Custom, Excise & Service Tax Tribunal
Rambus Chip Technologies India Pvt Ltd vs Commissioner Of Central Tax Bengaluru ... on 23 August, 2024
Service Tax Appeal No. 20298 of 2020
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2
Service Tax Appeal No. 20298 of 2020
[Arising out of Order-in-Appeal No. 319/2020 dated 09.06.2020 passed by the
Commissioner of Central Tax (Appeals-I), Bangalore]
Rambus Chip Technologies (India)
Pvt. Ltd.
IBC Knowledge Park Tower C&D,
12th Floor, No. 4/1,
Bannerghatta Road,
Bangalore-560 029 ................Appellant
Versus
Commissioner of Central Tax
Bengaluru South Commissionerate
5th Floor, C.R. Buildings,
P.B. No. 5400, Queens Road,
Bangalore-560 001 .............Respondent
Appearance:
Mr. Kumar Harsha Vardhan, Advocate for the Appellant Mr. Neeraj Kumar, Authorised Representative for the Respondent Coram:
Hon'ble Mr. P.A. Augustian, Member (Judicial) Hon'ble Mr. Pullela Nageswara Rao, Member (Technical) Final Order No.: 20704 / 2024 Date of Hearing: 25.04.2024 Date of Decision: 23.08.2024 Per: Pullela Nageswara Rao M/s. Rambus Chip Technologies (India) Pvt., Ltd., the appellant is engaged in providing software development services and accounting services to their parent company, Rambus Inc, USA. The services rendered by the appellant are in the nature of 'Information Technology Software Services (ITSS)' and 'Business Support Services (BSS)'. During the period January 2017 to June 2017, the entire services were exported to Rambus Inc, USA. The services supplied qualify as 'exports' Page 1 of 11 Service Tax Appeal No. 20298 of 2020 under the Rule 6A of the Service Tax Rules, 1994 (Export Rules), the services were exported without payment of service tax.
2. The brief facts of the case are that the appellant availed the cenvat credit of service tax paid on the input services to provide the export services under Cenvat Credit Rules, 2004, which remained unutilised, hence the appellant filed a refund application on 28.03.2018, seeking refund of the said unutilised CENVAT credit under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012-CE(NT) dated 18.06.2012 as amended by Notification No. 14/2016-CE(NT) dated 01.03.2016.
3. A Show cause notice dated 10.05.2018 was issued proposing to reject the refund claim, which was confirmed by the adjudicating authority vide order-in-original dated 26.03.2019. The adjudicating authority rejected the refund claim on the following grounds.
Sl.
No. Reasons for denial Amount (in Rs.) The refund claim filed by the appellant is hit by limitation, since the refund claim was not filed within one year from the 93,39,310 1 date of receipt of payment in convertible foreign exchange, and thus, the refund claim is time barred.
Invoice-wise details and invoice copies 2 pertaining to the refund claim of CENVAT 1,54,374 credit have not been produced The appellant has not furnished the 3 invoices, service tax payment details, etc. 20,595 Input services pertaining to retainer fees, 4 management, and consultancy services 1,59,437 etc., do not have nexus with the services exported 5 Total 96,73,716 Page 2 of 11 Service Tax Appeal No. 20298 of 2020
4. The appeal filed by the appellant against this order was upheld by the Commissioner (Appeals) with regard to the refund claim amounting to Rs. 93,39,310/- and the refund claims for the balance amount were remanded to the adjudicating authority. As regards, the refund claim of Rs. 93,39,310/-, the Appellate Authority held as under:
a. The refund claim filed by the appellant is barred by limitation as per Notification No. 14/2016-CE(NT) dated 01.03.2016. b. The first payment for the month of January 2017 was received on 10.01.2017, for February 2017 on 10.02.2017, and for March on 09.03.2017, and thus, the date of filing of the refund claim (i.e. 28.03.2018), for the period January 2017-March 2017 by the appellant is after the expiry of one year from the relevant date as defined under the Notification 14/2016.
c. The Adjudicating Authority has accepted that all the other conditions and procedures mandated by law was adhered by the Appellant, i.e., all the conditions prescribed under Rule 6A of the Service Tax Rules, 1994 have been fulfilled and the payments for the relevant period have been realized.
