2015 (12) TMI 745 - AT - Service Tax

Denial of refund claim - Rule 5 of the Cenvat Credit Rules, 2004 - Accumulated CENVAT Credit - Held that - refund claim sought to be denied on the premise that input service credit availed by the appellant does not fall under Rule 2(l) of Cenvat Credit Rules, 2004. As the appellant is an exporter of service and all the services have been availed by them in their activity of export of service the Cenvat credit lying in their account unutilized. It is not the case that the appellant has availed inadmissible Cenvat credit. The services availed by the appellant also do fall under the exclusive clause of 2(l) of Cenvat Credit Rules, 2004. In these circumstances, I hold that appellant is entitled for refund claim as claimed by them on merits as the services have been availed by the appellant for export of services. Therefore, I set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection under Rule 5 of Cenvat Credit Rules, 2004 based on non-conformance of input service credit with Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis:
The appellant, engaged in providing Software Development Products and promotional activities for foreign clients, filed a refund claim under Rule 5 of the Cenvat Credit Rules, 2004 for unutilized credit in their account. The claim was rejected on the grounds that the input service Event Management does not meet the criteria of Rule 2(l) of the Cenvat Credit Rules. While part of the claim was allowed, the balance was disallowed due to services not falling under Rule 2(l). The appellant argued that they are entitled to the refund under Rule 5 without a show cause notice, as they correctly availed Cenvat credit under Rule 3. They contended that the services were exclusively used for promoting foreign clients' products, meeting the criteria of Rule 2(l). The AR, however, claimed the services were unrelated to exports, thus not refundable.

Upon review, it was found that the appellant, an exporter of services, had accumulated unutilized credit from services used in their export activities. No inadmissible credit was availed, and the services met the exclusive clause of Rule 2(l). Consequently, the appellant was deemed eligible for the refund as the services were utilized for export purposes. The impugned order was set aside, and the appeals were allowed with consequential relief.