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2015 (5) TMI 774 - AT - Service TaxDenial of refund claim - Notification No. 5/2006-CE (NT) dated 14/03/2006 - nexus between the exported output service and the input services utilised - Held that - Nowhere in Rule 5 of the CCR, 2004, is there any condition of establishing a nexus between the input service credit taken and the output service exported. Notification No. 5/2006-ST also does not stipulate any such condition. So long as the credit is admissible and has been taken and lying accumulated and the exporter is unable to utilise the credit, he is eligible for refund of the accumulated credit. This is the whole purpose and aim of Rule 5 of the CCR Rule, 2004. The board s clarification also makes this point very clear. The decisions of this Tribunal in the case of Capiq Enigneering Pvt. Ltd. 2008 (10) TMI 84 - CESTAT, AHMEDABAD and Amdocs Business Services Pvt. Ltd. 2013 (9) TMI 31 - CESTAT MUMBAI also support this view - impugned order passed by the lower appellate authority cannot be faulted at all - Decided against Revenue.
Issues:
Refund of Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) - Nexus between exported output service and input services for refund eligibility. Analysis: The appeal challenged Order-in-Appeal No.PUN-EXCUS-001-APP-113-13-14 allowing refund of Rs. 23,87,705 to the respondent under Rule 5 of the Cenvat Credit Rules, 2004. The revenue contended that a nexus between the exported output service and the input services utilized must be established for refund eligibility under Notification No. 5/2006-CE (NT). The respondent, M/s. Emerson Innovation Center, Pune, argued that Rule 5 and the notification do not require such a nexus. They availed input service credit in October 2011 for services imported between May 2008 and September 2011, seeking a refund for exports made from October to December 2011. The respondent emphasized that as long as the credit is admissible and unutilized, refund can be claimed under Rule 5. They cited Tribunal decisions and a CBEC Circular supporting their stance that no direct correlation between input service credit and exported output service is necessary for refund eligibility. The Tribunal, after considering the arguments, highlighted that neither Rule 5 of the Cenvat Credit Rules, 2004, nor Notification No. 5/2006-CE (NT) impose a requirement to establish a nexus between input service credit and exported output service for refund eligibility. As long as the credit is admissible, accumulated, and unutilized, exporters are entitled to claim a refund under Rule 5. The Tribunal emphasized that the purpose of Rule 5 is to allow refunds for unutilized credits, as clarified by the CBEC Circular. The Tribunal also referenced previous decisions supporting this interpretation. Consequently, the Tribunal upheld the lower appellate authority's decision to allow the refund to the respondent, dismissing the Revenue's appeal for lacking merit. In conclusion, the judgment clarifies that under Rule 5 of the Cenvat Credit Rules, 2004, and Notification No. 5/2006-CE (NT), exporters can claim refunds for unutilized credits without the necessity of establishing a direct nexus between input service credit and exported output service. The decision reaffirms that as long as the credit is admissible and remains unutilized, exporters are eligible for refunds, aligning with the purpose of facilitating exports and zero-rating them.
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