2016 (1) TMI 1130 - AT - Service Tax

Refund claim - unutilized Cenvat credit lying in the Cenvat Credit account - Air Travel Agent s Service, Architect Service, Business Auxiliary Service, Business Support Service, Banking and Financial Services, Courier Service, Chartered Accountant Services, Commercial Training & Coaching Service, Event Management Service, Erection, Commissioning Installation, General Insurance Service For Employees, Health Service, Interior Decorator, Information Technology Software Service, Legal Service, Management, Maintenance & Repairs Service, Management Consultancy Service, Manpower Recruitment & Supply Agency Service, Pandal & Shamiana Service, Renting of Immovable Property Service Rent and Amenities/ Facilities, Outdoor Catering Service, Online Information & Database Service, Real Estate Agent Service, Testing Inspection & Cetification Service, Works Contract Service - export of output services - availed credit of service tax paid on their input services utilized for providing output services - nexus between input and output services. Held that - all the services are essential services for providing output services. Appellants are exclusively engaged in export of services and no service are provided domestically. Therefore use of all the above services and expenditure thereof born by the appellant are essential services for providing output services. In my prima facie view, appellants are entitle for refund of service tax paid on the above input services in view of various judgments of Hon ble High Court and Tribunal. I have also observed that in some of the similar services appellants have been sanctioned refund claim therefore in the present case on the same services rejection of refund claim is not legal and proper. As regard appeal No. ST/ 85008/ 15-MUM for the period April, 2010 to June, 2010 of Thane unit wherein credit was availed on the capital goods for an amount of ₹ 1,24,924/- , I find that as per the Rule 5 and Notification No. 5/2006-CE(NT) issued thereunder refund is eligible only in respect of excise duty/ service tax suffered on input/ input services used in export of goods, refund of excise duty paid on capital goods is not admissible in terms of Rule 5 of the CC Rules, 2004 and Notification issued there under. This position has been fairly conceded by the Ld. Counsel therefore Appeal No. ST/ 85008/ 15-MUM liable to be dismissed. - Partly appeals disposed of by way of remand

Summary

Issues Involved:
1. Nexus of input services with export of output services.
2. Eligibility of input services under the definition of 'input service.'
3. Admissibility of refund claims for service tax paid on input services.
4. Admissibility of refund claims for excise duty paid on capital goods.

Detailed Analysis:

1. Nexus of Input Services with Export of Output Services:
The appellants argued that all the services utilized were directly related to providing and exporting their output services. They cited multiple judgments to support their claim that similar services were deemed eligible for Cenvat credit. The services in question included Air Travel Agent Services, Architect Services, Business Auxiliary Services, and others. The Tribunal noted that the appellants were exclusively engaged in exporting services and that the use of all the mentioned services was essential for providing their output services.

2. Eligibility of Input Services Under the Definition of 'Input Service':
The appellants contended that the services they availed fell within the definition of 'input service' as per the Cenvat Credit Rules. This included services like General Insurance for employees, Legal Services, and Management Consultancy Services, among others. The Tribunal reviewed the nature and use of these services and found that they were indeed essential for the appellants' business operations, thereby qualifying as input services. The Tribunal also considered amendments to the definition of 'input service' effective from 1/4/2011, which excluded services for personal use of staff and employees.

3. Admissibility of Refund Claims for Service Tax Paid on Input Services:
The Tribunal acknowledged the appellants' reliance on various case laws where Cenvat credit was allowed for similar input services. It was noted that in some instances, the appellants had already received refunds for similar services, making the rejection of the current claims inconsistent. The Tribunal directed the adjudicating authority to re-process the refund claims and issue a denovo adjudication order, considering the Tribunal's observations.

4. Admissibility of Refund Claims for Excise Duty Paid on Capital Goods:
The appellants conceded that as per Rule 5 of the Cenvat Credit Rules, 2004, and the relevant Notification, refunds are only admissible for input services and not for excise duty paid on capital goods. Consequently, the Tribunal dismissed the appeal concerning the refund claim for excise duty paid on capital goods.

Conclusion:
The Tribunal concluded that the appellants were prima facie entitled to refunds for the service tax paid on input services used in the export of output services. The adjudicating authority was directed to re-process and re-adjudicate the refund claims accordingly. However, the appeal related to the refund of excise duty on capital goods was dismissed. All sixteen appeals were remanded to the Original Adjudicating authority for further action in line with the Tribunal's findings, except for the appeal concerning capital goods, which was dismissed.