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Judgment
This appeal is filed by the appellant against the order of the Commissioner of GST and CE (Appeals-II), Chennai, dated 29.11.2019 whereby the
appellant’s refund claim partially rejected by the adjudicating authority came to be upheld.
2.1 Brief facts, as canvased by the Ld. Advocate, leading to this appeal, interalia, are that appellant-assessee is engaged in providing design, graphics
services and other gamut of services to its parent company McKinsey Inc., USA, and is registered under Service Tax Department from 17.12.2011;
that the appellant exports most of its services outside India, which is an exempted service, appellant is not in a position to utilize the Cenvat credit
availed by them in full thereby leading to accumulation of Cenvat credit; that in order to encash the unutilized/accumulated Cenvat credit for the period
April 2012 to June 2012, a refund claim under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No.27/2012-CE(NT) dated 18.06.2012,
was made for an amount of Rs.2,50,81,127/- on 23.01.2013, within the time limit of one year from the date of receipt of export proceeds; that on
adjudication, the adjudicating authority allowed the refund claim to the extent of Rs.72,73,678/-, and also granted re-credit of Rs. 44,450/- as eligible
credit, but, rejected the refund to the extent of Rs. 1,72,05,940/-on the ground of input credit availed being prior to the date of registration; that
aggrieved, appellants preferred appeal before the Commissioner (Appeals), and vide Order-in-Appeal No.342/2016 (STA-I) dated 10.06.2016 the first
appellate authority set aside the order of the lower appellate authority and allowed the appeal. Against this, the department went on appeal before
CESTAT, Chennai, and the CESTAT vide Final Order No. 42324/2017 dated 11.10.2017, dismissed the appeal of the department; that aggrieved by
the same, the department went on appeal before the Hon’ble High Court against the final Order dated 11.10.2017 and no stay has been granted.
2.2 The appellant filed a refund claim on 30.05.2018 before the Assistant Commissioner of GST & CE, consequent to the Final Order of CESTAT
dated 11.10.2017, vide Order-in-Original No. 75/2019 ® dated 22.07.2019 refund claim was processed in accordance with law and the lower
appellate authority allowed the refund claim to the extent of Rs.1,55,38,246/- and disallowed Cenvat Credit to the tune of Rs.16,67,694/- on the
Repairs and Maintenance, Car parking, Health check-up for employees, Insurance for employees, Maintenance charges for cafeteria, Maintenance
charges for guest house, Pest control, Purchase of stationary for office and Rent a cab etc. Aggrieved by the above order, appellant filed appeal
before the Learned Commissioner (Appeals), who vide the impugned order dated 29.11.2019, upheld the Order-in-Original in its entirety and rejected
the appeal of the appellant. Aggrieved, appellant has filed this appeal on the following grounds. Â
· The eligibility for Credit on an Input Service shall not be ascertained when adjudicating admissibility of refund. Â
· The eligibility for credit on an input service must be ascertained according to the law in force at the time of invoicing/at the time the provision of
service is completed Â
· Credit availed by the appellant is eligible
· There is no requirement to establish nexus between input services and output service exported Â
· The ground of the impugned OIA that there was no nexus between the impugned services and the appellant’s output service/business and that
the impugned services are for personal consumption of employees, is incorrect. Â
· The Commissioner (Appeals) has not considered the case law quoted by the appellant in support of their contentions, etc.
2.3 The following are the case law relied on by the appellant in support of their contentions:
a. K Line Ship Management (I) (P) Ltd. Vs. Commissioner of Service Tax, Mumbai â€" 2017 (7) TMI 412 â€" CESTAT Mumbai.
b. Visual Graphics Computer Services (I) (P) Ltd. Vs. Commissioner of CE, Chennai â€" 2018 (1) TMI 269 â€"Cestat Chennai.
c. Harsco India Services Pvt. Ltd. Vs. CCE & ST, Hyderabad â€" 2017 â€" TIOL-528-CESTATHYD
d. CGST & CE, Chennai Vs. M/s. Sharada Motor Industries Ltd. 2019 (7) TMI 562 (Tri.- Chennai)
e. HCL Technologies Ltd. Vs. CCE, Delhi 2015 (40) STR 369 (Tri.-Del.)
Heard Shri Harish Bindumadhavan, Ld. Advocate for the assessees and Shri Arul C. Durairaj, Superintendent (AR) for the Revenue.
Ld. Advocate made oral and written submissions. He places reliance of D.O.F No. 334/1/2012-TRU dated 16.03.2012 regarding changes in service
tax wherein, it has been clarified by the Govt. of India, Dept. of Revenue, Tax Research Unit under Cenvat Credit Rules, 2004 and therefore there is
no requirement to establish nexus between input services and output services exported. In this connection he places reliance on the decision of the
Chennai Bench of the Tribunal wherein the issue is settled in favour of the appellant in its own case in Final Order No. 42324/2017 dated 11.10.2017.
He relies on Harsco India Services Pvt. Ltd.(supra), wherein it has been held that the Board vide letter dated 16.03.2012 has stated and clarified that
the new scheme of refund does not require the co-relation between exports and input services used in such exports and allowed the appeal in favour
of the appellant.
Ld. DR reiterated the findings of the lower authorities. He would also contend that “relevant period†as explained in Rule 5 should be looked
into which clearly talks of the period for which the claim is filed. Here the period of claim being April 2012 to June 2012, there was a change in law
effective from 01.04.2011 inasmuch as Rule 2(l) was amended and therefore, the interpretation drawn by the lower authorities are to be upheld.
Heard both sides, perused the documents placed on record and have also gone through the decisions/orders referred to during the hearing. I find it
unfortunate that the learned First appellate authority (FAA for short) has given some excuses to not to follow the orders of CESTAT, in the
appellant’s own case. It is not even the case of the learned FAA that the earlier order/s of this Bench that are referred in his own order at
paragraph 8 page 5, have been reversed by High court or have been set aside. The facts may or may not vary, but the principle that is laid down by a
higher forum is required to be followed. For these reasons, the impugned order has to set aside at once. But since there is no justifiable finding given
by ld. FAA in the impugned order on merits, I am of the opinion that the matter is required to be remanded to the file of ld. FAA to pass fresh order
on merits after hearing the assessee. When the assessee claims that the issue on hand stands covered by an order of a higher forum, in respect of the
very same assessee but for a different period, such previous order/s of a higher Forum shall be followed as long as the same are not stayed/set aside
by Hon’ble High court. Further, ld. FAA shall follow the hierarchical judicial discipline and also adhere to the principles of natural justice by
providing reasonable opportunities to the appellant herein, but however, considering the peculiar history of the case, ld. FAA shall pass de-novo
Appellate order within a period of six months from the date of receipt of this order.
(Order pronounced in the Open Court on 03.12.2020)