whether substantial benefit of refund can be denied on procedural infraction of non filing of declaration?

PJ/CASE LAW/2015-16/2622

Case:-CREST PREMEDIA SOLUTIONS PVT. LTD. Versus COMMISSIONER OF C. EX., PUNE-III

Citation: - 2015 (38) S.T.R. 46 (Tri. – Mumbai)

Brief facts: -The appellant were in appeal against the impugned Order-in-Appeal whereby Commissioner (Appeals) upheld the Order-in-Original in which rebate claim of Rs. 2,40,182/- was rejected.

The facts of the case were that the appellant were provider of “Business Auxiliary Services” which was exported. They were filing refund claims regularly under Rule 5 of Cenvat Credit Rules in respect of unutilised Cenvat credit of input services, used in the output services which were exported. For the period October, 2010 to March 2011, they did not claim Cenvat credit and instead filed a rebate claim in terms of Notification No. 12/2005-S.T., dated 19-4-2005. They filed a declaration as required under Notification No. 12/2005-S.T., dated 19-4-2005 on 27-9-2011 along with condonation of delay for late filing. Rebate claim was filed on 30-9-2011, whereas the export of output services had taken place during October, 2010 to December, 2010. The rebate claim was rejected on the ground that the declaration was to be filed prior to expiry of one year from the date of export of services.

Appellant’s contention:-The learned Counsel stated that all the conditions of Notification No. 12/2005-S.T. were fulfilled. However there was a delay in filing declaration which was to be filed before export as laid down in para 3.1 of the Procedure under Notification No. 12/2005-S.T. She relied on the case of Commissioner of Service Tax, Delhi v. Convergys India Pvt. Ltd. - 2009 (16)S.T.R.198 (Tri.-Del.) as affirmed by Hon’ble Punjab & Haryana High Court - 2010 (20)S.T.R.166 (P & H). She and Mr. Prasad Paranjpe, advocate made a statement in the Court that there was no duplication of refund as they had not availed refund claim under Rule 5 of the Cenvat Credit Rules, 2004 for the said period.

Respondent’s contention:-The learned A.R. reiterated the findings of the lower authorities and emphatically stated that condition of the Notification must be complied with, failing which benefit of the Notification should not be granted.

Reasoning of judgment:-after carefully considering the rival contentions it was held that the Notification No. 12/2005-S.T. grants rebate on inputs and inputs services used in providing taxable services which are exported. The Conditions and Limitations prescribed in the Notification as well as the Procedure are reproduced below :-

“2. Conditions and limitations :-

(a)    that the taxable service has been exported in terms of rule 3 of the said rules and payment for export of such taxable service has been received in India in convertible foreign exchange;
(b)    that the duty, rebate of which has been claimed, has been paid on the inputs;
(c)    that the service tax and cess, rebate of which has been claimed, have been paid on the input services;
(d)    the total amount of rebate of duty, service tax and cess admissible is not less than five hundred rupees;
(e)    no CENVAT credit has been availed of on inputs and input services on which rebate has been claimed; and
(f)     that in case, -
(i)     the duty or as the case may be, service tax and cess, rebate of which has been claimed, have not been paid; or
(ii)    the taxable service, rebate for which has been claimed, has not been exported; or
(iii)   CENVAT credit has been availed on inputs and input services on which rebate has been claimed,
the rebate paid, if any, shall be recoverable with interest as per the provisions of section 73 and section 75 of the Finance Act, 1994 (32 of 1994) as if no service tax and cess have been paid on such taxable service.

3. Procedure :-

3.1 Filing of declaration.- The provider of taxable service to be exported shall, prior to date of export of taxable service, file a declaration with the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, describing the taxable service intended to be exported with, -

(a) description, quantity, value, rate of duty and the amount of duty payable on inputs actually required to be used in providing taxable service to be exported;
(b) description, value and the amount of service tax and cess payable on input services actually required to be used in providing taxable service to be exported.

3.2 Verification of declaration.- The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall verify the correctness of the declaration filed prior to such export of taxable service, if necessary, by calling for any relevant information or samples of inputs and if after such verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise is satisfied that there is no likelihood of evasion of duty, or as the case may be, service tax and cess, he may accept the declaration.”

It seen from paras 5.7 and 9 of the Order-in-Original that the Conditions prescribed in para 2 of the Notification above, have admittedly been complied with by the appellant. However the procedure was not followed to the extent that declaration was filed after the export of services. It was noted that the contents of the declaration were not such, as cannot be verified from the records maintained. Records such as invoice on which input tax credit was availed and records indicating export of services would not reveal any information which was not verifiable later. Further the learned Counsel had made a statement that there has been no duplication of refund and they have not availed refund under Rule 5 of the Cenvat Credit Rules, 2004 and the Notification No. 12/2005-S.T. simultaneously. Further the finding, of the adjudicating authority and Commissioner (Appeals) clearly indicated that the appellant had not availed Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The contravention of not following the procedure of filing the declaration is indeed a procedural formality, for contravention of which substantial justice cannot be denied relying on the case of Convergys India Pvt. Ltd. (supra). In view of the above the rebate is sanctioned and the appeal is allowed.

Decision:-appeal allowed

Comment:- the gist of this case is that a substantial benefit to assessee cannot be denied just because of merely a procedural lapse. As all the details required in declaration was verifiable, all the rules and provisions were complied with, it was not at all valid to deny the benefit to assessee. When the error is negligible or a rectifiable one then the substantial benefit to assessee should not be deprived.

{prepared by:- Prayushi jain}

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PJ/CASE LAW/2015-16/2622

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