Custom, Excise & Service Tax Tribunal
Apex Co Vantage India Private Limited vs Rangareddy - G S T on 14 June, 2018
Appeal Nos. ST/30212-30214/2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Bench - SMB
Court - I
Sl. Appeal No. Appellant Respondent Impugned Order
No.
1. ST/30212/2018 Apex Co Vantage CCT, OIA No. HYD-SVTAX-
India Pvt. Ltd., Rangareddy RRC-APP-140 &141-
- GST 17-18 (APP-I) dated
04.12.2017
2. ST/30213/2018 -do- -do- OIA No. HYD-SVTAX-
RRC-APP-140 &141-
17-18 (APP-I) dated
04.12.2017
3. ST/30214/2018 -do- -do- OIA No. HYD-SVTAX-
RRC-APP-148-17-18
(APP-I) dated
11.12.2017
Appearance
Shri Rama Mohan, Chartered Accountant for the Appellant. Shri Guna Ranjan, Superintendent (AR) for the Respondent. Coram:
Hon'ble Mr. P. Venkata Subba Rao, Member (Technical) Date of hearing: 07/06/2018 Date of decision: 14/06/2018 FINAL ORDER No. A/30635-30637/2018 [Order per: P. Venkata Subba Rao] These appeals are filed by the appellant against Orders-
in-Appeal passed by the Learned Commissioner (Appeals) upholding the Orders-in-Original.1
Appeal Nos. ST/30212-30214/2018
2. Heard both sides and perused the records.
3. The brief facts of the case are that the appellant is an exporter engaged in the export of Information Technology services. They also rendered services to their Indian clients. But the bulk of their turnover is export of services and hence they accumulated CENVAT credit. They had filed an application under Rule 5 of CENVAT Credit Rules, 2004 to claim refund of CENVAT credit in proportion to their export services. These claims were rejected by the Adjudicating Authority on the ground that they had not debited the CENVAT credit amount from their books of accounts at the time of making the claim as required. It is further alleged that the refund claim amount was not reflected in the Service Tax returns filed by the appellant during the relevant period and the general ledger of the assesse to show that the duty has been debited cannot be considered as evidence, it being a private record.
4. Aggrieved, the appellant appealed to the Commissioner (Appeals) who dismissed the appeals and upheld the orders of the Original Authority. The present appeal is against the orders of the Commissioner (Appeals).
5. Learned Chartered Accountant appeared on behalf of the appellant and explained the sequence of events during the hearing as follows:
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Appeal Nos. ST/30212-30214/2018 Sl. Particulars No.
1. Appeal No. 30212/2018 30213/2018 30214/2018
2. Refund for the Quarter April - June July - Sept 2015 Jan - March 2015 2015
3. Date of application 30/03/2016 29/06/2016 25/01/2016
4. Refund Amount 7,32,287/- 10,32,532/- 5,39,822/-
5. Date of Entry in Books 30/06/2016 30/09/2016 31/03/2016
6. Date of Order by Deputy 23/12/2016 28/12/2016 23/12/2016 Commissioner
7. Due date of filing ST-3 for the 25/04/2016 period Oct 15 to March 16
8. Date of filing ST-3 for the 22/04/2016 period Oct 15 to March 16
9. Due date of filing revised ST-3 21/07/2016 for the period Oct 15 to March 16
10. Due date of filing ST-3 for the 25/10/2016 period April 16 to Sept 16
11. Date of filing ST-3 for the 24/10/2016 period April 16 to Sept 16
12. Due date of filing revised ST-3 23/01/2017 for the period April 16 to Sept 16
13. Date of filing revised ST-3 for 10/01/2017 the period April 16 to Sept 16
14. CENVAT Reversed amount 7,32,827/- 10,32,532/- 5,39,822/-
CENVAT reversed in revised Refer Page 49 Refer Page 49 Reduced ST-3 for the period April 16 to Table I 3 Table I 3 Opening Sept 16 CENVAT credit Refer Page 35 (rear side) Table I3
15. Appeal Order Date 04/12/2017 04/12/2017 11/12/2017 It is his submission that the appellant was under mistaken belief that the debit in their books of accounts had to be done after one year from the end of the quarter for which the refund claim is filed and they have done so. The refund claim, however, was filed before the end of one year. He further said that the appellant had mistakenly not entered these details in ST-3 returns but had subsequently filed revised the returns rectifying the defects. It is his further submission that the appellant is largely an exporter with a very small turnover in the domestic sector and hence always had accumulated CENVAT credit. It is his submission that due to ignorance, the appellant had not claimed refund of service tax during the previous periods but did 3 Appeal Nos. ST/30212-30214/2018 so for the period from April, 2015 onwards. They had filed refund claims but had not debited the amount in time i.e., before or at the time of making the claim. This mistake was rectified by them by subsequently debiting the amount. It an honest mistake because of which they should not be deprived of their substantive benefit of refund. It is his further submission the appellant does not stand to gain anything by not debiting as they always had surplus credit in their books of accounts because of their exports. Considering these facts, the Learned Commissioner (Appeals) should have taken a more holistic view of the situation and allowed them to refund which he did not. His submission is that the Tribunal should take a larger view of the situation and appreciate that the appellant has not gained anything by these technical mistakes and should not be deny the substantive benefit of refund. He further submits that even after this refund claim was rejected by the Original Authority and the First Appellate Authority they have not taken back the credit CENVAT in their accounts. He relied upon the following judgments and orders.
