Refund Can't Be Denied On Ground That It Earlier Period: CESTAT

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the refund cannot be denied on the ground that the refund pertains to an earlier period.

The bench of Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) has observed that Rule 5, by which the refund is given in respect of the credit taken, will be applicable even to refunds relating to the period prior to March 14, 2006. In other words, when the refund claim is made and the rule as amended is in operation, the refund cannot be denied on the ground that the refund pertains to an earlier period.

The appellant/assessee had filed refund claims applications under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) dated March 14, 2006, in respect of the unutilized balance of Cenvat Credit and a refund in respect of the service tax on services utilized for the export of goods as per the provisions of Notification No. 41/2007 dated October 6, 2007.

The refund claim was rejected by the adjudicating authority. However, on the appeal filed by the appellant against the order, the Commissioner (Appeals) allowed the appeal with consequential relief and remanded the case back to the original adjudicating authority.

The CESTAT has ruled in favor of the assessee in respect of all the issues, but for the issue pertaining to the effective date of Notification No. 5/2006-CE (NT), wherein the matter was remanded back to the Original Adjudication Authority. In view of the above directions, the matter was taken up for de facto adjudication by the Assistant Commissioner. The issue has been decided by the Assistant Commissioner, and it has been found that an amount of Rs. 55,88,459 pertained to the period prior to March 14, 2006, i.e., the introduction of Notification No. 5/2006-CE (NT), and as such, the refund of the same would not be admissible. The refund claim of Rs. 55,88,459 has been rejected. The appellant filed an appeal before the Commissioner (Appeals), which is currently pending.

The assessee contended that the Commissioner in the order has followed the decision in which it was held that refund under the provisions of Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 05/2006-CE(NT) dated March 14, 2006, is erroneously sanctioned and is liable to be rejected inasmuch as the same pertains to the period prior to the introduction of Notification No. 05/2006-CE(NT) dated March 14, 2006.

The Notification No. 11/2002-CE issued under Rule 5 of the Cenvat Credit Rules, 2004 allowed refund of CENVAT credit of specified duty only in respect of inputs used in or in relation to the manufacture of final products that are cleared for export under bond. On March 14, 2006, as per Notification No. 05/2006-CE (NT), a refund of CENVAT credit was allowed both in respect of the input or input services used in the manufacture of the final products, which are cleared for export under a bond or letter of undertaking. As well as input or input services used in providing output services that have been exported without payment of service tax.

The tribunal held that, as per the department, an amount of Rs. 55,88,459/- pertained to the period prior to March 14, 2006, i.e., the introduction of Notification No. 5/2006-CE, and as such, a refund of the same would not be admissible. The only reason given in the adjudication for rejection of the claim is that it pertains to the year prior to March 14, 2006.

The tribunal did not agree with the reason given in the adjudication for rejection of the claim and allowed the appeal.

Counsel For Appellant: Amber Kumrawat

Counsel For Respondent: Rajesh R Kurup

Case Title: Gujarat Ambuja Exports Ltd Versus Commissioner of C.E. & S.T.-Ahmedabad

Case No.: Service Tax Appeal No. 11936 Of 2015- DB

Click Here To Read The Order