Merely on basis of entry in ST-3 return it cannot be said whether assessee had availed credit or not

CESTAT, NEW DELHI BENCH

Glyph International Ltd.

versus

Commissioner of Central Excise, Noida

ORDER NO. 55149 OF 2013

APPEAL NO. ST/E/3863 OF 2012-SM

Date of Pronouncement- 21.12.2012

ORDER

Rakesh Kumar, Technical Member

The facts leading to this appeal are, in brief, as under:-

1.1 The appellant are a 100% Export Oriented Unit located in a Software Technology Part and are engaged in development of software for export. For development of software, they require a number of duty paid inputs and input services. The appellant from time to time filed rebate claims for rebate of service tax paid on input services and excise duty paid on duty paid inputs which were used in the development of software, which was exported out of India. The rebate claims are filed in terms of the provisions of Rule 5 of the Export of Service Rules read with Notification No 12/2005-ST dated 19.4.2005. One of the conditions for grant of rebate under this Notification is that no relavant credit should have been availed in respect of which rebate claim has been filed. The rebate claim for an amount of Rs. 3,52,360/- filed by the appellant for the period from October, 2010 to December, 2010 was rejected by the jurisdictional Asstt. Commissioner vide order-in-original dated 31.1.2012 on the ground that the appellant have not satisfied the conditions regarding non-availment of cenvat credit in respect of input or input services, as the perusal of the ST-3 Returns for October, 2010 to March, 2011 period filed by the appellant reveals that during this period, the appellant have availed input/input service cenvat credit and have also utilized the same. In course of proceedings before the Asstt. Commissioner, the appellant pleaded that they have not availed input or input service cenvat credit, that the figures regarding availment and utilization of cenvat credit in the ST-3 returns are in the fact the figures of rebate, which by mistake had been mentioned in the column relating to availment of cenvat credit, but this plea was not accepted by the Asstt. Commissioner. On appeal being filed before the Commissioner (Appeals), their appeal was dismissed vide order-in-appeal dated 27.2.2012. In course of appeal before the Commissioner (Appeals), the appellant produced a Chartered Accountant’s certificate certifying that no input/input service cenvat credit had been taken, but this plea was not accepted by the Commissioner (Appeals). The Commissioner (Appeals) also rejected the rebate claim on an additional ground not mentioned in the order-in-original which was that inputs/input services, in question, in respect of which the rebate claim has been filed, were not used in providing the taxable service exported by the appellant. Against this order of the Commissioner (Appeals), this appeal has been filed.

2. Shri J.K. Mittal, Id. Chartered Accountant for the appellant, pleaded that the dispute in this case is only for the period from October, 2010 to December, 2010, that the appellant are a 100% EOU located in Software Technology park and are engaged in the export of services, i.e. development of software for their clients abroad, that they are neither availing cenvat credit nor utilizing the same as their domestic transactions are rare and if they avail the cenvat credit, they cannot utilize the same, that period prior to October, 2010, rebate claims were regularly sanctioned by the jurisdiction Asstt. Commissioner treating their input, or input services as having been used in the development of software for export and during period after March, 2011, also, the rebate claims filed by them are being sanctioned, that latest order sanctioning input/input service rebate is order dated 30.08.2012 for the April, 2011 to June, 2011, that appellant during the period of dispute have not availed any cenvat credit, that in the ST-3 returns for the period from October, 2010 to March, 2011, the Appellant by mistake in Col.5b pertaining to “availment and utilization of cenvat credit” have mentioned the quantum of rebate claim sanctioned during that period as cenvat credit utilized, that this has happened due to mistake and just because of this, the department cannot presume that the appellant have availed and utilized the cenvat credit, more so, when for a software parts unit which is engaged in development of software for export, there was no occasion to utilize the cenvat credit, that when the appellant produced Chartered Accountant’s certificate certifying that during the period of dispute that from April, 2010 to December, 2010, no cenvat credit has been availed or utilized, the onus is on the department to contradict this fact by producing cogent evidence, that in this regard, he relies upon the judgement of the Tribunal in the case of R.B. Agarwal & Co. v. CCE [2006] 3 STT 339 (Kol. – CESTAT), wherein it was held that Chartered Accountant’s certificate produced should not be rejected unless there is contradictory certificate from another Chartered Accountant, that availment of cenvat credit and its utilization is a matter of record, which could have been verified by the department and just on the basis of ST-3 Returns, in which the rebate claim received by them was by mistake mentioned as utilization of cenvat credit, the department could not conclude that the appellant have availed and utilized the cenvat credit, that in view of this, the impugned order upholding the denial of rebate is totally wrong, that as regards findings in para 4.4. of the Commissioner (Appeals)’s order that in this case, the input services are not eligible for rebate, as the same have not been used for providing the services for export, the input services, in question, are internet/telecommunication services, housekeeping services, professional services, outdoor catering services, renting of immovable property services, maintenance & repair services, security’s agencies services, rent-a-cab operator services, management consultant services and insurance services, etc. all of which are necessary inputs for a software unit, that when during period prior to the period of dispute and period subsequent to the period of dispute, the rebate claims have been sanctioned in respect of the same input services, for the period from October, 2010 to December, 2010 the department can not take a different stand and that in view of the above submissions, the impugned order is not sustainable.

