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TMI Blog2025 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.04.2006 and 80% of the refund was sanctioned. On a review of the refund orders, Revenue issued two show cause notices, dated 26.12.2008 and 31.01.2008, proposing to demand the refund already sanctioned; deny the balance of the refund on the ground that there was no nexus between the input services and output services, nature of output services is not indicated in the invoices, FIRCs did not contain reference to export invoices, original copies of the FIRCs were not submitted and the services were rendered in India. 2.1 Learned Commissioner (Adjudication), dropped the demands raised in the show cause notices on the grounds that prior to 19.08.2009, there was no provision to review the refund orders in terms of Section 84 of Finance Act, 1994 and that the orders sanctioning refund were not appealed against. Committee of Chief Commissioners reviewed the order and accordingly, directed the Commissioner to file an appeal in terms of Section 86 (2) of Finance Act, 1994 on the grounds that: (i) Learned Commissioner erred in dropping the demand on the premise that the provisions of Section 84 were not prevalent during the relevant time. (ii) Learned Commissioner ignored the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T New Delhi * Eureka Forbes Ltd 2018 (8) TMI 1288-CESTAT Bangalore * CCE v. Jellalpore Tea Estate 2011 (3) TMI 11-Gauhati High Court * Bharat Box Factory Limited 2018 (5) TMI 1346-CESTAT Chandigarh 5. Learned Counsel submits also that without prejudice to the above, respondent had fulfilled the conditions prescribed under export rules read with the notification; the services rendered by the Respondent qualifies as export of services under Export Rules; refund claim was duly filed in accordance with Export Rules read with Notification; it was never disputed by department that the services rendered by the Respondent do not qualify as export of services, on earlier occasions; 100 % refund was sanctioned after examining all the conditions prescribed under the Export Rules and the Notification. She submits that it is a settled principle of law that the department cannot take different stands for different tax periods in respect of same facts and circumstances as held in Birla Corporation 2005 (186) ELT 266 (SC) and Genpact India Private Limited 2023 (68) GSTL 3 (P & H). 6. Learned Counsel submits further that the respondent fulfilled all the conditions prescribed under Rule 3(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank certifying the realization of export proceeds. She submits that allegation that co-relation of output service vis-à-vis output invoice is not established or FIRC's do not contain the reference of the invoices etc., are not correct; services rendered by the Respondent qualify as export of services under Rule 3(2) of the Export Rules; Respondent is entitled to claim refund of the unutilised credit of tax paid on the input services so utilised for rendering such output services under Rule 5 of the Export Rules; for earlier periods the refund claim of the Respondent was duly sanctioned by the department after proper verification and scrutiny on the basis that the services rendered by the Respondent qualify as export of services. She submits that even if there are procedural lapses, substantial benefit cannot be denied as held in Samsung R&D Institute India Bangalore Pvt Ltd 12019 (7) TMI 1418-CESTAT Bangalore and Robert Bosch Engineering and Business Solutions Limited 2017 (12) TMI 836-Cestat Bangalore. 9. Heard both sides and perused the records of the case. Issues in brief that need to be addressed in the instant case are as to whether: * The Revenue was correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o enable the department to focus on the cases where the amount sanctioned is higher than Rs. 50,000/-. 2.9 Once an Order-in-Original has been issued then the only way to assail the order is by way of appeal before the next higher authority or by way of action under the Section 84 of the Act 94. In context of the refunds under Central Excise Act, 1944, the position has been made clear by the CBEC in Circular No. 869/7/2008-CX dated 16.05.2008, Para 2.1 & 2 2 of the aforesaid circular are reproduced below. 2.1 All refund/rebate sanction orders must necessarily be issued as an Order-in-Original. A separate series with suffix 'R' for numbering of Orders-in-Original issued for sanction of refund/rebate claims may be used. However, in terms of risk to revenue, a monetary limit of Rs. 50,000/- has been fixed below which O-In-O may not be issued, if the rebate is sanctioned in full. This shall also enable the department to focus on the cases where the amount sanctioned is higher than Rs. 50,000/-. 2.2 All refund/rebate claims involving an amount of Rs. 5 lakh or above should be subjected to pre audit at the level of Deputy/Assistant Commissioner (Audit) in the Commissionerate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "M/s. SRD Nutrients Private Limited" (supra) can be considered to be refunds erroneously granted in view of the subsequent Judgment of the Apex Court in "M/s. Unicorn Industries" (supra) wherein the earlier Judgment of "M/s. SRD Nutrients Private Limited" (supra) was held to be "per incuriam" and whether the same can be recovered under the provisions of Section 11A of the Central Excise Act as sought to be done by the Department. The further question that has arisen for consideration in the present proceedings is whether an order passed by the Quasi-Judicial Authority under the Central Excise Department granting refunds earlier can be re- visited by another co-lateral authority of the same Department in exercise of their powers under the Central Excise Act. ........... ........... 