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

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