Pradeep Jain - Chartered Accountant

PJ/Case Laws/2009-10/24

Case Laws

Prepared By:

CA Pradeep Jain,

Sukhvinder Kaur LLB (FYIC)

and Mayank Palguata

Central Excise Section:

Case: - M/s Super Spinning Mills Ltd v/s Commissioner of Central Excise, Coimbatore

Citation: - 2009-TIOL-2083-CESTAT-MAD

Issue: - Whether rebate of duty is allowable on removal of inputs as such on payment of duty and on which cenvat credit has been availed?

Brief Facts: - Appellants assessee took credit on single yarn which is an input for them. They found market abroad for single yarn and exported the same as it is. They paid duty while exporting the said inputs and later on filed claims for refund of duty. The said claim was denied by the lower Authorities. Hence, appellant is before the Tribunal.

Reasoning of Judgment: - The Tribunal found that when an assessee takes credit on inputs, rule allow him to remove the inputs as such for export without payment of duty. In appellant’s case, the appellant has paid duty while exporting the goods. It is the policy of the Government to encourage exporters and to ensure that domestic taxes are not exported.

In instant case, the Tribunal held that appellants are not only eligible for duty paid on the yarn but also eligible for refund of the input duty credit in respect of the yarn unless such credit has been already utilised elsewhere. The impugned orders are contrary to the legal provisions as well as the Government policy. Impugned orders set aside. Matter remanded to the Original Authority to allow the claimed benefit to appellants.

Decision: - Appeals allowed accordingly.

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Case: - Mani Omega Granites Pvt Ltd v/s CCE, Salem

Citation: - 2009 (94) RLT 374 (CESTAT-Che.)

Issue: - Whether penalty under Section 11AC can be imposed when there is no allegation of willful suppression, fraud, or collusion leveled against the assessee in the show cause notice?

Brief Facts: - Appellant is an EOU and has availed exemption under Notification No. 22/2003-CE, dated 31.03.03 on TOR steel rods. The lower Authorities held that the said Notification did not cover TOR steel rods. The list of goods exempted for consumption by EOU in the granite industry which figured in Annexure-V to the said Notification did not cover the TOR steel rods. Penalty of Rs. 50, 000/- was imposed on the appellant under Section 11AC of the Central Excise Act, 1944. The appellant have deposited the short payment. However, the appellant are challenging the penalty imposed under Section 11AC before the Tribunal.

Appellant’s Contentions: - Appellants contended that the Show cause notice did not invoke suppression of facts or any other ingredient to justify invoking larger period and to impose penalty under Section 11AC.

Reasoning of Judgment: - The Tribunal held that the Show cause notice basic to the proceedings though invoked larger period under Section 11A of the Act, no willful suppression of facts, fraud, collusion etc on the part of the appellants was alleged. Thus, the penalty imposed under Section 11AC is not sustainable. Penalty set aside.

Decision: - Appeal allowed accordingly.

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Case: - Commissioner of C. Ex., Chennai v/s Ennore Foundries

Citation: - 2009 (244) E.L.T. 288 (Tri.-Chennai)

Issue: - Modvat of Additional Duty can be availed on the certificate issued by the Custom’s Authority.

Brief Facts: - Respondent has taken the credit of additional duty on the basis of certificate issued by the Appraising Officer. The additional duty is not mentioned in the bill of entry. Therefore, Department disallowed the credit on the same. The certificate of the Appraising Officer was obtained because the additional duty was not charged in the Bill of entry but later on, the said duty was demanded and paid.

Reasoning of Judgment: - After hearing the whole contention’s it is clear that custom authority had not charged the additional duty in bill of entry but subsequently demand was raised for the same and the respondent had paid the said duty. There was no other route open to the importers except obtaining the certificate from the Appraising officer. The certificate is conclusive evidence of duty payment. Hence, the order of the Commissioner (A) allowing credit of additional duty was right.

