2025 (7) TMI 1140 - AT - Service Tax

Cash refund of Cenvat Credit availed - export of services - applicability of Rule 5 as per the conditions prescribed by the N/N. 27/2012-CE(NT) - denial of refund claim made in terms of Rule 5 of CENVAT Credit Rules 2004 by holding that certain CENVAT Credits were not admissible - provisions of Rule 14 of CCR not invoked - HELD THAT - In respect of the same situation the Hon ble Tribunal in the case of M/s HCL Technologies vs. Commissioner of Central Excise Noida 2023 (10) TMI 959 - CESTAT ALLAHABAD where it has held that In absence of any proceedings under Rule 14 of Cenvat Credit Rules 2004 observations recorded by the Assistant Commissioner in above paras 8.1 to 8.10 of the order in original reproduced earlier are only in nature (of) observation (and) cannot be taken as denial of the credit. The above referred decision of this Tribunal in the matter of the Appellant also covers the situation in the present appeals and in absence of any proceedings under Rule 14 of Cenvat Credit Rules 2004 in these Appeals. Thus the observations made in the impugned order cannot be the reason for denial of the CENVAT Credit without proper proceedings in terms of Rule 14 of CENVAT Credit Rules 2004. It is found that as the Appellant took re-credit of the amounts therefore at this point of time the refund will not be granted. Also for the same reason the appellant claim to interest cannot be entertained as there was no proceeding for refund of credit suo-motto debited by the appellant for making claim of refund in terms of Rule 5 of the CENVAT Credit Rules 2004 i.e. no refund proceedings were there in terms of Section 11B of Central Excise Act 1944 so Section 11BB shall not be available. Appeal disposed off.

Summary

ISSUES:

Whether CENVAT Credit can be denied in refund proceedings under Rule 5 of the CENVAT Credit Rules, 2004 without initiating proceedings under Rule 14 of the same Rules.Admissibility of CENVAT Credit on various input services including gym equipment, event management, garden maintenance, canteen charges, domestic courier, creative design services, insurance, and others.Whether credit is admissible on invoices issued to unregistered premises or premises registered after the receipt of services.Whether absence of address or incomplete details on invoices affects admissibility of CENVAT Credit.Whether credit can be allowed on the basis of photocopies of invoices when original invoices are missing.Entitlement to interest on delayed refund where refund claim is rejected and credit is re-credited.

RULINGS / HOLDINGS:

Denial of CENVAT Credit in refund proceedings under Rule 5 without invoking Rule 14 is impermissible; "in absence of any proceedings under Rule 14 of Cenvat Credit Rules, 2004 observations… cannot be taken as denial of the credit."CENVAT Credit is admissible on input services that have "nexus with output services" and impact efficiency of providing output services, such as rent for car parking and canteen, photocopying, printing, binding charges, domestic courier, and creative design services.Credit is not admissible on services primarily for personal use of employees, including gym equipment/body grooming, event management services of recreational nature, garden maintenance, tea/coffee/food charges, guest house, yoga workshop, laundry charges, and insurance of paintings with no nexus to output services.Credit on invoices issued to unregistered premises or premises registered after receipt of services is not admissible; "Cenvat credit is admissible only to a registered person and that too on fulfillment of other legal requirements."Absence of address or other mandatory details on invoices is a substantive defect; credit cannot be allowed on such invoices as per Rule 4A of Service Tax Rules and relevant judicial precedent.Credit may be allowed on photocopies of invoices if the appellant can demonstrate payment and legal admissibility of credit to the satisfaction of the authority.Interest on delayed refund claim cannot be granted where refund is not granted and credit has been re-credited by the appellant; absence of refund proceedings under Section 11B precludes entitlement under Section 11BB.

RATIONALE:

The Court relied on the framework of the CENVAT Credit Rules, 2004, specifically Rule 5 (refund of CENVAT Credit) and Rule 14 (denial of credit proceedings), emphasizing that denial of credit requires formal proceedings under Rule 14 and cannot be done in refund proceedings under Rule 5.Precedents from this Tribunal and High Courts consistently hold that credit denial without Rule 14 proceedings is impermissible, and observations in refund orders do not amount to denial of credit.Interpretation of "input service" eligibility is guided by nexus with output services and impact on efficiency, as clarified by Board's Circular No. 120/01/10 dated 19.01.2010 and Hoard's Circular dated 19.01.2010, distinguishing between business-related and recreational/personal services.The statutory requirement under Rule 4A of Service Tax Rules mandates specific invoice details; failure to comply is a valid ground for denial of credit to prevent fraud and ensure proper documentation.The Court remanded certain issues for factual verification, such as registration status of premises at the time of invoice issuance, to ensure compliance with legal requirements before granting credit/refund.The Court recognized that re-crediting of CENVAT amounts by the appellant after refund rejection negates entitlement to refund and interest, consistent with the procedural requirements under the Central Excise Act, 1944.