2017 (9) TMI 1563 - HC - Service Tax

Refund of unutilized credit - rejection on the ground of nexus with finished output - Held that - reliance placed in the case of Commissioner of C.Ex. Nagpur Versus Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT , where it was held that the cost of any input service that forms a part of the cost of the final product, then Credit of Service Tax paid on such input services would be allowable - the input services have been availed of by the Respondent herein in the course of its business of providing outward services and hence, the Respondent is to refund claim of CENVAT Credit lying in its account due to export of service - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Challenge to order allowing respondent's appeal for refund of input service credit in relation to exported services.

Analysis:
The appellant challenged the order of the Customs, Excise and Service Tax Appellate Tribunal, which allowed the respondent's appeal for refund of input service credit related to exported services. The refund claim was partially allowed by the Adjudicating Authority and Commissioner (Appeals), leading to an appeal before the Appellate Tribunal. The core issue was whether the respondent could avail CENVAT credit on input services without nexus to the output service of Business Auxiliary Service exported by them.

The appellant contended that the respondent was not entitled to avail CENVAT credit on input services lacking a nexus with the exported output service. The respondent's counsel supported the impugned order. The High Court analyzed the issue in light of the definition of "input service" under Rule 2(1) of the 2004 Rules. Referring to a previous judgment, the Court highlighted that input services directly or indirectly used in or in relation to the manufacture of final products are eligible for credit. The Court emphasized that if the cost of any input service forms a part of the final product's cost, then the credit of Service Tax paid on such services would be allowable.

Based on the precedent cited, the Court held that the respondent had availed the input services in the course of providing outward services, making them eligible for the refund claim of CENVAT Credit due to the export of services. The High Court found no fault in the Appellate Tribunal's decision, which aligned with the previous judgment. Consequently, the Court dismissed the present appeal, ruling in favor of the respondent. No costs were awarded in this matter.