Decision: - Appeal rejected

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Case: - Tata Motors Ltd v/s Commissioner of Central Excise, Jsr

Citation: - 2009 (244) E.L.T. 315 (Tri.-Kolkata)

Issue: - Cenvat Credit cannot be availed on invoices other than duplicate for transporter copy unless the permission is granted by the department.

Brief Facts: - Appellant has availed the credit on the strength of extra copy or the original copy of invoice. The description of the impugned product was also not provided in the same. Respondent disallowed the Cenvat credit availed as the appellant failed to produce any valid duty paying document. Hence, the Appellant is before the Tribunal.

Appellant’s Contention: - The appellant argued that Cenvat Credit is not deniable as this is only a procedural lapse and on the basis of the same substantial benefit cannot be denied.

Reasoning of Judgment: - The Tribunal held that it is clearly stated in the Central Excise Rules that duplicate copy of invoice for transporter is valid document for availing Cenvat credit. If the permission is given by the department to avail the credit on supplementary invoice, then credit can be availed. Further, the Tribunal held that non-mentioning of name of the input would also disentitle the appellant from taking credit as there is no way of verifying which input has been received in the factory.

Decision: - Appeal dismissed

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Case: - Commissioner of C. Ex., JSR v/s Telco Construction Equipment Co. Ltd

Citation: - 2009 (244) ELT 223 (Tri-Kolkata)

Issue: - Whether the Commissioner (A) has power to remand the matter in case of a decision which is totally erroneous and not based on correct law?

Brief Facts: - The Adjudicating Authority wrongly applied the provisions of Rule 16(1) of the Central Excise Rules, 2002 which were not if force at the time of arrival of machine in question. The Commissioner (A) remanded the matter to the adjudicating authority for re-examination of the facts and law and directed the adjudicating authority to pass a fresh order. Revenue has come before the Tribunal challenging the order of remand of the Commissioner (Appeals).

Appellant’s Contention: - The main contention of the Revenue is that the Commissioner (A) has no power to remand the matter to the adjudicating authority after the amendment made under Rule 35A of the Central Excise Rules. Reliance was placed on the judgments given in MIL India Ltd v/s Commissioner of Central Excise, Noida [2007 (210) ELT 188 (SC)] and in C. C. Ex.v/s Enkay (India) Rubber Co. Pvt Ltd [2008 (224) ELT 393 (P&H)].

Reasoning of Judgment: - The Tribunal held that the situation in this case is peculiar as the Adjudicating Authority had applied provisions which were not applicable. In such a situation the matter was remanded for fresh adjudication.

The Tribunal relied upon the judgment of C. C. Ex, Ahmedabad-I v/s Medico Labs [2004 (173) ELT 117 (Guj)] wherein it was held that even after the amendment of Section 35A, the Commissioner (A) has power to remand. Reliance was also placed on the judgment in C. C. Ex, Kolkata-III v/s Panihati Castings Pvt Ltd [2009 (239) ELT 57 (Tri-Kolkata)]. It was found that in the case of Union of India v/s Umesh Dhaimode [1998 (98) ELT 584 (SC)] it was held that the appellate authority has power to pass such order as it deemed fit confirming, modifying or annulling the decision of the appealed against and an order of the remand necessarily annuls the decision which is under an appeal before the appellate authority. Even by virtue of the amended provisions of Section 35A of the Central Excise Act, a power has been conferred on the Commissioner (A) to pass such order as it deemed fit confirming, modifying or annulling the decision of the appealed against.

Thus, in the instant case, the order of remand necessarily annulled the decision under appeal.

Decision: - Appeal dismissed.

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Service Tax Section:

Case: - CCE, Indore v/s M/s Anant Commodities Pvt Ltd and Ors

Citation: - 2009-TIOL-2100-CESTAT-DEL

Issue: - Whether refund of service tax under Notification no. 41/2007-St can be denied on the ground that the various services utilised by the exporter are not falling under the specified services?

