Reverse-charge Cenvat credit remains valid on tax-payment challans, while export refund must follow quarterly eligible-credit formula.

Cenvat credit for service tax paid under reverse charge may be supported by TR-6 challans under Rule 9(1)(e), and a later provision concerning supplementary documents issued by output service providers does not govern such recipient credit. Refund under Notification No. 5/2006-C.E. (N.T.) must apply the export-turnover ratio to eligible credit earned during the relevant quarter, rather than to the closing credit balance. Where invoices are subsequently produced, their earlier non-production should not defeat substantive eligibility; the invoices require verification for compliance before consequential refund is granted.

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Issues: (i) Whether Cenvat credit and consequential refund could be denied for service tax paid under reverse charge on the basis of TR-6 challans by invoking Rule 9(1)(bb); (ii) Whether refund under Notification No. 5/2006-C.E. (N.T.) was required to be computed on gross eligible credit earned during the quarter rather than the closing balance; (iii) Whether refund could be rejected for non-production of invoices when the invoices were subsequently produced.

Issue (i): Whether Cenvat credit and consequential refund could be denied for service tax paid under reverse charge on the basis of TR-6 challans by invoking Rule 9(1)(bb).

Analysis: Rule 9(1)(e) of the Cenvat Credit Rules, 2004 recognises a challan evidencing service-tax payment by the person liable under reverse charge as a valid credit document. Rule 9(1)(bb) was introduced after the relevant refund period and, in any event, concerns supplementary invoices, bills or challans issued by a provider of output service; it did not govern credit availed by a recipient on TR-6 challans for tax paid under reverse charge.

Conclusion: Denial of refund relating to reverse-charge credit was unsustainable, in favour of the assessee.

Issue (ii): Whether refund under Notification No. 5/2006-C.E. (N.T.) was required to be computed on gross eligible credit earned during the quarter rather than the closing balance.

Analysis: The prescribed refund formula required application of the export-turnover ratio to the eligible Cenvat credit earned during the relevant quarter. Applying the ratio to the closing balance was inconsistent with that formula and resulted in excess rejection.

Conclusion: The computation-based rejection was unsustainable; refund must be recomputed on the eligible quarterly credit, in favour of the assessee.

Issue (iii): Whether refund could be rejected for non-production of invoices when the invoices were subsequently produced.

Analysis: The invoices were placed on record before the Tribunal. A technical lapse in their earlier production could not defeat substantive eligibility; verification of the invoices was required to determine compliance with statutory requirements.

Conclusion: The invoice-related claim was remitted for verification and consequential refund upon satisfaction of statutory requirements, in favour of the assessee.

Final Conclusion: The reverse-charge credit and the corrected refund computation were recognised, while the invoice-supported component requires departmental verification before consequential relief.

Ratio Decidendi: Credit validly availed on challans evidencing service-tax payment under reverse charge cannot be denied under a later-introduced provision governing supplementary documents issued by output service providers, and refund must follow the applicable statutory formula.

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