Wrong allegation of not following proper procedure when refund filed under correct notification.

PJ/CASE LAW/2014-15/2531

Case:-INFOSYS TECHNOLOGIES VS COMMISSIONER OF C.EX., CHANDIGARH

Citation:- 2014(36) S.T.R. 922(Tri.-Del.)

Brief facts:-The appellant were engaged the providing taxable services which they had exported. The period of dispute in this case was from April ’07 to Sept. ’07. In providing the output service for export, they had used certain inputs services in respect of which they took Cenvat credit of Rs. 11,20,486/-. Since they could not utilize this credit for payment of service tax on their domestic service transactions, they in accordance with the Provisions of Notification No. 5/2006-C.E. (N.T.), dated, 14-3-2006 issued under Rule 5 of Cenvat Credit Rules, 2004, applied for cash refund of the accumulated Cenvat credit. This refund application filed in terms of the Provisions of Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T.) issued under this rule, was considered by the Jurisdictional Assistant Commissioner, who vide Order-in-Original, dated 4-4-2008 rejected the refund application on the ground that the appellant had not followed the procedure prescribed under Notification No. 12/2005-S.T., issued under Rule 5 of the Export of Service Rules, 2005 and accordingly did not fulfill the conditions of the Notification No. 5/2006-C.E. (N.T.) issued under Rule 5 of Cenvat Credit Rules, 2004. The appeal against this order of jurisdictional Assistant Commissioner was dismissed by the Commissioner (Appeals) vide order-in-appeal, dated 23-9-2008, against which this appeal was filed.

Appellant’s contention:-Sh. K.S. Ravishankar, Advocate and Sh. Anirudh R.J. Nayak, Advocate, appeared on behalf of the appellant, pleaded that the refund application was filed by the appellant under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T.), issued under these rules, that Notification No. 5/2006-C.E. (N.T.) prescribed the conditions to be fulfilled and the procedure to be followed for claiming the cash refund of the accumulated Cenvat credit, that Notification No. 12/2005-S.T., issued under Export of Service Rules, 2005 prescribes the conditions to be fulfilled and the procedure to be followed for claiming rebate in respect of export of service, of the service tax paid on the output service exported or of excise duty paid on inputs and/or service tax paid on inputs services used for providing the services which had been exported, that Notification No. 12/2005-S.T., issued under Export of Service Rules, 2005 had no application to this matter, that in view of this the impugned order rejecting the refund application on the ground that the conditions prescribed in Notification No. 12/2005-S.T. have not been fulfilled and the procedure have not been followed, was totally incorrect.

Respondent’s contention:-Sh. Yashpal Sharma, the learned DR, defended the impugned order and reiterated the findings of the Commissioner (Appeals).

Reasoning of judgment:- The commissioner considered the submissions of both the sides and perused the records. On going through the records, they found that there was no dispute that the refund claim, in question, was for refund of accumulated Cenvat Credit. Terms of Rule 5 of the Cenvat Credit Rules, 2004 for which the Notification No. 5/2006-C.E. (N.T.), issued under these rules, prescribes the conditions to be fulfilled and the procedure to be followed. The Notification No. 12/2005-S.T., issued under Rule 5 of the Export of Service Rules, 2005, prescribes the conditions to be fulfilled and procedure to be followed for claiming rebate in respect of export of services. The two schemes are totally different and the procedure prescribed and the conditions to be fulfilled for claim of cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 and for claiming rebate in respect of export of services in terms of Rule 5 of the Export of Service Rules, are totally different. The lower Authorities mixed up the two issues. In the case in hand it was required to be seen as to whether the procedure prescribed under Notification No. 5/2006-C.E. (N.T.), issued under Rule 5 of Cenvat Credit Rules, 2004 has been followed and the conditions prescribed in this Notification have been fulfilled. Notification No. 12/2005-S.T., issued under Rule 5 of the Export of Service Rules, 2005, which prescribed the conditions to be fulfilled and the procedure to be followed for claiming rebate in respect of export of services, had no application. The impugned order was, therefore, set aside and the matter was remanded to the Assistant Commissioner for examining the refund claim under Rule 5 of the Cenvat Credit Rules, 2004 on the basis of the conditions and the procedure prescribed in this regard in the Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 which was the correct Notification applicable to this case. The appeal stood disposed of as above.

Decision:- Appeal disposed off.

Comment:- The gist of the case is that when refund claim for accumulated Cenvat Credit is filed, the procedure prescribed in the Notification No. 5/2006-C.E. (N.T.) is to be looked into. This notification prescribes the conditions to be fulfilled and the procedure to be followed for taking cash refund of accumulated Cenvat Credit. On the other hand The Notification No. 12/2005-S.T., has been issued under Rule 5 of the Export of Service Rules, 2005, prescribes the conditions to be fulfilled and procedure to be followed for claiming rebate in respect of export of services. The two schemes are totally different and the procedure prescribed and the conditions to be fulfilled for claim of cash refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 and for claiming rebate in respect of export of services in term of Rule 5 of the Export of Service Rules are totally different. Hence, the refund claim of accumulated credit filed under notification no. 5/2006-CE was held to be as correct compliance and matter was remanded for processing the refund claim.

Prepared by: Prayushi Jain

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PJ/CASE LAW/2014-15/2531

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