Custom, Excise & Service Tax Tribunal
Fisher Chennai Engineering Centre vs Service Tax -Commissioner Of ... on 22 September, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Service Tax Appeal No. 40956 of 2014
(Arising out of Order-in-Appeal No. 77/2014 (MST) dated 21.02.2014 passed by the
Commissioner of Customs, Central Excise and Service Tax (Appeals), No. 26/1,
Mahatma Gandhi Marg, Nungambakkam, Chennai - 600 034)
M/s. Fisher Chennai Engineering Centre : Appellant
Unit 4 & 2, 1st Floor, International Technology Park,
Taramani, CSIR Road,
Chennai - 600 113
VERSUS
Commissioner of Service Tax : Respondent
692, M.H.U. Complex, 6th Floor, Anna Salai, Nandanam, Chennai - 600 035 APPEARANCE:
Shri S. Viswanathan, Advocate for the Appellant Shri N. Satyanarayanan, Assistant Commissioner for the Respondent CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. 40830 / 2023 DATE OF HEARING: 28.08.2023 DATE OF DECISION: 22.09.2023 Order : [Per Hon'ble Mr. P. Dinesha] This appeal is filed by the assessee against the Order-in-Appeal No. 77/2014 (MST) dated 21.02.2014 passed by the Commissioner of Customs, Central Excise and Service Tax (Appeals), Chennai.
2.1 Brief relevant facts, as could be gathered from the Order-in-Original as well as the impugned Order-in-Appeal are that the appellant-assessee filed an application for refund of CENVAT Credit of Rs.32,42,592/- under Rule 5 of 2 Appeal No.: ST/40956/2014-DB the CENVAT Credit Rules ('CCR' for short), 2004 on 05.07.2010, by declaring that the input services received by them have been utilized in the provision of output services namely, consulting engineer service, which have been exported without payment of Service Tax. It appears that the appellant had also declared that they had exported the above output service without payment of Service Tax to their foreign clients, namely: -
(1) EL-O-Matic Valve Actuators (FE) PTE Limited, 19, Kiran Teck Crescent, Singapore - 628885 (2) Fisher Controls International LLC., 301, South 1st Avenue, P.O. Box - 190, Marhsall Town, IOWA -
50158 (3) Emerson Process Management Asia Pacific Private Limited, 1-Pandan Crescent, Singapore - 128461 (4) Emerson SZE, Jebel Ali Free Zone - South (Zone -
2), Dubai - 17022, UAE 2.2 The appellant had also declared that they could not utilize the CENVAT Credit of Duty / Service Tax taken on inputs / input services used in providing output services exported without payment of Service Tax and consequently, they had taken input / input service credit to the extent of Rs.32,42,592/- for the provision of output service of Rs.21,05,01,428/- and further admitting that the input service credit remained unutilized since the output service in toto was exported without any domestic clearance.
2.3 The period involved in the above appeal is from April 2008 to June 2009.
3. Entertaining a doubt that the application for refund filed by the appellant was hit by time-bar, Show Cause Notice No. 48/2010 (R) dated 30.08.2010 was issued thereby inter alia proposing to reject, under Section 11B of the Central Excise Act, 1944, their refund claim.
3Appeal No.: ST/40956/2014-DB
4. The appellant appears to have participated in the personal hearing wherein the Order-in-Original records the filing of declaration by the appellant containing the details of goods / services exported, on which the refund of input credit was claimed, duly certified by the authorized signatory of the company as well as the company's Chartered Accountant. With regard to the allegations of time-bar, the appellant appears to have pleaded that since their claim was under Rule 5 of the CCR, time-bar stipulated under Section 11B is not applicable and in this regard, the appellant had also relied on the following orders of CESTAT Benches: -
i. Gillooram Gourishankar v. Commissioner of C.Ex., Ranchi [2007 (213) E.L.T. 528 (Tri. - Kol.)] ii. Swagat Synthetics Ltd. v. Commissioner of C.Ex., Surat [2007 (220) E.L.T. 949 (Tri. - Ahmd.)]
5. The adjudicating authority having considered the explanation of the appellant during adjudication, however, vide Order-in-Original No. 84/2010 (R) dated 29.10.2010 rejected the entire claim on the ground that the same was barred by limitation, by relying on the decision in the case of M/s. Mafatlal Industries Ltd. v. Union of India [1997 (89) E.L.T. 247 (S.C.)].
6. Seriously aggrieved by the above rejection, the appellant appears to have filed an appeal before the first appellate authority and the lower appellate authority also having rejected their claim vide impugned Order-in-Appeal dated 21.02.2014, the same has been assailed in this appeal before us. In the impugned order, the lower appellate authority has upheld the rejection thereby endorsing the reliance of the adjudicating authority on the decision in M/s. Mafatlal Industries Ltd. (supra) and also a decision of the Hon'ble Madras High Court in the case of Commissioner of Central Excise, Coimbatore v. M/s. GTN Engineering (I) Ltd. [2012 (281 E.L.T. 185 (Mad.)] 4 Appeal No.: ST/40956/2014-DB
7. Shri S. Viswanathan, Ld. Advocate, appeared for the appellant and Shri N. Satyanarayanan, Ld. Assistant Commissioner, defended the impugned order.
