TaxTMI 
TaxTMI 
2015 (3) TMI 346
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....014, nearly 192 cases were listed for hearing after examination by the registry and identification of these cases as the one involving the issue relating to refund of CENVAT credit under Rule 5 of CENVAT Credit Rules 2004. 2. To facilitate proper discussion in the Court and submissions and also to speed up the process, a notice was issued by the Tribunal on 12.09.2014 which reads as under: IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, BANGALORE Date: 12.9.2014 NOTICE Nearly 195 cases have been listed for hearing on 17th September 2014 as batch cases. The issue involved according to officers who have put together the cases for hearing is the refund claims under Rule-5 of CENVAT Credit Rules. It is quite possible that some of the refunds may not be under Rule-5 and would have got included by mistake. Such cases will not be heard and will be posted for subsequent date in due course. 2. When the refund claims by purchasers of flats were considered, a note had been circulated by this Tribunal. This time also all the counsels as well as authorized representatives are requested to come prepared to argue on the following issues and also t....
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....dentified and that may be raised during the course of hearing. After considering the submissions it was decided that a separate order identifying common/legal issues and rendering decisions on this issues will be passed and thereafter individual appeals will be taken up treating the matters as part head in the coming days. 5. Thereafter the issues were taken up. 6. Since the issue involves the refund under Rule 5 of CENVAT Credit Rules, and the notifications issued there under, it would be appropriate to reproduce the relevant rules and notification before we proceed further since the same would be referred and discussed. "Refund of CENVAT credit. Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of. (i) duty of excise on any final product cleared for home consumption or for export on p....
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....rances of final products or the output services in value terms is fifty percent or more of the total clearances of final products or output services, as the case may be, in the preceding quarter; or (b) the claim is filed by Export Oriented Unit, the claim for such refund may be submitted for each calendar month. 3. The manufacturer or provider of output service, as the case may be, submits an application in Form A annexed to this notification (Not printed) to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, in whose jurisdiction,- (a) the factory from which the final products are exported is situated, along with the Shipping Bill or Bill of Export, duly certified by the officer of customs to the effect that goods have in fact been exported; or (b) the registered premises of the service provider from which output services are exported is situated, along with a copy of the invoice and a certificate from the bank certifying realization of exports proceeds. 4. The refund is allowed only in those circumstances where a manufacturer or provider of output service is not in a position to utilize the input credit o....
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....ed in the notification. However, rule 5 of CCR still need to be amended to give effect to the amendments. In exercise of the powers conferred by rule 5 of the CENVAT Credit Rules, 2004 (Hereinafter referred to as the 'said rules'), the Central Government hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), number-Central Excise (N.T.), dated the 14th March, 2006, published vide number G.S.R.156(E), dated the 14th march, 2006, namely:- In the said notification, in the Annexure, in Form 'A',- (i) in the portion beginning with the brackers, letter word "(a) on" and ending with the word "undertaking", for the words "used in or in relation to" shall be substituted; (ii) in the portion beginning with the brackers, letter and word "(b) on" and ending with the words "service tax", for the words "used in", the words "used for" shall be substituted; (iii) the portion beginning with the brackets and letter "(A)" and ending with the brackers, letter and words "(b) Output Services-", and portion beginning with the brackets and letter (B) and ending with the brackers, letter ....
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....INANCEDEPARTMENT OF REVENUE NEW DELHI Dated: June 4, 2010 In the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. -Central Excise (Non Tariff), dated the 27th February, 2010 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 123 (E), dated the 27th February, 2010, at page 60, in line 18, for "(b) Import Services", read "(b) Input Services". [F. No.334/1/2010-TRU] (K S V V Prasad) Under Secretary to the Government of India 6.1 Issue No. 1: Whether refund under Rule 5 of CENVAT Credit Rules would be admissible when there was no notification issued prescribing safeguards, conditions and limitation to be fulfilled by issue of a notification by the Government. The notification was actually issued on 14.03.2006. In some of the cases before us, the refund claims would have been rejected on the ground that the Notification 5/2006 had used the word 'used in' whereas the claim for the refund arose on the ground that such input services had been used directly or indirectly and the claim of the trade was that input service definition was an inclusive definition and ....
