V. Padmanabhan, Member (T)

1. The Hon'ble President has constituted this Larger Bench on the basis of the reference made by the Hon'ble Single Member vide his Interim Order No. 33/2017 dt. 19/09/2017. In the said reference, the learned Single Member observed as follows:-

When this matter was called out, after hearing the Bar on the issue, I find that the issue that falls for consideration is whether the time limit prescribed under Section 11B of the Central Excise Act, 1944 in respect of filing of refund claims whether has to be considered from the end of the quarter as prescribed under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 5/2006 dt. 14/03/2006 as amended by Notification No. 27/2012 or should be applied from the date of receipt of payment for export of services.

2. It was brought to my notice by the Bar that the Bench at Bangalore by Final Order No. 21636-21640/2017 dt. 05/04/2017 has held that provisions of Section 11B will be applicable from the date of receipt of payment for export of services, despite there being a condition mentioned for filing of refund claims once in a quarter and held that time period of one year from the end of quarter is inapplicable in view of the judgment of Hon'ble High Court of Madras in the case of CCE Vs. GTN [2012 (281) ELT 185 [LQ/MadHC/2011/4718] ] at the same time. It was brought to my notice by the Bar that same issue has been decided by the Division Bench of the Tribunal in the case of CST, Mumbai-II Vs. Sitel India Ltd. [2016-TIOL-818-CESTAT-MUMI] wherein the Bench has held that refund claims can be filed within one year from the end of the quarter, irrespective of the date of receipt of the FIRCs in that quarter. On perusal of the judgment of Hon'ble High Court, I find that the said judgment has not interpreted the condition of filing of the one refund claim at the end of a quarter, while the Division Bench of the Tribunal has considered the said condition.

3. In my view, the decision of Single Member Bench dt. 05/04/2017 has not considered view as has been arrived by the Division Bench in the case of Sitel India Ltd. As numerous appeals are pending in this Bench on this point of computation of time limit whether should be from the date of FIRC only or from the end of quarter of export of services and there being divergence of views of Tribunal, I deem it fit to direct the Registry to place this issue before the Hon'ble President and seek his advice for placing all these matters before Larger Bench to settle the question of law.

2. On the issue, various members of the Bar were heard as well as the learned ARs on behalf of the Revenue.

3. The submissions made by the lead counsel Shri V. Raghuraman, advocate is summarized below:-

i. Rule 5 of the CENVAT Credit Rules, 2004 (CCR) provides for refund of accumulated CENVAT credit if the same cannot be adjusted towards payment of duty of excise or service tax. The refund is to be allowed subject to the safeguards, conditions and limitations as specified by the Central Government. For this purpose, the Government initially issued Notification No. 5/2006-CE(NT) dt. 14/03/2006 specifying the relevant conditions. Rule 5 of the CCR was amended w.e.f. 01/04/2012. The Notification No. 5/2006 was also superseded by issue of Notification No. 27/2012-CE(NT)

dt. 18/06/2012. The Notification No. 5/2006 as well as the succeeding Notification No. 27/2012 provides for the refund claims to be filed on a quarterly basis. However, Export Oriented Units (EOUs) were given the option to file such claims once every calendar month.

ii. The issue under consideration before this Larger Bench is with reference to the time limit within which the refund claims under Rule 5 of CCR may be filed. Para 6 of the Notification No. 5/2006 (up to 17/06/2012) specifies that the refund claims may be made "before the expiry of the period specified in Section 11B of the Central Excise Act, 1944. (CEA)" In Notification No. 27/2012 , such specification is found in para 3(b).