Brief Facts: - The respondent, M/s Anant Commodities (P) Ltd have used the services of CHA and port services while exporting their goods. They filed for refund of service tax under Notification No. 41/2007-ST. Certain portion of refund claim was denied on the ground that the said amount did not represent the service tax on the value of customs clearance service as the same pertains to charges for cargo handling, stevedoring charges and stock management charges on DOB which are not part of the custom house agent’s service. Another amount of refund claim is not refunded on the ground that these represent service tax on wharfage which is not part of ‘port service’.

The respondent, M/s Laxmi Solvex Ltd have used the services under the head Technical testing and analysis service, GTA service and surveyor’s service. In respect of these services refund claim was filed under the said Notification. Revenue disallowed the refund on the ground that shipment sampling and supervision charges were included under the head of Technical testing and analysis which were not services specified in the said Notification. The service tax paid on GTA was disallowed on the ground that it includes amount charged for return of empty trucks from railway station to factory which is not the amount charged for transportation of goods for export.

The respondent, M/s Vipro Exim Ltd received the Port services, technical testing and analysis service and CHA services in relation to export of their goods. Refund claim was filed for these services under the said Notification. Refund claim was disallowed on the ground that the amount claimed under Technical Testing and analysis includes amount charged for “weighment”, “sampling” and “supervision of container stuffing” which are not specified services in said Notification. Service tax paid on CHA service was disallowed on the ground that it includes amounts charged for “Agency service” which are not the services of CHA relating to custom clearance.

The refund claims of all these parties were partly allowed by the Lower Authorities. Revenue filed review appeals against the said orders before the Commissioner (A) on the ground that certain amounts of refund allowed where relating to services which were not covered under the said Notification. The Commissioner (A) partly allowed Revenue’s appeal. The Revenue has filed appeal before the Tribunal challenging the allowance of refund claim. Respondent-assessee’s have filed cross objections against the appeal.

Reasoning of Judgment: - The Tribunal held that it is not the case of Revenue that the service provider, who had provided the taxable services, in question, to the Respondents, were not of the categories specified in the Notification No. 41/2007-ST. The Tribunal held that the Revenue seeks to do is to conduct a detailed review of the service tax payment by the service providers i.e. the Goods Transport Agencies, Ports, CHA, and Technical testing and analyses service providers and then disallow certain amounts of service tax refund to the respondents on the ground that those amounts represent the tax on amounts charged for the services which are not part of the value of GTA service, CHA services, Port services and Technical testing & analysis services. The Tribunal held that the refund of the disputed amounts is sought to be disallowed to the Respondents (service receiver) by reviewing the assessment of the service tax at service provider’s end.

Reliance was placed on the judgments in cases MDS Switch gear Ltd v/s CCE, Aurangabad [2001 (132) ELT 405], Johnson & Johnson Ltd v/s CCE [1997 (112) ELT 1901] and CCE v/s MOEL [1997 (113) ELT 66] wherein it was held that Cenvat credit cannot be denied to a receiver of duty paid inputs, by the Central Excise authorities having jurisdiction over the input receiver, by revising the assessment of duty at the supplier’s end.

The Tribunal held that the same principle will be applicable to the instant appeals. And unless and until, the service tax payment by the service providers is revised by the jurisdictional service tax officers, the service tax refund available to the exporters, who had received those taxable services in connection with export of goods, cannot be revised.

No infirmity in the impugned orders.

Decision: - Revenue’s appeal dismissed. Cross objections disposed off.

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Case: - M/s Ecof Industries Pvt Ltd v/s CCE, Bangalore

Citation: - 2009-TIOL-2109-CESTAT-BANG

Issue: - Whether the credit of service tax paid for one unit can be distributed to other unit of same manufacturer?

