JVS Export Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that refund of duty paid under mistake of law cannot be denied when the refund claim is filed within the time prescribed under section 11B of the Central Excise Act, 1944.
Facts- The appellants are manufacturers of woven fabrics such as kitchen terry towels, dish cloth etc. They are paying Service Tax under Reverse Charge Mechanism (RCM) on the foreign Agents Commission used for the export of goods. They filed, a refund claim under the provisions of Notification No. 17/2009-ST dated 7.7.2009 on 6.7.2010 for refund of service tax of Rs.25,44,209/- paid by them under the category of business auxiliary service on the commission paid to their foreign agent. They have subsequently modified the amount to Rs 25,33,516/- being the actual amount of Service Tax paid.
A Show Cause Notice was issued to them proposing rejection of the said refund claim on the ground that the said business auxiliary service was not specified under the said notification. After due process of law, the Original Authority split the refund as requested but rejected the refund claim of Rs.16,74,856/- on the ground that the impugned claim was not filed within six months stipulated under Notification No. 41/2007-ST dated 6.10.2007.
Aggrieved by the rejection of the refund claim by the original authority, the appellants filed an appeal before Commissioner (Appeals) who after examining the matter has upheld the Order in Original and rejected the appeal.
Conclusion- Section 11B of the Act is a substantive provision of the statute while a notification is only part of a subordinate legislation and cannot override the parent statute.
Held that the relevant date of computing six months under Notification No. 41/2007-ST dated 6.10.2007. is to be taken on the date when service tax is paid and not from the first day of the month following the quarter in which the export is made.
Held that duty has been paid under mistake of law because they followed the pattern of the earlier exemption Notification No. 41/2007-ST dated 6.10.2007., but when they realized their mistake, they have claimed a refund of duties paid. The refund of the same paid under a mistake, cannot be denied to them, when the claim is filed within time as per section 11B.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This is an appeal filed against Order in Appeal No. 320/2012 dated 21.12.2012 passed by the Commissioner of Central Excise (Appeals), Madurai.
2. The facts of the case are that the appellants are manufacturers of woven fabrics such as kitchen terry towel, dish cloth etc. They are paying Service Tax under Reverse Charge Mechanism (RCM) on the foreign Agents Commission used for the export of goods. They filed, a refund claim under the provisions of Notification No. 17/2009-ST dated 7.7.2009 on 6.7.2010 for refund of service tax of Rs.25,44,209/- paid by them under the category of business auxiliary service on the commission paid to their foreign agent. They have subsequently modified the amount to Rs 25,33,516/- being the actual amount of Service Tax paid. A Show Cause Notice was issued to them proposing rejection of the said refund claim on the ground that the said business auxiliary service was not specified under the said notification. The appellants in their reply to the notice requested that the refund claim be split into two portions. Rs.16,74,856/- of the claim pertaining to the period before 7.7.2009 to be processed under Notification No. 41/2007-ST dated 6.10.2007. and the other portion of refund claim of Rs.8,58,660/-pertaining to the period from 7.7.2009 to be processed under Notification No. 18/2009-ST dated 7.7.2009 for which they were otherwise also eligible for refund under Rule 5 of the CENVAT Credit Rules, 2004. After due process of law, the Original Authority split the refund as requested but rejected the refund claim of Rs.16,74,856/-on the ground that the impugned claim was not filed within six months stipulated under Notification No. 41/2007-ST dated 6.10.2007.. He rejected the other portion of the refund claim of Rs.8,58,660/- on the ground of absence of any provision for refund under the Notification No. 18/2009-ST dated 7.7.2009. He rejected the claim of Rs.8,58,660/- also under Rule 5 of CENVAT Credit Rules, 2004 for failure of the appellants to comply with the various conditions stipulated under the Notification No. 5/2006-CE (NT) dated 14.3.2006 which was issued under the said Rule. Aggrieved by the rejection of the refund claim by the original authority, the appellants filed an appeal before Commissioner (Appeals) who after examining the matter has upheld the Order in Original and rejected the appeal. Hence this appeal.
3. No cross objections have been filed by the respondent department.
4. I have heard Shri G. Shiva Kumar, learned Chartered Accountant on behalf of the appellant and Shri N. Sathyanarayanan, learned AC (AR) for the respondent.
5. The learned consultant for the appellant submitted that they are registered for payment of service tax as a recipient of services under the category of Goods Transport Agency Service and Business Auxiliary Service under reverse charge mechanism. Since they are exporters of goods, they are eligible for refund of service tax paid on input services under Notification No. 41/2007-ST dated 6.10.2007. upto 6.7.2009 and thereafter as per Notification No. 17/2009-ST dated 7.7.2009 and 18/2009-ST both dated 7.7.2009. The appellant has paid service tax as a recipient of service in the commission paid to foreign agents as detailed below:-
