Whether refund claim can be rejected on the ground of deficiency in documents while filing refund within due date ?

PJ/Case Law/2014-15/2167

Case:- M/s R L FINE CHEM Vs COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE

Citation:- 2014-TIOL-737-CESTAT-BANG

Brief Facts:-The brief facts of the case are that the appellants are manufacturers of excisable goods i.e. organic chemicals falling under chapter 29 Central Excise Tariff Act, 1985. They are availing facility of CENVAT credit under CENVAT Credit Rules, 2004. The appellants are exporting their manufactured goods and for the export purpose they have been receiving services from the commission agents located outside India under a contract or agreement. The services received from such foreign commission agents are taxable as classifiable under clause (105)(zzb) of Section 65 of Finance Act, 1994. But the manufacturer-exporters are exempted from the whole of the service tax leviable on the said service and the exemption is provided to them by way of refund of service tax paid, in terms of Notification No.41/2007-ST dt. 06/10/2007 as amended by Notification No.17/2008-ST dt. 01/04/2008. In view of this, the appellants have sought for refund of Rs.2,91,010/-, claiming as service tax paid on the commission to the foreign agents for the services received from them in respect of exports made during the quarter July 2008 to September 2008. The refund claim was received in the Divisional Officer on 31/03/2009. The Revenue officer after initial scrutiny of the refund claim, issued a deficiency memo dt. 06/04/2009 calling for certain additional documents and also returned the refund claim .The appellant resubmitted the claim along with the documents called for in the deficiency memo. The adjudicating authority after deducting the ineligible service tax amount of Rs.1,93,776/- sanctioned refund of Rs.2,71,634/- under Section 83 of Finance Act 1994 read with Section 11 B of Central Excise Act, 1944. Aggrieved by such an order of sanctioning refund by the adjudicating authority, the Department filed an appeal before the first appellate authority seeking to set aside the impugned order. The first appellate authority, after granting personal hearing and considering the submissions made by both sides, set aside the Order-in-Original and allowed the appeal filed by the Revenue on the ground that the assessee has filed refund claim beyond the period as has been mentioned in the Notification No.41/2007-ST as amended by Notification No.32/2008-ST dt. 16/11/2008. The assessee is in appeal before this Tribunal.

Appellant’s Contention:-It is his submission that appellant had filed the refund claim on the last day i.e. 31/03/2009 for the goods exported during the period July 2008 to September 2008. It is his submission that on 06/04/2009, the Superintendent of Central Excise, Tech-II, Bangalore issued a letter indicating the deficiency in the refund claim filed by the appellant having not furnished bank realization certificate and proof of having paid the service tax towards commission charges and returned the refund claim. It is his submission that the appellant had exported the goods and subsequently submitted the bank realization certificate and the proof of payment of service tax. It is his submission that benefit of Notification No.41/2007-ST should not have been denied to an assessee who has complied with the conditions and could have been asked to file the documents. For this proposition, he relied upon the decision of the Hon'ble High Court of Karnataka in the case of Sudhir Papers Ltd. Vs. CCE, Bangalore-I [2012 (276) ELT 304 (Kar.)]. It is also his submission that the refund claim which was filed by the appellant could not have been returned by the Superintendent as he has no authority to return the same.

Respondent’s Contention:- The learned DR on the other hand would reiterate the findings of the first appellate authority. It is his submission that the appellant had filed initially refund claim without the bank realization certificate and proof of payment of service tax is an accepted fact. It is his submission that as per Notification No.41/2007-ST condition No. 2(f), appellant was required to submit refund claim accompanying with all the documents. In the absence of any document, it cannot be said that the refund claim filed on 31/03/2009 is correct. It is the submission that refilling of refund claim on 27/04/2009 is beyond the period as mentioned in clause 2(e) of the said Notification.

Reasoning of Judgment:-   After considering the submissions made by both sides and perused the records. The issue to be decided in this case is whether resubmission of the refund claim by the appellant would be hit by limitation as provided under Notification No.41/2007-ST as amended by Notification No. 32/2008-ST. Undisputed facts are that the appellant herein is an exporter and has exported the goods. It is also undisputed that the appellant had paid service tax for commission charges. The said service tax was paid by him under the provisions of Section 66A of the Finance Act 1994, under the reverse charge mechanism.

                On perusal of the records, it was found that the appellant had filed refund claim on 31/03/2009 which is the last date when the refund claim can be filed for the period from July 2008-September 2008. It is seen from the impugned order, particularly from paragraph 9, that Revenue has not challenged the refund claim on merits before the first appellate authority. These findings are recorded by the first appellate authority. This would mean that the appellants are eligible for the refund of the amount of service tax paid by them and claimed by them. The only question remains is whether resubmission of the refund claim by the appellant on 27/04/2009 is hit by the clause 2(f) of the Notification No.41/2007-ST as amended. On perusal of the said clause, the said clause talks about submission of refund claim accompanied by the documents evidencing (i) export of goods, (ii) payment of service tax on the specified services for which claim for refund of service tax and (iii) wherever applicable, a copy of the written agreement entered into by the exporter with the buyer of the goods. It can be seen that there is no dispute as to the fact that the goods were exported by the appellants. The only proof, which the appellant could not produce or submit when they filed refund claim was in respect of payment of service tax. Subsequently it has been rectified and informed that the appellant had been able to submit proof of payment of service tax along with bank realization certificate, It is find that the view taken by the first appellate authority is incorrect, unsustainable; as substantive benefit should not be denied to an assessee if conditions are fulfilled. In the respondent considered view, instead of returning of the refund claim, the lower authorities could have asked the assessee to file bank realization certificate and proof of payment of service tax; which would have been complied by the appellant and in that case refund claim was well within the time. Be that as it may, clauses of Notification No.41/2007-ST as amended by the Notification No.32/2008-ST do not envisage rejection of the refund claim when it is due, if the exports are made and substantiated. Accordingly, Impugned order is set aside and appeal is allowed.

Decision:-   appeal allowed

Comment:- The analogy drawn from the case is that refund claim can not be rejected on the ground of deficiency of documents if the refund claim was filed on or before due date and the said documents could have been called for by the adjudicating officer to make good the deficiency.

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PJ/Case Law/2014-15/2167

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