Cenvat credit
cestat, mumbai
bench
WNS Global Services (P.) Ltd.
v.
Commissioner of Central Excise, Mumbai
Appeal no. ST/47,
48 & 142 of 2007 (Mum.)
ORDER NO. A/49 TO
51 OF 2008/WZB/CSTB/C-I
MS. Jyoti
balasundaram, vice president
And k.k. agarwal,
technical member
January 18, 2008
Rule 5 of the Cenvat Credit Rules, 2004 - Refund of Cenvat credit -
Period April, 2005 to March, 2006 - Prior to amendment dated 14-3-2006, rules 5
did not allow refund of unutilized service tax credit to provider of output service
- However, substituted rule 5 allowed refund to such providers - Assessee
exported services prior to date of amendment of rule 5 on 14-3-2006 - Refund
claims were filed after 14-3-2006 satisfying every requirement of substituted
rule 5 and notification issued thereunder - Whether since there was no
condition in amended rule 5 or notification thereunder that such refund would
apply only in respect of exports made after 14-3-2006, refund claims could not
be rejected - Held, yes [Para 10]
Circular & Notifications - Notification No.11/2002-CE(NT), dated
1-3-2002; Notification No.5 of 2006-CE (NT), dated 14-3-2006
FACTS
The appellant-assessee was engaged in providing business auxiliary services and export of said services. It was availing benefit of the Cenvat credit in respect of input services used by it in the export of auxiliary services. Since it was unable to utilize the said credit for the relevant period, it claimed refund according to substituted rule 5 amended with effect from 14-3-2006. the adjudicating authority rejected the claim on the ground that rule 5 prior to its substitution did not provide for refund of unutilized credit to the provider of output services. On appeal, the Commissioner (Appeals) also rejected the assessee’s plea that the substituted rule 5 was clarificatory in nature and that it had substantive right to claim refund under those provisions, once all the conditions prescribed under the notification were fulfilled. The Commissioner (Appeals) upheld the order of the adjudicating authority.
On appeal:
HELD
From a 
plain reading of the pre-substituted
rule 5 it is very clear that the intention has never been to allow refund of
unutilized service tax credit to the provider of output services. Rule 5 provided
that refunds would be subject to such safeguards, conditions and limitations as
may be specified by the Central Government. During the relevant period, neither
any conditions, safeguards and limitations were provided in respect of provider
of output services nor any procedure was prescribed for claiming refund of the
unutilized Cenvat credit availed on input services used in export of output
services. Such procedure has been prescribed for the first time vide
Notification No. 5 of 2006-CE(NT), dated 14-3-2006 wherein the extent of refund
has also been prescribed, in which was not there the earlier Notification No.
11 of 2002-CE(NT), dated 1-3-2002 which held the field during the relevant
period. When the amendment was carried out in 2006 allowing refund to the
provider of output services also, an additional safeguard was introduced in
rule.5 by addition to the proviso that the provider of output services should
not claim rebate of service tax under the Export of Services Rules, 2005 in
respect of such taxes. It was a simple omission and the Legislature prescribed
some procedure for claiming refund and the extent to which refund can be
claimed and imposed certain safeguards as has been done only now. In view of
that the alleged omission could neither be considered as an obvious mistake in
printing/ drafting, nor could the amended provisions be considered to be
clarificatory in nature and could not, therefore, have retrospective effect. [
However, the substituted rule 5, nowhere suggests or says that it will
apply to exports made after 14-3-2006. Hence, any claim filed on or after
14-3-2006 which satisfies other requirements of the rules and notification
issued thereunder cannot be turned down on a ground which is not a condition or
requirement of the rule or notification. A statute cannot be treated
retrospectively merely because it relates to the past action. A statute which
takes away or impairs vested rights acquired under existing laws, or creates a
new obligation or imposes a new duty, or attaches a new disability in respect
of transaction already made alone is called a retrospective legislation. The
position that a prospective benefit under a statutory provision is measured by
or depends on antecedent facts does not make the provision retrospective. [
Therefore, where the refund claims were filed after the amendment
satisfying every requirement of rule 5 and the notification issued thereunder,
the same could not be rejected as there was no condition in the notification or
rules that such refund would apply only in respect of the exports made after
14-3-2006. Once the refunds were under the amended rules and the notification
issued thereunder, the same could not be denied merely because they related to
the exports made prior to the date of amendment. [
Consequently, the appeals were to be allowed and the orders of the
Commissioner (Appeals) were to be set aside. [