Refund cannot be denied by reviewing the correctness of ST payment at the end of service provider.

PJ/Case law/2014-15/2281

Case:- COMMISSIONER OF CENTRAL EXCISE, NAGPUR Vs M/s SPENTEX INDUSTRIES LTD

Citation:- 2014-TIOL-551-CESTAT-MUM

Brief facts:-The brief facts of the case are that the respondent manufactured spun yarn/ polyester yarn falling under Chapter Heading 55 and 52 of the Schedule to the Central Excise Tariff Act, 1985. The appellant exported substantial part of its output and has accordingly incurred CHA and Port charges in the course of business for the period July, 2008 to Sept, 2008. The respondent incurred expenses as follows:-
(i)                             Agency charges                            Rs.17,775/-
(ii)                            Documentation charges                  Rs.5,004/-
(iii)                           THC Charges                                Rs.29,043/-
(iv)                           Shut-out cost                                 Rs.4,462/-
(v)                           Amendment charges                            Rs.62/-
(vi)                          Consultancy charges                       Rs.9,188/-
(vii)                          Port Services                                    Rs.721/-
                            Total Service Tax                               Rs.66,255/-

The respondent filed refund claim on 28.11.2008 as the CHA and Port Services have been exempted by virtue of Notification No. 41/2007-ST. Pursuant to show-cause notice and considering the claim, an amount of Rs.37,400.35 was sanctioned out of total claim of Rs.66,255/-. The balance claim was not found admissible as expenses under the sub-heading Consultancy charges, Shut out cost, Documentation charges, Port Services, as the said services are not covered under the definition of services provided for export of the said goods falling under the category of Sr. No. 2 of Notification No.41/2007-ST. Being aggrieved, the respondent carried the matter before the Commissioner (Appeals), who took notice of Circular No. 119/13/2009- Service Tax dated 21.12.2009, wherein Board has clarified that "exclusion should be allowed to such charges from the taxable value of CHA services, where the prescribed conditions are satisfied." Further observation that CHA has paid the Service Tax and had issued statutory invoice for the same and recovered the Service Tax on the basis of which the respondent has claimed the refund. Further, it was not in dispute that CHA service stands specified in Notification No. 41/2007. The CHA has provided service to the respondent and recovered the charges under various heads including transportation charges for export of goods directly from place of removal to Inland Container Deport (ICD). Therefore, in the light of the Board's circular dated 21.12.2009, the claim of refund was found to be admissible. Accordingly, the Commissioner (Appeals) allowed the appeal of the respondent with consequential relief. Hence, the revenue is in appeal before the Tribunal.

Appellant’s contentions:-The learned Supdt. (AR) appearing for the Revenue reiterates the findings in the Order-in-Original.

Respondent’s contentions:- None appeared on behalf of the respondent. However, a written submission has been filed by the respondent. The respondent has placed reliance on the ruling of CESTAT in the case of Commissioner of Central Excise, Indore Vs. Anant Commodities Pvt. Ltd. & others reported in = (2009-TIOL-2100-CESTAT-DEL), wherein it was held that refund under Notification No. 41/2007- ST cannot be denied by reviewing the correctness of the Service Tax payment at the end of service providers.

Reasoning of judgment:- Hearing considered the submissions of both sides, it is concluded that the Commissioner (Appeals) has rightly allowed the refund claim in full having considered the Board's circular dated 21.12.2009. Accordingly, tribunal found that there is no infirmity or impropriety in the impugned order and the appeal filed by the Revenue is rejected.

Decision:- The appeal is rejected.

Comment:-The essence of the case is that the refund cannot be denied by reviewing the correctness of the ST payment at the end of service providers. As far as it is not disputed that the service tax was paid and service has been availed for the purpose of export of goods, the refund should be granted as the ultimate intention of the government is not to export taxes and refund should not be denied if the substantial conditions have been complied with.

Prepared by: Monika Tak

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PJ/Case law/2014-15/2281

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