The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Bangalore has directed a reassessment of a CENVAT credit refund claim filed by Goodrich Aerospace Service Private Limited.
The CESTAT cited the need to verify that no overlapping refund claims exist between the company’s Software Technology Park of India ( STPI ) and 100% Export Oriented Unit ( EOU ), both operating from the same premises.
The appeal originated from the initial rejection of a Central Value Added Tax ( CENVAT ) credit refund claim amounting to Rs.68,62,276 by the Assistant Commissioner.
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The appellant, Goodrich Aerospace, a prominent aerospace component manufacturer, filed the refund under Rule 5 of the CENVAT Credit Rules, 2004, for unutilised accumulated credit due to the export of goods. The claim covered the quarter from January to March 2011.
According to the appellant, the refund should apply to input services solely linked to its EOU operations, which involve manufacturing and exporting components such as life rafts, aircraft seats and braking systems.
However, the Assistant Commissioner rejected the refund claim citing insufficient evidence to demonstrate exclusive use of input services by the EOU unit. The order also questioned whether the input services might have been shared between the EOU and STPI units, thus requiring an apportionment of service tax credits. The Commissioner (Appeals) upheld this rejection, leading Goodrich Aerospace to file an appeal before the CESTAT.
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The appellant, represented by Shri Mihir Deskmukh argued that the EOU and STPI units, although operating from the same compound, maintain clear separations and distinct accounting records. According to the appellant, each unit is independently responsible for service procurement and expense recording, with specific divisions designated for different functions.
The appellant asserted that there was no duplication in the refund claim, as each division maintains separate documentation and submits individual ER-2 returns for service tax reporting.
It was also contended that certain common services were required for the company’s overall operations rather than for any specific division and that all relevant documents had been presented to substantiate the non-overlapping nature of the claims.
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The appellant referred to a previous CESTAT ruling in their own case, reported as 2015-TIOL-584CESTAT-BANG. This ruling established that a one-to-one correlation between input and output services is not mandatory for refund eligibility under Rule 5 of the CENVAT Credit Rules, 2004. This ruling supports their argument that input services used commonly across their operations do not need a strict linkage to specific outputs to qualify for CENVAT credit refunds.
The respondent revenue, the Commissioner of Central Excise, represented by Shri Maneesh Akhoury maintained that the rejection was justified, arguing that the appellant had not sufficiently proven that no refund duplication existed across the STPI and EOU units.
The two-member bench of the CESTAT comprising Dr. D.M. Misra (Judicial Member) and Mrs. R. Bhagya Devi (Technical Member) determined that a remand was necessary to allow a thorough examination of the documentary evidence submitted by the appellant. The bench noted that similar refund claims had been partially approved in prior and subsequent periods after departmental verification of the appellant’s records. Accordingly, CESTAT directed the adjudicating authority to reassess the case with a focus on verifying the non-overlapping claims between the two units.
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The decision mandates the adjudicating authority to provide Goodrich Aerospace with a reasonable opportunity for hearing and to consider all submitted evidence in detail.
In result, the case was remanded for further examination, as evidence provided by the appellant suggested no overlapping refund claims between their STPI unit and 100% EOU unit.
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