CENVAT reversal and SEZ authorised operations support refund entitlement despite procedural list-based objections.

Reversal of CENVAT credit before filing the refund claim was treated as equivalent to non-availment, so the assessee was not disentitled to refund under Notification No. 12/2013-ST. The rejection based on alleged credit availment was therefore unsustainable and was set aside. For SEZ refunds, services used for authorised operations under the Special Economic Zones Act, 2005 could not be denied merely because they were omitted from the Unit Approval Committee list, where they formed part of the Development Commissioner's default list. The special SEZ law prevailed over inconsistent procedural conditions in the general notification, and the refund rejection was set aside.

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Issues: (i) Whether reversal of CENVAT credit in the subsequent return period amounts to non-availment so as not to disentitle refund under Notification No. 12/2013-ST; (ii) whether refund under the SEZ exemption can be denied merely because the input services were not reflected in the Unit Approval Committee list, when they were used for authorised SEZ operations and were covered by the Development Commissioner's default list.

Issue (i): Whether reversal of CENVAT credit in the subsequent return period amounts to non-availment so as not to disentitle refund under Notification No. 12/2013-ST.

Analysis: The credit initially reflected in the returns was reversed before the refund claim was filed. Reversal was treated as equivalent in law to non-availment of credit. The option in paragraph 5 of Notification No. 12/2013-ST is not attracted where the credit is not retained, and the authorities cited on conscious dual benefit were held inapplicable to an inadvertent availment followed by prompt reversal.

Conclusion: The refund rejection on the ground of CENVAT credit availment was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether refund under the SEZ exemption can be denied merely because the input services were not reflected in the Unit Approval Committee list, when they were used for authorised SEZ operations and were covered by the Development Commissioner's default list.

Analysis: The SEZ statute was applied as the governing special law. Exemption for taxable services used for authorised operations was held to flow from Section 26 of the Special Economic Zones Act, 2005, with Section 51 giving overriding effect over inconsistent requirements in general tax notifications. Rule-based conditions and procedural approval requirements could not override the statutory entitlement where the services were used for authorised operations and were covered by the default list. The absence of a service from the UAC-approved list, by itself, was held not to be a valid ground for denial.

Conclusion: The refund rejection based on non-inclusion in the UAC-approved list was unsustainable and was set aside in favour of the assessee.

Final Conclusion: The impugned orders were set aside and the refund appeals were allowed, with the assessee's SEZ refund entitlement recognised on the merits of both grounds.

Ratio Decidendi: Reversal of CENVAT credit before filing a refund claim is equivalent to non-availment, and statutory SEZ exemption for authorised operations cannot be denied on the basis of procedural or list-based conditions in a general notification where the special SEZ law governs.

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