Aggrieved by the rejection of the refund claim on the ground of limitation, the present appeal is filed before this Tribunal.
5. The learned counsel contends that; the claim has been filed within the prescribed time limit and is not barred by limitation; the law is well settled that the relevant date for the purpose of deciding the time limit for consideration of refund claims under Rule 5 of the Cenvat Credit Rules, 2004 has to be taken as the end of quarter in which the FIRC is received, in cases, where the refund claims are filed on a quarterly basis; they placed reliance on the following decisions: Page 3 of 11
Service Tax Appeal No. 20298 of 2020 a. Suretex Prophylactics India Pvt. Ltd. Vs. Commr. of C.Ex., Cus. & ST., Bangalore - 2020 (373) E.L.T. 481 (Kar.) b. CCE & CST, Bangalore Vs. Span Infotech (India) Ltd. - 2018 (12) GSTL 200 (Tri.-LB) c. Infosys Limited Vs. CC, CE & ST - Bangalore, Service Tax II - 2019 (11) TMI 1346-CESTAT Bangalore d. Commissioner of Service Tax, Mumbai Vs. Sitel India Ltd. - 2016 (4) TMI 112-CESTAT Mumbai e. Fisher Chennai Engineering Centre Vs. Commissioner of Service Tax, Chennai - 2023 (9) TMI 1066 - CESTAT Chennai
6. The learned counsel contended that; the refund claim has been filed for the period, January 2017 to March 2017 and the FIRCs were received, subsequently, i.e., between 10.01.2017, to 09.03.2017; considering that the time limit of one year has to be calculated from the end of the quarter in which the FIRC is received, the refund claim filed by them on 28.03.2018 is within limitation; in fact, they have filed the refund claim within one year from the last date of the quarter for which the refund claim was to be filed i.e., before 31.03.2018; and also within one year from the end of the quarter in which the FIRC is received; hence refund claim has been wrongly rejected by the Appellate Authority; there is no legal basis for an invoice-wise calculation of limitation period, especially since such condition has not been mentioned in the applicable statutory provisions or the notification thereof; assuming without conceding that the time limit of one year for filing, the refund claim has to be counted from the date of receipt of foreign exchange, part of the refund claim has been filed within the relevant time.
7. The learned counsel further contends that; the entire purpose of Rule 5 of the Cenvat Credit Rules, 2004 and the Notifications issued Page 4 of 11 Service Tax Appeal No. 20298 of 2020 under Rule 5 is to refund the accumulated input credit to exporters and zero rate the exports, hence such a beneficial provision cannot be interpreted strictly/narrowly; in the impugned order, the Appellate Authority has relied upon the judgements of the Hon'ble Supreme Court in Commissioner of Customs (Import) Vs. Dilip Kumar and Company - 2018 (361) E.L.T 577 (SC) and Novopan India Ltd., Vs. CCE & C, Hyderabad 1994(73) E.L.T 769 (SC) and held that an exemption notification is to be read strictly and in order to avail the benefit of an exemption notification, the conditions laid down thereunder have to be strictly adhered to; the Appellate Authority has failed to appreciate that the refund claim was filed under Rule 5 of the Cenvat Credit Rules, read with the relevant notifications viz., Notification No. 27/2012 and Notification 14/2016; therefore, it is clear that the issue involved in the instant case is not with respect to interpreting a tax exemption provision or notification but is with respect to the benefits granted by the Cenvat Credit Rules; as has been clarified by the Board vide Circular No. 120/01/2010-ST dated 19.01.2010, the entire purpose of Rule 5 of the Cenvat Credit Rules, 2004 and the notifications issued under Rule 5 is to refund the accumulated credit to the exporters and zero rate the exports; therefore, Rule 5 of the Cenvat Credit Rules and the relevant notifications are beneficial provisions (with the stated object of exporting services and not taxes) and are not in the nature of an exemption notification.
