Custom, Excise & Service Tax Tribunal
Spiderlogic India Pvt. Ltd vs Commr. Of Service Tax, Pune - I on 31 July, 2017
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
ST/86901/16
(Arising out Order-in-Appeal No. PUN-SATAX-000-APP-065-16-07 dated 12.05.2016 passed by the Commissioner of Central Excise (A), Pune)
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Seen
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
Spiderlogic India Pvt. Ltd.
Appellant
Vs.
Commr. of Service tax, Pune - I
Respondent
Appearance:
Shri H.P. Kanade, Advocate for the appellant
Shri V.R. Reddy, AC (AR) for the respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 03.07.2017
Date of decision : 31.07.2017
O R D E R No: ..
The appellants claimed refund for `5,43,054/- for the period April 2013 to June 2013 under Rule 5 of Cenvat Credit Rules, 2004 in respect of accumulated cenvat credit against the export of output service namely information technology software service. The adjudicating authority vide Order-in-Original dated 15.12.2015 sanctioned the refund of an amount of `2,96,582/-. However, an amount of `2,43,772/- was rejected on the following reasons:-
1) `2,31,688/- the claimants have taken a recredit of an amount of `2,31,688/- which was earlier rejected by the then Dy. Commissioner, Service tax cell, vide Order-in-Original dated 09.12.2013 on the ground that the said amount claimed as refund was time barred, while contesting their refund claim for the period July 2012 to September 2012. The appellants had included `231,688/- while arriving at the cenvat credit availed during the period April 2013 to June 2013 and have included the same in the amount of refund claim for the period April 2013 to June 2013.
2) `12,084/- this credit was availed on the capital goods whereas the capital goods is excluded in the definition of input service hence inadmissible cenvat credit for the purpose of refund.
2. As per the above observation net cenvat credit for the purpose of formula under Rule 5, the adjudicating authority only considered `29,658/- as net cenvat credit. Accordingly, refund of this amount has been allowed and remaining amount of `2,43,772/- was disallowed. Being aggrieved by the Order-in-Original the appellants filed appeal before the Commissioner (Appeals), who rejected the appeal by upholding the Order-in-Original dated 15.12.2015. The ld. Commissioner (Appeals) also gave a finding for rejecting the appeal that once the refund claim amounting to `2,31,688/- was rejected in the earlier quarter, the same cannot be claimed again in the subsequent quarter.
3. Shri H.P. Kanade, ld. Counsel appearing for the appellants as regards the claim of an amount of `12,084/- on the capital goods he clearly concedes that the appellant is not contesting the refund of this amount. As regards the refund of `2,31,688/- he submits that though the refund of this amount was rejected during the quarter July 2012 to September 2012 but they became entitled to recredit of the said amount in terms of clause (i) of para 2 of notification 27/12-CE(NT) dated 18.06.2012 issued under Rule 5 of Cenvat Credit Rules, 2004. Therefore their action of taking credit in quarter April 2013 to June 2013 is legal and correct and the same to be considered as cenvat credit availed during this quarter. Accordingly, for the purpose of refund this amount of credit cannot be reduced. He further submits that the appellants is a 100% export oriented unit therefore entire input services are used for export of output service accordingly, the refund cannot be denied for any reason.
4. Shri V.R. Reddy, Ld. AC (AR) appearing on behalf of the revenue reiterates the finding of the impugned order.
5. I have carefully considered the submission made by both sides. I find that the appellants have re-credited `2,31,688/- during the quarter April 2013 to June 2013 in terms of clause (i) of para 2 of notification 27/12-CE(NT) dated 18.06.2012, which reads as under:-
Notification No. 27/2012-C.E. (N.T.)
1.
2.
(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.
From the above clause, it can be seen that the claimant can take back the credit for an amount which was not sanctioned as refund under Rule 5 and notification issued thereunder. In the present case, for the quarter July 2012 to September 2012 the refund of `2,31,688/- was not sanctioned therefore, in accordance with clause (i) of para 2 of the notification, the appellant was statutorily entitled for taking credit of the said amount. Since their availment of credit in the quarter April 2013 to June 2013 is legal and correct the same is required to be considered for the purpose of refund for this quarter. In the adjudication proceeding, the availment of credit was not disputed whereas the refund was rejected. As regards formula, Rule 5 is reproduced below:-
RULE 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) W 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 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 [Service Tax Rules, 1994] in respect of such tax.
Explanation 1. - For the purposes of this rule, -
(1) export service means a service which is provided as per [rule 6A of the Service Tax Rules, 1994];
[(1A) export goods means any goods which are to be taken out of India to a place outside India.] (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-rules (3) and (3A) of rule 6 is determined.
6. From the reading of the above Rule, it can be seen that for the purpose of refund, the net cenvat credit means the total cenvat credit availed on inputs and input services by the manufacturer or output service provider reduced by the amount reversed in terms of sub-rule 5(c) of Rule 3, during the relevant period. In the facts of the present case, there is no dispute that the credit of `231,688/- was availed by the appellants during the relevant period April 2013 to June 2013 under the authority of clause (i) of para 2 of notification 27/12-CE(NT). Therefore this amount of `231,688/- is nothing but the credit availed during the relevant quarter. Therefore, this amount must be taken into total amount of net cenvat credit availed. Even though the refund in respect of this amount was earlier rejected on the ground of time bar, this cannot be the reason for denying the refund as the credit of same amount in the subsequent quarter, the law permits the assessee to take back the credit of said amount for which the refund was not earlier granted. If the amount of cenvat credit of `231688/- is reduced for the purpose of net cenvat credit the provisions of clause (i) of para 2 of notification 27/12-CE(NT) dated 18.06.2012 shall become redundant which is not the intention of the legislature. It is also pertinent to note that the appellant is a 100% EOU, so whatever cenvat credit has been availed on the input service, entire amount is refundable. In this case no one to one correlation is required. As regards the amount of `12,084/- the appellants have conceded that they are not contesting the same. Therefore rejection of refund claim for `12,084/- is upheld.
7. As per my above discussion, the appellant is entitled for the refund of `2,31,688/-. The appeal is partly allowed in the above terms.
(Pronounced in Court on ..............................) Ramesh Nair Member (Judicial) //SR
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ST/86901/16