2016 (12) TMI 1644 - AT - Service Tax

100% EOU - refund claim - export of services - Rule 5 of CCR 2004 - refund denied on the ground that the services on which refund has been claimed do not fall in the definition of input service as contained in Rule 2(l) of CCR - Held that - it is quite clear that the appellant is eligible for the benefit of refund in respect of services in dispute considering various judgements mentioned - the matter is remanded to the original adjudicating authority for considering the refund claim in accordance with law as regards other aspects except the eligibility in respect of services - appeal allowed by way of remand.

Summary

Issues Involved:
1. Denial of refund claim under Rule 5 of CENVAT Credit Rules (CCR), 2004.
2. Classification of services as 'input services' under Rule 2(l) of CCR, 2004.
3. Eligibility for refund of CENVAT credit on various services utilized by the appellant.

Issue-wise Detailed Analysis:

1. Denial of Refund Claim Under Rule 5 of CENVAT Credit Rules (CCR), 2004:
The appellant, a 100% Export Oriented Unit (EOU) engaged in software development and customer care services, filed refund claims for the periods January-March 2007 and April-June 2007 under Rule 5 of CCR, 2004. The assessing authority partially sanctioned the refund and rejected a significant portion, leading to the appellant's appeal. The Commissioner (A) upheld the rejection, prompting the present appeal.

2. Classification of Services as 'Input Services' Under Rule 2(l) of CCR, 2004:
The core issue revolves around whether the services on which the refund was claimed qualify as 'input services' under Rule 2(l) of CCR, 2004. The appellant argued that the services in question are critical for their business operations and should be considered input services. The services include Management Consultants Services, Erection, Commissioning & Installation Services, Real Estate Agents, Outdoor Catering Services, Rent a Cab Services, Event Management Services, Architects, Security Agency Services, Manpower Recruitment Services, Clearing and Forwarding Agent Services, Management Maintenance and Repairs, Courier Services, Commercial Training/Coaching Services, and Banking and Financial Services.

3. Eligibility for Refund of CENVAT Credit on Various Services Utilized by the Appellant:
The appellant provided a detailed table listing the services, their nexus to business activities, and relevant case laws supporting their claims. The Tribunal examined the table and found that the services indeed qualify as input services based on their nature and utilization in the business. The Tribunal referenced several precedents, including the appellant's own case and other similar cases, to support the admissibility of the credit.

Specific Services and Precedent Decisions:
- Management Consultants Services: These services are critical for statutory compliance, finance, and project management. Precedent cases include Juniper Networks India Pvt. Ltd. and Deloitte Tax Services India Private Limited.
- Erection, Commissioning & Installation Services: Essential for IT and ITES services, supported by cases like Dell International Services India P. Ltd.
- Real Estate Agents: Brokerage charges for office premises, supported by Deloitte Tax Services India Private Limited.
- Outdoor Catering Services: Necessary for round-the-clock operations, supported by Deloitte Tax Services India Private Limited.
- Rent a Cab Services: Essential for employee transportation, supported by Glyph International Ltd.
- Event Management Services: For business discussions and employee welfare, supported by Dell International Services India P. Ltd.
- Architects: Essential for product design, supported by M/s. Kipp (India) Pvt. Ltd.
- Security Agency Services: Critical for safeguarding confidential data and assets, supported by C. Cubed Solutions Private Limited.
- Manpower Recruitment Services: Essential for labor procurement, supported by C. Cubed Solutions Private Limited.
- Clearing and Forwarding Agent Services: Necessary for importing networking equipment, supported by C. Cubed Solutions Private Limited.
- Management Maintenance and Repairs: For maintaining equipment and buildings, supported by Capiq Engineering Pvt. Ltd.
- Courier Services: For exporting necessary documents, supported by Capiq Engineering Pvt. Ltd.
- Commercial Training/Coaching Services: For training employees, supported by Deloitte Tax Services India Private Limited.
- Banking and Financial Services: Essential for business operations, supported by M/s Convergys India Pvt. Ltd.

Conclusion:
After considering the submissions and judgments cited, the Tribunal concluded that the appellant is eligible for the refund of CENVAT credit on the disputed services. The appeal was allowed, and the matter was remanded to the original adjudicating authority for further consideration in accordance with the law, except for the eligibility of the services, which was affirmed. The judgment was pronounced in open court on 16/12/2016.