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M/s. D.E. Shaw India Software Pvt. Ltd. Versus CC, CE & ST, Hyderabad

Rejection of Refund of cenvat credit without issuing show cause notice - export of services - wrong application of formula prescribed in the Notification No.5/2006-CE(NT) dt. 14/03/2006. - further since there was DTA services provided by other units of the appellant, the original authority observed that CENVAT credit eligible for refund has to be restricted proportionately - principles of natural justice - Held that:- Admittedly, no show-cause notice was issued to the appellant specifying the gr .....

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observed that the formula used the word total CENVAT credit taken on input services . Therefore the inadmissible part of input services cannot be deducted before applying the formula. - In the absence of show-cause notice, the rejection of ₹ 4,41,981/- is unsustainable. For the reasons discussed in earlier paragraphs, the impugned order to the extent of rejecting the refund claim of ₹ 4,41,981/- is also set aside. The appellant is eligible for refund of ₹ 57,58,829/- as cla .....

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d refund claim for ₹ 57,58,829/- for the period October 2011 to December 2011 under Rule 5 of the CENVAT Credit Rules read with Section 11B of Central Excise Act, 1944, Export of Services Rules, 2005 and Notification No.5/2006-CE(NT) dt. 14/03/2006. The refund claim was filed on 26/09/2012 as the assesse was not in a position to utilize the CENVAT credit of service tax paid on input services during the above period. 3. The appellant was not issued any show-cause notice proposing to reject .....

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an extent of ₹ 4,41,981/- was disallowed observing that there is no nexus between the input services and the output service exported. 4. Again, since there was DTA services provided by other units of the appellant, the original authority observed that CENVAT credit eligible for refund has to be restricted proportionately and the refund allowed was erroneously reduced by ₹ 83,774/-. 5. The appellants filed appeal before the Commissioner(Appeals) raising the contention that principles .....

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w reference from CBEC Circular No.21/90-CX8 dt. 04/04/1990 wherein it is stated that the claimant has to be issued a notice pointing out the deficiencies in the refund claim. On this point, the Commissioner(Appeals) relied on various judgments which held that non-issuance of show-cause notice is violation of principles of natural justice. In spite of these discussions, no finding is recorded by the Commissioner(Appeals) on this point. He proceeded further to analyse the merits of the case and th .....

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to be rejected. The appellant thus did not get chance to file a defence. The non-issuance of show-cause notice cannot be viewed as a mere technical breach. In the case of CCE&Cus, Aurangabad Vs. Sidheshwar SSK Ltd. [2011(274) ELT 141 (Tri. Mumbai)], the refund claim was rejected by department without issuing a show-cause notice. The Commissioner(Appeals) set aside the order of rejection on the ground of absence of show-cause notice. The Revenue s appeal against this order was dismissed by th .....

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ted. The assessee can then defend the notice by putting forward necessary evidence establishing the assessee s case. Non-issuance of such a notice deprives the assessee of a fair opportunity to know the allegation as well as to put forward his defence. This is blatant violation of the principles of natural justice. The situation presented by this case cannot be resolved even by remand of the case. The unilateral order passed by the original authority so far as to the rejection of refund claim is .....

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ring. 9. The learned AR Shri N. Naik defended the impugned order contending that though no show-cause notice was issued, the Commissioner(Appeals) had granted opportunity for personal hearing. That therefore the rejection of refund of ₹ 4,41,981/- on the ground that there is no nexus for input services with the output services is valid and proper. The appellant has failed to establish that such services are necessary for providing the output services and that therefore the rejection of ref .....

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nal authority. 11. Admittedly, no show-cause notice was issued to the appellant specifying the grounds on which the refund claim is proposed to be rejected. No personal hearing was given at the stage of original adjudication. Thus appellant has been totally deprived of knowing the allegations or putting forward, a defence against the grounds for rejection of ₹ 4,41,981/-. 12. The learned counsel for appellant, in addition has put forward the contention that the refund allowed has been redu .....

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