2018 (5) TMI 400 – CESTAT MUMBAI – 2018 (363) E.L.T. 1158 (Tri. – Mumbai) – Refund claim – relevant date – whether refund claim under Rule 5 of Cenvat Credit Rules, 2004 is barred by limitation should be reckoned from the date of receipt of foreign exchange as held by the Commissioner (Appeals) or it should be considered from the date of export of service or raising of invoices? – Held that: – issue of limitation is no longer res integara as has been held in various judgements that in case of export of service relevant date for computing the limitation is date of receipt of convertible foreign exchange against the service exported and not from the date of invoice issued for providing the export service.
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Whether the Commissioner (Appeals) is right in holding that the eligible refund amount will not be reduced due to the assessee having utilized part of the cenvat credit balance for payment of service tax on domestic output services during the relevant period? – Held that: – amoun
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sue of admissibility of input service was raised in disposal of the refund claim filed under Rule 5 of the Cenvat Credit Rules. There cannot be two yardsticks i.e. one for allowing the credit and other for deciding the refund and therefore the refund claim cannot be rejected on the ground of admissibility of the input service at the stage of processing of refund claim.
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Appeal dismissed – decided against Revenue. – ST/87882/2017 – A/85850/2018 – Dated:- 20-2-2018 – Shri Ramesh Nair, Member (Judicial) Shri Atul Sharma, Asstt.Commr. (A.R.) for Appellant Shri Prasad Paranjape, Advocate for respondent The Revenue has filed the present appeal raising the following three questions of law: (a)Whether the relevant date for the purpose of deciding whether refund claim under Rule 5 of Cenvat Credit Rules, 2004 is barred by limitation should be reckoned from the date of receipt of foreign exchange as held by the Commissioner (Appeals) or it should be considered from the date of export of ser
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pondent, except for ₹ 1,51,518/-, for which the respondent has not filed appeal. The Revenue is in appeal to the extent the Commissioner (Appeals) has allowed the refund of the respondent. 3. Shri Atul Sharma, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the grounds of appeal. 4. Shri Prasad Paranjape the Ld. Counsel appearing on behalf of the respondent submits that as regard limitation in the case of respondent s own group-entities in Appeal No. ST/87435/2017 this Tribunal vide order No. A/85150-85151/2018 held that the computation of limitation in respect of filing the refund claim should be reckoned from the date of receipt of foreign exchange and not from the date of invoices or from the date of export of service, therefore this issue is already settled. 5. As regard the computation of eligible refund. He submits that the refund is to be computed as per the formula provided in Rule 5 of Cenvat Credit Rules,2004. The notification issued unde
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the respondent to utilize opening balance of cenvat credit at the beginning of the relevant period for the payment of their domestic service tax liability. He proposed to consider only that amount of cenvat credit availed during the relevant period after deduction of the amount used for payment of service tax on domestic service tax liability which is contrary to the clear provision under Rule 5 read with notification issued thereunder. Therefore the Commissioner (Appeals) has rightly held in favour of the respondent which deserves to be sustained. 6. As regard the eligibility of certain input services he submits that the Commissioner (Appeals) has rightly examined the eligibility of all the services before him based on the submission made before him in the grounds of appeal and hence allowed the claim of the respondent. He further submits that Revenue has never objected the availment of cenvat credit as no show cause notice was issued for denial of the credit. The issue of inadmissibi
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s date of receipt of convertible foreign exchange against the service exported and not from the date of invoice issued for providing the export service. The Tribunal in their own case passed the following order: 4. We have carefully considered the submissions made by both sides and perused the records. We find that in both the cases, the period involved is after 1.7.2012. Prior to 1.7.2012, the definition of export of service under Rule 5 was as under: – export service means the service which is provided as per provision of Export of Service Rules, 2005 whether the payment is received or not. However, from 1.7.2012, the aforesaid definition of export service under Rule 5 was amended. The amended definition reads as under: – export service means the service which is provided as per Rule 6A of the Service Tax Rules, 1994. Since all the relevant claims are pertaining to the period after 1.7.2012 only the amended definition of export service is applicable. Rule 6A of Service Tax Rules, 199
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and limitations, as may be specified, by the Central Government, by notification.] From the plain reading of the above Rule 6A, it can be seen that as per sub-rule (1) clause (e), the payment for such service should be received by the provider of service in convertible foreign exchange. Therefore, unless and until the payment consideration in convertible foreign exchange against the export of service is received, the export of service is not complete. Accordingly, the relevant date of one year for filing of refund claim should be reckoned from the date of receipt of convertible foreign exchange. Since the department in appeal has raised only the issue of time limit for filing the refund claim, we are not going into any other issue. 5. Accordingly, the impugned order is upheld and Revenue s appeals are dismissed. 8. In view of the above judgements of this Tribunal in the appellant s own group entities case, I hold that refund cannot be denied on the ground of limitation. As regard the i
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e (g) it is crystal clear that amount of refund claimed by the respondent shall not be more than the amount lying in balance at the end of the quarter or at the time of filing of the refund whichever is less. As per the fact narrated by the Ld. Counsel the refund claim amount is lesser, both the amount and cenvat credit balance at the end of the quarter as well as cenvat credit balance at the time of filing the refund and therefore the condition envisaged under clause (g) of para 2 of the notification is scrupulously complied with. It is also observed that in formula given under Rule 5 is relevant which is reproduced below: 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
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ices + 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. From the above formula, and definition of net cenvat credit, it is clear that only cenvat credit availed on the inputs and inputs services by the manufacturer or the output service provider should be taken as net Cenvat credit . The only amount w
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refore the refund claim cannot be rejected on the ground of admissibility of the input service at the stage of processing of refund claim. This was held by the Tribunal in the following cases : (i) Commissioner of Service Tax, Delhi v. Convergys India Pvt. Ltd. – 2009 (16) S.T.R. 198 (Tri.-Del.) (ii) Morgan Stanley Advantage Services Ltd. Versus Commr. Of S.T., Mumbai-II 2015 (37) S.T.R. 639 (Tri. – Mumbai) Thus, the adjudicating authority was supposed to first decide the issue of admissibility of the input service by way of issue of show cause notice and carry out adjudication thereof then only the refund could have been rejected on this point. But in the facts of the present case without carrying out any adjudication process straight away refund was rejected which is incorrect and illegal. Therefore on this count itself, the Revenue s appeal on the issue of admissibility of the input service does not sustain. As per my above discussion, the appeal of the Revenue is not maintainable.
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