Karnataka High Court

Principal Commissioner Of ... vs M/S Huawei Technology India Pvt ... on 9 February, 2022

Bench: Alok Aradhe, M.G.S. Kamal

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 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 9TH DAY OF FEBRUARY 2022

                         PRESENT

         THE HON'BLE MR. JUSTICE ALOK ARADHE

                           AND

         THE HON'BLE MR. JUSTICE M.G.S. KAMAL

                   C.E.A. NO.7 OF 2021

BETWEEN:

PRINCIPAL COMMISSIONER OF CENTRAL TAX
BANGALORE EAST , BMTC BUILDING
OLD AIRPORT ROAD, DOMLUR
BANGALORE - 560071, KARNATAKA.

REPRESENTED BY DEPUTY COMMISSIONER
OF CENTRAL TAX
BANGALORE EAST COMMISSIONERATE
TTMC BUILDING
ABOVE BMTC BUS STAND 4TH FLOOR
DOMLUR, BANGALORE - 560071.
                                           .... APPELLANT

(BY MR. JEEVAN J. NEERALGI, AGA)

AND:

M/S HUAWEI TECHNOLOGY INDIA PVT., LTD.,
LEVEL - 3, THE LEELA GALLERIA
THE LEELA PALACE, NO 23, AIRPORT ROAD
BANGALORE - 560008, KARNATAKA.
                                          ... RESPONDENT
(BY MR. N. ANAND, ADV., FOR
    MR. B.G. CHIDANANDA URS, ADV.,)
                            ---
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     THIS C.E.A. IS FILED UNDER SEC.35G OF THE CENTRAL
EXCISE ACT, ARISING OUT OF ORDER DATED 02.04.2019 PASSED
IN FINAL ORDER NO.20305/2019 PASSED BY THE CESTAT,
BENGALURU REGIONAL BENCH, BENGALURU, PRAYING TO DECIDE
SUBSTANTITAL QUESTION OF LAW FORMULATED AT PARA NO.6
OF THE APPEAL MEMO.        SET ASIDE THE FINAL ORDER
NO.20305/2019 DATED 02.04.2019 PASSED BY THE CUSTOMS,
EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, BENGALURU
REGIONAL BENCH, BENGALURU & ETC.

     THIS C.E.A. COMING ON FOR ADMISSION, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:

                           JUDGMENT

This appeal under Section 35G of the Central Excise

Act, 1944 (hereinafter referred to as 'the Act' for short) has

been filed against the order dated 02.04.2019 passed by the

Customs Excise and Service Tax Appellate Tribunal

(hereinafter referred to as 'the tribunal' for short).

2. Facts leading to filing of this appeal briefly stated

are that the respondent is registered under the Service Tax

Act and is engaged in providing Information Technology

Certificate Services and in export of the same. The

respondent filed the refund claim in respect of unutilized

CENVAT credit of service tax said to have been paid by it on

input service claimed to have been used by them during the

period in question viz., August 2008 to September 2008,

October 2008 to December 2008 and January 2009 to march

2009. The aforesaid claims were filed on 31.08.2009,

07.09.2009 and 14.09.2009. Show cause notices were

issued to the respondents in which it was asked to show

cause as to why the claims should not be rejected on the

grounds that the claimant was not registered with the service

tax during the period in question and the claim for CENVAT

credit was barred by limitation. The respondent filed a reply.

The Assistant Commissioner Service Tax, Bangalore - II by

order dated 08.01.2010 rejected the claims for refund made

by the respondent inter alia on the ground that it does not

possess service tax registration certificate for the period in

question.

3. Being aggrieved, the respondent filed an appeal

before the Commissioner of Central Excise (Appeals) - II,

Bangalore. The Commissioner (Appeals) by an order dated

26.03.2012 partly allowed the appeal and inter alia held that

the adjudicating authority has not mentioned any statutory

provision in the Rule / Act which prescribes registration to be

a pre condition for claiming benefit under the refund

Notification No.5/06. The appellant thereafter filed an appeal

which has been dismissed by the tribunal by an order dated

02.04.2019. In the aforesaid factual background, this appeal

has been filed.

4. Learned counsel for the revenue submitted that

the appellate authority as well as the tribunal ought to have

appreciated that the respondent was not registered and

therefore, was not eligible to claim the benefit of refund

under the Notification in question. In this connection, our

attention has been invited to para 3 of the notification

No.5/06 dated 14.03.2006. On the other hand, learned

counsel for the respondent submits that the question urged

by learned counsel for the revenue is no longer res integra

and has been decided by two division benches of this court in

'MPORTAL INDIA WIRELESS SOLUTIONS P. LTD. VS.

CST, BANGALORE, 2012 (27) STR 134 (KAR.) and

'COMMISSIONER OF S.T.BANGALORE VS. TAVANT

TECHNOLOGIES INIDA PVT. LTD.', 2016 (43) S.T.R. 57

(KAR.).

5. We have considered the submissions made on

both sides and have perused the record. An assessee is

required to fulfill the conditions mentioned in Rule 5 of

CENVAT credit Rules, 2004, which reads as under:

Rule 5.Refund of CENVAT credit. -

Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,

(i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or

(ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:

Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax.

Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilized for payment of service tax on any output service.

Explanation: For the purposes of this rule, the words "output service which is exported" means the output service exported in accordance with the Export of Services Rules, 2005.

6. Admittedly, in the instant case there is no dispute

that the respondent fulfilled the condition as set out in Rule 5

of CENVAT Credit Rules, 2004. However, the benefit of

refund has been denied to the respondent on the ground that

its not registered. Para 3 of the Notification No.5/06 dated

14.03.2006 does not contain any requirement with regard to

registration with the department as a condition precedent for

claiming CENVAT Credit Rules, 2004. Even assuming that it

is so, such an eligibility condition in the absence of any

sanction by the Rules cannot be prescribed by way of

notification. The question of law involved in this appeal is

squarely covered by two decisions of this court in 'MPORTAL