2024-VIL-410-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Export of finished goods - Refund of accumulated Cenvat credit under Rule 5B of Cenvat Credit Rules, 2004 read with Notification No.12/2014-C.E. (N.T.) dated 03.03.2014 – Denial of refund on the ground appellant manufacturing goods, having nil rate of duty, hence, not eligible for credit of service tax paid under RCM - Whether the appellant-assessee who pays service tax under reverse charge mechanism in terms of provisions of Section 68(2) of the Finance Act, 1994 can also be called ‘output service provider’ – HELD - It is an admitted fact that the appellants are registered with the department for payment of service tax on the taxable services received by it and had discharged the service tax liability on reverse charge mechanism - CENVAT credit scheme was introduced with the object of removing to a great extent the cascading burden in indirect taxes by expanding the coverage of credit for all inputs, including capital goods. Thus, service tax paid on the taxable services shall be available as CENVAT credit in terms of Rule 3 of CCR, 2004, and when such credit is unable to be utilized for payment of duty/tax, then the same shall be refunded under Rules 5, 5A and 5B of CCR, 2004 - it does not stand to reason to deny input tax credit and its refund in certain situations, on the ground that the legal provisions of such a refund is not applicable to such other persons, who have been made liable to pay service tax under Section 68(2) of FA, 1994 - the findings of the learned Commissioner (Appeals) in denial of Cenvat credit on the ground that the appellants being manufacturer of Nil rated goods, would stand covered by the restriction under Rule 6(1) of CCR, 2004 is incorrect and is not legally sustainable - the impugned order is set aside and the appeal is allowed
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