Rejection of refund on flimsy grounds would defeat the purpose of rebate schemes

The CESTAT Kolkata ruled that rejecting an exporter's refund claim on minor technicalities, such as not being registered with a specific Export Promotion Council, defeats the purpose of government rebate schemes designed to boost exports. The court found that the exporter had met the core conditions for the refund, and denying it based on registration with a recognised Trade Promotion Organisation would lead to unnecessary litigation and hinder export competitiveness.

The CESTAT, Kolkata in the matter of M/s Sethia Oils Ltd. v Commissioner of CGST & Excise, Kolkata North [Final Order No.75397/2022 dated July 13, 2022] has held that rejection of refund claimed by the exporter on flimsy grounds would defeat the purpose of rebate scheme and traps the exporters under unnecessary litigations.

Facts

This appeal has been filed by M/s Sethia Oils Ltd ("the Appellant") against the Order- in- Appeal ("the Impugned Order") passed by the Commissioner (Appeals) of CGST & Excise, Kolkata rejecting the refund claimed by the Appellant on the ground that exporter should be registered with the "Export Promotion Council" and being registered with "the Solvent Extractor's Association of India" which is a Trade Promotion Organisation ("TPO") ,would be of no help in getting the benefit of theProvision as per Para 3(h) of [Notification No.41/2012-ST dated June 29, 2012- (Rebate of service tax paid)]. Aggrieved by the impugned order, the Appellant filed an appeal in the CESTAT.

The Appellant contented that they are registered with TPO recognized and sponsored by the Government of India, Ministry of Commerce for export of "De-Oiled Rice Bran" and hence the condition of Provision as per Para (3)(h) of the Notification No.41/2012-ST dated June 29,2012was satisfied.

Issue

• Whether the Appellant is eligible for the refund claim without having registration with "Export Promotion council"?

Held

The CESTAT, Kolkata in [Final Order No.75397/2022 dated July 13,2022] has held as under:

• Observed that, there is no dispute that the goods were exported by the Appellant, and Service Tax was actually paid on export activity, in terms of the broad scheme of refund. Accordingly, refund must be granted to the Appellant.
• Stated that, the sole intention of the government to bring out these rebate schemes is to promote the exporters to compete with the global market exporters.
• Held that, the Impugned Order cannot be sustained as substantive benefit should not be denied to Appellant if the conditions are fulfilled and rejecting refund on flimsy grounds would defeat the purpose of rebate scheme and trap the exporters under unnecessary litigations.