3. Shri B.B. Sharma, Id. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it and emphasized that when the appellant in the ST-3 returns have mentioned the availment of cenvat credit in respect of inputs/input services and its utilization, the department was correct in denying the export rebate in terms of Notification No. 12/2005-(ST) as this rebate is available subject to condition that no input/input service cenvat credit has been availed. He, therefore pleaded that there is no infirmity in the impugned order.

4. I have considered the submissions from both the sides and perused the records. There is no dispute about the fact that the appellant are a software technology unit engaged in export of the services and that the rebate of duty paid inputs/input services used in development of software exported out of India would be available in terms of the Notification No. 12/2005 (ST) only if no cenvat credit in respect of those input/input services had been availed. Out of the two objections of the department in respect of the rebate ,in question, the first objection is that the input services in respect of which the rebate has been claimed are not input/input services utilized for providing the services for export. The input services in respect of which rebate has been claimed are internet/telecommunication services, housekeeping services, professional services, outdoor catering services, renting of immovable property services, maintenance & repair services, security agencies services, rent-a-cab operator services, etc. In my view all these services would be necessary input for a software unit and hence, it would be totally incorrect to deny rebate on the ground that the same are not the services required for development of software more so, when during the period prior to the period of dispute and they paid after the period of dispute, the department has been granting rebate in respect of these very services. Besides this, I also find that the Commissioner (Appeals) while giving this finding has not given reasons at all for the same. Therefore, the ground for denying rebate in para 4.4. of the impugned order is not a valid ground at all.

5. The second objection of the department is that the appellant do not satisfy the conditions no. 2(e) of 12/05 ST regarding non-availment of cenvat credit. The appellant’s plea from the very beginning has been that they have never availed cenvat credit either in respect of inputs or input services and that they have been claiming filing only the rebate in respect of input/input services from time to time and that in the ST-3 Return for October 2010 – March, 2011 the rebate claim had been mentioned as cenvat credit availed by mistake. I am of the view that when it is not denied that the appellant are a 100% EOU i.e. a STP unit and their domestic transactions are rare, there would not be no occasion for them to utilize the cenvat credit if any availed when it is not the case of the Department that they have also claimed cash refund of accumulated cenvat credit under Rule 5 of Cenvat Credit Rules, 2004. It would not be correct for the department to conclude that they have availed cenvat credit just on the basis of Col.5b of the ST-3 Return without checking the records, which are required to be maintained by the appellant for availment of cenvat credit in respect of the provisions’ of Rule 9(6) of the Cenvat Credit Rules, 2004. The availment of cenvat credit in respect of input or input services is a matter of fact which has to be verified from the records maintained by the appellant and no inferences can be drawn in this regard merely from the ST-3 Returns, when the appellant, from the very beginning are pleading that the entry in Col.5b regarding availment and utilization of the cenvat credit was made by them due to mistake and that the figures regarding utilization of cenvat credit mentioned in this col. is actually the figure of rebate claim which has been granted to them.

6. In view of the above discussion, the impugned order is not sustainable. The same is set aside and the matter is remanded back to the original adjudicating authority for deciding the rebate claim filed by the appellant afresh. If from the records maintained by the appellant, it is clear that they have not availed any cenvat credit the rebate claim would have to be accepted. The adjudicating authority while examining the rebate claim is also taken into account the Chartered Accountant’s certificate whose validity is to be considered in the light of the Tribunal’s decision in the case of R.B. Agarwal & Co. (supra). The appeal stands disposed of as above. Since the rebate claim two years old, the original adjudicating authority is directed to complete de novo adjudication within a period of 3 months.

NF