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2019 (6) TMI 1494 - AT - Service Tax100% EOU - Refund of unutilised CENVAT Credit - rejection of refund on the ground that appellant has not established the nexus of the input services with the output services provided - second ground for rejection of refund is that the ITSS services and Consulting Engineering Services were not taxable prior to 2008 - HELD THAT - A perusal of Rule 5 contained in CCR 2004 would show that it does not say that the appellant has to establish the nexus of the input services with the output services. The refund is eligible of the credit of the input services which are used for output services. The appellant has provided details of various services that were used during the relevant period for providing output services. Major part of the refund is for the period prior 01.04.2011 and a small amount of refund is for period after 01.04.2011. On perusal of the nature of the services, it is seen that in the case of M/S RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LTU, MUMBAI 2016 (8) TMI 123 - CESTAT MUMBAI the issue of nexus and the eligibility of credit of all services impugned herein were considered by the Tribunal and held in favour of the assessee - Similarly, in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX 2011 (9) TMI 450 - KARNATAKA HIGH COURT as well as KPIT CUMMINS INFOSYSTEMS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I 2013 (7) TMI 124 - CESTAT MUMBAI , it was held that refund cannot be rejected on the ground that ITSS services were not taxable prior to 2008. It is also to be pointed out that though the refund claim was rejected that prior to 2008, the output services are not taxable and therefore credit is not eligible, no show cause notice is so far issued proposing to recover any wrongly availed credit. The rejection of refund is unsustainable - appeal allowed - decided in favor of appellant.
Issues:
Refund claim rejection based on nexus of input services with output services and eligibility of credit on ITSS services pre-2008. Analysis: The case involved a 100% EOU filing 18 refund claims under Rule 5 of CCR 2004 for unutilised CENVAT Credit of service tax paid on input services from Feb 2008 to Mar 2012. The original authority partially sanctioned the refund, leading to an appeal before the Commissioner (Appeals) who remanded the matter initially. Subsequently, in Denovo adjudication, a part of the refund claim was rejected, and the rejection was upheld in the impugned order by the Commissioner (Appeals), prompting this appeal. The appellant argued that the rejection was primarily due to the lack of establishing the nexus between input and output services, emphasizing that all services were used for providing output services, especially prior to 01.04.2011. Additionally, the appellant contended that the credit availed on ITSS services pre-2008 was eligible, citing relevant case law. The Department, represented by the AR, reiterated the findings in the impugned order, emphasizing the ineligibility of credit on ITSS services pre-2008 and the lack of nexus between input and output services. Upon review, the Tribunal found that Rule 5 of CCR 2004 does not mandate establishing the nexus between input and output services for refund eligibility. The appellant provided details of services used for output services, with a significant portion of the refund pertaining to the period pre-01.04.2011. The Tribunal referenced precedents where the nexus and credit eligibility were upheld, emphasizing that no show cause notice was issued challenging the credit availed. Consequently, the Tribunal deemed the rejection of the refund as unsustainable and set aside the impugned order, allowing the appeal. In conclusion, the Tribunal allowed Appeal No. ST/21750/2014 with consequential relief, while dismissing Appeal Nos. ST/26087/2013, ST/27168/2013, and ST/28025/2013 as withdrawn. The judgment underscored the importance of credit eligibility and nexus between input and output services in refund claims, providing clarity on the interpretation of relevant rules and precedents.
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