One to one nexus between input & output not required for claim of refund: CESTAT

The Mumbai CESTAT in one of the matters has decided that the one-to-one nexus between input and output is not required to be examined for processing of the refund.

The present appeal and connected appeal pertain to rejection of refund claim to the appellant service provider.

Facts:

• For the period from September, 2008 to March, 2009, appellant’s claims for refund of Rs. 16,43,339/- and claim for Rs. 8,21,432/- for the period from April, 2009 to September, 2009, which were rejected by the adjudicating authority and Commissioner (Appeals) are challenged in this Tribunal.
• The grounds of rejection were
  1. Refund claim filed more than 3 months in a single claim application.
  2. Appellant did not avail registration with department.
  3. For the claim period no ST-3 return was filed.
  4. Services allegedly exported by the appellant were not used outside India.
  5. Claim being partially time bared.
  6. Credit on rent-a-cab and club or association services are inadmissible.
  7. Some Input tax credit invoices continued to be issued at old registered address of the appellant.
• Submission of refund claim for more than 3 months in a single claim application being primary issue in both the cases was taken up for discussion at the first instance.

Discussion and Findings:

• On a close reading of Notification No. 5/2006-C.E. (NT) dated 14.03.2006 and Rule 5 of CENVAT Credit Rules, 2004 it would clearly reveal that more than one claim application cannot be filed in a quarter but such claim is not restricted to be filed only for a quarter i.e. for 3 months in one application.
• Since, refund can be claimed within a period of one year and Notification No. 5/2006-C.E. (NT) dated 14.05.2006 has only provided additional benefit to the Export Oriented Units and units having more than 50% export turnover to file such refund claim in each calendar month, the use of word ‘may’ in the said notification has made it discretionary to the claimant to choose filing refund every month as a privilege granted to the exporter but the same cannot be treated as a mandatory requirement for filing in one month or three months without which refund claim should be refused.
• In respect of the second ground of rejection noted in the Order-in-Appeal of appeal No. ST/89857/2018 that appellant did not avail registration with the department for the period during which invoices were raised has been contested by both the parties.
• A bare reading of Appendix under para no. 3(b) clearly indicates that registered premises is to be situated within the territorial jurisdiction of the Deputy/Assistant Commissioner before whom Form A application was to be filed.
• In the case of the applicant, as reveals from case record and admitted by both the parties, appellant got registered with retrospective effect from 11.08.2009 and the first refund application was filed on 30.08.2009 i.e. after the registration was completed.
• It is, therefore, immaterial to examine the date of invoices if raised before the registration date as there is no such stipulation or conditionality in Notification No. 5/2006-C.E. (NT) or to say Circular No. 120/01/2010-ST.
• Further in para 7 of the said judgment of mPortal India Wireless Solutions Pvt. Ltd. Vs. CST, Bangalore [2012(27) STR 134 (Kar.)] it has been clearly held that registration is not a requirement for filing refund claim.
• In respect of ground 3 of rejection or the third issue i.e. required to be discussed here concerning filing of ST-3 returns periodically appellant has placed its reliance on the case laws in the case of 3DPLM Software Solutions Vs. Commissioner – Final order No. A/87226/2018 and Jagdamba Polymers Ltd. Vs. CCE, Ahmedabad – [2010 (253) ELT 656 (Tri.-Ahmd.)] to argue that there was no stipulation/provisions contained in Rule 5 for claiming such refund with ST-3 returns.
• Admittedly, this is a procedural laps since provider of output service availing CENVAT credit shall submit half-yearly returns in the form specified in the notification but there is no express provisions that in the event of non-filing of such returns, refund will be rejected except for violation of safeguards, conditions and limitations set out in the Appendix of Notification issued under Rule 9 for exporters.
• This being the facts on record and legal position it was considered that refund cannot be disallowed on the grounds set out in the second appeal.
• In respect of the other appeal additional grounds of rejection as enumerated in the order is that services exported by the appellant was not used outside India and some of the input services like rent-a-cab and club or association services were not having any nexus to export and some invoices raised in the old address and some were time barred.
• It can be said that during the relevant period, as per Export Service Rule, 2005 if service recipient is situated outside India and the consideration has been receipt in convertible foreign exchange it would satisfy the definition of export of services.
• It has been held in catena of judgments that in such cases, one to one nexus between input and output is not required to be examined, the bench was of the considered view that those credits were valid credits which were required to be refunded.
• Further, address mentioned in the invoice is immaterial when the same is raised in the appellant’s name when the other address is appellant’s own old premises concerning which no withdrawal of registration of that premises is available on record, except that a new registration is taken by the appellant for another location.
• However, the Bench stated that it preferred to concur with the findings of the learned Commissioner (Appeals) that time barred refund claims cannot be entertained as admissible.
• Therefore, partially time barred refund claim for the period October, 2009 to March, 2010 which has been rejected by the Assistant Commissioner in his order dated 09.07.2012 and confirmed by the Commissioner (Appeals) needs no interference by this Tribunal.