Samvardhana Motherson International ... vs C.C. & C.E. & S.T.-Noida

Date of Hearing: 10/06/2015

Date of Pronouncement:19/6/2015

[Arising out of OIA No.NOI/EXCUS/000/APPL/154/13-14 dated 30.7.2013 passed by Commissioner of CCE Noida (U.P.)]

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would 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 of the order?

4. Whether order is to be circulated to the Department Authorities?

Samvardhana Motherson International Ltd. Appellant

Vs.

C.C. & C.E. & S.T.-Noida Respondent

Appearance:

Present for the Appellant: Shri Shekhar Vyas, Advocate

Present for the Respondent: Shri Parmod Kumar, DR

Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial)

Final Order No.51953/2015

Per: Sulekha Beevi C.S.

1. Appellants are engaged in providing output service namely Management consultants, and Business Support Service which is taxable under section 65 (105) (zzzq) of the Finance Act, 1994. The appellants engaged M/s PricewaterhouseCoopers Pvt. Ltd., Mumbai to assist the appellants with the due diligence procedures in connection with acquisition of Peguform Holding, Germany by one of the subsidiaries of the appellants namely, M/S. Forgu GmbH, Germany. After receiving necessary reports of due diligence, the appellants provided their advice to M/s Forgu GmbH Germany regarding the acquisition. The input services thus provided by M/s. PWC and received by the appellants was exported by appellants to M/s Forgu, GmbH, Germany, under Business Support Services in terms of the agreement entered between the parties. For the input services provided by M/s.PWC to the appellants as stated above, they raised upon the appellants and charged service tax thereon. The appellants took credit in respect of these input service under the Cenvat Credit Rules, 2004. As the appellants could not utilize the said credit, they filed refund claim on 27/07/2012 for refund of unutilized Cenvat credit of Service Tax amounting to Rs. 12 68, 737/ (Rupees twelve lakh sixty eight thousand seven hundred thirty seven only) paid on input services during the period July 2011 to October 2011. On scrutiny of the invoices it was observed that appellants have filed claim for the quarter January 2012 to March 2012 and had submitted invoices dated 12.8.2011, 30.9.2011, 13.9.2011, 08,10,2011 and 31.7.2011. The export billing showed export of services on 28.03.2012. The adjudicating authority rejected the refund claim holding that no refund of Cenvat credit is admissible to the party in terms of Notification No. 05/2006  CE (N T) dated 14/03/2006 read with Rule 5 of Cenvat Credit Rules, 2004. The appellant filed appeal before The Commissioner (Appeals) who dismissed the appeal confirming the rejection of refund claim. The appellant is in appeal against the concurrent findings of the original authority and the Commissioner (Appeals) which are against the assessee.

3. When the case was taken up for hearing both sides submitted that the only issue to be decided is whether the appellant is eligible for refund claim for quarter January 2012 to March 2012 upon the input invoices which are prior to the claim period.

4. The Ld. and D R reiterated the findings in the impugned order and relied on the Notification No. 05/2006  CE (NT) dated 14th of March 2006. He contended that the authorities below have rightly rejected the refund claim for the reason that the input invoices submitted by the appellant pertains to period prior to the period of refund claim. That as per paragraph 4 of the above notification, the refund is allowed only in those circumstances where a manufacturer or provider of output service is not in a position to utilise 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 relates (hereinafter referred to as 'the given period'.). As the appellant has taken Cenvat credit prior to claim period the appellant is not entitled to get refund against those input invoices which does not cover the claim period as per the said notification.

5. The Ld. Counsel appearing for the appellant submitted that this aspect has been clarified by C. B. E.C. in para 3. 3 of Circular No. 120/01/2010  S.T.dated 19/01/2010, which is reproduced below;

"3. 3 quarterly refund claims[para (d) about];

As regards the quarterly filing of refund claims and its applicability, 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

6. The Ld. counsel further relied on the judgement reported in CCE, Mysore v. Chamundi Silks Textiles Ltd will stop, 2010 (20) S. T. R. 219 (TRI  Bang) and submitted that the appellant is eligible for refund of the service tax credit paid by them on the input service irrespective of the period when the credit was taken.

7. I have carefully considered the submissions made from both sides and perused the records. For the services provided by M/s. PWC to the appellants for due diligence, PWC raised invoice for the same and charged service tax thereon. The appellants took the credit of the same as input service under the Cenvat Credit Rules, 2004. As the appellants could not utilise the said credit, they filed the refund claim for the amount of Rs. 12, 68, 7 37/ .The ground on which the refund is denied is that the accumulated input service credit did not pertain to the period during which output services were exported for which the refund claim is made. The appellant has filed the claim on 27.7.2012 for the quarter January 2012 to March 2012. The invoices dated 08/12/2011, 30/09/2011, 13/09/2011, 10/08/2011 and 31/07/2011 which are prior to the claim period were submitted. The appellant got registration of Business Support Service on 13/03/2012. The export billing shows that services were exported on 28/03/2012. The refund claim of the appellant was rejected on the ground that the appellant has submitted input invoices which are prior to the claim period and also prior to getting registration Of Business Support Service.

The authorities below have relied on paragraph 4 of the Notification No. 05/2006  CE (N. T.) dated 14/03/2006. It is not in dispute that the appellants have accumulated credit which was unutilised. The appellants had taken the credit on receipt of the input service invoices of PWC and thereafter, the services were exported and then, the refund claim was filed. From the Boards Circular No. 120/01/2010 dated 19/01/2010 it is abundantly clear that accumulated input service credit, not pertaining to services exported during the quarter for which claim is made can be refunded as there is no bar in Notification No. 5/2006  C. E. (N. T.). The issue has been considered in CCE, Mysore vs. Chamundi Textiles (Silk Mills) limited 2011 (270) E LT 531 (TR I  Bang) and Amdocs Business Services Pvt. Ltd. 2013 (31) STR 249 (TRI  Mumbai) wherein it was held that the refund can be allowed of credit accumulated in the past period and claimed in a subsequent quarter . Therefore, in terms of the Board Circular stated above and also the decisions of the tribunal in Chamundi Textiles (Silk Mills) Ltd. and Am Docs Business Services (P) Ltd., (supra), I am of the view that the impugned order is unsustainable.

The same is set aside.

8. Thus, the appeal is allowed with consequential relief if any.

(Pronounced on 19/6/2015)

(Sulekha Beevi C.S.) Member (Judicial)

K. Gupta

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