No Interest payable to assessee on accumulated Cenvat credit lying unutilized

Conclusion: Interest was not payable accumulated CENVAT credit lying unutilized as in case of export of services under Rule 5 of the CENVAT Credit Rules, 2004, assessee was free to take back the credit of not sanctioned / partially sanctioned refunds.

Held: Appellant, who were registered under Service Tax, were providing services under the category of ‘advertising agency service’ and ‘business auxiliary service’. It had been exporting the said services to various clients located outside India and so, had been claiming refund of unutilized input service tax credit under Rule 5 of the CENVAT Credit Rules, 2004. Appellants had filed refund claim for sanction of refund. These refund claims were partially sanctioned as, while calculating the export turnover, the export invoices realized during the quarter which were dated more than one year, were treated as time-barred in terms of Section 11B of the Central Excise Act, 1944 and the amount realized in respect of these invoices was not reckoned in computation of the export turnover. Appellant had requested a refund of interest where the refund claims filed under Rule 5 of the CENVAT Credit Rules, 2004 were rejected by the original refund sanctioning authority in terms of the provisions of Section 11BB of the Central Excise Act, 1944. It was held that the procedure prescribed debiting the CENVAT Credit account before filing the refund claim and it also provided for taking back of the credit into their CENVAT Credit account of the amount not considered for sanction or where the refund claims were partially sanctioned. So, the provisions were very clear as to debiting or crediting of the CENVAT Credit maintained by an assessee prior to applying for refund or its sanction or otherwise. It had to be noted that accumulated CENVAT Credit lying unutilized did not carry any interest. The procedure prescribed for filing refund claims for unutilized CENVAT Credit in case of export of services under Rule 5 of the CENVAT Credit Rules, 2004 clearly laid down that assessee was free to take back the credit of not sanctioned / partially sanctioned refunds. As such, payment of interest in the circumstances of these appeals was not provided for.

FULL TEXT OF THE CESTAT CHENNAI ORDER