2015 (3) TMI 1104 - AT - Service Tax

Denial of refund claim - export of service or not - Notification No.5/2006-CE(NT) read with Rule 5 of CENVAT Credit Rules - Accumulated CENVAT Credit - Held that - as a result of providing of marketing and warranty support, the benefit of intermediate sales and benefit of sales goes to Sun Microsystems, Singapore and therefore it cannot be said that the service has not been exported at all. Commissioner has considered the provisions of Export of Services Rules and has held that the service has to be considered as performed in India, he has failed to take note of the fact that there is a specific provision in the Export of Services Rules providing that where a service is partly performed outside India and partly performed in India, it is considered as performed abroad. In this case, when marketing service is provided or warranty service is provided from India, the original request had gone to Sun Microsystems Singapore and or the appellant would have received the request as an agent to Sun Microsystems, Singapore and therefore it has to be held as partly performed in India and partly performed outside India. Therefore it has to be observed that appellant has rendered export of service. - Decided in favour fo assessee.

Summary

Issues:
1. Refund claim for CENVAT credit on input services under Notification No.5/2006-CE(NT) read with Rule 5 of CENVAT Credit Rules.
2. Rejection of refund claim based on the absence of export of service and the possibility of utilizing CENVAT credit for tax payment.

Analysis:
1. The appellant filed a refund claim for CENVAT credit taken on input services from October 2008 to February 2009. The claim was rejected citing two main grounds. Firstly, it was contended that there was no export of service as per the Export of Service Rules. The appellant argued that the services provided to Sun Microsystems, Singapore, including marketing and warranty support, should be considered as exported services. Citing a previous decision, the appellant highlighted that services performed partly outside India should be considered as performed abroad. The Tribunal agreed with the appellant's argument, emphasizing that service tax is a destination-based tax and that the appellant's services were used outside India, leading to the conclusion that the services were indeed exported.

2. The second ground for rejection was that the appellant could have utilized the accumulated CENVAT credit for tax payment. The appellant clarified that they had paid service tax in cash as required by law, and the entire amount was paid by them as a recipient of service. The appellant argued that if the law mandates service tax to be paid in cash, the available CENVAT credit cannot be used. The Tribunal concurred with the appellant's stance, stating that the rejection of the claim on this ground was not sustainable. Consequently, the appeal was allowed, granting relief to the appellant along with any consequential benefits.

In conclusion, the Tribunal's judgment favored the appellant by accepting their arguments regarding the export of services and the inability to utilize CENVAT credit for tax payment. The detailed analysis of the issues involved in the refund claim highlighted the legal nuances and interpretations of relevant rules, leading to the decision in favor of the appellant.