CESTAT Mumbai Remands CENVAT Credit Refund Claim Of Software Exporter For Fresh Adjudication

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the Revenue's appeal and set aside an order granting a refund of unutilised CENVAT credit to Physician Interactive India Pvt. Ltd. The Tribunal has remanded the matter to the original adjudicating authority for fresh consideration.

A Bench of Judicial Member S.K. Mohanty and Technical Member M.M. Parthiban held that the Commissioner (Appeals) failed to examine key factual issues bearing on the assessee's entitlement to CENVAT credit and its utilisation.

The dispute arose from a refund claim filed by the respondent under Rule 5 of the CENVAT Credit Rules, 2004. The company sought a refund on the ground that its manufactured goods were exported and the accumulated credit could not be utilised.

The original adjudicating authority rejected the claim by an order dated August 20, 2015. It held that the respondent's activity amounted to provision of service and not manufacture. It also held that the activity was fully exempt from duty under the applicable notification. On that basis, the authority ruled that the respondent was not entitled to avail CENVAT credit.

The Commissioner (Appeals) later allowed the refund. Aggrieved by that decision, the Revenue carried the matter in appeal before the Tribunal.

Allowing the Revenue's appeal, the tribunal noted that the appellate authority had not examined whether the respondent was entitled to CENVAT credit at all, particularly in view of the fact that the registration certificate was obtained only in 2014, much after the dates of the invoices issued by suppliers and service providers.

The tribunal further found that the Commissioner (Appeals) had not examined whether the disputed inputs and input services were actually used in the goods or services that were exported by the respondent.

"“…the learned Commissioner (Appeals) has not examined the aspects whether, the respondent should be entitled to the CENVAT Credit, in view of the fact that registration certificate was obtained by them in the year 2014 i.e., much after the date of the invoices issued by the supplier/service provider. Further, the learned Commissioner (Appeals) has also not examined whether the disputed goods were actually used in the goods/services, which were exported by the respondent.”

It also held that reliance placed on the tribunal's earlier decision in Sandoz Pvt. Ltd. was misplaced, observing that the said ruling was factually distinguishable from the present case.

Holding that proper fact-finding was required, the tribunal set aside the impugned appellate order and remanded the matter to the original authority for fresh adjudication. It directed that the respondent be granted an opportunity of a personal hearing before the issue is decided afresh.

Setting aside the impugned order, the tribunal remanded the matter with directions to grant personal hearing.

For Petitioner: Ranjan Kumar, Authorized Representative

For Respondent: Advocate M.P. Kasale