TMI Blog2024 (1) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... hat denial of refund claim mad in terms of Rule 5 without initiating any proceedings under Rule 14 is no tenable. Suffice to say that without initiating the proceedings in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994, CENVAT credit cannot be denied during the refund proceedings under Rule 5 ibid. Applicability of Rule 5 of CCR - HELD THAT:- Even if the contention of the revenue was to be accepted then also the credit should have been denied by initiating the proceedings under Rule 14 and not in proceedings of refund under Rule 5 of CENVAT Credit Rules, 2004. There are no merits in the impugned order to the extent it has sought to disallow the CENVAT Credit to the extent of Rs.4088/- + Rs.1,09,63,679/- + Rs.6,60562/- + Rs.54,20,341/- = Rs.1,70,48,670/- for determining the Net Cenvat Credit , in the formula prescribed under Rule 5 of the CENVAT Credit Rules, 2004. Thus the Net Cenvat Credit for the application of this formula should have been Rs.3,82,73,665/- and eligibility to refund determined ACCORDINGLY. The difference of the amount allowed as refund and the amount debited from the CENVAT Account on 19.02.2013 should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng taxable services classifiable as Management or Business Consultant Services, Consulting Engineer Services, market Research Agency Services, Commercial Training Coaching Services, Maintenance and Repair Service, Business Support Service, IPR Services other than Copy Right Services, Work Contract Services and Information Technology Software Services. 2.2 During the period April, 2012 to June, 2012 availed credit of the service tax paid on various services received which were used during the relevant period for exporting Information Technology Services, Business Auxiliary Services and Business Support Services. 2.3 They filed a refund claim of Rs.3,82,74,143/- on 19.02.2013 with the Assistant Commissioner of Central Excise, Division-II, Noida in respect of accumulated Cenvat credit of Service Tax paid on such input services in terms of Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No.27/ 2012-CE(NT) dated 18.06.2012 2.4 A Show Cause Notice dated 23.07.2013 was issued proposing to disallow refund of Cenvat Credit of Rs.1,78,50,725/- availed on various input services by the Appellant under Rule 3 read with Rule 2(l) of the Rules. The SCN proposed to rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Notification No.27/2012- CE (NT) dated 18.06.2012, refund of Rs.1,78,50,725/- is liable for rejection 2.5 The Show Cause Notice was adjudicated by the Ld. Assistant Commissioner vide Order-in-Original dated 28.10.2013. Aggrieved by the Order-in-Original, the Appellant filed an Appeal before the Ld. Commissioner(Appeals) bearing No.279/ST/2013 dated 24.12.2013. 2.6 The said Appeal was disposed of by the Ld. Commissioner(Appeals) vide the Impugned Order. 3.1 We have heard Shri Atul Gupta and Shri Prakhar Shukla Advocates for the Appellant and Shri Manish Raj, Authorized Representative for the Revenue. 3.2 Arguing for the Appellant, learned counsels submit,- the Department has not issued any Show Cause Notice under Rule 14 of the Cenvat Credit Rules, 2004 for denial of Cenvat Credit taken wrongly. It is disputing the availment of credit at the stage when the Appellant has filed refund application under Rule 5 of the Credit Rules. Since, the credit has not been denied under Rule 14, therefore the same is available in the books of the Appellant. Thus, the refund of the same is to be allowed under Rule 5 of the CCR, 2004. Reliance is placed on the following ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed within one year from the relevant date. As no one to one co-relation is required, once the credit is admissible, the appellants are eligible for refund. Further, refund of Cenvat should not be linked to Cenvat taken in a particular period only [D.O.F. No.334/1/2010-TRU, dated 26-2-2010]. In Transatlantic Packaging Private Limited, 2012 (28) STR 102 (Tri-Ahmd), it was held that when the admissibility of credit is not under dispute, the refund of such accumulated credit shall be allowed Reliance is further placed on the following decisions: Virtusa India Pvt. Ltd., 2017 (3) G.S.T.L. 359 (Tri. - Hyd.) Morgan Stanley Investment Mgmt. Pvt. Ltd., 2018 (363) E.L.T. 1158 (Tri.- Mumbai) Contata Solutions Pot. Ltd. [2017 (51) S.T.R. 423 (Tri. - All.)] Commissioner of Service Tax-III, Chennai vs. Cestat, Chennai, 2017 (3) G.S.T.L. 45 (Mad.) Sai Advantium Pharma Ltd. [2016 (45) S.T.R. 185 (Tri.