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TMI Blog2024 (4) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... liability on the taxable services received by it under Reverse Charge Mechanism (RCM) basis as per Rule 2(d) of the Service Tax Rules, 1994. During the disputed period, the appellants had exported the entire finished goods manufactured by it. Central Excise duty is not leviable on exportation of the goods and thus, the appellants was not in a position to utilize the Cenvat credit available in its books of accounts. For claiming refund of such accumulated credit, the appellants have filed three refund claims under Rule 5B of Cenvat Credit Rules (CCR), 2004 read with Notification No.12/2014-C.E. (N.T.) dated 03.03.2014 in the prescribed form. On scrutiny of the refund applications, the department felt there were certain discrepancies by which the appellants are not eligible for refunds and accordingly issue show cause notices, denying the claim for refund. These refund applications were adjudicated by the Original authority in rejecting the refund applications. The details of three refund applications filed by the appellants and the respective Order-in-Original are given in brief as below: Sl. No Impugned common Order-in- Appeal No. Order-in-Original No. and Date& ST Registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provider'? (ii) Whether manufacturer of goods having 'nil' tariff rate of duty is eligible for Cenvat Credit at all?, and in addressing these two issues, he had held that the orders of original authorities do not call for any interference by concluding on these two issues as follows. On issue (i), he concluded that Section 68(2) of the Finance Act, 1994 has a limited purpose of ensuring that the liability to pay tax is shifted to the tax-payer and he must abide by the other provisions of service tax laws. On issue (ii) he concluded that 'it is clear that the appellant manufacturing goods, having nil rate of duty, were not eligible for credit at all'. Thus, he dismissed the appeals filed by the appellants. 7.1 It is an admitted fact on record that the appellants are registered with the department for payment of service tax on the taxable services received by it and had discharged the service tax liability on reverse charge mechanism, as provided under sub-section (2) of Section 68 of the Finance Act, 1994. The relevant legal provisions are extracted and given below for ease of reference: "Charge of service tax on and after Finance Act, 2012. 66B. There shall be levied a tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Rules, 2004, have been framed in exercise of powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994). Rule 5 ibid provides for refund of Cenvat credit to a manufacturer who exports the final product or intermediary product for export without payment of duty; or to your service provider who provides output service is exported without payment of service tax, subject to certain conditions specified therein. Further, Rule 5B ibid also provide refund of service tax in respect of services notified under Section 68(2) ibid. The relevant legal provision is extracted and given below: RULE 5B. Refund of CENVAT credit to service providers providing services taxed on reverse charge basis. A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the sides, it is found that the appellants have filed a number of appeals in respect of the very same issue and these have already been disposed of by the Tribunal in the following manner as indicated below : Appeal No. & Date of CESTAT Order Gist of decision Further, action on remand, if any Gist of subsequent decision A/21054-21055 dt. 29.11.2017 Party's appeal dismissed - - A/91375-91377 dt. 05.12.2017 Matter remanded to Commissioner (A) Order-in-Appeal dt. 17.10.2018 Appellant party found eligible for refund A/85198-85199 dt. 31.01.2018 Party's appeal dismissed - - A/86969 dt. 08.05.2018 Party's appeal allowed. Earlier order of the Tribunal distinguished and it does not have any binding precedent for deciding this issue A/85649 dt. 05.03.2020 Matter remanded to Commissioner (A) Order-in-Appeal dt. 17.10.2018 Appellant party found eligible for refund Further, it is also found that the above issue is no more open to dispute as in the appellants' own case, the Tribunal has held that they are eligible to refund of CENVAT credit under Rule 5B ibid and distinguished the other cases where the Tribunal had ordered for dismissal of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service provider for the purpose of Section 66 ibid. Therefore, we are of the view that the benefit of exemption Notification No. 17/2004- S.T., dated 10-9-2004 should also be available to the respondent. We find that the Tribunal in the case of United News of India (supra) while interpreting the provisions of Section 66A ibid, has held that the benefit of the exemption should also be available to the recipient of service. The relevant paragraph in the said order is extracted herein below : 5. Heard both sides and perused the appeal records. The only dispute in the case is that the eligibility of the appellant for the exemption under Notification cited above as a recipient of service. A plain reading of Section 66A brings out the legal obligation of the recipient of service in certain situations. The said Section stipulates that taxable service shall be treated as if provided by the recipient of service in India and accordingly, all the provisions of Chapter V shall apply. We find that the tax liability is put on the appellant on such legal fiction. It is not legally tenable to hold that such legal fiction will have limited application only for payment of service tax and not wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of exempted services or input service as is used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services and the credit not allowed shall be calculated and paid by the manufacturer or the provider of output service, (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - [(i) cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorised operations; or (ii) cleared to a hundred per cent. export-oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995, number G.S.R. 602(E), dated the 28th August, 1995; or (iva) supplied for the use of foreign diplomatic missio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently, the duty paid on peppermint oil by debiting the input credit being not valid the question of allowing rebate of that duty does not arise at all. 22. It is true that under Rule 6(1) of the 2004 Rules, credit of duty paid on inputs is not allowable when the inputs are used in the manufacture of exempted final products. But Rule 6(2) of 2004 Rules provide that where the inputs are used in the manufacture of exempted as well as dutiable final products, then credit of duty paid on inputs used in the manufacture of dutiable final products is allowable, provided separate accounts regarding the receipt, consumption and inventory of the input used in the manufacture of dutiable final product are maintained. However, Rule 6(6) of 2004 Rules provides that the provisions contained in Rule 6(1) to 6(4) of 2004 Rules shall not apply in certain specified cases, where the excisable goods are cleared without payment of duty. Clause (v) of Rule 6(6) of the 2004 Rules provides that where the exempted goods are cleared for export without payment of duty under Central Excise Rules, 2002, then the provisions contained in Rule 6(1) to 6(4) of 2004 Rules shall not apply. Thus, Rule 6(6) of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been cleared for export under bond and, therefore, Rule 6(1) to 6(4) of 2004 Rules would not apply, but Rule 6(6)(v) would apply. In other words, non allowability of input credit under Rule 6(1) to 6(4) of 2004 Rules is applicable only when the inputs used in the manufacture of exempted final products are cleared for home consumption without payment of duty and not when exempted final products are cleared for export without payment of duty under bond. In the present case, exempted menthol crystals has been exported without payment of duty under bond and, therefore, the assessee was entitled to take the credit of duty paid on menthol used in the manufacture of exempted menthol and utilize that credit for paying duty on clearance of peppermint oil. Since peppermint oil was exported on payment of duty, the assessee was entitled to claim rebate of duty paid on exported peppermint oil under Rule 18 of the Central Excise Rules, 2002. 28. In the result, we hold that in the facts of the present case, since the exempted menthol crystals as well as dutiable peppermint oil manufactured out of duty paid menthol have been exported by the assessee, the provisions of Rule 6(1) to 6(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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