i) Commissioner of Service Tax, Delhi Vs. Covergys India (P.) Ltd., [2009 (21) STT 67 (NEW DELHI -CESTAT)]
ii) Kothari Infotech Ltd., Vs. Commissioner of Central Excise, Surat [2013 (38)taxmann.com 298 (Ahmedabad - CESTAT)]
iii) Manubhai & Co. Vs. Commissioner of Service Tax, Ahmedabad [2011 (21) STR 65 (Ahmedabad - CESTAT)] 4 Appeal Nos. ST/30212-30214/2018
iv) Wipro Ltd., Vs. Union of India [2013 (32) taxmann.com 113 (Delhi)]
v) Commissioner of Central Excise-I Vs. SG Analytics (P.) Ltd., [2016 (72) taxmann.com 180 (Mumbai - CESTAT)]
vi) Indago Vs. Commissioner of Service Tax, Pune [2016 (69) taxmann.com 199 (Mumbai - CESTAT)]
vii) Principal Commissioner of Service Tax, Pune Vs. Prodair Air Products India (P.) Ltd., [2016 (71) taxmann.com 358 (Mumbai -
CESTAT)]
6. The Learned Departmental Representative on the other hand, vehemently opposed the appeal and said that the statutory requirement under Rule 5 of the CENVAT Credit Rules read with procedure laid down in Notification No. 05/2006-CE (NT) cannot be modified by the Tribunal. It must be followed. He further argued that debiting the amount in the CENVAT credit before filing the refund claim is a substantive requirement and is not a mere procedure.
7. I have considered the both arguments and perused the records. The Constitution of India has demarcated the roles of Legislature, Executive and Judiciary. Legislation is the exclusive domain of the Legislature. To provide flexibility in the law to deal with changing needs and conditions, the parent Act itself delegates the powers of delegated legislation to the Executive i.e., the Government which is accountable to the Parliament. This delegated legislation, in 5 Appeal Nos. ST/30212-30214/2018 the form of Rules, Regulations, Notifications, etc., is subject to the control of the Parliament. Every Gazette Notification with the Rules, Regulations, Notifications, etc., is placed before the Parliament and is scrutinised by the Parliamentary Committee on Subordinate Legislation and where, it feels, necessary, modified. Thus, it is clear that:
a) The legislation is the exclusive privilege of the Legislature;
b) When the legislature delegates powers to make Rules, Regulations, issue notifications, etc., such delegation is done to the Government which is answerable to the Legislature any and
c) All delegated legislations are, through a well laid down process, placed before the legislature and scrutinised by it and where it feels necessary, amended as per its directions.
