Refund of service tax paid on port service

CASE STUDY

Introduction:

Port Services – Requirement of payment of service tax to service provider for receipt of port services is only while allowing refund. Refund of service tax not to be denied on the ground that service provider was not authorized by the port.
Goods Transport Agency Services – Refund of service tax has been denied on ground that prescribed document issued by service provider was not furnished. Statement showing detailed value of services received is sufficient and can be verified by original adjudicating authority in case of doubt. Non-submission of self-certified copies of document is a curable defect rather than a tool to reject the claim.

GUJARAT TEA PROCESSORS & PACKERS LTD. v/s C.C.E., AHMEDABAD-II[2012 (27) STR 158 (Tri.-Ahmd.)]

Relevant Legal Provisions:

Section 11B of Central Excise Act, 1944

Claim for refund of duty and interest, if any, paid on such duty —
(1) Any person claiming refund of any [duty of excise  and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise  and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person :
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) substituted by that Act :
[Provided further that] the limitation of one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest.
(2)   If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise]is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund
Provided that the amount of [duty of excise and interest, if any, paid on such duty] as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise]under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to –

(a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India;
(b) unspent advance deposits lying in balance in the applicant’s account current maintained with the Commissioner of Central Excise;
(c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act;
(d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;

(e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he
had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
(f)   the duty of excise and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify :

Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person.

(3)   Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).

(4)   Every notification under clause (f)  of the first proviso  to sub-section (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder.

(5)   For the removal of doubts, it is hereby declared that  any notification issued under clause (f) of the first proviso to sub-section (2), including any such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette.

[Explanation. — For the purposes of this section, -

(A)  “refund” includes rebate of duty of excise on excisable goods exported out of India or on       excisable materials used in the manufacture of goods which are exported out of India;

(B)  “relevant date” means, -

(a)  in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, -

(i)   if the goods are exported by sea or air, the date on which the ship or the aircraft in which    such goods are loaded, leaves India, or
(ii) if the goods are exported by land, the date on which such goods pass the frontier, or
(iii)  if the goods are exported by post, the date of despatch of goods by the Post Office concerned    to a place outside India;

(b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid;

(c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory;

(d) in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction;

(e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such     person;

(ea) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 5A, the date of issue of such order;

(eb) in case where duty of excise is paid provisionally under this Act or the rules made there   under,  the date of adjustment of duty after the final assessment thereof;

(ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction;

(f) in any other case, the date of payment of duty.

Brief Facts:

The appellant had exported packaged tea and submitted refund claims for service tax paid by them used for export of finished goods on the services received by them viz. Port service and GTA service. As regards Port service, the refund claim has been disallowed on the ground that person providing service was not authorized by the Port. As regards GTA service, the refund has been denied on the ground that the credit was taken on the basis of debit note issued by service provider and further original copies of debit note/invoice were not signed and the appellant did not produce proof of payment of service tax to the satisfaction of lower authority.

Appellant’s Contention:
Appellant contended that according to proviso to Rule 4A "in case the provider of taxable service is good transport agency, providing service to any person, in relation to transport of goods by road in a goods carriage, an invoice, a bill or as the case may be, a challan shall include any document by whatever name called, which shall contain the details of the consignment note, number and date, gross weight of the consignment and certain other information as required under this sub-rule". Therefore, the denial of refund on the ground that document issued by service provider was not a prescribed document does not appear to be supported by the relevant rule reproduced above. Further he submits that they had submitted self certified copies. In any case, it is a curable defect and they could have been asked to cure the defect rather than using it as a tool to reject the claim.

Issue Involved:

The issues involved in this case were that-
1. Port service - Whether the refund of service tax can be denied on the ground that the Service provider was not authorized by the port?
2. Goods Transport Agency service - Whether the refund of service tax can be denied on the ground that the self certified copies of documents issued by the service provider were not submitted?

Order of CESTAT: -

v The Hon’ble CESTAT held that as regards refund of service tax paid on Port service, the issue is covered by the precedent decisions of the Tribunal, wherein it has been held that what is required to be seen while allowing refund is as to whether the service tax has been paid by the appellant and the service received was port service or not and the refund sanctioning authority cannot go into the question whether the service provider was authorized by port or not. The decisions in which a view has been taken are as under :
         a) Dishman Pharma & Chemicals Ltd - 2011 (21) S.T.R. 246
         b)Ramdev Food Products Pvt. Ltd. - 2010 (19) S.T.R. 833
v Further as regards deficiencies in the debit note, Rule 9(2) of CENVAT Credit Rules, 2004 provides that the Assistant Commissioner or Deputy Commissioner can accept the document even if it does not contain certain details but contains other details as specified therein. Therefore, the original adjudicating authority is required to apply Rule 4A of Service Tax Rules, 1994 and Rule 9(2) of CENVAT Credit Rules, 2004 and examine the eligibility of CENVAT Credit of service tax paid and refund as the case may be. In this case, they find that this has not been done by both the lower authorities. Further, the appellant had given a statement showing the details of value of service received, service tax payable and amount of service tax paid by them during audit. Inspite of this, the original adjudicating authority observed that the copy of ledger was not produced. When detailed statement is produced, it has to be assumed that the ledger is supposed to reflect very same details. No efforts have been made to verify whether the cheque numbers given as proof of payment of service tax are verified. Therefore, they find that details given by the appellant as regards proof of payment of service tax are sufficient and the original adjudicating authority can get it verified in case of doubt. Therefore, the question of not having evidence cannot arise. Another observation made is that the appellant was required to produce self certified copies of documents which they have failed to do.

Decision:
The appeal was partly allowed.

Conclusion:

We have faced litigation from the department on this point. They have issued numerous show cause notices saying that the refund of port services will not be allowed as the person is not authorized by port authorities. We have pleaded that the authorities are not issuing authorization as well as it is procedural requirement. When the service tax is paid and service is used in export of goods then substantial conditions are fulfilled, the refund should be granted to us. But the department has disallowed the same. Even the Commissioner (Appeal) has also not granted refund to us. Now, this new case law will be favorable to us. We hope that the department might grant refund to us for old cases. Now, new law has been changed and any person operating in port area will be termed port services. But the department has come up with new allegation that the assessee is registered under BAS, BSS and not under port services. By the time, the decision will come; the law has changed once again. Under the new regime of negative list, there is no classification of service. The department will come out with a new objection and it will not be settled before CESTAT. Although the Government has announced to reduce litigation but the field formation is no mood to reduce the same.

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PJ/CASE STUDY/2012-13/18
11 August 2012

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PJ/CASE STUDY/2012-13/18 11 August 2012

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PJ/CASE STUDY/2012-13/18
11 August 2012