Relevant date for refund of accumulated credit in case of export of service.

PJ/CASE LAW/2015-16/2682

Case:-COMMR. OF CUS., C. EX. & S.T., GOA VERSUSRATIO PHARMA INDIA PVT. LTD.

Citation:- 2015 (38) S.T.R. 83 (Tri. - Mumbai)

Brief facts:-This appeal had 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 were that the respondents are a 100% EOU in the service sector providing ‘Scientific and Technical Consultancy Service’. The entire services were exported as per Rule 3 of the Export Services 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-C.E. (N.T.), dated 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 had 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 were exported. Whereas the interpretation of the lower authority was 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-C.E. (N.T.) were to be submitted not more than once for any quarter in a calendar year. According to Commissioner (Appeals), the refund was 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 was outside the purview of Section 11B of the Act.

Appellant’s contention:-the ld. AR 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 was 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. v. Commissioner of Central Excise, Pune-I, vide Order No. A/918/2014/SMB/C-IV, dated 6-5-2014 [2015 (37)S.T.R.321 (Tri.-Mumbai)] and the decision of Hon’ble High Court of Madras in the case of Commissioner of Central Excise, Coimbatore v. GTN Engineering (I) Ltd. reported in 2012 (28)S.T.R.426 (Mad.) = 2012 (281)E.L.T.185 (Mad.). And therefore, in the case of said two invoices, refund should not be granted.

Respondent’s contention:- The ld. Counsel contended that since they were exporting services, 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, 10-6-2008, 27-6-2008 and 30-6-2008. 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 Section 11B. It was also stated that without prejudice to the above, time limit stipulated under Section 11B was not applicable in cases of refund claim made under Rule 5 of the Cenvat Credit Rules.

Reasoning of judgment:- The bench carefully considered the submissions made by both sides. The only issue to be decided was whether the refund claims had 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-C.E. (N.T.) were reproduced below :
6. 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 required 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 required 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 dispatch of goods by the Post Office concerned to a place outside India”.
The first question which arose was whether the above provisions of Central Excise Act will apply to services under the Service Tax Act, as Section 11B applied to goods only. He 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 applied in relation to a duty of Excise. Therefore, it was inferred that just as the relevant date in the case of Central Excise was the date of export of goods, the relevant date in the present case would mean would be the date on which the services were exported. This view was also stated in the case of M/s. Affinity Express India Pvt. Ltd. (supra) and GTN Engineering (I) Ltd. (supra). This being his stated view, the respondent would be eligible for refund in respect of all invoices except two invoices, namely Invoice No. RPIN/EOU/2008/033, dated 27-6-2008 and Invoice No. RPIN/EOU/ 2008/037, dated 30-6-2008 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 his view on the issue at hand, he 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. v. C.C. & S.T., Bangalore - 2014 (34)S.T.R.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.v. 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, he considered view 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-C.E. (N.T.), dated 14-3-2006 for sanction of refund of Cenvat Credit under Rule 5 of Cenvat Credit Rules read with Notification No. 5/2006-C.E. (N.T.), dated 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 it 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 is referred to the larger bench.

Decision:- Matter referred to larger bench.

Comment:- The crux of the case is that as there are contrary views in case of relevant date for the purpose of computing time limit for filing refund claim of accumulated credit in case of export of service, the matter has been referred to the larger bench. The provisions pertaining to relevant date given in case of export of goods is being specified in section 11B of the Central Excise Act, 1944 have been made applicable to the Service tax matters also but there is no clarity as regards relevant date for filing refund claim of accumulated credit in case of export of service. Consequently, the matter has been referred to the larger bench.

Prepared by:- Prayushi Jain

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PJ/CASE LAW/2015-16/2682

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