Benefit of Refund Claim of Cenvat Credit cannot be Denied for Procedural Lapses: CESTAT [Read Order]

The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that benefit of a refund claim of Cenvat credit cannot be denied for procedural lapses.

The revenue department challenged the order passed by the Commissioner of Service Tax (Appeals-I), Chennai allowing the appeals filed by M/s. Ad2pro Media Solutions Private Limited, the respondent.

The respondent was providing the taxable service of ‘Advertising’ to their clients abroad and has filed these refund claims under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-C.E.(N.T.) dated 18.06.2012, being the unutilized CENVAT Credit about the period. The Assistant Commissioner of Service Tax sanctioned a part of the refund claims while partially rejecting them. 

While determining the export turnover and total turnover, payments received in respect of certain invoices for which the refund claims were filed, were held to be ineligible since documents had not been filed within the time frame stipulated under Section 11B of the Central Excise Act, 1944.

The value of export invoices within the stipulated time frame of those invoices whose export dates were within one year preceding the date of filing of the refund claim was only considered for computation of the export turnover, resulting in partial rejection of the refund claims filed.

The refund sanctioning authority has disallowed credit to the extent of Rs.14,50,865/- of the input tax credit on account of nonregistration of premises, Service Tax payment being made beyond the three months in terms of Rule 4(7) of the CENVAT Credit Rules, 2004 and CENVAT Credit taken before the date of payment of Service Tax.

It was held that the date of receipt of payment in a convertible foreign exchange where the provision of service has been completed should be the ‘relevant date’ in terms of Section 11B of the Central Excise Act, 1944, thereby allowing the appeals filed by the respondent-assessee. 

It was a settled law that substantial benefit cannot be denied for procedural lapses; the only aspect that was to be ensured is that the refund should not be claimed more than once on the same invoice.

It was observed that in the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which does not exist in law.

In respect of refund claims filed under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-C.E.(N.T.) dated 18.06.2012,  that the assessee is not immediately utilising the credit for payment of duty on clearance of goods or for providing services.

The two-member bench comprising Mr P Dinesha, (Judicial) and Mr Vasa Seshagiri Rao, (Technical) observed that for computation of Net CENVAT Credit, only these credit amounts are considered an actual sanction of refund claims will take some processing time and the assessee would have been found eligible to utilize these credits by that time even otherwise.

The CESTAT upheld the order passed by the Commissioner (Appeals) and dismissed the appeal.

To Read the full text of the Order CLICK HERE

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