8. Of course, High Courts and Supreme Court who have the mandate to interpret the Constitution, review the legislation for its constitutionality, etc., which is another additional check on the legislation. However, neither the officers enforcing the law nor the quasi-judicial authorities including the Tribunals (which are creations of the law) have the power to modify, amend, insert, delete, stretch or restrict the scope of the Act, Rules, Regulations or the Notifications. Their role is confined to interpreting the laws and applying them to the case in hand. The Hon'ble Apex Court in the case of UOI vs Kirloskar Pneumatics Company [1996 (84) ELT 401 (SC)] not only clarified this position but further held that even when exercising the 6 Appeal Nos. ST/30212-30214/2018 powers under Article 226/227, the High Courts cannot direct the officers to act contrary to the law. Para 10 of this judgment reads as follows:
"10. According to these sub-sections, a claim for refund or an order of refund can be made only in accordance with the provisions of Section 27 which inter alia includes the period of limitation mentioned therein. Mr. Hidayatullah submitted that the period of limitation prescribed by Section 27 does not apply either to a suit filed by the importer or to a writ petition filed by him and that in such cases the period of limitation would be three years. Learned counsel refers to certain decisions of this Court to that effect. We shall assume for the purposes of this appeal that it is so, notwithstanding the fact that the said question is now pending before a larger Constitution Bench of nine Judges along with the issue relating to unjust enrichment. Yet the question is whether it is permissible for the High Court to direct the authorities under the Act to act contrary to the aforesaid statutory provision. We do not think it is, even while acting under Article 226 of the Constitution. The power conferred by Article 226/227 is designed to effectuate the law, to enforce the Rule of law and to ensure that the several authorities and organs of the State act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law. In particular, the Customs authorities, who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to Section 27, whether before or after amendment. May be the High Court or a Civil Court is not bound by the said provisions but the authorities under the Act are. Nor can there be any question of the High Court clothing the authorities with its power under Article 226 or the power of a civil court. No such delegation or conferment can ever be conceived. We are, therefore, of the opinion that the direction contained in clause (3) of the impugned order is unsustainable in law. When we expressed this view during the hearing Mr. Hidayatullah requested that in such a case the matter be remitted to the High Court and the High Court be left free to dispose of the writ petition according to law."
The above scheme of things under the constitution as well as the above judgment of the Supreme Court that the creatures of law cannot act contrary to the law lays down the basic framework for me to decide the issue at hand. The question to be decided is whether the Order-in-Appeal passed by the First Appellate Authority is as per the statutory provisions or not. Rule 5 of the CENVAT Credit Rules, 7 Appeal Nos. ST/30212-30214/2018 2004 and the Notification No.05/2006 - CE (NT) prescribing the conditions, limitations and safeguards read as follows:
"Rule 5 of CENVAT Credit Rules and Notification No. 5/2006 -
C.E. (N.T.) [5. Refund of CENVAT Credit. - (1) A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette:
Refund amount = (Export turnover of goods+ Export turnover of services) x Net CENVAT credit Total turnover Where,-
(A) "Refund amount" means the maximum refund that is admissible;
(B) "Net CENVAT credit" means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider reduced by the amount reversed in terms of sub-rule (5C) of rule 3, during the relevant period;
(C) "Export turnover of goods" means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking;
(D) "Export turnover of services" means the value of the export service calculated in the following manner, namely:-
Export turnover of services = payments received during the relevant period for export services + export services whose provision has been completed for which payment had been received in advance in any period prior to the relevant period - advances received for export services for which the provision of service has not been completed during the relevant period;
(E) "Total turnover" means sum total of the value of -
(a) all excisable goods cleared during the relevant period including exempted goods, dutiable goods and excisable goods exported;
(b) export turnover of services determined in terms of clause (D) of sub-rule (1) above and the value of all other services, during the relevant period; and
(c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed.
(2) This rule shall apply to exports made on or after the 1st April, 2012:
Provided that the refund may be claimed under this rule, as existing, prior to the commencement of the CENVAT Credit (Third Amendment) Rules, 2012, within a period of one year from such commencement:
Provided further that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and 8 Appeal Nos. ST/30212-30214/2018 Central Excise Duties and Service Tax Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Services Rules, 2005 in respect of such tax.
Explanation 1.- For the purposes of this rule,-
(1) "export service" means a service which is provided as per the provisions of Export of Services Rules, 2005, whether the payment is received or not;
(2) "relevant period" means the period for which the claim is filed.
Explanation 2.- For the purposes of this rule, the value of services, shall be determined in the same manner as the value for the purposes of sub-rule (3) and (3A) of rule 6 is determined.] Notification No. 5/2006-CE In exercise of the powers conferred by rule 5 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the "said rules"), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No th 5/2006 - Central Excise (N.T), dated the 14 March, 2006, published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 156(E), th dated the 14 March, 2006, the Central Board of Excise and Customs hereby directs that refund of CENVAT credit shall be allowed subject to the procedure, safeguards, conditions and limitations as specified below, namely:-. 2.0 Safeguards, conditions and limitations.- Refund of CENVAT Credit under rule 5 of the said rules, shall be subjected to the following safeguards, conditions and limitations, namely:-
(a) the manufacturer or provider of output service shall submit not more than one claim of refund under this rule for every quarter:
provided that a person exporting goods and service simultaneously, may submit two refund claims one in respect of goods exported and other in respect of the export of services every quarter.