- Bang.)] There are no domestic clearances by the Noticee from the premises for which refund was filed. Thus, the export turnover of the Noticee is the total turnover and the basis of denial of refund of Rs.8,01,577 / - is legally incorrect Without prejudice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice means any service,- (i) used by a provider of output service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for- (a) construction or execution of works contract of a building o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service of renting of the premises at Plot No. 2A Technology Zone, Sector-126 from M/s. Optiemus Infracom Ltd; and the agreement meant for the purpose clearly states that the premises will be used by the appellants for the purpose of software development and information technology enabled activities and ancillary purposes; that the invoices in question contain the name and address of the appellants and hence are satisfying conditions provided under Rule 9 of CCR, 2004 read with Rule, 4A of the Service Tax Rules, 1994.A perusal of the copies of the invoices submitted by the appellants reveals that these invoices have been issued in the name of address of M/s Samsung India Electronics Pvt. Ltd. Tower A 8-10 Floor, Plot C-28/29, Sector-62, Noida. I find that the appellants have not rebutted the findings of the adjudicating authority that the invoices, in question were not addressed to their registered premises. In view of above facts and circumstances am of the opinion that the invoices in question do not satisfy the provisions laid down under Rule 9 of the CCR, 2004 read with Rule 4A of the Service Tax Rules, 1994. In view of above facts, I agree with the findings of adjudicating aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any [duty of excise and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] before the expiry of [one year] [from the relevant datel [[in manner] as may be prescribed and the such form and application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of [duty of excise and interest, if any, paid on such duty] in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such [duty and interest, if any, paid on such duty] had not been passed on by him to any other person: 5.7 A study of Section 11B (1) divulge that stipulate time limit for seeking refund is one year. In view of above facts, I concur in the opinion of the adjudicating authority that this part-of the refund claim of the appellants is hit by limitation of time as provided under the legal provisions as described herein above and the appellants are not entitled for such part of refund of Rs.54,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of One Advertising and Communication P. Ltd. v. CCE- 2012 (27) STR 344 (Tri-Ahmd.) Hotel services have been availed for stay of their Chief Executive for the purpose of business and meeting the clients But in the instant case the premises is claimed to be taken on rent for providing output service and in this regard there is legal provision to get the premises registered or incorporated in the registration. Therefore, the decision of Hon'ble Tribunal in the said case is distinguishable from the present case. I, thus hold that the appellants are not entitled for the refund of Rs.6,60,562/- availed against such invoices 5.9 The appellants has argued that while calculating the admissibility of refund by applying formula prescribed under Notification 27/2012-CE (NT) dated 18.6.2012 an amount of Rs.8,01,577/- has been denied on the ground that it pertains to domestic clearances whereas there were no domestic clearances; hence claimed the impugned order to be non-speaking. The appellants contested that there were no domestic clearance from the present premises and export turnover was the total turnover, therefore, the basis of denial of refund of Rs.8,01,577/- is le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es provided by the appellants in DTA and the amount of refund has been ascertained in accordance with the formula prescribed under the said Notification for the purpose. find that the appellants claim is false. The appellants are hereby warned not to plead such false claim contrary to the facts and the figures available in their record. 4.3 From the above it is observed that refund claim filed by the appellant for the amount of Rs.3,82,74,143/- has been modified by the original authority to the extent of allowing the Refund for Rs.2,04,23,418/- and rejecting the refund for the amount of Rs.1,78,50,247/-. No appeal has been filed by the revenue for the refund amount held admissible to the appellant. From the impugned order it is evident that refund of Rs.4088/- + Rs.1,09,63,679/- + Rs.6,60562/- = Rs.1,16,28,329/- has been disallowed holding that the credit in respect of these was not admissible to them for the reasons stated in the impugned order. Rs.54,20,341/- has been disallowed holding that the claim is barred by limitation; Rs.8,01,577/- has been disallowed holding that appellants had made certain domestic clearances which were to be taken into account for det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt under the authority of Rule 14 of Cenvat Credit Rules, 2004. One of the determinants of entitlement is utilization of procured goods or services in the manufacture of dutiable goods or rendering of taxable services and it may not always be possible for manufacturers and service providers to be able to segregate so at the threshold, or account for at the time of consumption, the ultimate deployment of, particularly, services and, in acknowledgement thereof, Rule 6 of Cenvat Credit Rules, 2004 offers different avenues for reversal on actual, or mathematically approximate, segregation on their own initiative. Failure to voluntarily reverse empowers invoking of Rule 14 of Cenvat Credit Rules, 2004 by jurisdictional authorities. It is, thus, patently obvious that Rule 14 of Cenvat Credit Rules, 2004 is the sole route available for erasure of credit taken at the threshold, or continued thereafter, but is, or has been, rendered ineligible. 