Custom, Excise & Service Tax Tribunal
M/S. Mportal (India) Wireless ... vs The Commissioner Of Service Tax on 1 July, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No:ST/177/2009 (Arising out of Order-in-Appeal No. 341/2008-ST dated 30.12.2008 passed by the Commissioner of Central Excise (Appeals-II) Bangalore) 1. Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. mPortal (India) Wireless Solutions Private Limited Appellant Vs. The Commissioner of Service Tax Bangalore Respondent
Appearance Shri B.G. Chidananda Urs, Advocate, for the Appellant Shri U. Raja Ram, JDR, for the Respondent CORAM MR. P. KARTHIKEYAN, HONBLE MEMBER (TECHNICAL) Date of Hearing: 04.06.2010 Date of decision: 01.07.2010 FINAL ORDER No._______________________2010 Per P. Karthikeyan The appellant M/s. mPortal (India) Wireless Solutions Pvt. Ltd., Bangalore, is a STPI Unit engaged in development and export of Software. It had claimed refund of accumulated cenvat credit of Rs. 4,36,985/-. It had received various input services in relation to development and export of software. The period of dispute is the Financial Year 2006-2007. Vide OIO No. 47/2008 dated 30.05.2008, the Assistant Commissioner, Service Tax, Division-III, Bangalore, rejected the refund claim filed by the appellant. He found that the appellant was engaged in software development, which was not a taxable service. The assessee was not eligible for taking Cenvat credit as per Rule 6(1) of the Cenvat Credit Rules, 2004. It appeared that it had received input services such as telephone services, security, consultancy, software development, manpower supply and recruitment. But the assessee had not furnished particulars of services utilised. He rejected the refund claim also on the ground that the assessee was not registered with the Department as a provider of service. Also, the refund claim was barred by limitation.
2. Vide the impugned order, the Commissioner (Appeals) sustained the order of the Original Authority on the same findings.
3. Before the Tribunal, the appellants have raised several grounds to justify their entitlement to refund of cenvat credit in terms of Rule 5 of CCR, which provides for grant of refund of accumulated cenvat credit. With the supporting case-laws, it is argued that irrespective of whether input material or service is used in manufacture of exported excisable goods or output services, an assessee is qualified for refund of the accumulated cenvat credit. There were Circulars binding the officers of the Department to expeditiously sanction refund claims filed by exporters. Citing the judgment of the Apex Court in Sandvik Asia Ltd. Vs. CIT ((2006 (196) ELT 257(SC)), it is argued that for delay in grant of refund, the appellants were entitled to interest on the delayed refund. It is submitted that in M/s. Punjab Stainless Steels Industries Vs. CCE 2008-TIOL-1004-CESTAT-DEL, the Tribunal had held that input credit/rebate cannot be denied on the ground that the export goods are exempted. Relying on the decision of the Tribunal in Sudha Dyeing & Printing Mills Pvt. Ltd. Vs. CCE [(2008 (221) ELT 107(Tri.-Ahmd.)], it is submitted that there was no time limit provided for utilising the cenvat credit and that once the credit was utilised for payment of duty and the refund if any due, would be subject to the time limit prescribed for claim of refund. There cannot be any time limit for claiming refund of accumulated cenvat credit. This was also the ratio of the following judicial authorities:-
(i) Swagat Synthetics Ltd. Vs. CCE2007 (220) ELT 949(Tribunal)
(ii)Gilloram Gaurishankar Vs. CCE 2007 (213) ELT 528(Tribunal) It was also submitted that substantial benefit of cenvat credit could not be denied on a technical ground of the assessee being not registered with the Department. Reliance is placed on the decision of the Tribunal in BSNL Vs. CCE 2008-TIOL-1989(T).
4. Heard both sides.
5. I have carefully perused the case records and studied the submissions by both sides. The impugned order held that the appellant being a unit engaged in software development, an activity exigible under the Central Excise Act but exempt by notification, it was not eligible to credit of service tax paid on input services in terms of Rule 6(1) of Cenvat Credit Rules(CCR). This Rule is reproduced below.
RULE 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of [exempted goods or for provision of exempted services,] except in the circumstances mentioned in sub-rule (2).
[Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.]
(i) I find that the decision sustained in the impugned order is in accordance with these provisions. This reading of the Rule by the authorities cannot be faulted. However, I find that para 6.11 of the Hand Book of Procedures of the Foreign Trade Policy 2004-2009 reads as follows.
6.11 Entitlement for supplies from the DTA
(a)
(b)
(c) In addition, the EOU/EHTP/STP/BTP units shall be entitled to the following:-
i ii.
iii.
iv.
v. CENVAT Credit on service tax paid.
Obviously the policy of the Government is to allow STP units like the appellants Cenvat credit of duty/ service tax paid on inputs/input services. This benefit is apparently not limited by provisions of the CCR. This plea was, however, not taken by the appellant. Therefore, the appellant was entitled to take credit of service tax paid on input services.
(ii) Another ground on which the claim is rejected is that the same is barred by limitation. I find that the relevant date specified in Section 11B of the Act does not mention anything as regards refund of cenvat credit. Therefore, the limitation u/s 11B does not apply for refund of accumulated cenvat credit.
(iii) A major reason to reject the claim is that the appellant is not registered with the department. I find that Cenvat scheme is available only to an assessee registered with the department. I find that unless the developer of software exported is registered with the department, it cannot earn credit of service tax paid on input services in its accounts. Refund is allowed of credit earned which cannot be utilized, for any reason, and lying in the cenvat account. A person not registered with the department cannot obtain refund under Rule 5 of CCR. I find that the BSNL case cited by the appellant did not deal with the requirement of registration to qualify for credit.
(iv) The objection that the claimant had not produced the documents to substantiate the entitlement and the amount, I find, is to be sustained.
6. In the result the appeal is rejected.
(Pronounced in open Court on 01.07.2010) (P. KARTHIKEYAN) Member (T) /pr/