2016 (7) TMI 1175 - AT - Service Tax

Refund of un-utilized cenvat credit - brought forward of credit - determination of amount to be refunded for export of services for the relevant period - amount of CENVAT credit restricted as per service tax return for the quarter - Rul 5 of CCR - export of Information Technology Software Services during the period April-June,2012 - Held that - It was held in the case of WNC Global Ltd 2015 (11) TMI 905 - CESTAT MUMBAI that for the purpose refund, Cenvat credit of any particular quarter will include the amount of brought forward credit as well from the earlier quarter therefore following the ratio of the said decision, even though credit was availed in February 2012 the same was lying in the balance as on 31 March, 2012, the same was carried forward to April, 2012 and therefore opening balance of April, 2012 will also be included for the purpose of taking the net Cenvat credit in the quarter April-June, 2012. It is also pertinent that undisputedly entire services of the appellant are exported, in such case entire Cenvat credit availed by the appellant has to be refunded to them. It is also pertinent that undisputedly entire services of the appellant are exported, in such case entire Cenvat credit availed by the appellant has to be refunded to them. In my view the formula provided in the notification for calculation of refund amount is workable only in a situation when the assessee is engaged in the provisions of services which are exported as well as provided in the domestic market. For this reason also the appellant being 100% exporter of services is entitle for the refund of brought forward amount of ₹ 6,12,463/- Refund allowed - Decided in favor of assessee.

Summary

Issues:
1. Refund claim rejection by Commissioner of Central Excise (Appeals) for the period April-June, 2012.
2. Dispute regarding availed Cenvat credit and refund claim for services exported without payment of Service tax.
3. Rejection of refund claim for Cenvat credit availed in February 2012 and carried forward to April 2012.
4. Interpretation of rules regarding the admissibility of Cenvat credit for the quarter April-June, 2012.
5. Applicability of formula for calculating refund amount in the case of 100% exporter of services.

Analysis:
The appeal was filed against the Order-in-Appeal rejecting a refund claim of Rs. 6,39,121 for the period April-June, 2012, where the appellant, engaged in providing "Information Technology Software Services," had exported taxable output services without paying Service tax. The appellant filed a refund claim for Rs. 31,71,969 based on the exported services valued at Rs. 17,96,69,852 without payment of Service tax. The dispute arose as the appellant had availed Cenvat credit of Rs. 25,59,408 during April-June, 2012, including Rs. 6,12,463 availed in February 2012 but not claimed in the refund for the quarter ending March 2012. The Commissioner(Appeals) rejected the appeal stating that Cenvat credit availed before April 2012 cannot be claimed in the subsequent quarter. The appellant argued that since 100% of their services were exported, all Cenvat credit should be refundable, citing a Tribunal judgment allowing brought forward credit for refund purposes.

The Tribunal found that the lower authorities rejected the refund claim based on the availed credit pertained to April 2012, but it was the first-time claim for the quarter April-June, 2012, not a second claim for the previous quarter. Following the precedent, the Tribunal included the brought forward credit from the earlier quarter in the net Cenvat credit for April-June, 2012. Given the appellant's 100% export of services, the entire Cenvat credit should be refunded. The Tribunal opined that the formula for refund calculation applies to situations involving both export and domestic market services, not to 100% exporters. Consequently, the Tribunal held the appellant entitled to the refund of the remaining amount of Rs. 6,12,463 for the period April-June, 2012, within the stipulated time period under the law.

In conclusion, the Tribunal allowed the appeal, modifying the impugned order to grant the appellant the refund of Rs. 6,12,463, with any consequential relief in accordance with the law.