Brief Facts: - Appellant has head office situated in Chennai and has units in Malur as well as in Cuttack. They distributed the credit of service tax in respect of their Malur unit even though the service tax was paid in respect of services used by their Cuttack Unit. The lower Authorities restricted the distribution of service tax credit in such manner. Appellants are, therefore, before the Tribunal.

Appellant’s Contentions: - Appellant contended that the service tax distributed by the head office confirmed to the conditions specified in Rule 7 of the Cenvat Credit Rules, 2004. It is also stated that Para 2.3 of the master Circular dated 23.08.07 has been followed by them. It is argued that neither the Circular nor the Rule itself prohibits distribution of service tax credit relating to one unit of a manufacturer to another unit of the same manufacturer or service provider. There are only 2 conditions-firstly, the Service Tax credit to be distributed against the documents should not exceed the service tax paid and secondly, the credit of service tax should not be in respect of exempted finished goods and exempted finished goods and exempted output services.

Respondent’s Contentions: - Revenue referred to Rule 3 of the CCR to support their claim that service tax credit relating to one unit should not be distributed to another.

Reasoning of Judgment: - The Tribunal found that Rule 3 merely says that a manufacturer/producer of final products or a provider of taxable service shall be allowed to take credit of any output services received by the manufacturer of such final product or provider of output services. The availability of credit therefore is related to the manufacturer of goods or provider of output services as a whole and not restricted to any particular unit of the manufacturer/service provider.

The Tribunal further held that combined reading of Rule 7 and the clarificatory Circular dated 23.08.07 shows that there are only two restrictions regarding the distribution of credit. First condition is that the credit should not exceed the amount of service tax paid. The second restriction is that the credit should not be attributable to services used in manufacture of exempted goods/providing of exempted services. There are no other restrictions under the Rules.

The Tribunal held that the restriction sought to be applied by the Revenue does not find mention in the Rules. Thus, the restricting of distribution of service tax credit in the impugned order cannot be upheld.

Decision: - Appeals allowed.

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Case: - Akar Info-Media (P) Ltd v/s Commissioner of Service Tax, Ahmedabad

Citation: - [2009] 23 STT 431 (AHD-CESTAT)

Issue: - Whether credit is admissible if the same is taken belatedly? Whether refund of service tax will be available which was not payable in the first place but was passed on to the client?

Brief Facts: - Appellant received the sponsorship services and paid service tax on the same. Thereafter they filed refund claim on the ground that they were not liable to pay service tax on the said service.

Appellant has filed a second claim of refund of service tax paid on business exhibition service. Refund was rejected on the ground that the Cenvat credit was taken in March 2007 whereas the payment in respect of the bills was made in the months of June 2006 to October 2006. Since credit itself was not admissible, the refund claim has been rejected.

Appellant’s Contentions: - With regard to refund of service tax on sponsorship services, the appellant has produced certificate from Chartered Accountant certifying that service tax was not collected from the customers and the documents submitted nowhere mention that excess tax collected was returned to the client.

With regard to refund of service tax on business exhibition service, the appellant submitted that Rule 4(7) of Cenvat Credit Rules in respect of credit in respect of input service does not prescribe any time-limit for taking the credit. It is also submits that it cannot be compared with the Cenvat credit in respect of inputs or capital goods in view of the specific separate provision which provides that credit can be taken on or after the day on which payment is made towards the input service and service tax is paid.

Respondent’s Contentions: - Revenue contended that the refund claim in respect of sponsorship service has been rejected on the ground of unjust enrichment. He submits that the appellant’s claim is that in some cases they have refunded the service tax to the customers. It is also claimed by the appellants that in all the invoices except in respect of services provided to foreign clients, service tax was not shown separately. If this is the case, the normal conclusion would be that service tax was collected in respect of all invoices for the services provided to the domestic clients. Therefore as rightly observed by the Lower Authorities, the appellants have collected the service tax from all the clients and, therefore, refund cannot be granted unless it is proved that the liability of service tax has not been passed on and the appellants have failed to discharge this liability.

