TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 346
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....ing 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 to come with relevant details so that the time taken for ....
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....s 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 payment of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible....
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....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 or input service credit allowed under rule 3 of the said rules against goods exported during the quarter or month to which the claim relates (hereinaft....
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....004 (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 and words "(b) Import Services" shall be omitted; (iv) after the heading "(D) ENCLOSURES:-", and the entries there under, the following shall be inserted, namely:- "(DD) The Exporter shall g....
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....) 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 further it has also used the word 'used for' for providing the output services. That being the position the rejection of refund claim on the ground that only when the services are used directly for providing output services refund would be available was not correct. However this issue is not required to be dealt ....
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....iew 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 safeguards and conditions and limitations which were prescribed in the notification issued subsequently which are not merely procedural but substantive in nature. In the absence of a notification, the benefit could not have been allowed since the conditions and safeguards were essential parts and they came to be introduced only subse....
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.... 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 remittance for consideration for the services rendered is received in foreign currency from the principal abroad. However, the stand has been taken by the Revenue that in such cases, the entire activity of sales, marketing promotions and after sales service/maintenance etc. takes place in India only and therefore it cannot be said that there ....
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....ation 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, renovation or repairs of the premises of the provider of output service or for an office relating to such premises, procurement of inputs, activity relating to business such as inter alia inward transportation of inputs or capital goods and output transportation to the place of removal, would constitute input service. "Input service" is defined as applicable ....
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....td [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 (supra). 6.7. Issue No.7: Foreign Inward Remittance Certificate. In certain cases, the lower authorities have taken a view that production of foreign inward remittance certificate by the claimant to claim refund is not sufficient. A certificate from the bank certifying that the amount in the invoice has been received specifically with reference to the invoice has ....
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....stigations 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 Revenue was insisting that the invoices should have been issued in terms of Rule 4A of Service Tax Rules by the foreign service provider. We consider that these are not requirements which are required to be fulfilled in the notification and we are sure the wiser counsel would prevail. In some cases, the authorities have insisted that the invoice for the input service and output s....
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....peal. 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 taken. Therefore, we do not propose to render a decision on this issue treating it as a common issue. 6.12. Issue No. 12: Rejection of refund claim on the ground that output service is not taxable. Learned A.R. on behalf of the Revenue submitted that refund is not admissible when output service is exempted and not taxable. However, several decisions were cited by learned counsels on beha....
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....partment, 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 the case may be, or used in the intermediate product cleared for export, or used for providing output service which is exported". In the case of manufacture of goods, there is a requirement that they should be exported under bond or Letter of undertaking and there is no requirement that they should be taxable. In the case of output service, there is neither such requirement that it should be taxable nor r....
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.... 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 a view that notification is part of statute and therefore we cannot say that it is beyond the power to incorporate a provision like this in the notification. Moreover, if the notification was to reproduce the provisions of section 11B of Central Excise Act without referring to the section, this objection could not have been raised at all. Another argument advanced was that Section 11B would not be applica....
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....e 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 decisions was rendered by Hon'ble High Court of Jharkhand in the case of Commissioner of Central Excise, Jamshedpur vs. Tata Motors Ltd. [2013 (296) E.LT. 7 (Jar.)]. In our view, this decision should not be taken into account in view of the facts that in that case, there was an order of disallowance of credit which had not become final and therefore, refund claim could not have been filed by the assessee at all. P....
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..... [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 (I) Ltd. (supra). In Swagat Synthetics case (supra), Hon'ble High Court of Gujarat took note of the decision in Paragraph 16 and observed that Rule 57F (13) of the Central Excise Rules, 1944 does not prescribe any time limitation. In the absence of such limitation, Hon'ble High Court of Gujarat also held that claim cannot be rejected on the ground of limitation. On this ground, Hon'ble High Court of Madras distinguis....
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....AT 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 upon the decision rendered by Hon'ble High Court of Andhra Pradesh in the case of S.K. Mahaboob Ali vs. Director General Police, C.R.P F., New Delhi [2005 (192) E.L.T. 143 (A.P.) and submitted that when there are decisions taking different views by co-ordinate Benches of Hon'ble Supreme Court, the later is better. On this ground also, the decision of Hon'ble High Court of Madras rendered in the case of C.C.E. vs. GTN Engineeri....