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Judgment
Appellant has filed these nine appeals against the two impugned orders dated 18.2.2020 and 19.2.2020 whereby the Commissioner (A) has partially rejected the refund claims of the appellant under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No.27/2012 dated 18.6.2012. Since all the issues involved in all these nine appeals are identical, therefore, all the nine appeals are being taken up together for discussion and disposal.
The details of all the nine appeals are given herein below:
Sl. No.
Appeal No.
Refund Period
Disputed refund
1
ST/20390/2020
Oct. 2013 to Dec. 2013
2,16,568
2
ST/20391/2020
Jan. 2014 to Mar. 2014
3,05,821
3
ST/20392/2020
July 2014 to Sep. 2014
1,67,476
4
ST/20393/2020
Jan. 2015 to Mar. 2015
2,97,764
5
ST/20394/2020
Apr. 2015 to Jun. 2015
1,20,389
6
ST/20395/2020
Jul. 2015 to Sep. 2015
9,13,703
7
ST/20396/2020
Jan. 2016 to Mar. 2016
7,74,155
8
ST/20397/2020
Apr. 2016 to Jun. 2016
1,86,229
9
ST/20398/2020
Jan. 2017 to Mar. 2017
7,84,566
Total
37,66,671
Briefly the facts of the present case are that the appellants are registered under the Service Tax for providing Information Technology Software Services. They had filed nine refund claims for various quarters claiming refund of unutilized CENVAT credit of service tax availed on the input services for providing output service said to have been exported during the relevant period as shown in the table above. The claims were filed under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.27/2012-CE (NT) dated 18.6.2012. After following the due process, original authority has partially allowed the refund and rejected the refund on certain input services against which the appellant filed appeals before the Commissioner (A) in two rounds of appeal and the Commissioner (A) finally vide the impugned orders has rejected the refund on certain input services. Hence, present appeals.
Heard both the parties and perused the records.
Learned counsel for the appellant submitted that the impugned order denying refund is not sustainable in law as the same has been passed without properly appreciating the amended definition of 'input service' and the Notification No.27/2012-CE (NT) dated 18.6.2012. He further submitted that each of the input service on which refund has been rejected has been held to be input service by various decisions of the Tribunal and the High Courts. He also submitted that the findings in the impugned order on the point of nexus are misconstrued and determination of eligibility of refund is not akin to determination of eligibility to input credit. He also submitted that both the authorities have grossly erred in rejecting the refund on input services on the ground that the absence of such input service will not adversely impact the quality and efficiency of the provision of the output service. Further, both the authorities have not appreciated the ambit and scope of revised definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004. He also submitted that after the clarification issued by the Department vide its letter dated 16.3.2012 wherein the department has clarified that the new scheme for claiming refund does not require the kind of correlation that is noted at present between the exports and the input services used in such export services. Duties or taxes paid on any goods or service that qualifies as input or input services will be entitled to be refunded in the ratio of export turnover to total turnover. Learned counsel has given the reference case laws for each of the service, where the Tribunal has held the same as input service.
· Input Service Case Laws Event Management Service
· Sponsorship Service
· Management, Maintenance and Repair
· Supply of Tangible goods
· Business Support Service
· Photography Service
· Moneygram India Pvt. Ltd. vs. AC, Mumbai West: 2020 (3) TMI 744 - CESTAT- Mumbai
· Honda Motorcycle & Scooter India Pvt. Ltd. vs. CCE, Delhi-III: 2006 (8) TMI 308 - CESTAT-Chandigarh
· ARRIS Group India Pvt. Ltd. vs. CCE: 2018 (5) TMI 560-CESTATBANGALORE
· Lubrizol Advanced Materials India Pvt. Ltd. vs. CCE, Belapur: 2019 (1) TMI 720 -CESTAT-Mumbai
5.1 He further submitted that there cannot be different yardstick for establishing nexus for taking the credit and refund of credit and refund cannot be denied when admissibility of CENVAT credit was not objected at any moment of time and the department is not permitted to question the eligibility of CENVAT credit at the time of claiming refund. For this, he relied upon the following decisions and Circulars:
· CBEC Circular No.120/01/2010-ST dated 19.1.2010
· Convergys India Services Pvt. Ltd. vs. CCE: 2020-TIOL-1696-CESTATCHD
· Kline Ship Management India Pvt. Ltd. vs. CCE: 2018 (12) TMI 1481-CESTAT-MUMBAI
· CST, Mumbai-II vs. M/s. Technip India Ltd.: 2017-TIOL-3708-CESTATMUM.
