2017 (5) TMI 1456 - AT - Service Tax

100% EOU - Refund claim of unutilised CENVAT credit - Held that - it is clear that while arriving the export value, only the value final products and output services exported during the given period, has to be taken into consideration and not the value of the equipment exported. The appellant has failed to substantiate how the value of equipment exported is their final product or output services in the instant case - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on export turnover calculation method.

Analysis:
The case involves an appeal against the rejection of a refund claim by the Commissioner(Appeals) concerning the calculation of export turnover for a 100% EOU engaged in providing technical services abroad. The appellant hired technical equipment from an Indian company to execute a service contract in Oman and filed a refund claim for unutilized CENVAT credit of Central Excise duty and service tax paid on specified services/inputs used for export. The dispute arose regarding the inclusion of the equipment value in the export turnover calculation. The appellant argued that the equipment was not a final product or output service and should not be considered in export turnover. However, the Commissioner(Appeals) held that as per Notification No.5/2006, only the value of final products and output services exported should be included in export turnover, not the value of equipment exported. The Commissioner(Appeals) reasoned that the appellant failed to prove how the equipment value constituted final products or output services, and thus, the equipment value should be included in the total turnover. Consequently, the refund claim was partially rejected based on this interpretation.

The appellant contended that the impugned order was unsustainable as it did not consider the provisions of Service Tax and was based on assumptions and presumptions. The appellant argued that the formula prescribed in Notification No.5/2006 was not applicable as there was no export of goods, only technical services. The appellant emphasized that the foreign currency received was for services, not goods or machinery. On the other hand, the authorized representative defended the impugned order, stating that the Commissioner(Appeals) had issued a reasoned order after considering the appellant's submissions. The authorized representative highlighted the Commissioner(Appeals)'s findings regarding the computation of export turnover and total turnover as per the notification, emphasizing that the equipment value should be included in the total turnover, leading to the rejection of part of the refund claim.

In conclusion, the Tribunal found no infirmity in the impugned order and upheld the rejection of the refund claim. The Tribunal determined that the Commissioner(Appeals)'s decision was legal and reasonable, requiring no interference. Therefore, the appeal was dismissed, affirming the rejection of the refund claim based on the calculation method of export turnover and total turnover as per the notification.