2016 (11) TMI 578 - AT - Central Excise

Refund of unutilised CENVAT credit - Rule 5 of CENVAT Credit Rules - 100% EOU - Inter Unit Transfer (IUT) clearances - Legal consultancy service - erection, commissioning or installation charges - Held that - both fall in the definition of input service under Rule 21 of CCR, Rules. Management, maintenance and repair service - project management consultancy service - Held that - both fall in the definition of input service but the appellant has to produce sufficient document before the original authority to prove that the same are used in or in relation to the business of the appellant. Appeal allowed by way of remand by holding that the deemed exports are considered at par with the physical export and with regard to management, maintenance and repair service and project management consultancy, though in principle they fall in the definition of input service but for quantification purpose, the appellant is directed to appear before the original authority and produce the requisite documents for the purpose of quantification - The original authority is directed to dispose of the matter within a period of three months after affording an opportunity of hearing to the appellant and giving him an opportunity to produce the documents.

Summary

Issues: Refund of unutilised CENVAT credit for various services under Rule 5 of CENVAT Credit Rules - Deemed export - Rejection of refund claim for certain services - Requirement of producing documents for quantification.

Analysis:
1. The appellant, a 100% EOU manufacturing pharmaceutical products, filed a refund claim under Rule 5 of the CENVAT Credit Rules for unutilised CENVAT credit towards export and other input services during January 2012 to March 2012. The adjudicating authority partially rejected the claim, alleging that certain input services were not directly used in manufacturing the final product or providing output services. The rejection included the claim related to Inter Unit Transfer clearances without export details. The first appellate authority further rejected the refund claim for specific services, resulting in a total rejection of a significant amount. The appellant then appealed against this decision.

2. During the hearing, the appellant's counsel argued that Inter Unit Transfer from one EOU to another is deemed export, and the rejection of credit related to this is unjustified. The counsel also contended that the rejected services were indeed used in or in relation to the business, citing supportive judgments. It was emphasized that there is no explicit requirement to provide proof of exports between EOUs under the Central Excise Act or CENVAT Credit Rules.

3. The learned AR acknowledged that deemed exports are considered for refunds but highlighted discrepancies in the documents provided by the appellant regarding deemed exports. The AR suggested remanding the matter to the original authority for further verification and document submission to establish deemed export transactions accurately.

4. The Tribunal analyzed the services in question, including legal consultancy, management, maintenance, repair, project management consultancy, and erection, commissioning, and installation services. While acknowledging that these services fall within the definition of input services, the Tribunal stressed the need for the appellant to produce sufficient documentation to prove their direct use in the business for quantification purposes.

5. Ultimately, the Tribunal allowed the appeal by remanding the case to the original authority. Deemed exports were equated with physical exports, and the appellant was directed to provide necessary documents for quantification related to certain services. The original authority was instructed to resolve the matter within three months after giving the appellant an opportunity to present the required documentation.

This detailed analysis of the judgment highlights the key issues of refund claims, deemed exports, rejection of specific services, and the importance of producing documents for quantification in a comprehensive manner.