46. "Erroneous Refund" The provisions of Section 11A in the context of the present proceedings have been invoked by the Department by treating the refunds granted earlier to the petitioners to have been granted "erroneously". A perusal of the provisions of Central Excise Act and the Rules framed thereunder reveals that the term erroneous has not been defined anywhere. In this context, it is relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944. What cannot be lost sight of is that the Department sanctioned the refunds demanded/claimed by the petitioners on the basis of the Judgment in SRD Nutrients without any demur. The contention of the departmental counsel that the refunds sanctioned become erroneous by virtue of the Apex Court holding the judgment of SRD Nutrients to be rendered per incuriam as the still earlier Judgments of the Apex Court rendered in Modi Rubber (supra) and Rita Textile (supra) were not considered, cannot accepted. It is not disputed that pursuant to the judgment of the SRD Nutrients, a review application was filed by the Department and which was dismissed on 10-7-2018. ..... 67. The Officers of the Central Excise Department exercise Quasi judicial functions. The orders passed by the Department Officers being in exercise of Quasi Judicial powers cannot be co- laterally revoked/reviewed except when permitted under the Statute. It is seen that against sanction orders passed the concerned officers, the statute does not provide for any review of such order passed. However, under Section 35, there is a provision for appeal, which however has not been resorted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the legal precedents holding the field then cannot be termed as erroneous merely because of the change in legal position subsequently. 14. We find that Hon"ble Delhi High Court while dealing with similarly placed issue regarding the assessment, in the case of BT (INDIA) PRIVATE LIMITED in W.P.(C) 13968/2021 held that assessment requires to be revised by competent authority before taking executionary action. We are of the considered opinion that the same principle applies to the present case where show cause notices have been issued to recover the refunds sanctioned to the appellants by invoking the provisions of Section 73, without a competent authority determining that the refunds were erroneous. Hon"ble High Court held as follows: 62. Both these decisions and the views expressed therein came to be specifically noticed and reaffirmed by three learned Judges of the Supreme Court in ITC Limited. The decision of the Supreme Court in ITC Limited assumes added significance, insofar as the present case is concerned, in light of it having found that a self- assessment return, even in the absence of a formal order dealing with the same, wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to be made. 66. In our considered view, unless the self- assessed return, as submitted had been questioned, re-opened or re-assessed and the assertion of the petitioner of the services rendered by it qualifying as an „export of service" questioned or negatived in accordance with the procedure prescribed under the Act, its claim for refund could not have been negated. As was observed by the Supreme Court in ITC Limited, a self-assessed return also amounts to an „assessment" and unless it is varied or modified in accordance with the procedure prescribed under the relevant statute, the same cannot possibly be questioned in refund proceedings. As the Supreme Court had held in the decisions aforenoted, the authority while considering an application for grant of refund neither sits in appeal nor is it entitled to review an assessment deemed to have been made. In fact, the Supreme Court in ITC Limited had described refund proceedings to be akin to execution proceedings. 67. We thus come to the firm conclusion that in the absence of the self-assessed return having been questioned, reviewed or re-assessed, the claim for refund of CENVAT credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of such credit for the purpose of refund under Rule 5. First of all, we note that the eligibility of certain input services for credit purposes is being disputed and denied by the Original Authority during the course of processing the refund claim under Rule 5. The correct course of action would be to decide the eligibility of various input services for credit and thereafter in the refund proceeding decide the correctness of the claim in terms of the provisions of Rule 5 read with the relevant notification. We find that such process has not been followed in the present cases. In any case, we are examining the respondents" eligibility for these credits as upheld by the Appellate Authority. 4. The outdoor catering service is availed by the respondents for the catering facility rendered to the employees in order to provide round the clock uninterrupted export service to the foreign recipients. In such scenario, it is necessary to examine the context of input service and its nexus with the output service. The respondents are engaged in providing service to clients located in different countries and different time zones. In such situation we find that in a continuous operation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as it is proven the same has been used in providing export services. Once it is established that the said services have been used for providing the output service, rebate claim becomes admissible subject to verification of the payment of Service Tax on the said services .....". 16. Regarding the submissions like non-production of original FIRCs, non-mentioning of output service in the invoices and discrepancies in the figures etc., we are in agreement with the submissions of the learned Counsel for the respondents that procedural lapses, if any, should not come in the way to extend the substantial benefit available to the respondents. 17. In view of the above, we find that Revenue has clearly erred in issuing the show cause notices under Section 73 of the Finance Act. We find that during the impugned period, Commissioner of Central Excise has no power to examine the legality or propriety of the orders passed by lower authorities save otherwise than by invoking the provisions of Section 84. In this case, no such power has been exercised. Further, in contravention of the provisions of Section 84, the show cause notice has been issued beyond the expiry of two years. We are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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