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....to be considered as factory gate and therefore several services including GTA services, have been considered to be not input services at all and eligibility of CENVAT credit has been denied and refund also has been denied. There are several decisions which have been taken subsequent to 2006 wherein the Tribunal has taken a view that wherever exports have taken place on FOB basis, the place of removal has to be considered as port/airport/land customs station. Therefore once place of removal is taken as port/airport/land customs station all the services utilized up to the stage would become eligible for refund under Rule 5 of the balance of CENVAT credit. 6.3. Issue No. 3: Whether CENVAT credit can be refunded under Rule 5 when there was no notification prior to 14.03.2006. It was submitted by the authorized representatives of the department that the Rule clearly provided that the manufacturer or the provider of output services shall be allowed refund of such amount subject to safeguards, conditions and limitations, as may be specified, by the Central Government by notification. On this ground it was submitted that the benefit could not be allowed since there were several safeg....
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....t during that time the rule itself did not provide for refund of credit in respect of input services. 6.4. Issue No. 4: There is also another stand taken by the Revenue that in respect of 100% EOUs, the CENVAT credit cannot be taken at all since the finished goods are exempt. However after 10.09.2004, CENVAT Credit Rules have been amended to provide for availment of CENVAT credit by 100% EOUs also and thereafter no refund claims can be rejected on this ground. In our opinion after 10.09.2004 CENVAT credit cannot be denied on the ground that unit availing the credit is a 100% EOU. Further we also take note of the fact that Circular No. 54/2004-Cus. dated 13.10.2004 also clarifies that credit can be taken by 100% EOUs. 6.5. Issue No.5: The activity of provision of service is in India and therefore the claim for refund on the ground that service has been exported cannot be accepted. In some services especially business auxiliary service, some of the assessees in India rendered services to the principals abroad by undertaking sales promotion and marketing of their goods. The question arises whether it may be said that there is an export of service in such cases. No doubt re....
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....t Rules, 2004 as:- "Input services" means any service - (i) used by a provider of taxable service for providing an output service: or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and included services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal.' On true and fair construction of Rule 2(1), insofar as is relevant to the facts on hand, it is clear that any service used by the provider of a taxable service for providing an output service including services used in relation to the setting up, modernisation, ren....
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.... case of Maruti Suzuki Ltd. (supra), we hold that the services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2(1) of 2004 Rules". At this juncture learned A.R. submitted that the decision in the case of Telco Construction Equipment Ltd [2013 (32) STR 482 Tri-Bang] should be considered and he submits that in this decision, the Tribunal had taken a view that several services may not be considered as input services and he also submits that this decision considers almost all the precedent decisions on the issue. However, we take note of the fact that after the matter was referred to third Member, the Tribunal came to the conclusion that the matter should be remanded to enable the appellant to establish integral connection between the service and the business of manufacture of final product, it is nobody's case that there is no need to establish the relation between the input services and the business of manufacture. This is precisely the conclusion that has been arrived at by the Hon'ble High Court of Bombay in the case of Ultratech referred to (s....
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....red to be established. It is definitely possible for the proper officer considering the refund claim to verify the documents produced and come to the conclusion whether foreign remittances in respect of exports made have been received or not. If there is difficulty, they can definitely seek clarification. If it is found that claimant is misleading the department, Investigations can be taken up. If there is misdeclaration or mala fide, proceedings can be initiated. 6.8. Issue No.8: Can clearance to a 100% EOU be considered as export? After hearing both sides, we find that this issue is no longer res integra and is covered by the decision in the case of NBM Industries [2012 (276) ELT 9 Gujarat] & Shilpa Copper Wire Industries [2011 (269) ELT 77 Gujarat.] Therefore, we consider th at wherever this issue is involved, the authorities sanctioning the refund would follow these decisions. 6.9. Issue No.9: Proof of payment of service tax. In some cases, the authorities sanctioning the refund are insisting that the claimant should produce proof of payment of service tax by the service provider. It was also mentioned during the course of hearing that in one of the cases, the Reven....
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....ument have been received and accounted for in the books of the account of the receiver, he may allow the Cenvat credit. We find that the assessees are also making mistake of not filing application seeking consideration of their claim by applying provisions of Rule 9(2) of the Cenvat Credit Rules 2004 and the departmental authorities also have refused to consider during the course of appeal. Wherever documents are defective but these requirements are the ones which are not mandatory as per the provisions of Rule 9 of CCR, 2004 or defects are held to be curable by precedent decisions cited before the original adjudicating authority, in our opinion, such claims have to be considered by applying provisions of Rule 9(2) instead of rejecting the claims outright. We also advise the assessees wherever such requests have not been made, they may make such requests and the authority can consider such requests and thereafter, process the refund claim. As regards defects which are not covered by Rule 9(2), in the absence of any specific decision or a general ruling taking a view that all defects are curable, at this stage, it has to be considered on case to case basis and a view has to be ta....
