In Prayosha Healthcare Pvt Ltd v. C.C.E. & S.T.-Vadodara-ii [Excise Appeal No.11102 of 2018 dated September 21, 2021], the current appeal has been filed against Order-in-Appeal OIA-VAD-EXCUS-002-APP-613-2017-18 dated November 21, 2017 (“OIA”) passed by Commissioner (Appeals) of Central Excise, Customs and Service Tax- VADODARA-I (“Respondent”) for rejecting the appeal against Order-in-Original (“OIO”) which rejected the refund claim against reversal of Central Value Added Tax Credit (“CENVAT”) of Prayosha Healthcare Pvt Ltd (“the Appellant”).
The Appellant availed CENVAT Credit of Service Tax paid on sales commission to which the audit officers raised objections holding the same to not be admissible since sales commission is not an input service and the credit availed should be reversed. On the objection, the Appellant reversed the CENVAT Credit however filed a refund claim within a year from date of reversal on the ground that CENVAT credit is admissible on sales commission as per the ruling provided in the judgment M/s. Essar Steel India Ltd. v. C.C.E [2016-TIOL-520-CESTAT-AHM].
OIO- The OIO rejected the refund claim on the ground that sales commission is not input service and also on the ground that the Appellant had reversed the amount without under protest thereby, the Appellant agreed to the audit.
OIA- After filing of the appeal against OIO, the OIA also rejected the claim of the Appellant on the ground of non admissibility of sales commission as input services by referring to the definition of input service.
The Hon’ble CESTAT Ahmedabad on the current issue observed that even though the reversal was not made under protest, the Appellant has the right to claim refund within one year as per Section 11B of Central Excise Act,1944 (CE Act). Noted, that the Appellant not filing the application under protest letter while reversing the credit refund cannot be rejected on this ground.
Further, noted that the matter as to whether sales commission is admissible as input service is subjudice before the Hon’ble Gujarat High Court in the case of M/s Essar Steel India Limited (supra), and Hon’ble Supreme Court in Cadila Healthcare Limited v. Commissioner of Central Excise, Surat-II [Appeal No: E/957/2012-DB], therefore the same cannot be decided on merits yet.
Held, the OIA is set aside and the appeal is allowed by way of remand to the Adjudicating Authority to pass a fresh order once the legal issue on admissibility of CENVAT Credit on sales commission is settled before the Hon’ble Supreme Court and Hon’ble Gujarat High Court.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
Brief facts of the case are that the appellant have availed the Cenvat Credit in respect of service tax paid on sales commission. The audit officers have raised objection that the sales commission is not an admissible input service. On the objection of the audit party, the appellant have reversed the Cenvat credit. Thereafter, they have filed refund claim within one year from the date of reversal on the ground that as per subsequent development of law in case of M/s. Essar Steel India Ltd. V/s. CCE-2016-TIOL-520-CESTATAHM the Cenvat credit is admissible on sales commission. The adjudicating authority has rejected the refund claim on the ground that sales commission is not input service and also on the ground that the appellant have admittedly reversed the amount without under protest hence, the appellant had agreed to the audit, on the basis of which the audit para was closed and the queries were settled. Being aggrieved by the Order-In-Original, the appellant filed appeal before the Commissioner (Appeals) who rejected the appeal only on the ground that the sales commission is not an admissible input service referring to the definition of input service. Therefore, the appellant is before this tribunal.
2. Shri. Vinay Kansara, learned counsel appearing on behalf of the appellant submits that as regards the objection of non admissible of the Cenvat credit on sales commission the department has not issued the show cause notice. Therefore, the refund cannot be rejected. As regard the issue on merit that whether the Cenvat credit is admissible on sales commission, he submits that the issue is pending before the Hon’ble Gujarat High Court in the case of M/s. Essar Steel India Ltd. and also before the Hon’ble Supreme Court in the case of M/s. Cadila HealthCare Pvt. Ltd. He further submits that even though the protest was not lodged while reversing the credit the appellant has within right to file a refund claim within a stipulated period of one year as provided under section 11B of Central Excise Act,1944. Therefore, only because the under protest reversal was not made refund cannot be rejected on this ground.
3. Shri. R.P. Parekh, Learned Authorized Representative appearing on behalf of the revenue reiterates the finding of the impugned order. He filed written submission dated 08.09.2021 which is taken on record. He also relies on the judgment of this Tribunal vide final order No. A/11238/2018 dated 14.06.2018 in the matter of M/s. Amar Engineering Co. Versus C.C.E. and S.T.-Vadodra-i. Taking support of this judgment he submits that once an assessee paid the amount admittedly that attained finality and it is closure of the case therefore no refund claim can be entertained.
4. I have carefully considered the submission made by both the sides and perused the records. I find that the issue involved is whether the appellant is entitled for refund claim against the reversal of Cenvat Credit made as per the audit objection in respect of sales commission or otherwise. I find that the reversal was made on the objection of the audit party. Though the reversal was not made under protest but the appellant has right to claim refund within one year as mandated under section 11B of Central Excise Act,1944., therefore only on the ground that the appellant has not filed under protest letter while reversing the credit refund cannot be rejected on this ground. As regard the merit that whether the sales commission is admissible input service or otherwise the issue is subjudice before the Hon’ble High Court of Gujarat in the case of Essar steel India Ltd. and also before the Hon’ble Supreme Court in the case of the Cad ila Health Care Ltd. Therefore, at this stage the merit cannot be decided.
5. Accordingly, I set aside the impugned order and allow appeal by way of remand to the Adjudicating Authority for passing a fresh order after the legal issue is settled on the admissibility of the Cenvat Credit on sales commission by the Hon’ble Apex Court in the case of M/s. Cadila HealthCare and also by the Hon’ble High Court in the case of Essar Steel India Ltd.
6. Appeal is allowed by way of remand in above terms.
(Dictated and pronounced in the open court)
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