8. The learned counsel has relied on the judgement of the Hon'ble Larger Bench of CESTAT in Krishna Food Products Vs. Additional Commissioner-2021 (5) TMI 906-LB Delhi, wherein it is held that Cenvat Credit Rules is a beneficial legislation, and a narrow/literal Page 5 of 11 Service Tax Appeal No. 20298 of 2020 meaning must be avoided; the Larger Bench has referred the judgement of the Supreme Court in Government of Kerala Vs. Mother Superior Adoration Convent reported in 2021 (376) E.L.T 242 (SC) to reiterate that the Supreme Court in Dilip Kumar (supra) did not refer to the line of authority, which made a distinction between exemption provisions generally and exemption provisions, which have a beneficial purpose; therefore, the ratio of Dilip Kumar (supra) and similar judgements shall apply only while interpreting exemption notification and not while construing a beneficial provision like the Cenvat Credit Rules; the power to grant exemption from service tax is prescribed under Section 93 of the Finance Act, 1994, only a notification issued under the provisions of Section 93 of the Act can be termed as an exemption notification; the relevant Notifications 27/2012-CE and 14/2016-CE were both issued under Rule 5(1) of the Cenvat Credit Rules, 2004 to notify the procedure, safeguards, conditions, and limitations for claim of refund; the said notifications have admittedly not been issued under Section 93 of the Finance Act, 1944, hence they cannot be termed as exemption notifications; therefore, the impugned order has erroneously relied upon the judgement of the Hon'ble Supreme Court in Dilip Kumar (supra).
9. The learned counsel further submits that; the substantive benefit cannot be denied to the appellant due to procedural lapse; the Hon'ble Supreme Court in Mangalore Chemicals and Fertilisers Ltd. Vs. Deputy Commissioner reported in 1991 (55) E.L.T, 437 and Commissioner of Central Excise Vs. Hari Chand Shri Gopal and others reported in [2011 1 SCC 236] have held that a person cannot be deprived of his vested rights, even if procedural conditions have not been complied with; Page 6 of 11
Service Tax Appeal No. 20298 of 2020 hence the claim should not have been denied on the basis of delay in filing of the refund application, which is merely a procedure lapse; further the learned counsel has cited the case of Sajan Services Pvt. Ltd. Vs. Commissioner of Pune-II reported in 2021, TMI 1350-CESTAT Mumbai.
10. The learned Authorised representative (AR) for the Revenue fairly admits that the issue is covered by the decision of the Larger Bench of the Tribunal in the case of M/s Span Infotech (India) Pvt. Limited.
11. Heard both sides and perused the records.
12. The issues involved in this case are whether the time limit of one year for filing the refund claim under Rule 5 of the Cenvat Credit Rules, 2004 is to be counted from (i) the date of receipt of foreign exchange, or (ii) the end of the quarter in which the foreign exchange is received, in cases where the refund claims are filed on a quarterly basis?
13. We find that in this case the original authority has rejected the refund claim of ₹93,39,310/- on the grounds that the refund claim was not filed within one year from the date of receipt of payment in convertible foreign exchange and thus the refund claim is time barred. With regard to the other issues, the Adjudicating Authority has remanded the case and the same are not subject matter of this appeal.
14. We find that the Adjudicating Authority was satisfied with respect to the conditions required to be fulfilled under Rule 5 of Notification No. 14/2016-CE(N.T) except the condition of filing of the refund claim before the proper officer within one year from the date of receipt of payment in convertible foreign exchange. The only ground on which the Adjudicating Authority has rejected the refund claim is that the filing of the refund claim was not within one year from the date of receipt of the Page 7 of 11 Service Tax Appeal No. 20298 of 2020 payment in convertible foreign exchange. We find that foreign convertible exchange is received by the appellant for the period January 2017 to March 2017 between 10.01.2017 to 09.03.2017, therefore, the last payment for the quarter was received on 09.03.2017.
15. We find that for the exports of January 2017, FIRC was received on 10.01.2017, for exports in February 2017, FIRC was received on 10.02.2017, and for the exports in March, the FIRC was received on 09.03.2017, so for the quarter January to March 2017, the refund claim has to be filed before 31 March 2018, in the subject case appellant has filed refund claim on 28.03.2018, which is within one year from the quarter ending January-March 2017.
