2013 (12) TMI 1375 - AT - Service Tax

Rejection of rebate claim - Notification No. 12/2005-S.T., dated 19-4-2005 - Input services used in development of software exported out of India - Availment of CENVAT Credit - Held that - The input services in respect of which rebate has been claimed are internet/telecommunication services, housekeeping services, professional services, outdoor catering services, renting of immovable property services, maintenance & repair services, security agencies services, rent-a-cab operator services, etc. In my view all these services would be necessary input for a software unit and hence, it would be totally incorrect to deny rebate on the ground that the same are not the services required for development of software more so, when during the period prior to the period of dispute and they paid after the period of dispute, the department has been granting rebate in respect of these very services. Appellant are a 100% EOU i.e. a STP unit and their domestic transactions are rare, there would not be no occasion for them to utilize the Cenvat credit if any availed when it is not the case of the Department that they have also claimed cash refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004. It would not be correct for the department to conclude that they have availed Cenvat credit just on the basis of Col. 5b of the ST-3 Return without checking the records, which are required to be maintained by the appellant for availment of Cenvat credit in respect of the provisions of Rule 9(6) of the Cenvat Credit Rules, 2004. The availment of Cenvat credit in respect of input or input services is a matter of fact which has to be verified from the records maintained by the appellant and no inferences can be drawn in this regard merely from the ST-3 Returns, when the appellant, from the very beginning are pleading that the entry in Col. 5b regarding availment and utilization of the Cenvat credit was made by them due to mistake and that the figures regarding utilization of Cenvat credit mentioned in this col. is actually the figure of rebate claim which has been granted to them. Matter is remanded back to the original adjudicating authority for deciding the rebate claim filed by the appellants afresh. If from the records maintained by the appellant, it is clear that they have not availed any Cenvat credit the rebate claim would have to be accepted - Decided in favour of assessee.

Summary

Issues:
1. Rejection of rebate claim based on non-availment of Cenvat credit.
2. Denial of rebate on the ground of input services not being utilized for export services.
3. Dispute regarding the appellant's claim of not availing Cenvat credit.
4. Validity of Chartered Accountant's certificate in confirming non-availment of Cenvat credit.

Analysis:

1. The appellant, a 100% Export Oriented Unit engaged in software development for export, filed a rebate claim for service tax and excise duty paid on inputs. The claim was rejected due to alleged availing of Cenvat credit as per ST-3 Returns. The appellant contended that the figures were mistakenly mentioned and produced a Chartered Accountant's certificate confirming no Cenvat credit availed. The Tribunal held that mere mention in ST-3 Returns does not prove availing of credit, directing a fresh examination of rebate claim.

2. The department also denied rebate on the basis that the input services claimed were not utilized for providing export services. The Tribunal disagreed, stating that the services like internet/telecommunication, housekeeping, etc., were necessary inputs for a software unit. The Tribunal found no valid grounds for denial, especially when rebate for similar services was granted before and after the disputed period.

3. The appellant consistently maintained not availing Cenvat credit, emphasizing their rare domestic transactions. The Tribunal observed that without concrete evidence contradicting the appellant's claim, presumption of availing credit based on ST-3 Returns alone was unjustified. The onus was on the department to verify records before concluding availing of credit.

4. The Tribunal highlighted the importance of the Chartered Accountant's certificate in confirming non-availment of Cenvat credit. Referring to precedent, the Tribunal stressed that unless countered by contradictory evidence, such certificates should hold weight. The validity of the certificate was to be considered during the fresh adjudication, emphasizing the need for a thorough examination of records.

In conclusion, the Tribunal set aside the impugned order, remanding the matter for fresh adjudication. The original authority was directed to complete the process within three months, emphasizing the necessity to verify records to determine the validity of the rebate claim and the Chartered Accountant's certificate.