In Service Tax Appeal No. 40017 of 2014 – CESTAT - Services for testing raw materials eligible for refund, as they have nexus with manufacturing of finished products: CESTAT (Chennai)
Members Sulekha Beevi C.S. (Judicial) & M. Ajit Kumar (Technical) [30-05-2023]

Read Order: R.K. Industries IV v. Commissioner of GST & Central Excise

Chahat Varma

New Delhi, June 1, 2023: The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled that services used for testing of raw materials, are eligible for credit or refund, as they have a nexus with the manufacturing of finished products.

Brief facts were that the appellants, engaged in manufacture of ready-made garments, had filed refund claim in terms of Notification No.17/2009-ST dated 07.07.2009 for refund of service tax paid by them on services provided to them by Custom House Agents, Technical Testing and Analysis Agencies. The refund claim was rejected on two grounds. Firstly, that it was time-barred. Secondly, that the conditions set out in the notification had not been fulfilled by the appellant.

The two-member bench reviewed para 2(f) of Notification No. 17/2009, which stated that the refund claim had to be filed within one year. The bench held that the rejection of the entire claim for a quarter solely based on a few shipping bills beyond the one-year limit was not justified. They held that the invoices filed within the one-year period should have been considered for the respective quarters. The issue was remanded back to the adjudicating authority with directions to examine the shipping bills within the one-year time limit.

The bench further noted that the Notification did not impose any conditions regarding refund claims specifically related to testing and analysis services. Consequently, the rejection of the refund claim on the grounds that the services were utilized for testing raw materials was not deemed acceptable by the Tribunal.

The bench concluded that when there was no dispute with regard to the services availed and the service tax paid, the rejection of refund was without any basis.