For quarterly refund claims, Rule 5 limitation expires at the end of the FIRC-receipt quarter.

M/s Mobility App Consultant, an advertising agency and provider of export services, sought refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004.

The refund applications, relating to two quarters and covering 18 Foreign Inward Remittance Certificates (FIRCs) received between 1 January 2017 and 30 June 2017, claimed ₹5,03,878.

The adjudicating authority treated the claims as time-barred, except for ₹4,357, and rejected the balance claim of ₹4,99,521.

The Commissioner (Appeals) upheld the rejection on the basis that the applications were not filed within one year from the dates of receipt of the respective FIRCs.

The assessee appealed before the CESTAT, relying on the Larger Bench decision in Span Infotech Pvt. Ltd., which held that, where refund claims are filed quarterly, limitation is to be computed with reference to the end of the quarter in which the FIRC is received.

Whether the limitation period for claiming refund of accumulated CENVAT credit under Rule 5, in respect of export of services, is to be computed from the date of receipt of each FIRC or from the end of the quarter in which the FIRC was received, where refund claims are filed quarterly?

Whether the principle laid down in Span Infotech Pvt. Ltd. continues to apply to FIRCs received after the amendment introduced by Notification No. 14/2016-CE (NT) dated 1 March 2016?

Rule 5 of the CENVAT Credit Rules, 2004 governs refund of accumulated CENVAT credit attributable to exported services and prescribes the applicable formula and limitation framework.

Clause 2 of Notification No. 27/2012-CE (NT) permitted the claimant to file one refund application for each quarter.

In Span Infotech Pvt. Ltd., the Larger Bench held that, for quarterly refund claims relating to export of services, the relevant date for limitation is the end of the quarter in which the FIRC is received, rather than the individual date of receipt of the FIRC.

Notification No. 14/2016-CE (NT), dated 1 March 2016, amended the earlier notification; however, the Tribunal held that the principle in Span Infotech remained applicable even after the amendment.

The Tribunal held that computing limitation separately from the date of each FIRC would conflict with the statutory and procedural scheme permitting only one refund application per quarter.

Such an interpretation could effectively extinguish the claimant’s right to include certain FIRCs in a quarterly claim, particularly where an FIRC was received close to the end of the quarter, because the one-year period might expire before the claimant could file the permitted quarterly application.

The Department’s contention that Span Infotech was confined to the period before 1 March 2016 was rejected.

The Tribunal noted that the Larger Bench had considered the effect of the amendment and had concluded that the relevant date remained the end of the quarter in which the FIRC was received, where the assessee filed refund claims quarterly.

Since the appellant had declared that it filed returns and refund claims on a quarterly basis, the claims could not be rejected as time-barred merely because more than one year had elapsed from the dates of individual FIRCs.

It held that, for quarterly refund claims under Rule 5, limitation is computed from the end of the relevant quarter in which the FIRC was received, and that this principle applies notwithstanding Notification No. 14/2016-CE (NT) dated 1 March 2016.

The appellant was held entitled to the refund with applicable interest, and the Department was directed to make payment within two months from communication of the order.