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TMI ID= 256612
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  • Cases Cited

2015 (2) TMI 612 - CESTAT MUMBAI

M/s. Kirloskar Ebara Pumps Ltd. Versus Commissioner of Central Excise, Kolhapur

Denial of refund claim - Unjust enrichment - Export of services - Bar of limitation - Held that:- Commissioner (Appeals) that the appellant would be unjustly enriched is not clear to me. - Clearly, the invoices show that the incidence of tax has not been passed on to the customers abroad. Once appellant have discharged the proof of not passing on the incidence of tax, the onus lies on the department to prove that duty incidence was passed. The invoices prove to be contrary and the department has not been able to establish that the duty incidence has been passed on to the customers abroad. In any case, it is a settled matter that the unjust enrichment does not arise in the case of export of services.

On the issue of limitation, the Commissioner (Appeals)'s reliance on Eaton Industries (2010 (12) TMI 71 - CESTAT, MUMBAI) is clearly misplaced. -The provisions of Central Excise Act including Section 11B have been made applicable to Service Tax under Section 83 of the Finance Act, 1994. Therefore, the provisions of Section 11B will apply. - amount for which refund has been claimed was paid in cash on 5.2.2011 and the refund application was filed on 28.7.2011. Therefore, the refund was filed on 28.7.2011. - refund allowed on merit as well as period of limitation - Decided in favour of assessee.

No.- Appeal No. ST/507/12

Order No.- Final Order No. A/121/2015-WZB/SMB

Dated.- December 30, 2014

Citations:

  1. Commissioner of Central Excise, Pune I Versus Eaton Industries P. Ltd. - 2010 (12) TMI 71 - CESTAT, MUMBAI

P. S. Pruthi,JJ.

For the Appellant : Shri A V Naik, Adv.

For the Respondent : Shri B K Iyer, Supdt AR

ORDER

Per: P S Pruthi:

The appellant is in appeal against the impugned Order-in-Appeal in which the Commissioner (Appeals) has rejected the refund claim on grounds of unjust enrichment and limitation.

2. The facts are that the appellant are engaged in providing taxable service of “Market Research Agency (MRA)” to companies abroad. They paid Service Tax of ₹ 18,26,064/- on the services exported by them by debiting the CENVAT Credit amount from the account which reflects the credit on input services used by them in providing the output services of MRA. As the department was of the opinion that the input CENVAT Credit was wrongly used, the appellant, on persuasion by the department, reversed the credit of ₹ 18,26,064/- which was utilized by them for payment of Service Tax on MRA service exported. The appellant also paid the entire amount of ₹ 18,26,064/- in cash vide GAR-7 challan no. 369 dated 5.2.2011. Later the appellant realized that MRA service provided to client abroad amounts to export of service and, therefore, they had inadvertently paid the amount of ₹ 18,26,064/- and took re-credit of this amount in Cenvat Account which had been reversed earlier. Therefore, they filed refund claim on 29.7.2011 for ₹ 18,26,064/-. The refund claim is the subject matter of appeal. The Commissioner (Appeals) held that the service provided is to be treated as export of service which is exempted from liability of payment of Service Tax under Rule 4 of the Service Tax Rules, 2005. The Commissioner (Appeals) also held that the appellant is not entitled to refund of Service Tax as they had already re-credited the amount of Service Tax paid by them in their CENVAT Credit Account and they would be unjustly enriched if such refund is allowed to them. The Commissioner (Appeals) also held that the refund claim is time barred as the relevant date in the case of export of service is the date when the payment of service exported by them has been received by the assessee. He relied on the Tribunal's decision in the case of Commissioner of Central Excise, Pune I vs. Eaton Industries Pvt. Ltd. - 2011 (22) STR (Tri-Mum) . According to him, the appellant had not submitted the information about the date of payment of service exported and therefore, he held the refund claim has not been filed within the period of limitation.

3. The learned Counsel showed the export invoice which only reflects the service charges for the Market Research Information. The column against Service Tax has been left blank and therefore, he states, the question of unjust enrichment does not arise. On the issue of limitation, he states that the payment was made on 5.2.2011 and refund claim was filed on 28.7.2011 and is therefore, well within the time limit prescribed in the statute.

4. The learned AR reiterates the findings of the Commissioner (Appeals).

5. I have carefully gone through the facts of the case and submissions made by both sides. I note that on the issue whether the MRA service provided to clients abroad is an export of service or not, has already been decided by the Commissioner (Appeals), who held that the said service is to be treated as export of service. Therefore, the only issues to be decided in this matter are the issues of unjust enrichment and time limitation.

5.1 The findings of the Commissioner (Appeals) that the appellant would be unjustly enriched is not clear to me. In fact it is confusing as to how he has arrived at this conclusion. It is nowhere brought out on record in any part of the proceedings as to why the CENVAT Credit of ₹ 18,26,064/- was not admissible to the appellant. The entire sequence of events show that since the appellant was not required to pay the Service Tax on the export of service, the status of CENVAT Credit Account needs to be restored to its original status. The appellant debited ₹ 18,26,064/- from their CENVAT Credit account for payment of duty on export of service, which was not required to be paid. Therefore, as the matter stands today, this CENVAT Credit is to be restored in the CENVAT account. Further, since the appellant had paid the amount of ₹ 18,26,064/- in cash, the same is to be refunded as the amount was paid by them wrongly. I do not see how this refund will amount to double benefit or unjust enrichment. Clearly, the invoices show that the incidence of tax has not been passed on to the customers abroad. Once appellant have discharged the proof of not passing on the incidence of tax, the onus lies on the department to prove that duty incidence was passed. The invoices prove to be contrary and the department has not been able to establish that the duty incidence has been passed on to the customers abroad. In any case, it is a settled matter that the unjust enrichment does not arise in the case of export of services. Therefore, on the issue of unjust enrichment, I hold that the same does not arise and the appellant is eligible for the refund.

5.2 On the issue of limitation, the Commissioner (Appeals)'s reliance on Eaton Industries (supra) is clearly misplaced. In that case, the issue was refund of CENVAT Credit on input used in the service exported. It was held that the relevant date for considering the time period for eligibility of refund under Export of Service Rules is the date of payment for service exported. In the present case, refund was sought on the tax paid on export of service which was not required to be paid. The provisions of Central Excise Act including Section 11B have been made applicable to Service Tax under Section 83 of the Finance Act, 1994. Therefore, the provisions of Section 11B will apply. The relevant date is specified in clause (B) of Explanation to Section 11B of the Central Excise Act. Under the said clause (B), the relevant date as specified for various circumstances from clause (a) to (f). The clauses at (a) to (e) do not apply in the present case. Clause (f) states that “in any other case, the date of payment of duty”.

5.3 In the present case, the amount for which refund has been claimed was paid in cash on 5.2.2011 and the refund application was filed on 28.7.2011. Therefore, the refund was filed on 28.7.2011. Therefore, the refund was filed well within the period of one year form the relevant date specified under Section 11B. Therefore, the refund claim is not hit by the bar of limitation.

6. In view of the above, the impugned order is set aside and the appeal is allowed with consequential relief.

(Pronounced in Court)

 
 
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