The learned counsel submitted that Section 11B of the CEA provides for a time limit of one year from the "relevant date". But when the definition of relevant date is considered as per sub-clause 5(B) of Section 11B, it may be seen that in sub-clause (a) which is in respect of goods exported, the relevant date has been specified but as far as export of services is concerned, there is no applicable sub-clause. Hence the learned counsel argued that only the period of one year specified in Section 11B is relevant for the purposes of refund under Rule 5 of CCR, the relevant date should be ignored.

iii. The learned counsel referred to the Export of Services Rules, 2005 in which Rule 3(2) specifies that the taxable service shall be treated as 'export of service' only when the payment for such service is received by the service provider in convertible foreign exchange. Even for the earlier period when the Service Tax Rules, 1994 was in vague. Erstwhile Rule 6A specified the same condition.

The learned counsel argued that in view of the above, relevant date for export of services should be taken as the date of receipt of the consideration in foreign currency which is evidenced by FIRC.

He further submitted that an amendment to this effect was carried out subsequently by the Government in Notification No. 27/2012 vide Notification No. 14/2016 dt. 01/03/2016. However he also argued that such an amendment cannot be given retrospective effect since the same is not beneficial to the assesses. In this connection, he referred to the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-Tax Vs. Vatika Township P. Ltd. [(2014) 367 ITR 466 (SC)] (Constitutional Bench) wherein the Apex Court observed that while a law is enacted for the benefit of the community as a whole, it may be given the benefit retrospectively. But the provision imposing burden or liability can be viewed only prospectively.

He finally summed up his argument and submitted that the beneficial interpretation should be extended to the assesses as held by the Division Bench of the Tribunal in the case of CST, Mumbai-II Vs. Sitel India Ltd. [2016-TIOL-818-CESTAT-MUM] where the Bench held that refund claims can be filed within one year from the end of the quarter irrespective of the date of receipt of FIRCs in that quarter.

4. Shri Chidanand Urs, learned counsel contested the jurisdiction of the Single Member to make a reference for constitution of Larger Bench. It is his submission that in view of the decision of the Division Bench of the Tribunal in favour of the assesses, the Single Member is required to follow the same as per judicial propriety.

5. Shri M.S. Nagaraja, learned advocate while adopting the argument of Shri Raghuraman, relied on the decision of the Hon'ble Karnataka High Court in the case of mPortal India Ltd. [2012 (27) STR 134 (Kar.)] and submitted that provisions of Section 11B of the Act itself will be inapplicable for refund under Rule 5 of CCR.

6. Shri S. Ananthan, learned Chartered Accountant submitted that the provisions of Section 11B must be read and interpreted strictly. This Section applies only to a refund of excise duty or output service tax and does not apply to refund of unutilized CENVAT credit which is wholly governed by Rule 5 of CCR. Accordingly he submitted that the provisions of Section 11B is totally inapplicable under Rule 5.

7. We heard Dr. J. Harish, learned AR on behalf of the Revenue. His submissions are summarized below:-

i. The conditions, safeguards and limitations as far as refund of unutilized CENVAT credit under Rule 5 of CCR has been specified through Notification No. 5/2006 (for the period up to 17/06/2012) and subsequently by Notification No. 27/2012 (w.e.f. 18/06/2012). Both the notifications clearly specified that such refund claims shall be filed before the expiry of the period specified in Section 11B ibid. Accordingly, he submitted that the time limit specified in Section 11B cannot be ignored.

ii. The "relevant date" for determining the one year time limit under Section 11B is specified clearly in respect of export of goods. However the same has not been done in respect of export of services. However, in this connection, the amendment carried out in Notification No. 27/2012 by Notification No. 14/2016 (NT) dt. 01/03/2016 is relevant and is as follows:-

"(b) The application in the Form A along with the documents specified therein and enclosures relating to the quarter for which refund is being claimed shall be filed as under:

(i) in case of manufacturer, before the expiry of the period specified in section 11B of the Central Excise Act, 1944 (1 of 1944);

(ii) (ii) in case of service provider, before the expiry of one year from the date of-

(a) receipt of payment in convertible foreign exchange, where provision of service had been completed prior to receipt of such payment; or

(b) issue of invoice, where payment for the service had been received in advance prior to the date of issue of the invoice.".

iii. Since export of services is completed only with receipt of payment in foreign exchange, the date of such receipt may be taken as the relevant date for export of services. He submitted that there is no justification for extending this date till the end of the quarter.

iv. In respect of export of goods, the relevant date in Section 11B has been specified as the date of export of such goods. The details of export of services will be known to the assesses as soon as such export is done inasmuch as they are required to file ST3 returns periodically where all such details are furnished.

v. He summed up with the submission that the date of receipt of foreign exchange must be considered as the relevant date. In the view of Revenue, there is no justification to extend such date till the end of the quarter.

