2015 (7) TMI 431

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....ppellant had filed a refund claim on the ground that they were not in a position to utilise the Cenvat credit of service tax taken on input services used for providing output services under "Banking & other Financial services", which were exported. The lower authorities issued a show-cause notice to the appellant directing them to show-cause why the said refund claim be not rejected due to the deficiency as pointed out in the show-cause notice. The show-cause notice was contested by the appellant. The Adjudicating Authority after following the due process of law held against the assessee and rejected the refund claims. Aggrieved by such order, appellant preferred an appeal before the first appellate authority. The first appellate authority ....

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....609 (Bom). He would plead that the issue on merits be decided and matter may be remanded for quantification of the refund claim. 5. Ld. Departmental Representative, on the other hand, would draw our attention to Notification 04/06 and submits that said Notification has amended earlier Notification to make provider of output services eligible to claim refund. He would submit that as per the earlier provision only a manufacturer could have claimed the refund for the unutilised Cenvat credit. He would submit that both the lower authorities were correct in the finding recorded by them. Ld.AR would also rely upon the 'Maxwell on the Interpretation of Statutes' and submitted that if any Notification is to be perceived as retrospective in n....

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....Credit Rules, 2004 from 14.03.2006 only when the provider of output service was brought in as one of the entity who claimed the refund under the said rules. The said finding of the Notification 4.06 dated 14.03.2006 and 5/06 dated 14.03.2006 is not applicable retrospectively. 10. We find that the argument made by the ld. Departmental Representative and the reasoning recorded by the first appellate authority on this point are erroneous. First and foremost, it is seen and undisputed that appellant is eligible to avail Cenvat Credit of the input service which has been used by him for providing output services, which are exported. Secondly, we find that an identical issue in respect of the very same Notification i.e. 4./2006 was before this ....

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....notification: Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty; Provided farther that no credit of the additional duty leviable under subsection (5) of section 3 of the Customs Tariff Act, shall be utilised for payment of service tax on any output service. Explanation:- For the purposes of this rule, the words "output service which is exported" means the output taxable service, exported in accordance with the Export of Services Rules, 2005." After March 2006 : "5. Refund of CENVAT credit - Where ....

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....t service which is exported' means the output service exported in accordance with the Export of Services Rules, 2005." It is noticed from the comparison of the two provisions that while under substituted Rule 5, both manufacturer of goods or provider of output services were allowed to utilize Cenvat credit in respect of the inputs services used by them in the manufacture of exported goods or exported output services for payment of duty of excise on any final product cleared for home consumption or for export on payment of duty or for payment of Service Tax on the output services but where such adjustment was not possible, under pre-substituted Rule 5 the manufacturer alone was allowed refund of unutilized cenvat credit subject to suc....

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....question of even a manufacturer of goods exported availing drawback of service tax paid on input services prior to 13.7.2006." 11. The revenue aggrieved by such an order preferred an appeal before the Hon'ble High Court of Bombay. Their Lordships rejected the contention of the Revenue by holding as under:- "9. The above finding of the CESTAT cannot be faulted because substituted Rule 5 of the Cenvat Credit Rules, 2004 does not make any distinction between exports made prior to 14-3-2006 or after 14-3-2006. IN other words, as per the substituted Rule 5 refund of unutilized cenvat credit in respect of exports effected in the past is available to the manufacturer as well as provider of output service. Proviso to Rule 5 as it stood pr....