Decided on March 27,2015

Ionnor Solutions Pvt. Ltd. Appellant
Commr. of C. Ex. And S.T. Respondents


R.K.SINGH,MEMBER (T) - (1.)APPEAL has been filed against Order -in -Appeal No. CHD -EXCUS -000 -APP -214 -13 -14, dated 17 -12 -2013 which upheld the Order -in -Original dated 10 -6 -2013 in terms of which refund claim of Rs. 9,87,555/ - was rejected along with a refund amount of Rs. 1,055/ -. The appeal is only in respect of rejection of the refund claim amounting to Rs. 9,87,555/ -. The appellants had claimed the said refund in terms of Notification No. , dated 14 -3 -2006. They are a 100% export oriented unit (under STPI scheme) and have no domestic sales. They filed refund claim of the said amount for the quarter 4/2011 to 6/2011 within the prescribed time -limit. The said refund claim was rejected referring to Para 4 of the said notification on the ground that the credit of which refund was sought pertained to the input services received during the period June, 2008 to June, 2010 and therefore, it did not pertain to the quarter during which the exports took place and in respect of which the refund claim was filed. The appellants have argued that they were receiving the input service namely "renting of immovable property service" and due to initial confusion, the landlord did not pay Service Tax during the said period (June, 2008 to June, 2010) but once the situation got clarified, they (the service provider) paid the entire Service Tax for that period in the month of May, 2011 along with interest and the appellants took Cenvat credit of only the Service Tax portion thereafter. Para 4 of the Notification No. is reproduced below for convenience.
"Para 4 - The refund is allowed only in those circumstances where a manufacturer or provider of output service is not in a position to utilize the input credit or input service credit allowed under Rule 3 of the said rules against goods exported during the quarter or month to which the claim related (hereinafter referred to as 'the given period')."

The appellate authority apparently interpretated this para to mean that refund of only those input services can be allowed which were consumed during the quarter in which the exports took place and in respect of which the refund claim was filed. However a careful reading of that para vis -a -vis the situation obtaining in the present case clearly reveals that Revenue is not disputing the fact that the credit of Service Tax taken by them was admissible. It is also a fact that the appellants were not in a position to utilize the credit against the goods exporting during the quarter to which the claim relates. Seen in this light there is no doubt that the refund claim was not in violation of the said para 4 of the said Notification. Thus the Commissioner (Appeals) while rejecting the refund claim seems to have imported his own condition to the effect that the credit taken must pertain to the quarter during which the goods were exported and for which the refund was claimed. It is seen that C.B.E. & C. vide a Circular No. , dated 19 -1 -2010 (in Para 3.3) also clarified the matter as under : - -

"Since no bar is provided in the notification, there should not be any objection in allowing refund of credit of the past period in subsequent quarters. It is possible that during certain quarters, there may not be any exports and therefore, the exporter does not file any claim. However, he receives inputs/input services during this period. To illustrate, an exporter may avail of Rs. 1 crore as input credit in the April -June quarter. However, no exports may be made in this quarter, so no refund is claimed. The input credit is thus carried over to the July -September quarter, when exports of Rs. 50 lakh and domestic clearances of Rs. 25 lakh are made. The exporter should be permitted a refund of Rs. 66 lakh (as his export turnover is 66% of the total turnover in the quarter) from the Cenvat credit of Rs. 1 crore availed in April -June quarter. The illustration prescribed under para 5 of the Appendix to the notification should be viewed in this light. However, in case of service providers exporting 100% of their services, such disputes should not arise and refund of Cenvat credit, irrespective of when he has taken the credit, should be granted if otherwise in order. Such exporters may be asked to file a declaration to the effect that they are exporting 100% of their services, and only if it is noticed subsequently that the exporter had provided services domestically, the proportional refund to such extent can be demanded from him."

From the above clarification of C.B.E. & C. it is evident that the refund claim for a particular quarter need not be in respect of input services consumed in that quarter. The appellants had no domestic sales. In the light of the analysis/discussion above, I find that the impugned order is not sustainable and the same is therefore, set aside and it is held that the appellants are entitled to obtain the refund of Rs. 9,87,555/ -. The primary adjudicating authority is consequently directed to grant the said refund to the appellants.

(Pronounced in the Court on 27 -3 -2015)


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