Whether appeal maintainable against order for grant of refund on the sole ground that Commissioner Appeals has no power to remand?

PJ/Case law/2013-14/1920

Case:-COMMISSIONER OF C.EX., BANGALORE VERSUS ARICANT CCOMMUNICATION PVT. LTD.

Citation:-2013(31) S.T.R. 548 (Tri.-Bang.)

Issue:-Whether appeal maintainable against order for grant of refund on the sole ground that Commissioner Appeals has no power to remand?

Brief Facts:-Heard both sides on the application for condonation of delay. Considering the grounds disclosed, the delay of 29 days in filing the appeal was condoned.
Heard both sides on the stay petition filed by the department. Considering the nature of dispute, the prayer for staying the operation of the impugned order was declined and the appeal was taken for final disposal.
The respondent- assessee exported IT software services during the period May 2008 to June 2008 and filed a refund claim for a sum of Rs. 2,99,354/- under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006 dated 14-3-2006 on input services used in the export of output services. The original authority rejected the claim holding that the services on which credit has been availed did not have nexus with the output services exported. On appeal by the party, the Commissioner (Appeals) has set aside the order of original authority. Therefore, the department is in appeal.

Appellant Contentions:-The learned DR submits that the Commissioner (Appeals) has no powers of remand and therefore, the order of the Commissioner (Appeals) should be set aside and the matter remanded to the Commissioner (Appeals) for fresh consideration. In this regard, he relies on the decision of the Hon'ble Supreme Court in the case of MIL India Ltd. v. Commissioner of C. Ex., Noida [2007 (210) E.L.T. 188 (S.C.)] and also the decision of the Tribunal in the case of Commissioner of Central Excise, Noida v. Orient Crafts Ltd. [2011 (21) S.T.R. 302 (Fri.-Del.)].

Respondent Contentions:-The learned Advocate for the respondent reiterated the submissions in cross objections and fairly submits that though it is named as cross objection, they are not claiming any relief other than what has been granted by the learned Commissioner (Appeals). He also submits that the Commissioner (Appeals) has given detailed findings on the nexus issue and what was remitted to the original authority is only in relation to the Board's Circular No. 120/1/2010 dated 19-1- 2010.

Reasoning of Judgment:-Tribunal has carefully considered the submissions made by both sides and perused the records. The disputed services are six in numbers. The Commissioner (Appeals) has examined the nexus between each of the 'input services' and 'output service' exported by the assessee and recorded his findings in detail, which are as follows :
"Telecom service: Telecommunication services, Internet telephony services, pager services etc., are required by the Company to communicate with clients, employees and partners across all locations in relation to the business operations of the Company. This is a vital requirement for the Company to carry on its business activities and the input services are essential for the provision of output services.
Management, Maintenance or Repair service :Equipments installed in the office premises such as air-conditioners, computers, UPS etc. require constant maintenance and repair for carrying out the business operation within the premises. Therefore, such maintenance of repair services are essential to maintain the equipment in the running conditions to facilitate the business operations in relation to the output services rendered by the Company. This service is eligible if it is used in the registered premises only.
Renting of immovable property:This service is eligible for refund restricted to registered premises only, excluding for car parking/cafeteria.
Security agency service:The protection and safety of the office premise, assets and employees is necessary and required to be maintained round the clock. Thus, these services are directly related to the services provided by the company. Further, the unit being an STP unit, security of the building, computers, networking equipment, all assets and all that is within it is an essential requirement. It is submitted that the appellant also has to deal with confidential data of their clients and the security personnel are therefore essential to secure the precincts of their building from outside as well as inside.
Chartered Accountant's Services:The Chartered Accountant's Services are in relation to various accounting and auditing aspects of the business of the Company. As per the statutory requirement, every company has to get their accounts audited. Further, the services in relation to accounting and auditing are clearly understood to be related to the business of a service provider.
Clearing & forwarding Agency service:Software industry requires many hardware and software which are not available in our country. Sometimes because of the foreign client/customer agreement conditions, imports are required. To facilitate such import of goods, help of CHA, freight & forwarding agents services is a must to handle the customs and sea/air/land port works. Hence these input services are essential for output service and qualify for refund."
He has also given reasons for accepting the registration certificate for "Consulting Engineer Service" taken by the assessee which was subsequently amended as sufficient for seeking the refund claim. In effect, the Commissioner (Appeals) has not remitted any issue on merits to be decided by the original authority. It is basically for quantification purposes based on the Chartered Accountant's certificate as envisaged in the Board's Circular dated 19-1-2010. In these circumstances, the grounds taken by the department that the Commissioner (Appeals) has no power of remand has no relevance to the present case.-No other valid grounds have been adduced to interfere with the order of the Commissioner (Appeals).
The appeal of the department is, therefore, rejected. Cross objection which is merely in support of the Commissioner's (Appeals) order is also disposed of. Stay petition and application for condonation of delay are also disposed of.

Decision:-The appeal of the department is rejected.

Comment:-The essence of this case is that the order granting refund claim cannot be contested merely on the grounds that the Commissioner Appeal remanded the matter to the adjudicating authority who consequently granted the refund and as the Commissioner Appeals has no power to remand, the order sanctioning the refund claim is not tenable. The order sanctioning the refund is proper if the same has been passed by analysing the admissibility of refund claim.

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PJ/Case law/2013-14/1920

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