Custom, Excise & Service Tax Tribunal
Power Link System Private Limited vs Commissioner Of Central Excise on 29 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.ST/40150/2015 & ST/40151/2015
[Arising out of Order-in-Appeal No.198/14 & 199/14 dated 20.10.2014 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals-I), Coimbatore]
Power Link System Private Limited
Appellant
Versus
Commissioner of Central Excise,
Coimbatore Respondent
Appearance:
Shri M. Karthikeyan, Advocate For the Appellant Shri R. Chandrasekaran, AC (AR) For the Respondent CORAM:
Honble Shri P.K. Choudhary, Judicial Member Date of hearing/decision :29.3.2016 FINAL ORDER No.40616-40617/2016 Both the appeals are arising out of a common impugned order passed by Commissioner (Appeals) and therefore they are taken up together for disposal.
2. M/s.Power Link Systems Pvt. Ltd. (appellant herein) is engaged in providing taxable service of commission agents for textile machineries under the category of "Business Auxiliary Service". They are also providing maintenance and repair service. They are the sole selling agents of M/s.Murata Machinery Ltd., Japan. Since the appellants are exporting their services and consideration is received in foreign exchange, they have opted to avail refund in view of Notification No.27/2012-CE (NT) dt. 18.6.2012 read with Rule 5 of CENVAT Credit Rules, 2004. The appellant has appointed sub-agents within the country for the purpose of canvassing business and procuring orders. The invoices raised by the sub-agents on the appellants, includes service tax. The service provided by sub-agents being eligible as input service for the appellants, they have availed cenvat credit. Since the appellants are having export of services, they have filed refund claims for an amount of Rs.11,28,304/- quarterwise, under Rule 5 of CCR read with Notfn 27/12.dt. 18.6.2012. The claims were found to be not corroborated with documentary evidence and not complied with conditions of the said notification and hence appellants were issued with four show cause notices, which were adjudicated by two separate OIOs. The details of claims, SCN, period etc. are tabulated herein under :-
S.No. Refund Claim Period SCN OIO Sl.No.date
1.
6,99,519 07/12-09/12 29.08.13 R.20/2014-(AC) dt. 24.06.14
2. 1,48,008 10/12-12/12 19.09.13
-do-
3. 2,05,054 04/13 06/13 05.11.13
-do-
4. 75,723 04/12 06/12 21.08.13 R.21/2014-(AC) dt. 11.07.14 11,28,304 The refund claims were rejected by the adjudicating authority which was upheld by the Commissioner (Appeals). Being aggrieved, the appellant-assessee is in appeal before this Tribunal.
3. Ld. counsel Shri M. Karthikeyan, Advocate appearing on behalf of the appellant-company draws my attention to the OIO internal page 9, page 38 of the appeal paper book (Appeal No.40150/15) wherein the adjudicating authority has recorded his findings and framed the issues for consideration and has discussed each issue in the subsequent paragraphs. The ld. counsel reiterated the findings in para-18 therein and submits that the adjudicating authority accepted the appellant-assessee's submissions and status in para-18 and holds the view in subsequent para-19. Ld. Counsel further draws my attention to sample copies of tax invoices submitted by them on pages 76 to 78 of the appeal paper book wherein the description of service provided to the overseas company has been mentioned as "commission" for the service rendered. He also draws my attention to the Bank Realization Certificate (BRC) on pages 122 to 126 of the appeal paper book wherein the details of remittances is furnished. The purpose is mentioned as "Sales Commission". He drew my attention to page 90 of the paper book which is part of the ST-3 returns filed by appellant-assessee wherein the description of taxable service has been mentioned as "Business Auxiliary Service". In regard to the observation of the adjudicating authority, regarding the validity of the agreement, that appellants have not produced copy of extension of their agreements, the Ld. counsel draws my attention to page 127 of the appeal paper book and also at page 133 wherein Article 6 i.e. Terms of Validity has been amended with the following remarks :-
This agreement shall come into force on the day and year first above written and be valid thereafter for one (1) year upon expiry of which the Agreement shall be automatically renewed for further periods of one (1) year each time, unless otherwise terminated in writing by either MURATA or AGENT with prior notice.
