CENVAT - Refund - Export of service takes place at time of issuing invoice - date of receipt of payment is not relevant: CESTAT
By TIOL News Service
MUMBAI, JUNE 16, 2014: THE appellants filed a refund claim on 23.12.2009 under Rule 5 of the CCR, 2004 read with Notification No.5/2006-CE(NT) dated 14.3.2006 for an amount of Rs.14,53,763/- for the period October, 2008 to December, 2008.
The adjudicating authority held -
+ Part of the refund claim was time barred.
+ Claim of Rs.4,96,794/- was sanctioned.
+ CENVAT Credit of Rs.1,58,371/- was disallowed on the ground that the same had no nexus with the output service.
Having failed before the Commissioner(A), the appellant is before the CESTAT and with the assistance of several case laws submits -
+ Notification No.5/2006 CE(NT) does not specify the relevant date for computing the time limit prescribed under Sec. 11B of the CEA, 1944. Further although Sec. 11B defines the relevant date in different situations the said section does not specify the relevant date in respect of refund of CENVAT Credit under Rule 5 of the CCR.
+ Even if the time limit is to be computed it has to be computed from the date of receipt of the money in respect of the export of service or at least from the last day of the quarter for which the refund claim pertains; the time limit is only a procedural and cannot be considered as mandatory or substantive law.
The Revenue representative submitted that the issue about the time limit has been examined by the Madras High Court in the case of GTN Engineering (I) Ltd. 2012-TIOL-369-HC-MAD-CX . It was also submitted that Notfn. No.5/2006-CE(NT) clearly prescribed in clause (6) that the refund claim is to be filed before the expiry of the period specified in section 11 B of the CEA, 1944. Inasmuch as the relevant date is mentioned in clause (B) to Explanation under Sec.11B and in terms of which in case of goods exported out of India where a refund of excise duty is available in respect of the excisable materials used in the manufacture of such goods, the date is when the goods are exported by sea or air and this would also apply to the tax paid on input services used in the export of services. That Export of Service Rules does not specify the day for the act of export but only details the condition to be satisfied so as to consider the service as export of service. Considering the explanation in s.11B, in the case of export of services, even though Explanation does not detail the relevant date but the day invoice is raised or the services are exported through e-mail or any other means will be the relevant date for export.
The Single Member Bench after adverting to the clause 6 of the Appendix of the notification 5/2006-CE(NT) and the provisions of section 11B of the CEA, 1944 observed that although the situation relating to export of services is not specifically covered by any of the sub-clause of Clause (B) of Explanation, sub-clause (a) is the clause which is nearest to the situation relevant for the export of services and, therefore, a combined and harmonious reading of Rule 5, Section 11B and Notification 5/06-CE(NT) would indicate that the period of one year is to be computed from the date of export of the service.
The Bench also extracted the relevant portion of the judgement of Madras High Court in the case of GTN Engineering (I) Ltd 2012-TIOL-369-HC-MAD-CX and after noting that the same is the latest on the subject matter concluded that the period of limitation of one year is required to be enforced and the relevant date for counting the said period of one year will be from date of export.
The Single Member also departed from another SMB decision cited by the appellant in the case of Eaton Industries Private Ltd., - 2011-TIOL-166-CESTAT-MUM where it is held that the r elevant date for filing of refund of credit in respect of Export services is the date when the payment of service (exported) is received and not date of providing the service. It was held that the export of service takes place at the time or issuing invoice and the payment condition is only to ensure that the service provider receives the payment in convertible foreign exchange so as to get the benefit of service tax. Inasmuch as the date of receipt of such payment is not relevant for determining the time of export, the Member held.
It was thus concluded that the relevant date for determining the period of limitation will be the date of export of services or the date when the invoices are raised.
The other case laws cited by the appellant were not considered as worth adverting since they were rendered in a different context.
As regards the credit/refund denied on the ground that some services (CHA, Meal Coupon, Air Travel Agent, Photocopy etc.) do not have any nexus with the export service, the Bench relied upon the decision in Ultratech Cement Ltd 2010-TIOL-745-HC-MUM-ST and held that the same are input services and the appellants are entitled to the refund of the same. In the matter of an amount of Rs.73,207/- claimed as tax relating to transport charges, the same was allowed but the part of the amount which had been recovered from the employees was held as ineligible. The amount was directed to be worked out accordingly.
In fine, the appeal was allowed in the above terms.
In Passing Also See : 2014-TIOL-1034-CESTAT-BANG
(See 2014-TIOL-1035-CESTAT-MUM)