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.... prior to amendment. Therefore, decisions in cases where credit has been denied or refund has been denied on the ground that export is not made under Bond or Letter of Undertaking cannot be sustained. 6.13. Issue No.13: Cenvat credit without registration. We take note of the fact that even in the case of rejection of refund on the ground that appellant is not registered with the Service Tax department, Hon'ble High Court took a view that even if unit is not registered, credit would be admissible. Provisions of Rule 3 of Cenvat Credit Rules, 2004 show that credit can be taken by a manufacturer or a provider of output service and there is no requirement of registration under Rule 3 of the CCR, 2004 at all. 6.14. Issue no. 14: Taxability of output and admissibility of Cenvat credit. Further when we consider Rule 5 of Cenvat Credit Rules, without consideration of any case law or any decision, it appears that there may not be any such restriction that output service or goods should be taxable. In fact, Rule 5 uses the clause "where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as th....
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....e applied. The answer is that if a provision or a clause in the notification is in excess of powers granted for issue of notification or amending a rule or for any other purpose, the remedy is under Article 226 of the Constitution or Article 32 of the Constitution and therefore, the Tribunal can only see whether notification or rule or act and whether those provisions have been followed or not and cannot go into correctness or virus of a provision of a rule or notification. Therefore, we have to apply the notification and only if there is ambiguity, we may have to resort to interpretation but not when the notification is clear. There is no dispute on meaning of words used in this clause and it would be inappropriate to take the view advanced before us that this provision should be ignored or not applied. Moreover, as submitted by learned A.R., notifications are to be placed before the Parliament and they have to be approved. That being the position, it cannot be said that the legislature is not aware of such notification and therefore, it is also to be held that notification has also been approved by Parliament. We also take note of the fact that Hon'ble Supreme Court has taken....
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.... done. Therefore, provisions of Section 11B for the purpose of limitation would be applicable. Moreover, it is settled law that while interpreting notification or statute, it is necessary to interpret in such a manner that the relevant clause or the provision does not become OTIOSE. If the submission made be learned counsel on behalf of the appellants that Section 11B would not be applicable at all, we would be rendering the clause relating to Section 11B in the notification totally irrelevant for the purpose of refund. In view of this reason, this submission cannot be accepted. 6.16. Issue No.16: Method for calculation of relevant date. Next question arises is how to apply Section 11B for calculating limitation. The Hon'ble High Court C.C.E. vs. GTN Engineering (I) Ltd. [2012 (28) S.T.R. 426 (Mad.)] has taken a view that in such cases, the date of export of goods would be relevant date for arriving at the relevant date. Learned counsel on behalf of the appellants relied upon 3 decisions of various High Courts wherein a view was taken that there is no limitation for the purpose of refund of accumulated credit under Rule 5 of the Cenvat Credit Rules, 2004. One of the....
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....ndix read with Section 11B ibid but was filed late by 27 days could not have been made the sole ground for the rejection of application as barred by limitation. In fact, the claim in question did not fall strictly within the four comers of Section 11B but it essentially fell within the four corners of Clause 6 of Appendix to notification issued under Rule 57F." In the decision rendered in the case of GTN Engineering (i) Ltd. [2012 (28) S.T.R. 426 (Mad)], Hon'ble Madras High Court considered this issue in great detail and provisions were cited and considered. Being a judgment which was delivered later and considered all the relevant statutory provisions, in our opinion, it would be appropriate to follow the decision of the Hon'ble High Court of Madras than Hon'ble High Court of Jharkhand cited supra. Another decision cited by learned counsel on behalf of the assesses is the decision rendered by Hon'ble High Court of Gujarat in the case of Commissioner of C. Ex. & C. Surat-I vs. Swagat Synthetics (2008 (232) E. L T. 413 (Guj.)]. This decision was considered by Hon'ble High Court of Madras in the case of Commissioner of C. Ex., Coimbatore vs. GTN Engineering ....
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..... We may point out that when a statute empowered for such claim, the said provision must be read to find out as to the relevant date. Rule 5 specifies that "where any input or input service is used in the manufactures of final produce which is cleared for export under bond or later of undertaking as the case may be, or used in the intermediate product cleared for export or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed." 15. A reading of the above rule, though there is no specific relevant date is prescribed in the notification, the relevant date must be the date on which the final products are cleared for export. If any other conclusion is arrived, It will result in disentitling any person to make a claim of refund of CENVAT credit. Admittedly, the respondent has made a claim only invoking Rule 5 of the CENVAT Credit Rules, 2004. In that view of the matter, there cannot be any difficulty for us to hold that the relevant date should be the date on which the export of the goods was made and for such goods, refund of CENVAT credit is claimed." Learned A.R. on behalf of the Revenue relied up....