2017 (4) TMI 1238 - AT - Central Excise

CENVAT credit - case of Revenue is that that the respondent-assessee during the material period was not providing any taxable service in the terms of Finance Act, 1994 and hence it could not be considered as an output service provider as per Rule 2(p) of CCR 2004 and hence there was no input service on which Cenvat credit of service tax could be taken under Rule 2 (l)(i) and rule 6 (1) of CCR, 2004 - Held that - The said ground is not sustainable for the reason that had such Cenvat credit been not admissible, the Revenue could have issued SCN for recovery of such inadmissible Cenvat credit whereas the fact is that no such show cause notices were issued for recovery of said Cenvat credit - the refund of Cenvat credit taken by the manufacturer or provider of taxable service, is admissible - appeal dismissed - decided against Revenue.

Summary

Issues:
- Admissibility of Cenvat credit for services provided by a 100% EOU under Business Auxiliary Services category.
- Interpretation of Rule 2(p) of CCR 2004 regarding output service provider status.
- Validity of refund claims filed by the respondent for exported services.

Analysis:

The Appellate Tribunal CESTAT, ALLAHABAD heard an appeal filed by the revenue against an Order-in-Appeal passed by the Commissioner of Central Excise & Customs (Appeals), Noida. The respondent, a 100% EOU registered for providing Business Auxiliary Services to its parent company in the USA, filed refund claims under Rule 5 of CCR for services exported to the USA. The revenue contended that the respondent was not providing taxable services during the material period, challenging the admissibility of Cenvat credit under Rule 2(p) of CCR 2004 and Rule 6(1) of CCR, 2004.

The Tribunal found the revenue's grounds unsustainable as no show cause notices were issued for recovery of the allegedly inadmissible Cenvat credit. The Tribunal clarified that the refund of Cenvat credit is admissible to both manufacturers and providers of taxable services. Therefore, the ground that the respondent was not an output service provider as per Rule 2(p) of CCR 2004 was deemed misconceived. Consequently, the Tribunal dismissed the revenue's appeal, ruling in favor of the respondent-assessee and entitling them to consequential benefits as per the law.

In conclusion, the Tribunal upheld the validity of the refund claims filed by the respondent for services exported to the USA, emphasizing the admissibility of Cenvat credit for services provided by a 100% EOU under the Business Auxiliary Services category. The judgment clarified the interpretation of Rule 2(p) of CCR 2004 and highlighted the importance of issuing show cause notices for challenging the admissibility of Cenvat credit.