Whether service tax refund be rejected on the ground of non-submission of original invoices and non-mentioning of shipping bill number?

PJ/Case Law/2013-14/1848

Case:- MERIDIAN APPARELS LTD Vs COMMISSIONER OF CENTRAL EXCISE, COIMBATORE

Citation:- 2013-TIOL-1280-CESTAT-MAD

Brief facts:-There are two appeals being considered in this proceeding. They arise from two different impugned orders but relates to the same issue in respect of the same appellant and hence they are considered together.

The appellant is an exporter of apparels. They filed refund claims in respect of input services utilized in connection with export of their goods in terms of Notification No.41/07-ST dt. 6.10.2007 and Notification No.17/09-ST dt. 7.7.2009 for the period 1.7.2009 to 30.9.2009 in the first appeal and for the period 1.7.09 to 6.7.2009 in respect of second appeal. After adjudication and first appeal, refund of tax paid on “CHA Services” and “Technical Testing & Analysis Services” stands refused to the appellant. Aggrieved by the orders of the lower authorities, appellant filed appeals.

Appellant’s contention:-The counsel for appellant submits that the claims have been rejected on the ground that the invoices raised by CHA did not indicate the shipping bill number in respect of which tax was paid. There is also a ground that the original invoices had not been produced before the adjudicating authority. They submit that they had the original invoices and that they were willing to produce before the adjudicating authority but were not given a chance. The advocate further concedes that the invoices issued by CHA do not indicate the shipping bill numbers and the notification specifies such requirement. She submits that this is a condition to be complied by CHA while issuing the invoice and since they were not much concerned about refund, there was some difficulty in getting the shipping bill number incorporated in the invoices. However, they can produce copies of shipping bills related to the bills raised by CHA and also produce original copies of the invoices issued by CHA before the adjudicating authority if a chance is given. In respect of Technical Testing & Analysis Service, the objection raised by the Revenue is that appellant has not been able to show any agreement between them and the testing agency to prove that the technical testing and analysis service was in relation to the goods exported. She submits that though such a condition was there in the notification No.41/07, no such condition is there in Notification No.17/09-ST dt. 7.7.09. She submits that on the insistence of the buyers, the testing is done to ensure the quality of the goods so that appellant's reputation with the clients abroad is maintained. She submits that she can produce invoices raised by the testing agency and demonstrate that such testing was in relation to goods exported if a chance is given in the matter.

Ld. AR, at the outset, raised technical objection that this matter relates to an exemption notification issued as per the provisions of Section 93 of the Finance Act, 1994 and therefore relates to rate of duty and hence the matter should be decided by Division Bench of the Tribunal and not by a Single Member Bench. Opposing this objection, Ld. advocate submits that appellant is not required to pay any service tax and there is no dispute about rate of duty or any tax to be paid by the appellant and therefore this dispute cannot be considered to be relating to a matter involving rate of duty simply for the reason that refund of service tax is administered through a notification issued under Section 93 of the Finance Act'94 and it is only appropriate that the matter is decided by Single Member Bench considering that even matters of the year 2004 are still pending decision before DB.

Respondent’s contention:-On the merits of the case, Ld. AR for Revenue submits that in respect of CHA services, the notification clearly requires that the shipping bill number and date should be indicated in the invoice. This being a statutory requirement, it cannot be circumvented or diluted to grant refund. He relies on the decision of CCE New Delhi Vs Hari Chand Shri Gopal 2010 (260) ELT 3 (SC) = (2010-TIOL-95-SC-CX-CB). Further, he contests that without demonstrating that the invoice raised by CHA was in relation to specific exports made by appellant, refund cannot be granted. In respect of technical testing & analysis service, he says that such a condition was there in the first notification and therefore it cannot be relaxed when that notification was in force. When the second notification was in force, even during that time appellant has to demonstrate that the testing was in relation to goods exported.

Reasoning of judgment:- As far as the objection raised by Revenue on the jurisdictional issue, it was found that this is not a matter relating to a dispute involving rate of duty and it is only proper that the matter is decided by a Single Member Bench so that there is no unnecessary workload on the Division Bench so it was decided to take up matter for hearing and disposal. It is true that there are two defects in respect of CHA services. One is that original copy of invoice raised by CHA is not produced which is a defect that can be very easily cured because the appellants are willing to produce it before the adjudicating authority. The second issue is in respect of the fact that shipping bill numbers have not been indicated in the invoices raised by CHA. This being a condition to be complied with by a third party, some difficulties could have been there in the initial phase of implementation of such a scheme and if such nexus can be established through documents available otherwise, such evidence should be looked into and the substantial benefit cannot be denied when the requirements specified under the statute can be verified otherwise.

Accordingly, the appeal was allowed subject to appellant proving that the said services were in relation to the exported goods.

Decision:- Appeal allowed.

Comment:- The essence of this case is that substantial benefit of service tax refund cannot be denied for the procedural lapses when the requirements specified under the statute can be verified through documents available as the ultimate intention of the legislation is to promote exporters and give maximum benefit to them.

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PJ/Case Law/2013-14/1848

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