16. In this regard, we find that the Larger Bench of the Tribunal in the case of M/s Span Infotech (India) Private Limited, has held that:-
"9. Rule 5 of the Cenvat Credit Rules, 2004 provides for refund of unutilized Cenvat credit, even after adjustment of the same for payment of duty of excise or service tax. The conditions, safeguards and limitations for consideration of such refund claims have been spelt out by the Government through notifications. Notification No. 5/2006 (up to 17-6-2012) and Notification No. 27/2012 (w.e.f. 18-6-2012) (as amended) has specified the conditions in this regard. These notifications specify that such refund claims are to be filed within the period specified in Section 11B. The relevant date specified under the above section leaves no room for doubt as far as export of goods is concerned. However as far as export of services is concerned, the various sub-sections specifying relevant date under Section 11B do not cover the case of export of services. Further, the exporters of Page 8 of 11 Service Tax Appeal No. 20298 of 2020 services have been given the option to file claims for such refunds once in a quarter and in respect of 100% EOUs, once in a month. The issue referred to Larger Bench is whether the time limit prescribed under Section 11B in respect of filing of refund claims is to be applied from the date of receipt of payment for export of services or can be considered from the end of the quarter in which such payments have been received.
10. After considering the provisions of the notifications issued under Rule 5 of the CCR, we note that there is a specific condition that the refund claims are required to be filed within the period specified under Section 11B. Consequently, we are of the view that completely ignoring the provisions of Section 11B may not be appropriate. This view is supported by the decision of Hon'ble Madras High Court in the case of GTN Engineering (supra) wherein Hon'ble High Court has disagreed with the view expressed by Hon'ble Karnataka High Court in the case of mPortal (supra) that Section 11B will have no application with respect to refund under Rule 5 of CCR.
11. The definition of relevant date in Section 11B does not specifically cover the case of export of services. Hence, it is necessary to interpret the provisions constructively so as to give its meaning such that the objective of the provisions; i.e. to grant refund of unutilized Cenvat credit, is facilitated. By reference to the Service Tax Rules, 1994 as well as the successor provisions i.e. the Export of Services Rules, 2005, we note that export of services is completed only with receipt of the consideration in foreign exchange. Consequently, the date of Foreign Inward Page 9 of 11 Service Tax Appeal No. 20298 of 2020 Remittance Certificate (FIRC) is definitely relevant. The Hon'ble Andhra Pradesh High Court has held that the date of receipt of consideration may be taken as relevant date in the case of Hyundai Motors [2015 (39) S.T.R. 984 (A.P.)].
12. The related question for consideration is whether the time limit is to be restricted to the date of FIRC or can be considered from the end of the quarter. The Tribunal in the case of Sitel India Ltd. (supra), has observed that the relevant date can be taken as the end of the quarter in which FIRC is received since the refund claim is filed for the quarter.
13. Revenue has expressed the view that relevant date in the case of export of services may be adopted on the same lines as the amendment carried out in the Notification No. 27/2012, w.e.f.
1-3-2016. Essentially, after this amendment the relevant date is to be considered as the date of receipt of foreign exchange. While this proposition appears attractive, we are also persuaded to keep in view the observations of the Hon'ble Supreme Court in the case of Vatika Township (supra), in which the Constitutional Bench has laid down the guideline that any beneficial amendment to the statute may be given benefit retrospectively but any provision imposing burden or liability on the public can be viewed only prospectively. Keeping in view the observations of the Apex Court, we conclude that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis." Page 10 of 11
Service Tax Appeal No. 20298 of 2020
17. In view of the above decision of the Tribunal, we find that in this case the one-year period for filing of the refund would commence from the end of the quarter January 2017 to March 2017, since the refund claims are filed on quarterly basis. We find that the refund claim has been filed within one year from the end of the quarter January 2017 to March 2017 on 28.03.2018.
18. In view of the above discussions and the catena of decisions of the Hon'ble High Court and the Tribunal, we find that the rejection of the refund of Rs. 93,39,310/- is not tenable, and hence the appeal needs to be allowed, and we do so.
19. Accordingly, appeal filed by the appellant is allowed with consequential relief, if any as per law.
(Order pronounced in Open Court on 23.08.2024) (P.A. Augustian) Member (Judicial) (Pullela Nageswara Rao) Member (Technical) Sasidhar Page 11 of 11