6. Address on Invoices for Input Services:The Revenue argued that invoices for Management & Business Consultant Services and Chartered Accountant Services were in the name of the corporate office instead of the manufacturing premises. The Tribunal held that this was a technical lapse and substantive benefits could not be denied for procedural irregularities.7. Applicability of National Litigation Policy:The Respondent argued that the appeal was not maintainable under the National Litigation Policy due to the low amount involved. The Tribunal decided to address the appeal on its merits without delving into the National Litigation Policy.8. Admissibility of Cenvat Credit on Various Input Services:The Tribunal noted that the admissibility of Cenvat Credit on various input services had already been decided in the Respondent's favor in prior cases. Principles of res judicata applied, and the issue could not be reopened.9. Interpretation of 'Input Service' under Rule 2(l) of the Cenvat Credit Rules, 2004:The Tribunal emphasized that the definition of 'input service' under Rule 2(l) uses the terms 'means' and 'includes,' which widens its scope. Services used directly or indirectly in relation to the manufacture of final products are covered under this definition.10. Relevance of Prior Judgments and Principles of Res Judicata:The Tribunal observed that the issue of Cenvat Credit on input services had been conclusively decided in the Respondent's favor in previous judgments. Therefore, the matter could not be reopened unless new material emerged.11. Procedural Irregularities in Addressing Invoices:The Tribunal held that procedural irregularities, such as the address on invoices, could not be a ground to deny substantive benefits like Cenvat Credit.Conclusion:The Tribunal found no infirmity in the impugned order and dismissed the Revenue's appeal, thereby upholding the Respondent's entitlement to the refund of Cenvat Credit on input services. The cross-objection was also disposed of accordingly.