2024 (11) TMI 207 - AT - Service Tax

Addendum to show cause notice after six months valid, Cenvat credit refund allowed despite procedural lapses

Times Content Limited Versus Commissioner of Central Excise and CGST, New Delhi

CESTAT NEW DELHI held that issuance of an addendum to show cause notice after six months was legally valid, citing precedent that deficient notices can be ... Issuance of an Addendum/Corrigendum to the Show Cause Notice (SCN) after a six-month gap - HELD THAT:- The initial notice was issued to deny the appellant’s claim for refund for non-fulfilment of the conditions of the Notification. The said addendum dated 14.10.2019 further supplements the allegations contained in the original show cause notice, stating that the formula for calculating the refund amount was not fulfilled. We note that in the case of Gwalior Rayon Mfg. (Wvg.) Co [1982 (4) TMI 68 - HIGH COURT OF M.P. AT JABALPUR] held that merely because necessary particulars have not been stated in the show cause notice, it could not be a valid ground for quashing the notice, because it is open to the petitioner to seek further particulars, if any, that may be necessary for it to show cause if the same is deficient. Therefore, we hold that there is no legal infirmity in the issuance of addendum in this regard. Refund of accumulated Cenvat credit availed on export of services - appellant had failed to provide supporting documents in relation to the payment received during the relevant period, hence the refund claim was being rejected - whether the appellant has fulfilled the conditions of the Notification No. 27/2012-CE (NT) dt 18.06.012 as amended by Not. No. 14/2016-CE (NT) dated 1.03.2016? - HELD THAT:- In Mangalore Chemicals and Fertilizers Ltd [1991 (8) TMI 83 - SUPREME COURT] held that the procedural infraction of Notification, Circulars etc., are to be condoned, if exports have already taken place and the law is settled now that substantive benefit cannot be denied for procedural lapse. Similarly, in the decision in the case of Agio Pharmaceuticals Limited [2013 (6) TMI 686 - GOVERNMENT OF INDIA] the Government held that there is no dispute of duty or export of duty of goods registered in warehouse under Rule 9 of Central Excise Rules, 2002. Goods were cleared from factory under Central Excise supervision and ARE-1 signed by both partners endorsed by Customs and the Central Excise authorities stated that the goods exported, shipping bills and substantial conditions of Notification No. 19/2004- CE (NT), dated 06.09.2004 and Rule 18 of Central Excise Rules, 2002 were complied with. Rebate cannot be denied for minor procedural infraction. In the instant case, it is established that broadcast services were exported. Thus, we hold that there is no reason for denying the refund on minor procedural infractions. However as the relevant documents were not submitted before the original authority, we hold that this matter needs to be remanded, giving an opportunity to the appellant to produce all the relevant and supporting documents before the original adjudicating authority to satisfy the remaining condition of the notification. Refund of Swachh Bharat Cess to the appellant - We note that the issue is no more res integra in view of the decision of this Tribunal in State Street Syntel Services Pvt., Ltd. [2019 (6) TMI 859 - CESTAT MUMBAI] wherein while discussing Section 119 of the Finance Act, 2015 and various other case laws, held that the Swachh Bharat Cess paid on input services has to be available as Cenvat Credit and the same can be discharged by utilizing Cenvat Credit and the appellant therein are entitled for refund of it. Consequently, we hold that the appellant cannot be denied the refund of what is allowed to them statutorily, merely on the grounds that they have submitted a letter to the Department for not pressing the same. Issues Involved:1. Validity of Addendum/Corrigendum to Show Cause Notice (SCN).2. Application of refund formula for 100% exporters.3. Eligibility for CENVAT credit refund despite procedural lapses.4. Refund of Swachh Bharat Cess.Detailed Analysis:1. Validity of Addendum/Corrigendum to Show Cause Notice (SCN):The appellant challenged the issuance of an Addendum/Corrigendum to the SCN six months after its initial issuance, arguing it constituted an afterthought and was not legally valid. The tribunal noted that the issuance of an addendum to the SCN is permissible as it supplements the original notice. Citing the case of Gwalior Rayon Mfg. (Wvg.) Co. Vs. UOI, the tribunal held that the absence of necessary particulars in the original SCN does not invalidate it, as further particulars can be sought by the appellant. Therefore, the tribunal found no legal infirmity in the issuance of the addendum.2. Application of Refund Formula for 100% Exporters:The appellant argued that the formula for refund calculation under Rule 5 of the CENVAT Credit Rules, 2004, was not applicable as they were a 100% exporter. The appellant contended that the formula should not restrict the refund of tax paid on input services since their entire turnover pertains to export services. The tribunal noted the appellant's claim that the Department's application of the formula led to the denial of rightful refunds in quarters with no export receipts. The tribunal agreed that substantive benefits cannot be denied for procedural infractions and held that the appellant's claim should not be rejected solely due to early submission. The tribunal emphasized that procedural requirements are intended to facilitate verification and should not obstruct substantive rights.3. Eligibility for CENVAT Credit Refund Despite Procedural Lapses:The tribunal observed that the appellant had satisfied all conditions except providing supporting documents for payments received during the relevant period. The tribunal reiterated that substantive benefits should not be denied due to procedural lapses, citing the Supreme Court's decision in Mangalore Chemicals and Fertilizers Ltd Vs. Deputy Commissioner. The tribunal held that the denial of the refund on procedural grounds was unjustified and remanded the matter to allow the appellant to submit relevant documents to the adjudicating authority.4. Refund of Swachh Bharat Cess:The appellant claimed a refund of Swachh Bharat Cess, which was initially agreed to be withdrawn under departmental insistence. The tribunal noted that the issue was settled in favor of the appellant in previous tribunal decisions, where it was held that Swachh Bharat Cess paid on input services is eligible for CENVAT credit and refund. Consequently, the tribunal ruled that the appellant could not be denied the refund of Swachh Bharat Cess, despite their earlier letter to the Department.Conclusion:The tribunal set aside the impugned order and allowed the appeal by way of remand, providing the appellant an opportunity to present the necessary documents to substantiate their refund claim. The tribunal's decision reinforces the principle that procedural lapses should not obstruct the entitlement to substantive benefits, particularly in cases involving export incentives and credits.