2015 (4) TMI 746 - AT - Service Tax

Denial of refund claim - Refund of unutilized CENVAT Credit - nexus with the output services which have been exported - input services of landscaping in their offices - erection of IT cables - setting up of modernization and renovation of premises - Held that - These services are having nexus to the output services provided to them - as per CBEC circular dated 19.01.2010 appellant are entitled for refund claim which was remained unutilized in their Cenvat Credit account due to export of services - Decision in the case of Tribunal in the case of KPMG Vs. C.C.E. New Delhi 2013 (4) TMI 493 - CESTAT NEW DELHI and Millipore India Pvt. Ltd (2011 (4) TMI 1122 - KARNATAKA HIGH COURT) followed - Decided in favour of assessee.

Summary

Issues:
Appeal against rejection of refund claim of Rs. 26,11,022 under Rule 5 of Cenvat Credit Rules, 2004 for exported services.

Analysis:
1. Nature of Services and Nexus: The appellant, a provider of output services, exported services and filed a refund claim for unutilized Cenvat Credit. The claim was denied citing lack of nexus between the contract services availed and the output services provided. The appellant argued that the services, such as landscaping, IT cables, and framework installations, were essential for modernization and renovation of premises to enhance the atmosphere for providing output services. The appellant relied on precedents and CBEC Circular to support the contention that these services qualified as input services related to setting up modernization, renovation, or repairs of premises for output services.

2. Opposing Contentions: The respondent opposed the claim, stating that the services availed had no direct connection with the output services provided by the appellant. The respondent highlighted the need for a harmonious interpretation of rules and circulars to establish the nexus between input and output services. The denial of the refund claim was based on the argument that the services did not impact the efficiency of providing output services, as per the CBEC circular.

3. Examination of Refund Claim: The Commissioner examined the case in detail, focusing on the nature of services availed and their impact on the provision of output services. The Commissioner noted that the Works Contract Services (WCS) for external development of premises lacked justification regarding their necessity for providing output services for export. The Commissioner referred to the CBEC circular to emphasize the importance of establishing a sufficient nexus between input services and the efficiency of providing output services.

4. Tribunal's Decision: The Tribunal reviewed the arguments and precedents, including the case of KPMG, to determine the eligibility of various input services for Cenvat Credit. The Tribunal held that services like common area management, maintenance, repairs, employee insurance, cab services, and car parking were eligible for Cenvat Credit. Additionally, the Tribunal referred to the High Court's decision in the case of Millipore India Pvt. Ltd., where landscaping services were considered part of modernization and renovation of office premises, thus having a nexus with the final product and output services. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting the refund claim with any consequential relief.

In conclusion, the judgment addressed the crucial issue of establishing a nexus between input services availed and the provision of output services for claiming Cenvat Credit. The detailed analysis of the services provided and their impact on enhancing the efficiency of output services played a significant role in determining the eligibility of the refund claim, ultimately resulting in the appeal being allowed in favor of the appellant.