2010 (6) TMI 452 - AT - Central Excise

Cenvat credit - refund of accumulated Cenvat credit - appellants (sic) (respondents) are STPI Units engaged in export of services - Revenue argued that the output services of the appellants are not taxable and therefore they cannot avail Cenvat credit in view of the specific prohibition contained in Rule 6(1) of Cenvat Credit Rules, 2004 - Held that - as per the provisions contained in the policy STPI Units are entitled to Cenvat credit of service tax paid on input services used in production of output services - As per Rule 5 of CCR, for any reason, if the assessee is not able to utilize the credit, it will be entitled for refund - respondents have made out a strong prima facie case for its entitlement to credit on the strength of the provisions contained in the Exim Policy - revenue s stay applications are rejected

Summary

Issues:
1. Stay application by revenue for orders impugned.
2. Entitlement to Cenvat credit for STPI Units engaged in export of services.
3. Interpretation of Rule 6(1) of Cenvat Credit Rules, 2004.
4. Eligibility for refund under Rule 5 of CCR.
5. Prima facie case for credit based on Exim Policy.
6. Decision on stay applications.

Analysis:
The judgment pertains to stay applications filed by the revenue challenging orders vacating the rejection of refund applications for accumulated Cenvat credit by STPI Units engaged in service exports. The revenue contended that the units were not entitled to credit as their output services were not taxable, citing Rule 6(1) of Cenvat Credit Rules, 2004. Conversely, the respondent argued that STPI Units could claim credit under the Exim Policy and be eligible for a refund under Rule 5 of CCR if unable to utilize the credit.

Upon examining the submissions, the Tribunal found that the respondents had established a strong prima facie case for credit entitlement based on the Exim Policy provisions. Consequently, the Tribunal declined to interfere with the impugned orders at that stage and rejected the stay applications. The cases were directed to be posted along with Appeal No. ST/591/2009 on a specified date. The decision was pronounced and dictated in open court, with the stay applications being the focal point of the judgment.