2015 (1) TMI 956 - AT - Service Tax

Denial of refund claim - CENVAT Credit - Nexus with manufacturing activity - Held that - In all these cases, the services are having a nexus with the manufacturing activity from the place of removal as was required during the relevant time. In the case of export of goods on FOB basis, the place of removal has to be treated as the port and substantial portion of the service relates to freight outward, CHA inward, security charges, building service charges etc. Since the port is considered as place of removal, freight outward upto the place of removal would be a eligible service and freight inward in any case is eligible and CHA charges also relating to inputs would be eligible. After consideration of various services listed in the year, I find that appellant is eligible for the refund and in any case the policy of Government is not to export taxes. Under these circumstances, I do not find any merit in the appeal filed by the Revenue - Decided against Revenue.

Summary

Issues:
1. Refund claim allowed for various services
2. Nexus of input services with manufacturing activity
3. Eligibility for refund under Notification No.05/2006-CE(NT) dt. 14/03/2006

Analysis:
1. The judgment concerns a dispute where the Revenue challenged the lower authorities' decision to allow a refund claim filed by the respondent for a range of services, including AMC charges, calibration, CHA inward and outward, freight inward and outward, security charges, testing charges, telephone charges, housekeeping, statutory audit fees, consulting charges, traveling expenses, and more. The appellant contested that the input services lacked a nexus with manufacturing activities and that the refund should not have been granted based on the premise that the services were used directly or indirectly in relation to manufacturing.

2. The Tribunal, after hearing the arguments presented by the Revenue, analyzed the nature of the services in question and their connection to the manufacturing process. It was established that the services had a nexus with the manufacturing activity, especially in cases of export where the place of removal was considered as the port. Notably, services like freight outward, CHA inward, security charges, and building service charges were deemed eligible as they were directly related to the export process. The Tribunal emphasized that the policy of the Government was to not export taxes, further supporting the eligibility of the appellant for the refund. Consequently, the Tribunal found no merit in the Revenue's appeal and rejected it.

3. The judgment also addressed the issue of eligibility for refund under Notification No.05/2006-CE(NT) dated 14/03/2006. It was acknowledged that the appellants had fulfilled the necessary conditions for claiming the refund under the said notification. The Tribunal's decision to allow the refund was based on the understanding that the services in question were indeed linked to the manufacturing activity, particularly in the context of export transactions where the port served as the place of removal. This interpretation aligned with the policy direction of not taxing exports and supported the appellant's entitlement to the refund.