Provisions prevalent at the date of filing refund claim to be applied.

PJ/Case Law/2013-14/2328

Case:- FAIZAN SHOES PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI

Citation:-2014 (34) S.T.R. 205 (Tri. - Chennai)

Brief facts:- The four Misc applications filed by the appellants are for incorporation of additional grounds. The same are allowed in the absence of any opposition from the department’s side.
The appellants are exporters who have claimed refund of service tax amounts paid on services in relation to the exports under Notification No. 41/2007-S.T., dated 6-10-2007. These have been rejected by the authorities below on one or the other grounds mentioned below:-
1.     At the time of export, proviso (e) to para-1 of the said notification required that the exporter should not have availed drawback of service tax. This condition is not satisfied by the appellants on the date of export even though the condition itself was omitted w.e.f. 7-12-2008 prior to filing of the refund claims.
2.     At the time of export, the said notification provided a time-limit of 6 months for filing of the refund claim even though, by the time the claims were filed, the time-limit was extended to one year w.e.f. 7-7-2009.
3.     The said notification provided a condition that the exporters shall declare the amount of commission in the shipping bill.

Appellant’s contentions:-Shri N. Viswanathan, ld. advocate appearing for the appellants, states that in the case of WNS Global Services (P) Ltd. v. CCE, Mumbai - 2008 (10)S.T.R.273 (Tri.-Mumbai)the Tribunal has held in paragraph 10 thereof that where the refund claims are filed after an amendment and the requirements are satisfied, the refund claims cannot be rejected. He states that on the date of refund application, there was no requirement that drawback should not have been taken and also the time-limit was also extended to one year. Hence, all the refund claims are admissible. As regards the omission of the commission amount in the impugned shipping bills in few cases, he states that the SCNs were silent on this ground and hence impugned orders are beyond the grounds taken in the SCN and further that this was only a procedural condition.

Respondent’s contentions:- Ld. JCDR appearing for the department opposes the contentions made on behalf of the appellants and cites the decision of the Tribunal dated 18-8-2011 in the case of CCE, Madurai v. Shiva Tex Yarn & Others in Appeal Nos. ST/432, 433/2011 [2012(25)S.T.R.56(Tri.-Chennai)]to the effect that the amendments to a notification are only of prospective effect.

Reasoning of judgment:- The Hon’ble Tribunal find that the decision cited by the ld. JCDR is rendered by a Single Member Bench whereas the decision cited by the ld. advocate is that of a Division Bench including the Single Member who has rendered the decision dated 18-8-2011. As such, the Division Bench decision is required to be followed in preference to the Single Member Bench decision. Secondly, the provisions contained in the cited notification have been extended to free the Indian exports from domestic taxes by refunding the service tax so that the domestic taxes are not exported along with the goods and the Indian goods become competitive in the international market. This objective would also be served by following the decision of the DB. Further, they find that when the time-limit was extended from 60 days to 6 months, the Board itself by Circular dated 12-3-2009 clarified that pending claims should be dealt with applying the amended provision as also noted by another Bench of the Tribunal in the case of CCE, Surat v. Essar Steel Ltd. - 2010 (20)S.T.R.769 (Tri.-Ahmd.). Accordingly, following the cited decision of the Tribunal in the case of WNS Global(supra) and the Board’s Circular dated 12-3-2009, they are of the view that in regard to both the objections raised i.e. clause relating to non-availability of drawback as well as for the time-limit, the amended provisions as applicable on the date of filing of refund claims require to be applied.
As regards the non-mention of the commission amounts in the shipping bill, this is a mere procedural condition and the refund claims can be considered if there is documentary evidence regarding the amount of service tax paid on the actual amounts of commissions disbursed.
In view of their findings as above, the impugned orders are set aside and all the five appeals are allowed with the direction that the refund amounts be allowed to the appellants, if otherwise due.

Decision:- Appeals allowed.

Comment:-The crux of the case is that the amended provisions as applicable on date of filing the refund claims are to be applied. Also, non-mention of commission amounts in shipping bill is procedural lapse and the refund is to be granted if payment of service tax and use of service in the exported goods is not disputed.

Prepared by:- Monika Tak

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PJ/Case Law/2013-14/2328

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