Order – 15 March 2024

Parties: Nico Extrusions Ltd Vs Commissioner of C.E. & S.T.-Daman

Facts –

• The Appellant, Nico Extrusions Ltd, had paid the service tax on the ocean freight on 25.01.2018 for the period January, 2017 to June, 2017 on the insistence of the audit party. Since the appellant was entitled for the Cenvat credit of the service tax paid on the ocean freight on the reverse charge mechanism, they have claimed the refund.
• The same was rejected by the Adjudicating Authority on the ground that since the amount of service tax was paid on insistence of the audit party, there is suppression of fact and in terms of Rule 9 (1) (bb) of Cenvat Credit Rules, 2004, the appellant is neither entitled for the Cenvat credit nor for the refund of the said amount.

Issue –

• Whether appellant is entitled to refund of ocean freight paid on the insistence of the audit party?

Order –

• The Tribunal observed that the service tax on ocean freight was paid by the appellant only on insistence by the audit party whereas levy of service tax on the ocean freight was debatable and various litigation were going on and finally it was held that ocean freight is not liable to service tax, despite this the appellant have paid the service tax on the ocean freight alongwith interest.
• Moreover, the appellant was not issued any show cause notice invoking the extended period for demand of service tax, interest and equal amount of penalty, this itself shows that there is no suppression of fact on the part of the appellant in payment of service tax on the ocean freight.
• Accordingly, the appellant was entitled for the Cenvat credit and therefore, they were also entitled for the consequential refund of the service tax along with interest paid on ocean freight. The appellant is also entitled for interest on refund amount in terms of Section 11BB of Central Excise Act, 1944 since there is delay in giving refund.