8. We have heard all connected parties in great length and perused the connected records. In the interest of bringing clarity to the issue on hand, we ignore the objection raised on jurisdiction and proceed to decide the issue on merit.

9. Rule 5 of the CENVAT Credit Rules, 2004 provides for refund of unutilized CENVAT credit, even after adjustment of the same for payment of duty of excise or service tax. The conditions, safeguards and limitations for consideration of such refund claims have been spelt out by the Government through notifications. Notification No. 5/2006 (up to 17/06/2012) and Notification No. 27/2012 (w.e.f. 18/06/2012) (as amended) has specified the conditions in this regard. These notifications specify that such refund claims are to be filed within the period specified in Section 11B. The relevant date specified under the above section leaves no room for doubt as far as export of goods is concerned. However as far as export of services is concerned, the various sub-sections specifying relevant date under Section 11B do not cover the case of export of services. Further the exporters of services have been given the option to file claims for such refunds once in a quarter and in respect of 100% EOUs, once in a month. The issue referred to Larger Bench is whether the time limit prescribed under Section 11B in respect of filing of refund claims is to be applied from the date of receipt of payment for export of services or can be considered from the end of the quarter in which such payments have been received.

10. After considering the provisions of the Notifications issued under Rule 5 of the CCR, we note that there is a specific condition that the refund claims are required to be filed within the period specified under Section 11B. Consequently, we are of the view that completely ignoring the provisions of Section 11B may not be appropriate. This view is supported by the decision of Hon'ble Madras High Court in the case of GTN Engineering (supra) wherein Hon'ble High Court has disagreed with the view expressed by Hon'ble Karnataka High court in the case of mPortal (supra) that Section 11B will have no application with respect to refund under Rule 5 of CCR.

11. The definition of relevant date in Section 11B does not specifically cover the case of export of services. Hence, it is necessary to interpret the provisions constructively so as to give it meaning such that the objective of the provisions; i.e. to grant refund of unutilized CENVAT credit, is facilitated. By reference to the Service Tax Rules, 1994 as well as the successor provisions i.e. the Export of Service Rules, 2005, we note that export of services is completed only with receipt of the consideration in foreign exchange. Consequently, the date of Foreign Inward Remittance Certificate (FIRC) is definitely relevant. The Hon'ble Andhra Pradesh high Court has held that the date of receipt of consideration may be taken as relevant date in the case of Hyundai Motors [2015 (39) STR 984 (AP)].

12. The related question for consideration is whether the time limit is to be restricted to the date of FIRC or can be considered from the end of the quarter. The Tribunal in the case of Sitel India Ltd. (supra) has observed that the relevant date can be taken as the end of the quarter in which FIRC is received since the refund claim is filed for the quarter.

13. Revenue has expressed the view that relevant date in the case of export of services may be adopted on the same lines as the amendment carried out in the Notification No. 27/2012 , w.e.f. 01/03/2016. Essentially after this amendment the relevant date is to be considered as the date of receipt of foreign exchange. While this proposition appears attractive, we are also persuaded to keep in view the observations of the Hon'ble Supreme Court in the case of Vatika Township (supra), in which the Constitutional Bench has laid down the guideline that any beneficial amendment to the statute may be given benefit retrospectively but any provision imposing burden or liability on the public can be viewed only prospectively. Keeping in view the observations of the Apex Court, we conclude that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.

14. With the above observations, we revert the matter to the regular Benches for deciding the respective appeals.