Relevant date for computing time limit for refund for export of services.

PJ/CASE LAW/2014-15/2445

Case:-COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, GOA Vs M/S RATIO PHARMA INDIA PVT LTD

Citation:-2014-TIOL-2397-CESTAT-MUM

Brief Facts:- This appeal has been filed by Revenue against impugned order-in-appeal of Commissioner (Appeals), who had upheld the order of adjudicating authority granting refund of Rs.5,97,244/- for the period 1.4.2008 to 30.6.2008 to the respondents.

The facts are that the respondents are a 100% EOU in the service sector providing 'Scientific and Technical Consultancy Service'. The entire services are exported as per Rule 3 of the Export Service Rules, 2005. They filed the aforesaid refund claim on 15.4.2009 under the provisions of Rule 5 of Cenvat Credit Rules 2004 read with Notification No. 5/2006-CE(NT) dt. 14.3.2006. The adjudicating authority held that Cenvat Credit on their inputs to the tune of Rs.2,92,238/- and on input services to the tune of Rs.3,05,006/- all totaling to Rs.5,97,244/- was availed and since the respondents were not in a position to utilize the Cenvat Credit, they were entitled to refund of the unutilized credit. In appeal, Revenue has contended that as per Explanation B(a) to Section 11B, the limiting period of one year for sanction of refund is to be taken from the date of shipment of the goods which are exported. Whereas the interpretation of the lower authority is that the period of one year would start from the quarter of the month to which the refund claim pertains as the refund claims under Notification No. 5/2006-CE(NT) are to be submitted not more than once for any quarter in a calendar year. According to Commissioner (Appeals), the refund is for credit accumulated and not for the duty paid on the
services exported in term of Section 11B and, therefore, Rule 5 of Cenvat Credit Rules is outside the purview of Section 11B of the Act.

Appellant contentions:- The Ld. A.R. reiterated the grounds of appeal. He also showed from the records that, in the case of two invoices raised the service was provided in 2007 whereas the invoices were issued in 2008. According to him, the date of actual supply of export of service which is available in this case should be taken as the relevant date under Section 11B as held by the CESTAT in the case of M/s. Affinity Express India Pvt. Ltd. Vs. Commissioner of Central Excise Pune-I,vide order No. A/918/14/SMB/C-IV dt. 6/05/2014 and the decision of Hon'ble High Court of Madras in the case of Commissioner of Central Excise, Coimbatore Vs. GTN Engineering (I) Ltd. reported in 2012 (281) E.L.T. 185 (Mad.) . And therefore, in the case of said two invoices, refund should not be granted.

Respondent Contentions:- The Ld. Counsel contended that since services are exported the relevant date for limitation given in Section 11B will be raising of invoices or date of payment will be the date of export of service. He stated that in the present case the refund claim was filed with the department on 15.4.2009 and the export invoices were raised on 21.4.2008, 30.4.2008, 19.5.2008, 30.5.2008, 3.6.2008, 6.6.2008, 10.06.2008, 27.6.2008 and 30.06.2008. The payment of service was received thereafter and, therefore, the refund has been filed within the time limit of one year under the provisions of Section11B. It was also stated that without prejudice to the above, time limit stipulated under Section 11B is not applicable in cases of refund claim made under Rule 5 of the Cenvat Credit Rules.

Reasoning of Judgment:- The Tribunal considered the submissions made by both sides. The only issue only to be decided is whether the refund claims have been filed within the time limit prescribed in Rule 5 of the Cenvat Credit Rules read with notification No. 5/2006 and Section 11B of the Central Excise Act. For convenience the relevant part of notification No. 5/2006-CE(NT) are reproduced below:

Appendix:

"The application in Form A, along with the prescribed enclosures and the relevant extracts of the records maintained under the Central Excise Rules, 2002, CENVAT Credit Rules, 2004, or the Service Tax Rules, 1994,in original, are filed with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, before the expiry of the period specified in section 11B of the Central Excise Act, 1944(1 of 1944)."

As clause (6) of the Appendix to the Notification requires that the refund claims should be filed before the expiry of the period specified in Section 11B, we may have at the relevant provisions of Section 11B. Section 11B requires that the refund claim should be filed before the expiry of one year from the relevant date. The relevant date as per Explanation B of Section 11B read as under:

"(B) "Relevant date" means,-

(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods,-

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or

(ii) if the goods are exported by land, the date on which such goods pass the frontier, or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;”

The first question which arises is whether the above provisions of Central Excise Act will apply to services under the Service Tax Act, as Section 11B applies to goods only. It was noted that under Section 83 of the Finance Act, the provisions of Section 11B of the Central Excise Act, shall apply in relation to service tax as they apply in relation to a duty of excise. Therefore, it is inferred that just as the relevant date in the case of Central Excise is the date of export of goods, the relevant date in the present case would mean would be the date on which the services are exported. This view is also stated in the case of M/s. Affinity Express India Pvt. Ltd. (supra) and GTN Engineering (I)(supra). This being my stated view, the respondent would be eligible for refund in respect of all invoices except two invoices, namely invoice No. RPIN/EOU/2008/033 dt. 27/06/2008 and invoice No. RPIN/EOU/2008/037 dt. 30/06/2008 under which the services were provided in 2007 but billed in June 2008 and for which refund is claimed on 15.4.2009.

Having given view on the issue at hand, the tribunal brought on record, following decisions of the Tribunal in similar matters:

(i) In the case of Affinity Express India Pvt. Ltd. (supra) it was held that the relevant date for determining the period of limitation will the date of export of services or the date when the invoices are raised.

(ii) In the case of Business process Outsourcing (I) Pvt. Ltd. Vs. C.C. & S.T., Bangalore 2014 (34) STR 364 (Tri-Bang) , it was held that the relevant date should be the date on which consideration is received, whether it is part or full or advanced.

(iii) Bechtel India Pvt. Ltd. Vs. Commissioner of Central Excise, Delhi 2014 (34) S.T.R. 437 (Tri. - Del.) held that the relevant date is the date of receipt of foreign exchange.

To have a uniformity on the issue in view of the different judgments of the Tribunal, it was considered that the matter should be referred to Larger Bench.

The following question is hereby referred to the President for consideration by the Larger Bench. Whether the "relevant date” for deciding the limiting period of one year under Clause 6 of Appendix to Notification 5/2006-CE(NT) dt. 14.3.2006 for sanction of refund of Cenvat Credit under Rule 5 of Cenvat Credit Rules read with Notification No. 5/2006-CE(NT) dt. 14.3.2006 in the case where service is exported is:

(a) The date of export of service, or

(b) The date of export invoice, or

(c) The data of receipt of foreign exchange whether is is part of full or advanced

Or

(d) The date when both activities have been completed i.e. service has been exported and foreign exchange has been received (as foreign exchange may be received in advance.

In view of the above findings, the matter was referred for consideration by the larger bench.

Decision:-Reference to Larger Bench.

Comment:- The substance of the case is that in view of different tribunals adopting different parameters for computing the time limit for filing refund claim under Rule 5 of the Cenvat Credit Rules 2004, it was considered apt to refer the matter to the larger bench of the tribunal so that the ambiguity created on account of different judgments is overcome.

Prepared By:-Meet Jain

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PJ/CASE LAW/2014-15/2445

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