SAP Labs India Private Ltd vs Commissioner Of Central Tax, Bengaluru East

The common issue in all these appeals that are to be decided is, whether the adjudicating authority is correct in rejecting the appellant's claim for refund of unutilised cenvat credit?

Heard shri T.R. Venkateswaran, learned chartered accountant for the appellant and Smt. C.V. Savitha, Superintendent, learned AR for the Revenue. I have considered the rival contentions and gone through the documents as well as case laws relied upon during the course of argument.

It is the case of the appellant that in its refund claim, it had voluntarily reduced the utilised cenvat credit and accordingly, claimed the lesser of the eligible refund amount and balance cenvat credit at the end of the quarter. It was also pleaded that in the de novo Order-in-Original, while computing the refund of unutilised cenvat credit as per the formula prescribed in the Notification No.5/2006-CE(NT) dt. 14/03/2006, the adjudicating authority had once again reduced the utilised credit, which had resulted in reducing the same amount twice. It is the case of the Revenue that the appellant had utilised the cenvat credit towards DTA clearance, they were entitled to refund only the cenvat credit that remained unutilised and that the appellant had not placed any documentary evidences in support of its claims. It is also alleged that the appellant had not cleared the nexus test, and hence the disallowance was sustained in the First appeal.

It is settled that with effect from 01/04/2011, the Board has itself done away with the nexus test vide its Notification No.27/2012-CE(NT) dt. 18/06/2012, and hence the disallowance for want of nexus cannot sustain. This view has been expressed in many orders of CESTAT benches, the latest one being of this very bench in the case of Samsung R & D Institute India Bangalore Pvt. Ltd. Vs. CCT, Bengaluru East [2021(3) TMI 1002 - CESTAT, Bangalore]. To this extent therefore, the impugned order is set aside.

It is now required to examine whether the reduction of utilised credit for domestic clearances has been done twice, or not. It is not in dispute that the appellant's claim for refund was after reducing the utilised cenvat credit which appears to have again been reduced by the sanctioning authority in the de novo Order-in-Original. The Commissioner (Appeals) in the impugned order observed that the appellant's claim for refund of unutilised cenvat credit was not supported by documentary evidences, which would only mean that the appellant perhaps did not properly explain the same with supporting documents as well as computations.

In view of the above, the only option for me is to remand the matter back to the file of the adjudicating authority before whom the appellant shall furnish all such evidences as well as computations to establish that it has already reduced voluntarily the utilised cenvat credit and if satisfied, the adjudicating authority shall work out the refund in accordance with law. Once the refund is granted, the interest under Section 11BB which is automatic shall also be granted. The appeals are allowed by way remand, on the above terms.

(Order pronounced in the Open Court on 25/10/2021)