Custom, Excise & Service Tax Tribunal
Ispat Industries Ltd vs Commissioner Of Central Excise, Raigad on 19 September, 2011
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No. ST/195/10
(Arising out Order-in-Appeal No. YDB/57/RGD/2010 dated 01.02.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai II)
For approval and signature:
Honble Mr. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
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2. Whether it should be released under Rule 27 of the Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
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Ispat Industries Ltd.
Appellant
Vs.
Commissioner of Central Excise, Raigad
Respondent
Appearance:
Shri Vishal Agarwal, Advocate for the appellant Ms. D.M. Durando, DC AR the respondent CORAM:
Honble P.R. Chandrasekharan, Member (Technical) Date of hearing : 19.09.2011 Date of decision : 19.09.2011 O R D E R No:..
This appeal is directed against the Order-in-Appeal No. YDB/57/RGD/2010 dated 01.02.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai II. Vide the said order the ld. Commissioner (Appeals) rejected the claim of refund of the appellant amounting to Rs.1,98,260/- relating to the service tax paid by them to the Custom House Agent (CHA) services in respect of the goods exported by them.
2. The facts of the case are that the appellant Ispat Industries Ltd. are manufacturers of iron and steel products. They also export the said products out of India. For undertaking the export, they availed the service of CHAs and the CHAs charged them for the services rendered and also charged them service tax Rs.1,98,260/- for the period April to June 2008. On exports of the goods, the appellant filed a refund claim claiming refund of service tax paid on CHA services in terms of the provisions of Notification 41/07-ST dated 06.10.2007. The original authority rejected the claim for refund vide order dated 25.9.2008 on the ground that the appellants exporter had not submitted any proof of payment of service tax to the Service Providers as required under clause (1)(c) of the said Notification. Hence in the absence of such proof, they are not eligible for refund of service tax in respect of CHA services. However, the appellant had submitted proof of payment of service tax to the CHAs vide letter dated 25.9.2008 wherein they enclosed letters from the CHAs for having received payment for services rendered and also for payment of service tax. The said letter was received in the Asst. Commissioners office on 26.9.2008 after he had passed the Order-in-Original dated 25.9.2008. The appellant preferred an appeal before the Commissioner (Appeals) against the said order and the ld. Commissioner vide the impugned order rejected the claim for refund on an altogether different ground. The relevant portion of the said order is reproduced below:
As regards service tax on CHA services, the Notification no. 41/2007-ST dt. 06.10.2007 at para 2(f) specifies the documents that shall accompany the refund claim. One of the three documents is the one which evidences the payment of service tax on the specified services for which claim for refund of service tax paid is filed. I find that the appellants have not produced any proof of any such payment of service tax by the CHAs, either before the lower authority or during the appeal proceedings. Mere certificates from the respective CHAs do not constitute documents evidencing payment of service tax as envisaged in the said Notification. Hence the impugned order rejecting the refund claim of Rs.1.98,216/- does not warrant interference. The appellants are before us against the impugned order.
3. The ld. counsel for the appellant submits that as per Notification 41/07-ST dated 06.10.07 the appellant is eligible for refund of service tax paid on the services which are utilised in the export of goods and CHA services as one of the services notified for such refunds. As per the procedure prescribed, the exporter has to submit evidence to the effect that they have actually paid service tax on the specified services in terms of clause (c) of the proviso to opening para of the Notification. Further, under clause (f) refund claim shall be, inter alia, accompanied by documents evidencing payment of service tax on the specified services for which refund of service tax paid is filed. The ld. Commissioner has interpreted this to mean that the exporter has to submit the original TR6 challan under which the services provider, namely CHA, has paid he service tax to the exchequer. The Central Board of Excise and Customs vide circular 106/9/08-ST dated 11.12.2008 clarified various issues relating to refund of service tax paid under Notification 41/07-ST dated 06.10.07. In the said circular, CBEC has clarified as follows:-
Clarification: The invoices/challans/bills issued by supplier of taxable service, in conformity with Rule 4A of The Service Tax Rules, 1994, are reasonable evidence that the services on which refund is being sought are taxable services. The compliance of condition that exporter had actually paid the service tax rests with the exporter claiming refund. Therefore, insofar as this condition is concerned, the refund claim should be processed based on furnishing of appropriate invoices/bills/challan by the person claiming refund and undertaking to the effect of payment of service tax by him. For the purpose of compliance verification, random checks should be carried out independently and where the refund amount is significant, post refund audit may also be carried out.
4. The ld. counsel also relies on the judgment of the Tribunal in the case of Hindustan Gum & Chemicals Ltd. vs. CCE 2010 (20) STR 666 wherein it was held that the exporters claiming refund of service tax need to produce only proof of their payment of service tax to the service provider and they are not required to provide proof of service tax by the service provider to the exchequer.
5. Ld. AR appearing for revenue reiterates the findings given by the lower authority but fairly concedes that the Board circular dated 11.12.2008 clarifies the position.
6. I have carefully considered the rival submissions. From the clarification issued by the Board, it is absolutely clear that so long as the exporter produced invoice/challan/bill, issued by the supplier of taxable service in conformity with Rule 4A of the Service Tax Rules, 1994, that would be reasonable evidence that the service on which refund is being sought are taxable service and compliance of condition that the exporter has actually paid the service tax. Further, this Tribunal in the case of Hindustan Gum & Chemicals (supra) has held as follows:-
I have considered the submissions made by both the sides. I find that the stand taken by the lower authorities that the appellant should produce copies of challans under which payment of service tax was made by the service provider is totally unreasonable and is not required as per the Notification. It is not the case of the department that appellants have not paid the service tax amount to the CHA who provided them the service. The claim has been rejected on the ground that the challans under which service tax was paid by the CHA has not been produced. This is not a requirement as per the Notification. Further I also find that Commissioner (Appeals) has also held that the refund of service tax is not admissible for the service of Customs House Agent service. However Notification no. 17/08-ST dated 1.4.2008 clearly provides that refund of service tax paid in respect of services provided by the Customs House Agent in relation to export goods. Under these circumstances, I hold that appellants are eligible for the refund claim in respect of all the invoices excepting the four invoices in which registration number of the service provider is not available. The matter is remanded to the original adjudicating authority to reconsider the refund claim in the light of above observations.
7. In the light of the clarification given by the CBEC and also order of this Tribunal in the case cited supra it is clear that the exporter claiming refund of service tax has to furnish only documentary evidence in support of his payment of service tax to the service provider. He is not required to submit any evidence of the payment of service tax by the service provider to the exchequer and the same is not provided for, for claiming refund under Notification 41/07-ST dated 06.10.07. Therefore, the ld. appellate authoritys order is bad in law and requires to be set aside and I do so.
8. Since the appellant has furnished documentary evidence to the Jurisdictional Asst. Commissioner for having paid the service tax to the service provider after he passed the order, the matter has to go back to the original adjudicating authority for consideration of the refund claim in the light of the documentary evidence submitted by them. Thus the appeal is allowed by way of remand.
(Operative part pronounced in Court) P.R. Chandrasekharan, Member (Technical) SR 7