CESTAT, NEW DELHI BENCH
Commissioner of Central Excise, Chandigarh-II
FINAL ORDER NO. 794-796/2012-SM(BR)
APPEAL NO. ST 560 TO 562 OF 2011-SM
JUNE 13, 2012
1. The appellant is a manufacturer of cotton terry towels who exports most of the goods, almost to the extent of 99%. In respect of certain services availed by them for the export activity they claimed refund of service tax paid by them under the provisions of Notification No. 17/2009-ST dated 7.7.2009. The adjudicating authority granted such refund on many of the services involved but he refused to grant such refund as in the case of service tax paid on scientific testing services, CHA services and rail freight. Out of these the major amount relates to scientific testing services.
2. The reason in respect of testing services, given by the adjudicating authority is that the appellants have not been able to establish correlation between the consignment which was sent for testing and samples which was exported. In the case of rail freight, the adjudicating authority’s objection is that the receipt is issued by CONCOR and also for the reason that the receipts could not be correlated with each of the consignments which were exported. In the case of services of CHA, the adjudicating authority raised the objection that there is no exact correlation with the CHA services and the consignment exported.
3. Before the adjudicating authority the appellants had taken the ground that scientific testing is done both in India and abroad before export of goods and the bill raised for such services will not show the shipping bill number and date. However, the adjudicating authority was not satisfied this. The appellant filed an appeal with Commissioner (Appeals). The Commissioner (Appeals) raised an objection that the appellants have not produce Chartered Accountant’s certificate as prescribed in board’s circular No. 120/01/2010-ST dated 19.1.2010 for claiming the refund. He did not give any finding on the merits of the issue based on which adjudicating authority had rejected the claim.
4. The Authorised Representative of the appellant submits that the said circular issued by CBEC is with reference to refunds that may be claimed under Rule 5 of Cenvat Credit Rules 2004. In the case of refund claimed under Notification No. 17/2009 the requirement is not applicable in view of the provisions in clause 2(j) of the Notification which says that where the amount of refund sought under a claim is more than 0.25% of the declared free on board of value of export, certificate issued by the Chartered Accountant who audits the annual accounts of the exporter is required. The claim in these appeals is much less than 0.25% of the declared FOB value of export for the relevant period. Therefore the said provision is not applicable. Thus the submission of the AR for appellant is that the claim is rejected without properly considering the matter in the light of the Notification and also circulars issued by the CBEC.
5. The ld. AR for Revenue is relying more on the finding of original adjudicating authority rather than the findings of the Commissioner (Appeals). The substance of their argument is that unless proper correlation between the service availed of the goods exported is established such refunds cannot be granted.
6. I have considered arguments on both the sides. In the first place, I notice that the amount in dispute is only to the extent of 4.14 lakhs in three appeals in respect of scientific testing of their products. The only deficiency is that they are not able to establish the correlation between the samples tested and each consignment that was exported. I find that against item 3 of the table annexed to Notification 17/2009 providing for refund of service tax paid on technical testing and analysis there is no condition imposed in column (4) of the table and that being the case there is no need to insist on the type of co-relation being insisted upon by Revenue.
7. In the case of invoices for rail freight issued by CONCOR the fact that the goods have been taken to ICD is not disputed. The container numbers are also shown to reasonably establish that the service was in respect of export of goods. In this case refund is authorized as per item 7 in the table to the Notification. A1 what is required is that the invoice issued by the exporter should indicate that the goods were exported through the ICD concerned. There is no case made out that such condition is not met. So I do not see any reason to deny refund in respect of this service either.
8. In the case of CHA service the appellants have submitted a list of shipping bill numbers for which the amounts involved were charged by the CHA. The revenue has been asking for copies of shipping bills. I find that the refund in respect of this service is governed by item 11 in the Table to the Notification. The Conditions prescribed in column (4) of the table annexed to the Notification in respect of this service are the following:
“Exporter shall produce, –
(i) invoice issued by custom house agent for providing services specified in column (3) specifying, –
(a) number and date of shipping bill;
(b) number and date of the invoice issued by the exporter relating to export of goods;
(c) details of all the charges, whether or not reimbursable, collected by the custom house agent from the exporter in relation to export goods;
(ii) details of other taxable services provided by the said custom house agent and received by the exporter, whether or not relatable to export goods.
9. It appears that the deficiency is that the bills raised by the CHA do not show the shipping bill numbers and date and the full requirements of the above conditions are not met. The reason given in the impugned order is that copies of shipping bills are not produced. No such condition is prescribed against S. No. 11. The exporter has given a detailed worksheet showing the shipping Bill Numbers to which each bill of CHA relates. The issue appears to be that the CHA has been raising one bill in respect of many shipping bills. There is nothing unusual about it. Since the CHA may not be aware of this requirement of the exporter, such bills were not issued and exporter might not have obtained such bills. This is a curable defect. The appellant may get the worksheet prepared by them countersigned by the concerned CHA and also furnish information as required in the condition as above. Subject to meeting the above requirement the refund in respect of this service also is allowed.
10. Thus, I allow the appeals after setting aside the orders of the lower authorities and ordering refunds of the impugned amounts subject to the terms above.