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2014 (4) TMI 288 - AT - Service TaxCalculation of refund - Formula given in Rule 5(1) of the Cenvat Credit Rules, 2004 - Held that - it was the case of the appellant that 100% of the credit with respect to Services Exported should be refundable under Rule 5 of the Cenvat Credit Rules, 2004. There is no evidence on record that appellant has taken any input service tax with respect to exempted services exported out of India. As per the definition of Export Output of Services , given in Clause (D) of Rule 5(1) of the Cenvat Credit Rules, 2004, no distinction is made with respect to payments received from export of services. Further, the logic of giving cash refund of taxes used, in relation to export of goods/ services under Rule 5 of Cenvat Credit Rules, 2004, is to have Zero rated exports. In the case of the appellant, no exempted service is provided in the domestic tariff area. Therefore, even exempted export services will required to be added to the Export turnover of services and all the unutilised service tax credit pertaining to exported service will be admissible as refund under Rule 5 of the Cenvat Credit Rules, 2004 - Following decision of Zenta Pvt. Limited vs. CCE, Mumbai 2012 (6) TMI 606 - CESTAT, MUMBAI - Decided in favour of assessee.
Issues:
Calculation of refund under Rule 5 of the Cenvat Credit Rules, 2004 for unutilized CENVAT credit on exported services. Analysis: The appellant, engaged in providing I.T. enabled services, filed appeals against six Order-in-Appeal Nos. challenging the calculation of refund claim amount by the Revenue. The main argument by the appellant was that the value of Technical Testing and Analysis Services should be added to both 'Export Turnover' and 'Total Turnover' as per the provisions of Notification No. 7/2010-CE (NT). The appellant contended that all services exported, whether dutiable or exempted, should be included in the turnover calculations. Additionally, it was emphasized that no services were provided to the Domestic Tariff Area (DTA), and all services were exported, warranting full refund of unutilized CENVAT credit as per Rule 5 of the Cenvat Credit Rules, 2004. The Revenue, represented by the AR, argued that exempted services exported should only be included in the total turnover, not the Export Turnover, as no service tax credit is admissible for exempted services. The AR supported the order passed by the first appellate authority. Upon hearing both sides and examining the case records, the Tribunal focused on the calculation of refund under Rule 5(1) of the Cenvat Credit Rules, 2004. The formula for refund amount was considered, which involves the Export turnover of goods and services divided by the Total turnover, multiplied by the Net CENVAT credit. The definitions of Export turnover of services and Total turnover were crucial in determining the refund calculation. The Tribunal agreed with the appellant's argument that 100% of the credit related to Services Exported should be refundable under Rule 5 of the Cenvat Credit Rules, 2004. It was noted that there was no evidence of the appellant taking input service tax for exempted services exported. The definition of 'Export Output of Services' did not differentiate based on payments received, supporting the inclusion of all exported services in the turnover calculations. The Tribunal highlighted the concept of 'Zero rated' exports and concluded that even exempted export services should be added to the Export turnover of services, allowing for the refund of all unutilized service tax credit on exported services. In light of these considerations, the appeals filed by the appellants were allowed, providing them with consequential relief as deemed necessary.
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