2022 (7) TMI 1063 - AT - Service Tax

Refund of CENVAT Credit - rejection of refund on the ground that the appellant did not debit the amount of refund claim in their cenvat credit record/ ledger at the time of filing refund claim, under the admitted fact that such debit was made later on under intimation to Revenue before adjudication of the claim - Rule 5 of Cenvat Credit Rules read with Notification No. 27/2012-CE (NT) - HELD THAT - The debit of the amount of refund claim in the cenvat credit account suo moto before the adjudication, is sufficient compliance of Condition No. 2(h) of the Notification No.27/2012-CE. Further relying on the ruling of the Hon ble Supreme Court in the case of CCE VERSUS M/S HARI CHAND SHRI GOPAL 2010 (11) TMI 13 - SUPREME COURT , it is further held that the Commissioner (Appeals) have mis-conceived and mis-directed himself by ignoring the ruling of the Hon ble Supreme Court, which is both judicial indiscipline and also in violation of Article 141 of the Constitution of India. The Adjudicating Authority is directed to grant refund within a period of 45 days from the date of receipt of this order along with interest as per Rules (starting from the end of 3 months from the date of filing of the refund claim till the date of grant of refund claim) - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Whether the refund claim under Rule 5 of Cenvat Credit Rules was rightly rejected for not debiting the amount in the cenvat credit record at the time of filing the claim.

Analysis:
The appellant, an exporter of taxable services, filed a refund claim for an amount under Rule 5 of Cenvat Credit Rules. The Revenue rejected the claim as the appellant did not debit the claimed amount in the cenvat record at the time of filing. The Adjudicating Authority upheld the rejection based on this ground. The Commissioner (Appeals) also supported the rejection, citing a previous Tribunal ruling that did not allow flexibility in relaxing the conditions of the notification. The appellant argued that they debited the amount later, before adjudication, and provided evidence through a Chartered Accountant certificate and cenvat ledger. The appellant relied on a Tribunal ruling that explained the doctrine of substantial compliance, emphasizing actual compliance with the substance essential to the statute's objectives. The appellant urged for the appeal to be allowed based on substantial compliance.

Continuing the analysis, the Tribunal considered the contentions and held that the appellant's suo moto debit of the refund claim amount in the cenvat credit account before adjudication constituted sufficient compliance with the notification's condition. The Tribunal referred to a Supreme Court ruling to support this interpretation of substantial compliance. The Tribunal criticized the Commissioner (Appeals) for disregarding the Supreme Court ruling, labeling it as judicial indiscipline and a violation of the Constitution. Consequently, the Tribunal allowed the appeal, set aside the impugned order, and directed the Adjudicating Authority to grant the refund within 45 days from the order date, along with applicable interest as per Rules.

In conclusion, the judgment revolved around the rejection of a refund claim due to the appellant's failure to debit the claimed amount in the cenvat record at the time of filing. The Tribunal emphasized the concept of substantial compliance and ruled in favor of the appellant, considering the later debit before adjudication as sufficient compliance with the notification's condition. The Tribunal's decision was supported by legal interpretations and previous rulings, ultimately allowing the appeal and directing the refund to be granted with interest.