(b) in this notification quarter means a period of three consecutive months with
st st
the first quarter beginning from 1 April of every year, second quarter from 1 July, st st third quarter from 1 October and fourth quarter from 1 January of every year.
(c) the value of goods cleared for export during the quarter shall be the sum total of all the goods cleared by the exporter for exports during the quarter as per the monthly or quarterly return filed by the claimant.
(d) the total value of goods cleared during the quarter shall be the sum total of value of all goods cleared by the claimant during the quarter as per the monthly or quarterly return filed by the claimant.
(e) in respect of the services, for the purpose of computation of total turnover, the value of export services shall be determined in accordance with clause (D) of sub-rule (1) of rule 5 of the said rules.
(f) for the value of all services other than export during the quarter, the time of provision of services shall be determined as per the provisions of the Point of Taxation Rules, 2011.
(g) the amount of refund claimed shall not be more than the amount lying in balance at the end of quarter for which refund claim is being made or at the time of filing of the refund claim, whichever is less.
(h) the amount that is claimed as refund under rule 5 of the said rules shall be debited by the claimant from his CENVAT credit account at the time of making the claim.
(i) In case the amount of refund sanctioned is less than the amount of refund claimed, then the claimant may take back the credit of the difference between the amount claimed and amount sanctioned.
3.0 Procedure for filing the refund claim. - (a) The manufacturer or provider of output service, as the case may be, shall submit an application in Form A annexed to the notification, to the Assistant Commissioner of Central Excise or 9 Appeal Nos. ST/30212-30214/2018 Deputy Commissioner of Central Excise, as the case may be, in whose jurisdiction,-
(i) the factory from which the final products are exported is situated.
(ii) the registered premises of the provider of service from which output services are exported is situated.
(b) The application in the Form A along with the documents specified therein and enclosures relating to the quarter for which refund is being claimed shall be filed by the claimant, before the expiry of the period specified in section 11B of the Central Excise Act, 1944 (1 of 1944).
(c) The application for the refund should be signed by-
(i) the individual or the proprietor in the case of proprietary firm or karta in case of Hindu Undivided Family as the case may be;
(ii) any partner in case of a partnership firm;
(iii) a person authorized by the Board of Directors in case of a limited company;
(iv) in other cases, a person authorized to sign the refund application by the entity.
(d) The applicant shall file the refund claim along with the copies of bank realization certificate in respect of the services exported.
(e) The refund claim shall be accompanied by a certificate in Annexure A-I, duly signed by the auditor (statutory or any other) certifying the correctness of refund claimed in respect of export of services.
(f) The Assistant Commissioner or Deputy Commissioner to whom the application for refund is made may call for any document in case he has reason to believe that information provided in the refund claim is incorrect or insufficient and further enquiry needs to be caused before the sanction of refund claim.
(g) At the time of sanctioning the refund claim the Assistant Commissioner or Deputy Commissioner shall satisfy himself or herself in respect of the correctness of the claim and the fact that goods cleared for export or services provided have actually been exported and allow the claim of exporter of goods or services in full or part as the case may be."
It is clear that, notification lays down that the amount claimed as refund of CENVAT amount should be debited before applying for the Refund and the appellant had not done so. They have debited the amount, but much later and thereby they violated the condition 2(h) of the notification. The Adjudicating Authority had, therefore, rejected the refund and the First Appellate Authority has upheld the Order-in- Original and rejected the appeal. I have considered the argument of the Learned Chartered Accountant of the appellant that it was a technical mistake which has been rectified by the debit entry made later. The Rule or the notification does not provide the flexibility to the officers or the Tribunal to relax condition 2(h) of the notification. I 10 Appeal Nos. ST/30212-30214/2018 have also examined the case laws cited by the appellant and find none of them deal with the specific case in hand of not debiting the CENVAT credit before applying for a refund under Rule 5 of CENVAT Credit Rules. I am therefore, left with no option but to uphold the Order-in-Appeal and reject the appeal and I do so.
9. The appeal is rejected.
(Order pronounced on 14.06.2018 in open court) (P. VENKATA SUBBA RAO) MEMBER(TECHNICAL) Lakshmi....
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