5 . Nexus , as it is generally known, goes beyond the obvious entitlement or disentitlement and is a corollary of intangibility of services that hampers certainty of utilization in the output/output service sought to be circumscribed by dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 . Similar stand was adopted by the Tribunal in Commissioner of CGST, Mumbai v. Citicorp Services India Pvt. Ltd. thus : 4.4. . Further, the correctness of availment of Cenvat Credit at the stage of filing of refund claim cannot be questioned, since the statute deals with the situation differently. It is seen from the impugned order that no such notice was issued to the appellant herein. The preliminary objections to the refund limited itself to a few objections that appear to have been responded to and none of those have proposed that the said amount of credit was to be recovered. In the absence of this critical requirement to comply with principles of natural justice, the denial of credit is without authority of law and impugned order is set aside. In case of Responsibility India Business Advisors Pvt. Ltd. [2023 (69) G.S.T.L. 90 (Tri. - Mumbai)] following has been held- 7. The scheme of Rule 5 of Cenvat Credit Rules, 2004 is abundantly clear. To the extent of eligibility, the assessee cannot be denied refund and the disallowed portion, if any, remains in the credit of the assessee for debit of future tax/duty liability. Therefore, denial of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod advances received for export services for which the provision of service has not been completed during the relevant period; (E) Total turnover means sum total of the value of (a) all excisable goods cleared during the relevant period including exempted goods, dutiable goods and excisable goods exported; (b) export turnover of services determined in terms of clause (D) of sub-rule (1) above and the value of all other services, during the relevant period; and (c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed. (2) This rule shall apply to exports made on or after the 1st April, 2012: Provided that the refund may be claimed under this rule, as existing, prior to the commencement of the CENVAT Credit (Third Amendment) Rules, 2012, within a period of one year from such commencement: Provided further that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l products are exported is situated. (ii) the registered premises of the provider of service from which output services are exported is situated. (b) The application in the Form A along with the documents specified therein and enclosures relating to the quarter for which refund is being claimed shall be filed by the claimant, before the expiry of the period specified in section 11B of the Central Excise Act, 1944 (1 of 1944). Rule 5 defines Net Cenvat credit to mean total Cenvat credit availed on inputs and input services by the manufacturer or the output service provider reduced by the amount reversed in terms of sub-rule (5C) of Rule 3, during the relevant period Thus, the Cenvat credit availed on inputs and input services during the relevant period, i.e., the subject quarter for which refund is claimed, as reduced by the amount reversed under Rule 3(5C) of the Rules is considered as 'Net Cenvat credit It is, thus, the total Cenvat credit availed during the particular quarter which is to be considered for determining the amount of refund In terms of the provisions of Rule 5 read with Notification No.27/ 2012-CE(NT), the whole credit availed during the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant is as per the impugned order is Refund of Cenvat Credit = Export Turnover X Total admissible credit /Total Turnover = 966604676 x 21224995/1004541918 = Rs.2,04,23,418/- However in terms of value of Net Cenvat Credit, determined above the eligibility to refund shall be as follows: Refund of Cenvat Credit = Export Turnover X Total admissible credit /Total Turnover = 966604676 x 38273665/1004541918 = Rs.3,68,28,233/- We do not agree with the contention of the appellant to the effect that for computing the total turnover, only turnover from the specific premises from where the services have been exported is to be considered. It is the contrary to the contention of the appellant themselves that for determining the Net Cenvat Credit, the Credit admissible in respect of the services received at any of premises should be taken into account. In our view in case of Centralized registration the term Total Turn Over in Rule 5 of CENVAT Credit Rules, 2004 refers to the total turnover of the registrant. To this extent we do not find any fault in the impugned order. 4.8 However we find that Notification No.27/2012-CE (NT) dated 18.06.2012 reproduced earlier at (h) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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