As regards the claim for refund of credit of service tax, on Business Exhibition Service, he submits that the credit was taken much later than the period of six months from the date of payment of service tax and, therefore, appellants are not eligible for the credit and, consequently, they are not eligible for the refund also. In support of this contention he has cited several decisions of the Tribunal.

Reasoning of Judgment: - The Tribunal held that although no separate service tax amount is shown in the invoices but the fact that in some cases service tax was refunded to appellant’s clients shows that in all the cases the amount collected included the availment of service tax. The conclusion drawn by the Chartered Accountant that the amount charged did not include service tax is not explained and does not appear to be logical. The burden of proving that the benefit of the service tax liability has not been passed on is on the appellants and under these circumstances the certificate of Chartered Accountant is not based on facts and from the documents, the only conclusion that emerges is that in respect of domestic clients, appellants had collected the service tax. Therefore the claim for refund of this amount has been rejected correctly and therefore this part of the order is upheld.

With regard to refund claim for service tax on Business Exhibition service, the Tribunal held that unlike Cenvat credit on inputs/capital goods where credit can be taken immediately on receipt of inputs/capital goods, in the case of service tax the credit can be taken only after the payment is made in respect of the bills raised for providing service and the rule also requires that service tax is also paid. Therefore the service receiver is obliged not only to make payment but would also be responsible to ensure that service tax has been paid. In this case admittedly the payments were made from June 2006 to October 2006, but does not come out clearly as to whether there were different services and in respect of how many service tax was paid in June, etc. In view of the obligations cast on the service receiver, the time taken by the appellants to take the credit does not appear unreasonable especially in view of the fact that exact delay in respect of each credit has not been brought out in the records. Further, the appellant had also claimed that the amount paid was not final and only after the service tax was fully received, the actual amount payable was determined. Under these circumstances the benefit of doubt has to be extended to the appellants and it has to be held that credit has been taken within a reasonable time.

Decision: - Appeal partly allowed.

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Case: - Chitrakoot Steel & Power Pvt. Ltd. v/s Commr. of C. Ex., Chennai

Citation: - 2008 (10) S.T.R. 118 (Tri. - Chennai)

Issue: - Whether Cenvat credit availed on input services requires to be reversed in case the inputs or capital goods are removed as such?

Brief Facts: - Appellant cleared some of inputs/capital goods from factory premises. On the same he has reversed the cenvat credit availed on inputs according to Rule 3(5) of Cenvat Credit Rule, 2004. The department raised demand to reverse the Cenvat credit availed on the input services along with credit availed on the inputs.

Appellant’s Contentions: - Appellant pleaded that in Rule 3(5) of Cenvat Credit Rule, 2004 it is clearly mentioned that the assessee is required to reverse the Cenvat Credit on the inputs/ capital goods which are removed by him as such. The same was done by them. There is no rule relating to reversal of Cenvat Credit availed on the input services which are relating to the removal as such. Therefore the demand and penalty raised by department is not justifiable.

Appellants also referred to Rule 14 which provided for recovery of Cenvat credit taken or utilised wrongly. The appellants had not taken or utilised the credit wrongly. The appellants had validly availed the credit on receipt of the inputs. On return of the same to the supplier, similar amount of service tax accrued to the Government under the GTA service. Appellants have also relied on clarificatory letter DOF No. 334/1/2007-TRU dated 28-2-2007 addressed to the Commissioners and Chief Commissioners.

Respondent’s Contentions: - Respondent replied that as the inputs are not used in the manufacturing of the final product, therefore the credit availed on the input service relating to removal as such is not justifiable.

