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2015 (4) TMI 430 - AT - Service TaxRefund of cenvat credit - export of non-taxable servcies - Notification No. 5/2006-CE (NT) - information technology software service - Service became a taxable service from 16/5/2008 and therefore prior thereto no credit in respect of that service was admissible and no refund was admissible - Held that - under Rule 5 ibid refund of Cenvat credit is allowed only in respect of input services used in providing output service which is exported. Output service during the relevant period was to mean a taxable service as per definition under Rule 2 (P) ibid. Thus it is evident that prior to 6.5.2008 the appellants were not exporting any output service and therefore Rule 5 itself is not applicable in their case. Decision in the case of mPortal India Wireless Solutions.(P) Ltd 2011 (9) TMI 450 - KARNATAKA HIGH COURT and 2010 (7) TMI 92 - CESTAT BANGALORE distinguished. Cenvat credit is governed only and only by Cenvat credit Rules and therefore the above observation of CESTAT that this benefit is apparently not limited by provisions of Cenvat Credit Rules is devoid of any basis at all. In any case as CESTAT itself observed that this plea was not taken by the appellant and having regard to the fact that CESTAT also gave this finding rather tentatively as is evident form the word apparently appearing in that sentence it can not be inferred that CESTAT laid down any ratio to be followed as a precedent. - impugned order does not suffer from any legal infirmity and therefore the same is sustained - Decided against assessee.
Issues: Appeal against rejection of refund of input service credit for export of "service" prior to a specific date under Notification No. 5/2006-CE (NT).
Analysis: 1. The appellants, a 100% EOU (STPI Unit) exporting 'Information Technology Software Services,' sought a refund of input service credit under Notification 05/2006-CX(NT) for services exported before 16/5/2008. The rejection of their claim for the period prior to October 2007 was challenged based on payment of service tax on input services used for export during the non-taxable period. Reference was made to relevant judgments and Circular 54/2004-Cus. 2. Rule 5 of the Cenvat Credit Rules allows refund of Cenvat credit only for input services used in providing "output service" that is exported. The term "output service" during the relevant period referred to a "taxable service." As the appellants were not exporting any "output service" before 16/5/2008, Rule 5 was deemed inapplicable. Notification 5/2006-CE(NT) allows refund for input services used in providing "output service" that has been exported without service tax payment, which did not apply to the appellants' situation. 3. The reference to Board Circular No.54/2004-Cus clarified EOU's Cenvat credit facility but within the framework of Cenvat Credit Rules, which did not permit credit when no "output service" was provided. The judgments cited were analyzed, with the conclusion that they did not apply to the present case. The CESTAT judgment highlighted was found to lack a legal basis regarding Cenvat credit rules, and its observation was not considered as a precedent. 4. The judgment upheld the rejection of the refund claim, stating that the impugned order was legally sound. The appeal was dismissed on 13.3.2015.
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