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2016 (7) TMI 91 - CESTAT HYDERABAD

2016 (7) TMI 91 - CESTAT HYDERABAD - TMI - 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 wa .....

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(2) TMI 271 - CESTAT MUMBAI]. The Tribunal 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 eligib .....

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es and Business Support Services. They filed 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 .....

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g services, advertising agency services to 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(Appea .....

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onal hearing. The Commissioner(Appeals) drew 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 furth .....

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unds on which the refund claim is proposed 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 ap .....

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s on which the refund is liable to be rejected. 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 .....

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ven granting an opportunity of personal hearing. 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 servi .....

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y wrong application of formula by the original 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 conte .....

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edit taken on input services Rs.65,58,699 Total unutilized credit on input service = ₹ 57,58,829 (ii) Refund of input service credit= (E x A) / D = 6558699x492117614 499883330 = 6456809 (iii) Amount of refund of input tax credit would be ( unutilized credit or refund eligible as per Rule 5 whichever is lower) = 57,58,829 13. Thus as per the formula, the total credit taken (E) has to be applied to compute the refund credit. The original authority first held on merits that ₹ 4,41,981/- .....

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