Reasoning of Judgment: - The Tribunal held that there is no statuary provision to reverse the Cenvat credit availed on the input services relating to goods removed as such. Rule 14 of the Cenvat Credit Rules, 2004 provides for recovery of Cenvat credit availed or utilised wrongly. In the instant case, the appellants had taken the credit correctly in terms of the statutory provisions. No provision exists in the Finance Act, 1994, which would render utilisation of such credit erroneous for the reason that some of the inputs, transport of which yielded GTA service tax credit are returned as not suitable. The credit availed is anyway used to pay duty on the finished goods. Impugned order is not sustainable and accordingly is vacated.

Decision: - Appeal allowed.

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Case: - In re: G.P.L. Polyfills

Citation: - 2009 (14) S.T.R. 557 (Commr. Appl)

Issue: - Whether the appellant were eligible for refund of Service Tax under the Notification No. 41/2007-ST dated 06.10.07 paid on port services and transport services or not.

Brief Facts: - Appellant filed refund under Notification No. 41/2007-ST for service tax paid by them on Port Services and Services of Transportation from ICD to the port in relation to export goods. Department disallowed the same on the ground that appellant has not fulfilled the condition mentioned in the said Notification. It was alleged that appellants have not submitted any documentary evidence to show that the service tax on the specified services has been paid. The copy of bills submitted by the appellant did not show as to whether the appellant has paid the Service Tax or not. Department also alleged that conditions of proviso (e) of the paragraph 1 of the said notifications have not fulfilled by the appellant inasmuch as the appellant has claimed drawback claim on the goods exported, whereas the condition in aforesaid notifications stipulates that said goods should be exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. It was further alleged that service tax paid on the charges viz. THC, DOC, Documentation Charges, Port Charges, Port additional charges and Bill of Lading charges do not fall under the category of “Port Services”. For transportation of goods from ICD to the port, it was alleged that claim of only freight charges was admissible. And the refund claimed on service tax paid on MT TSC charges, Wharfrage charges, Grip charges and LDD TSC charges were not allowable as these did not fall under the specified services. The refund claim of Service Tax on Freight Charges had been held ineligible on the ground that the bills pertaining to the freight charges does not show as to whether the charges have been paid for transporting the goods from factory to ICD or from ICD to the port. The lower Authorities have denied the refund. Appellant is before the Tribunal challenging the impugned orders.

Reasoning of Judgment: - The Tribunal held that the definition of transportation of goods in container by rail under Section 65 (105) (zzzp) covers ‘any service’ in relation to transport of goods in container by rail, in any manner. Thus, the MTTSC charges, Wharfrage charges, Grip charges and LDD TSC charges recovered by CONCOR in relation to transport of goods in container by rail, were treated as a part and partial of Goods Transport Service and were made liable to Service Tax.

With regard to finding of the adjudicating authority in respect of documentary proof to show that the element of Service Tax has not been passed is concerned, the Tribunal found that no such condition is laid down in the notifications. Therefore, the refund of Service Tax on this ground also cannot be denied or varied. It was held that the appellant has proved that the entire charges including service tax paid by them was towards transportation of exported goods and therefore, they were eligible for refund of service tax.

With regard to port services, the Tribunal held that there was no hint as to how the adjudicating authority has arrived at the conclusion that as the services have been rendered by the forwarding agency therefore it is not a specified service under the Notification. Even if the observations of the adjudicating authority are considered for a little while, the Tribunal did not find any provision that restricts the forwarding agency to provide the ‘port services’ after getting their Registration Certificate endorsed for the purpose. Moreover, the adjudicating authority has tried to distinguish the specified service by correlating it with the service provider, which is not proper. The right approach is that the service itself should have been distinguished. It is on record that all the service providers are registered with the department and their Service Tax registration numbers are mentioned on the bills/challans.