· Verisign Services India Pvt. Ltd. vs. CCE: 2018-TIOL-1473-CESTATBANG.
5.2 He further submitted that the Commissioner (A) has wrongly relied upon the Board Circular No.120/01/2010-ST dated 19.1.2010 for the purpose of establishing the nexus with the output service exported. This Circular is not applicable in the present case as per the learned counsel as the appellant is claiming refund under Notification No.27/2012-CE (NT) dated 18.6.2012 and after the Notification No.27/2012-CE (NT) dated 18.6.2012, the TRU vide letter D.O.F. No.334/1/2012-TRU dated 16.3.2012 has clarified the refund procedure and has done away with the nexus test. 5.3 The learned counsel for the appellant has prayed that the appellant is entitled for grant of interest on delayed processing of refund claim beyond the period of three months from making such an application and in this respect, he relied upon the decisions rendered in the following cases:
· Ranbaxy Laboratories Ltd. vs. UOI: 2011-TIOL-105-SC
· Xerox Business Services India Pvt. Ltd. vs. Commissioner of Central Tax & Central Excise: 2019-TIOL-508-HC-Kerala
· M/s. Reliance Industries Ltd. vs. CCE: 2014-TIOL-1486-CESTATAhmedabad
· UOI vs. M/s. Hamdard (Waqf) Laboratories: 2016-TIOL-21-SC-CX
On the other hand, the learned AR defended the impugned orders and justified the rejection of refund on the basis of the Circular relied upon by the Commissioner (A) in the impugned order. He further submitted that in appeal No.ST/20397/2020 for the period January 2017 to March 2017, in respect of Business Support Service, Management, Maintenance and Repair Service, Recovery for Gym and supply of tangible goods, all these input services have been specifically excluded from the definition of 'input service' as provided in Rule 2(l) of CENVAT Credit Rules, 2004 as all the invoices for these input services relates to maintenance of gyms. This submission of the learned AR has been admitted by the learned counsel for the appellant and he did not press for refund of these amounts in Appeal No.ST/20397/2020.
After considering the submissions of both the parties and perusal of the material on record, I find that the appellants have claimed refund on all these input services which are essential for running the business of the appellant. As the appellant is a 100% Export Orient Unit and does not have any DTA service and hence, they have filed refund claims under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.27/2012-CE (NT) dated 18.6.2012. Refunds have been rejected by both the authorities on the finding that the input services have no nexus with the output service of export, which according to various decisions and also the TRU letter dated 16.3.2012, is not required to be established. Further, I find that in the impugned order, Commissioner (A) has wrongly relied upon the old circular of 2010 whereas the definition of 'input service' has been amended with effect from 1.4.2011 and vide Notification No.27/2012-CE (NT) dated 18.6.2012 one-to-one correlation is not required to be established. Further, the appellant has given detailed reasons explaining the nexus between the input service and the output service exported by the appellant. Moreover, the department has not questioned the CENVAT credit availed by the appellant at the initial stage and as per the decisions relied upon by the appellant cited supra the same cannot be questioned at the time of claiming of refund. Since all the input services involved in the present cases except those four services viz., Business Support Service, Management, Maintenance and Repair Service, Recovery for Gym and supply of tangible goods in Appeal No.ST/20397/2020, have been held to be input services by various decisions cited supra and by following the ratio of the said decisions, I hold that the appellant is entitled to refund of CENVAT credit on all these input services.
7.1 Further, I find that as per the decision in the case of Ranbaxy Laboratories (supra), appellant is also entitled for grant of interest on delayed refund claim beyond the period of three months. It is pertinent to note that the apex court in the case of Ranbaxy Laboratories (supra) has held as under:
"9. It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable. ....
In view of the above analysis, our answer to the question formulated in para (1) supra is that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made."
7.2 Further, Kerala High in the case of Xerox Business Services India Pvt. Ltd. (supra) and also apex court in the case of UOI vs. Hambard L(Waqf) Laboratories, have held that the assessee is eligible for interest on refund amount sanctioned, in case, there is a delay beyond the stipulated period of three months as prescribed under the law. Hence, I hold that appellant is entitled for the interest on the delayed sanction of the refund.
In view of my discussion above, I allow the appeals of the appellant except four input services viz., Business Support Service, Management, Maintenance and Repair Service, Recovery for Gym and supply of tangible goods in appeal No.ST/20397/2020 and accordingly, all the appeals are disposed of.
(Order was pronounced in Open Court on 23.03.2021)