2017 (5) TMI 99 - AT - Service Tax

100% EOU - refund of CENVAT credit of service tax paid on various input services - Rule 5 of CCR - denial on the ground that ron ore was not a manufactured product and the appellant was not entitled to avail input services - Held that - the Commissioner (A) has misconstrued the definition of mining activity and has wrongly held that it does not amount to manufacture whereas the mining activity amounts to manufacture and is an excisable goods within the meaning of Section 2(d) of Central Excise Act, 1944 - the CBEC vide Circular No.943/4/2011-CX has also clarified with regard to few services for which the CENVAT credit is permissible - refund allowed - decided in favor of appellant.

Summary

Issues:
12 appeals challenging the order of the Commissioner (A) regarding refund claims for CENVAT credit on various input services for the period from October 2006 to December 2007.

Analysis:
1. The appellants, a 100% EOU engaged in manufacturing iron ore, filed 12 appeals against the common impugned order by the Commissioner (A) regarding refund claims. The appellant exported 100% of their final products and claimed refund of CENVAT credit on service tax paid for input services. The adjudicating authority partially allowed and rejected the refund claims, leading to the appeals.

2. The appellant contended that the impugned order misconstrued the definition of manufacture and input services, going beyond the show-cause notice. They argued that mining activity amounts to manufacture, making iron ore excisable goods. The appellant relied on judicial precedents and highlighted that various input services were essential for manufacturing and exporting their goods, falling under the definition of input services as per Rule 2(l) of CCR.

3. The AR reiterated the findings of the impugned order, which rejected the refund claims for specific services. After hearing both parties and examining the records, the Tribunal found that the Commissioner (A) erred in rejecting the refund for certain services without the Department filing an appeal. The Commissioner (A) misunderstood the definition of mining activity as manufacture and failed to appreciate the wide interpretation of input services by courts and CBEC circulars.

4. The Tribunal, following various judicial decisions, concluded that the appellant's case aligned with precedents establishing the eligibility of input services for CENVAT credit refund. Noting that the appellant did not contest certain amounts due to insufficient documentation, the Tribunal allowed all appeals except for those amounts. The Tribunal emphasized the importance of correctly interpreting the definition of input services and manufacturing activities in granting refunds.

5. In the final judgment pronounced on 20/04/2017, the Tribunal allowed the appeals, except for the amounts not claimed by the appellant, providing consequential relief accordingly. The decision highlighted the necessity of adhering to legal definitions and precedents in determining refund claims for CENVAT credit on essential input services used in manufacturing and exporting excisable goods.