It was held that services named as Terminal Handling Charges (THC), DOC charges, Re-releasing charges has been held to be not specified services for the purpose of exemption by the adjudicating authority. For arriving at this conclusion the adjudicating authority has relied upon the list of certain charges for services rendered in respect of port services that are mentioned in the clarificatory Circular No. B-11/1/2001-TRU dated 9-7-2001. Perusal of the said circular vis-a-vis the definition of “port services” shows that the appellant’s submissions in this regard are quite forceful and genuine that these services fall under port services. The use of words “any service” in the definition of “Port service” has given the definition a broader meaning which cannot be overridden by any clarification. The adjudicating authority has not considered the word “some” used in the clarificatory Circular No. B-11/1/2001-TRU dated 9-7-2001 and by doing so it has restricted the definition of “port services” to the extent mentioned in the said circular. The Tribunal observed that the services mentioned in the said circular are not exhaustive but they are only illustrative in nature. While deciding the issue, the definition provided under Section 65(82) of the Finance Act has to be considered which has broader implication. The charges mentioned hereinabove, by their name and nature, clearly fall in the heading of “Port Services”. The THC by its name is the Terminal Handling Charge, which no doubt is paid at the Port after the goods are handed over for loading into the ship for sailing. Similarly the DOC charges, the re-releasing charges and the B/L charges are also the charges which are paid at port either in relation to the goods or the vessel. These charges are paid at the time in-between, when the goods are unloaded at the port and are to be loaded in the vessel for sailing. Since the Service Tax is levied on these charges under the category of “Port Service”, the exemption under the said notification is definitely available to said charges. Observations of the adjudicating authority are not proper and are liable to be set-aside. The appellant are eligible for getting exemption by way of refund on the aforesaid specified services.

With regard to allegation that the appellant has not brought any evidence to prove that the Service Tax was paid by them, The Tribunal observed that the appellant has clearly mentioned the details of the cheque issued in the name of service providers, which is sufficient to prove that the Service Tax liability was borne by them. In case of any suspicion, it was open for the department to call for the additional information from the either end i.e. from the appellant or the service provider.

With regard to allegation that the appellant did not produce any evidence to show that the service providers were the registered port service providers duly authorized by the port, the Tribunal observed that the Service Tax registration number was available on each invoice/challan and the fact of payment of Service Tax was mentioned therein. This was a clear-cut evidence to prove that the service providers were registered Service Tax provider. It was open for the department to conduct an enquiry, in case of any suspicion. The notification governing the provisions of refund, nowhere envisages for producing or submitting of any such certificate with the claim. Thus, the refund of service tax on the port service was available to the appellants. The observations of the adjudicating authority are liable to be set aside.

With regard to allegation that the appellant have availed drawback and therefore have contravened the condition (e) of the proviso to the paragraph 1 of the notification, the Tribunal held that the said condition envisages in clear terms that the refund shall only be allowed if the said goods have been exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. In this regard, the appellant has clearly mentioned that they have claimed drawback of Central Excise Duty only. The element of Service Tax was not included in the FOB value, therefore question of availing drawback on the Service Tax did not arise. The Tribunal observed that the appellant had claimed all industry rate of drawback which pertains to the Central Excise duty only. It is a fact on record that the goods were exported through ICD, Kanpur and the drawback was processed and paid by the department, in Kanpur. In case, there was any reason to distrust the declaration of the appellant, the matter should have been confirmed from the ICD, Kanpur before denying the claim. It was also observed that if the theory of inclusion of all the expenses in the sale value as followed by the adjudicating authority is approved, no assessee shall ever be able to claim refund of service tax paid on the services utilized for exporting the goods, in case the drawback of the central excise duty is claimed. It has clearly been mentioned in the aforesaid condition of the notification that if the drawback in respect of Service Tax has not been claimed, the exemption from paying Service Tax in the shape of refund shall be available. No other condition was required to be fulfilled for availing the exemption. Thus, the order disallowing the claim on this ground was not legal and proper. The appellant has succeeded in proving that the drawback on Service Tax was not claimed by them. Therefore, the appellant is eligible for refund of Service Tax paid by them.

Decision: - Appeals allowed with consequential relief.

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