Ness Technologies (India) Private ... vs Commissioner Of Service Tax Division V, ...

[Arising out of Order-in- Appeal No. 677-678/PD/14 dtd. 26/6/2014 passed by the Commissioner of Central Excise & Service Tax (Appeals-IV), Mumbai]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Ness Technologies (India) Private Limited : Appellants

VS

Commissioner of Service Tax Division V, Mumbai : Respondent

Appearance

Shri. Mihir Deshmukh, Advocate for the Appellants Shri. A.B. Kulgod, Asstt. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 8/6/2015 Date of decision: 8/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. 677-678/PD/14 dtd. 26/6/2014 passed by the Commissioner of Central Excise & Service Tax (Appeals-IV), Mumbai, wherein Ld. Commissioner(Appeals) upheld the order-in-original dated 4/10/2013 and rejected the appeal of the appellant.

2. The fact of the case is that the refund claim was rejected on the ground that appellant has availed Cenvat Credit in terms of para 2(g) of Notification No. 40/2012-ST dated 20/6/2012. The adjudicating authority rejected the claim which was challenged by appellant before the Commissioner(Appeals), who upheld the rejection order of the original authority therefore the appellant is before me.

2. Shri. Mihir Deshmukh, Ld. Counsel for the appellant submits that though the appellant has taken credit on the specified services initially but before filing refund claim they have reversed the credit. It is his submission that credit so availed was not utilized by the them for the reason that their 100% services are exported and therefore they could not have utilized the credit. He submits that though credit was availed but since it was reversed without utilization this is a case as if no credit was availed. In this support he placed reliance on the judgment in the case of Bombay Dyeing Manufacturing Co. Ltd.[2207(215)ELT 55] , wherein Honble Supreme Court held that before the utilization, reversal of Cenvat credit, amount to not taking credit. In view of this judgment he submits that in the present case also they have admittedly reversed credit without utilization therefore in view of this Honble Supreme Court judgment it amounts to not taking credit and therefore there is no violation of condition of clause provided under 2(g) of the Notification No. 40/2012-ST.

3. Shri. A.B. Kulgod, Ld. Asstt. Commissioner(A.R.) appearing for the Revenue reiterates the findings of the impugned order. He further submits that though the appellant has reversed the Cenvat credit but even though they have not untilized the same in view of the supreme court judgment in the case of Union of India Vs. Ind Swift Lab. Ltd. [2011(265) ELT 3(SC)] interest is applicable from the date of taking credit till the date of reversal thereof. He submits that appellant was required to pay interest on the reversal of the credit.

4. I have carefully considered the submissions made by both sides and perused the record.

5. I find that Ld. lower adjudicating authority as well as the Ld. Commissioner (Appeals) held that since the appellant have availed the Cenvat credit on specified services they have violated the condition provided under clause 2(g) of the Notification No. 40/2012-ST, therefore they are not entitled for the refund as provided under the said notification. The fact that though the appellant had availed the Cenvat credit on the specified services but subsequently they reversed it before making application of refund before the lower adjudicating authority. The contention of the appellant is that even though they have availed credit, since they reversed the Cenvat credit consequently it should have considered as non taking of credit, accordingly condition provided under 2(g) of the Notification No. 40/2012-ST stood complied with. I have gone through the judgment in the case of Bombay Dyeing Manufacturing Co. Ltd (supra) wherein Honble Supreme Court categorically held that even if the Cenvat Credit was availed but if the same is reversed without utilization, it will amount to not taking the credit.

In view of this Honble Supreme Court judgment, I am of the view that since the appellant had reversed the credit even before making application of refund and under the admitted fact that same was not utilized by them it is considered as if Cenvat credit not availed and therefore condition provided under clause 2(g) of the Notification No. 40/2012-ST stand complied with. However I agreeing with the Ld. A.R. that interest from the date of taking credit till the date of reversal is applicable for the reason that as per the Honble Supreme Court judgment in the case of Union of India Vs. Ind Swift Lab. Ltd.(supra) and also as per the Rule 14 clearly provides that interest is payable on the credit not only in respect of utilization but also in respect of taking credit. Agree with the ratio of the Supreme Court Judgment as well as Rule 14, I hold that appellant is required to pay the interest from the date of availment of credit on specified services till the date of reversal. On payment of such interest appellant shall be entitle for refund. I therefore remand the matter to the original adjudicating authority to dispose of the refund by passing a denovo adjudication order taking into consideration my above observations and ensure that appellant has paid interest as discussed above.

The appeal is remanded to the original adjudicating authority in above terms.

(Dictated in court)

Ramesh Nair Member (Judicial)

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