8.1 The Ld. Advocate would submit that the appellant is an EOU / STPI exporting consulting engineer services and thereby availing CENVAT Credit in respect of input services; refund of the same was claimed under Rule 5 of the CCR, though the exports were made between April 2008 and June 2009, but however, the foreign exchange receipts for the above exports were realized only during July and August 2009 in terms of Softex Forms filed before the STPI.
8.2 He would thus contend that in a similar situation, the Ld. Larger Bench of the CESTAT in the case of Commissioner of C.Ex., Cus. and Service Tax, Bengaluru v. M/s. Span Infotech (India) Pvt. Ltd. [2018 (12) G.S.T.L. 200 (Tri. - LB)] has clearly held that the relevant date for filing of refund claim under Rule 5 of the CCR is to be reckoned from the end of the quarter in which the FIRC is received in cases where the refund claims are filed quarterly.
8.3 He would also refer to an Order of the Chennai Bench of the CESTAT in the case of M/s. Miramed Ajuba Solutions Pvt. Ltd. v. Commissioner of Service Tax-III, Chennai [Service Tax Appeal Nos. 41386 to 41393 of 2017] wherein vide Final Order Nos. 40245 to 40252 of 2023 dated 03.04.202, this Bench has considered the orders of various CESTAT Benches and held that the denial of refund claims, in an almost similar circumstance, is not in accordance with law.
8.4 He would thus request for setting aside the impugned order and to allow the appeal, thereby directing the authority to grant refund as claimed by the appellant.
9. Per contra, Ld. Assistant Commissioner supported the findings in the impugned order.
5Appeal No.: ST/40956/2014-DB
10. Having heard the rival contentions, we find that the only issue is: whether the denial of refund, as claimed by the appellant, by the lower authorities is in order?
11. We have perused the orders of lower authorities and we have also gone through the Final Order of this Bench in the case of M/s. Miramed Ajuba Solutions Pvt. Ltd. (supra) relied upon by the Ld. Advocate.
12. We find that this Bench has considered in threadbare almost similar issue in the light of the Order of the Ld. Larger Bench in the case of M/s. Span Infotech (India) Pvt. Ltd. (supra) and also referred to orders of various CESTAT Benches across the country, and held as under: -
"6.4 We find that there is no ground that Section 11 B mandates that the date of invoice must be considered as the relevant date. The residual category under Section 11 B is the date of payment of duty. In case of export of services as in these appeals there is no payment of duty at all. As such, the Tribunal has considered as to what constitutes an export of service under the Export of Service Rules and concluded that the date of realization of foreign exchange is the relevant date. If the export is not complete, the exporter of services is not entitled to claim refund under Rule 5 of CCR, 2004. Therefore, harmoniously reading the Export of Service Rules and Section 11 B of CEA, 1944, the Tribunal has held a view that in case of export of services, the relevant date must be the date of realization of foreign exchange. For this reason only, an Amending Notification No. 14/2016-CE (NT) dated 01.03.2016 was issued to remove the lacuna in the initial Notification No.27/2012-CE (NT) dated 18.06.2012.
6.5 We find that the issue of limitation/Time bar in the impugned order stands settled in favour of the appellants in view of the Larger Bench decision in the case of Span Infotech Pvt. Ltd. ,- 2018 (12) G.S.T.L. 200 (Tri.-LB) wherein the Tribunal has held as follows:-
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.6
Appeal No.: ST/40956/2014-DB 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 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 7 Appeal No.: ST/40956/2014-DB quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.
Further, we find that while scrutiny of the refund claims filed by the appellants, the lower adjudicating authority rejected a portion of the refund claims for the reason that they are not eligible for availment of Cenvat credit under Cenvat Credit Rules, 2004, on account of missing invoices, excess credit wrongly taken, Not being related to output service, non- mentioning of service provider's registration number on the input/input service invoices etc. Learned Advocate for the appellants has submitted that these invoices are actually available but due to omission missed out to be attached at the time of filing refund claims and they had submitted all the copies of those invoices before the lower adjudicating authority. But the lower adjudicating authority have not taken them into consideration and proceeded to reject the refund claims. Learned Advocate has also argued that the proper way to recover ineligible credit is by resorting to Rule 14 of CCR read with Section 73 of the Finance Act and not during the time of scrutiny of refund claims. We find that in the grounds of appeal the appellants have admitted that certain excess credit was wrongly taken by them amounting to Rs.7,819/- and a few invoices involving a credit of Rs. 1,91,935/- were not submitted which were categorized as missing. The appellant is required to reverse this input tax credit as admitted by them."
13. In view of the above, we are of the clear view that the rejection of refund by the lower authorities is not in order, for which reason we set aside the impugned order.
14. Resultantly, the appeal is allowed with consequential benefits, if any, as per law.
(Order pronounced in the open court on 22.09.2023) Sd/- Sd/-
(M. AJIT KUMAR) (P. DINESHA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Sdd