2026 (2) TMI 1010 - AT - Service Tax

Refund of CENVAT credit: remand ordered for verification of FIRCs and bank records before refund decision.

Eligibility for refund of unutilised CENVAT credit under Rule 5 is affirmed subject to documentary proof linking input services to exported output ... Refund of unutilised CENVAT credit under Rule 5 - definition of input services and 'used in or in relation to' - nexus between input services and exported services - Rule 14 recovery procedure vis-a -vis refund under Rule 5 - relevant date and limitation for refund u/s 11B - acceptance of FIRC or certified bank statement as proof of receipt of foreign exchange - procedural defects in invoices/debit notes not ipso facto fatal to refund claim - HELD THAT:- As per Rule 14, it clearly mandates that in case of irregular availment of credit or its utilization, such credit can be recovered from the assessee and for effecting the recoveries, provisions of Section 11A of the Central Excise Act, 1944/Section 73 of the Finance Act, 1944 shall apply and not while considering the refund claim under Rule 5 of the proceedings. The issue is squarely covered by the Tribunal in the matter of Qualcomm India Pvt Ltd Vs. Commr. of Cus. [2019 (8) TMI 1645 - CESTAT HYDERABAD]. As regarding rejection of refund claim alleging non submission of invoice, we find that on perusal of the debit note submitted by the appellant, and details being available in the invoices refund cannot be rejected on such procedural issues. As regarding the finding limitation we find that no such contention made by the adjudication authority or in the show cause notice, further as per the finding in the impugned order it is specifically stated that refund claim was submitted on 30.11.2009 for the period for April 2009 to September 2009 and adjudication authority specifically held that the claim is filed within the time limit in terms of the section 11B of the Central Excise Act, 1944 made applicable to service tax under Section 83 of the Finance Act, 1944. As regarding the finding related to improper of address in some documents, the issue was considered by this Tribunal in the matter of M/s Nexus Engineers vs CCE & GST, Lucknow [2024 (2) TMI 562 - CESTAT ALLAHABAD], where the refund was denied on the ground that the invoices against which the Appellant taken the credit was not addressed to the registered premises of the Appellant and it was held that the issue is no more res integra as it was decided that for claiming the benefit of inputs services it is not necessary that the invoices being addressed to the registered premises of the Appellant. Thus, the appellant is eligible for the refund as claimed by them, however, it is necessary to prove that the refund claimed by the appellant on the input services are utilized in the output services which are being exported for which foreign inward remittances are received. We, therefore, find that the matter needs to be remanded to verify the same. It is also to be noted that vide letter dated 12.03.2009 the Board has clarified that in cases were bank do not issue FIRCs, refund may be allowed on the basis of duly certified bank statement. Accordingly, the bank statements in lieu of FIRCs can also be accepted for the purpose of sanctioning the refund claims. Appeal is allowed by way of remand only for the limited purpose of verifying the FIRCs. Issues: (i) Whether the appellant is eligible for refund of unutilised CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 in respect of input services used in exported services; (ii) Whether the matter should be remanded for verification of FIRCs/bank documents correlating exports with receipt of foreign inward remittances.Issue (i): Eligibility for refund of unutilised CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004.Analysis: The relevant statutory framework includes Rule 5 and Rule 14 of the CENVAT Credit Rules, 2004, Rule 2(l) (definition of input services), Notification No. 5/2006-C.E. (N.T.) dated 14.03.2006 and its amendment by Notification No. 7/2010-C.E. (N.T.) dated 27.02.2010, Section 11B of the Central Excise Act, 1944 and clarificatory Circular/letter regarding a simplified refund scheme. Rule 14 prescribes recovery procedure and does not provide a ground to deny refund under Rule 5. The amended scheme and departmental clarifications permit refund of duties/taxes paid on input services in the ratio of export turnover to total turnover and relax strict correlation requirements, allowing indirect use to qualify. Documentary evidence produced by the appellant (debit notes, CA certificate) and Tribunal precedents treating invoice/address defects and procedural noncompliances as not fatal were considered.Conclusion: The appellant is eligible for refund under Rule 5 subject to satisfaction of documentary proof linking the input services to exported output services and the applicable temporal limit under Section 11B; denial of refund on grounds of alleged irregular availment recoverable under Rule 14 or on procedural invoice/address defects is not sustainable.Issue (ii): Whether the appeal should be remanded for verification of FIRCs/bank documents.Analysis: The appeal record shows FIRCs and related export documents are central to establishing the relevant date and entitlement to refund. The Tribunal found that some documents require verification and that certified bank statements may be accepted in lieu of FIRCs per Board guidance. Given factual issues on correlation between debit notes, FIRCs and export receipts, limited remand for verification and opportunity to the appellant to produce/clarify records is appropriate.Conclusion: The appeal is allowed in part by remanding the matter to the adjudicating authority for verification of FIRCs/bank statements and related documents and for granting the appellant opportunity to produce records; on such verification the entitlement to refund is to be decided in accordance with Rule 5 and applicable provisions.Final Conclusion: The Tribunal affirmed the appellant's substantive entitlement to claim refund under Rule 5 subject to documentary verification and procedural compliance, and therefore remitted the matter for limited factual verification of FIRCs/bank documents rather than finally adjudicating the refund claim.Ratio Decidendi: Recovery procedure under Rule 14 does not justify denial of refund under Rule 5; entitlement to refund under the amended Rule 5/notifications depends on qualification as input services and satisfaction of documentary proof linking exports with receipt of foreign exchange, and procedural invoice/address defects are not determinative where sufficient corroborative evidence exists.