He submits that all the conditions have been fulfilled and there is no case to reject their refund claims and prays for setting aside the impugned order. Ld.counsel filed a copy of Final order No.41066/2015 dt. 24.3.2015 passed by this Bench in the appellant's own case and pleads for setting aside the orders and for allowing both the appeals.
4. Ld. A.R. Shri R.Chandrasekaran, AC, appearing on behalf of Revenue, reiterates the findings contained in the impugned order. He submits that the adjudicating authority was justified in rejecting the claims of refund for the reason that it appears that one Bank Realization Certificate (BRC) is a combination of several export invoices and they were not reconciled by appellant-assessee at the time of filing refund claim. He also submits that there was no debit by appellant from cenvat account at the time of making the claim as required under Rule 5 of CCR 2004 and Notfn 27/2012-CE (NT) dt. 18.6.2012. He further submits that the claim is for Rs.11,28,304/- and in their cenvat account they have made debit entry of Rs.2,05,054/- only in the month of June 2013 and they have not produced any cenvat credit register evidencing debit of refund amount.
5. Heard both sides.
6. The issue relates to refund of Cenvat credit in terms of Rule 5 of CCR 2004. This rule is an export promotion oriented rule, which envisaged granting of refund of Cenvat credit lying unutilised with the manufacturer or provider of output service consequent upon the exports effected without payment of excise duties and without payment of service tax. This rule is governed by Notification No.27/2012 CE (NT) dated 18.06.2012 as amended.
7. It is seen from the order-in-original passed by Assistant Commissioner that it is accepted by the lower authorities that the service in question perse is eligible for credit. However, the refund claimed has been denied on certain procedural lapses taking into consideration, the procedure involved in Rule 5 of the Cenvat credit Rule 2004 and the Notification cited supra.
8. The first objection of the lower authority is that the invoice submitted by the service provider does not indicate all particulars. I find that these objections could have been avoided if the lower authority had called for the details of the purchase order and other correspondence and the terms of understanding between the appellants and service providers. Appellants in the grounds of appeal have consistently taken a stand that the sub agents were engaged by them for procuring orders relating to export of services provided by the appellants. Once the service in question had been held to be eligible for the credit, the lower authorities should have verified the nature of payment effected on such services and the appointment of said sub agents who had provided such service.
It should not be difficult for the appellants to give the particulars of such sub agents and the manner in which such services were to be provided. Therefore the rejection of invoices on the ground of lack of particulars is not correct.
9. It is also noticed that the refund had been rejected on the ground that there was no agreement between the service providers and the appellants for providing the service. It is the ground of the Assistant commissioner that the copy of the agreement was given only after issue of Show cause notice. This ground for rejection is also not tenable as the genuineness of the documents has not been disputed.
10. It is also noticed that the claim is rejected for want of methodology for the quantification of the commission paid. It is observed that so long as the commission paid is not disputed, which can even be verified from the bank statements or certificates from the bank, the rejection of claim for want of quantification of the commission paid is not legally tenable.
11. It is also noticed that the services exported are treated as 'exempted services' for which no credit is admissible hence on this ground claim is rejected. I observe that under Rule 6 (8) of the Cenvat credit rules, services provided will not be an exempted service, if conditions prescribed under Rule 8(a) and (b) are satisfied. The lower authority had not examined whether these conditions are satisfied. It is also noticed that one of the findings of the lower authority is that bank realisation certificates has not been correlated with the export invoices. I observe that in the event of non-realisation of remittances for export of services which is also governed under FEMA Act, in which case, the lower authority should have examined whether any action was taken under the FEMA against the appellants. In absence of any such proceedings, I cannot presume that the remittances of export of services are not correlatable.
12. Keeping the above observation and keeping the view that claiming of refund under Cenvat Credit Rules is part of the export promotion scheme without properly examining the records, such benefits cannot be denied, since the records in question can be properly verified by the Assistant commissioner, who had passed the order-in-original. I, therefore, remand the entire matter to the original authority for examining the issue afresh after giving sufficient opportunity for producing all required particulars. The appellants are also directed to cooperate to produce all the corroborative and correlatable documents to the original authority and prove their entitlement to the refund accordingly. Appeals are disposed off accordingly.
(Operative part of the order pronounced in open court on 29.3.2016) (P.K.CHOUDHARY) JUDICIAL MEMBER gs 8