2018 (11) TMI 848 - AT - Service Tax

Cash Refund of accumulated CENVAT Credit - export of services - performance based service - palace of supply of services - it was alleged that services provided by the appellant to their overseas service recipient was in the nature performance based service in India, hence not an export service - Rule 5 of the CCR 2004 - Held that - This Tribunal has already taken a view that the aforesaid services rendered by the appellant are in the nature of export of service and hence eligible to cash refund of accumulated CENVAT Credit. In the case of Advinus Therapeutics Ltd. 2016 (12) TMI 34 - CESTAT MUMBAI , this Tribunal more or less in similar circumstances, considering all aspects of the issue, interpreting Rule 3, 4 of Place of Provision of Services Rules, 2012, and Rule 6A of Service Tax rules, 1994, applying the principles of law laid down in this regard and the Board s clarification held that scientific or technical consultancy service provided in the development of drugs, to the overseas recipient of such service, is an export service . The appellants are eligible to cash refund of the accumulated CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004, except in relation to input service denied by the learned Commissioner (Appeals) observing that there is no nexus between the input and output service, as the necessary evidences in relation to Building maintenance charges were not produced and the rent-a-cab service has been mentioned in the exclusion clause of input service after amendment to Rule to 2(1) of the Cenvat Credit Rules, 2004 with effect from 01.04.2011 - matters are remanded to the adjudicating authority to calculate the admissibility refund amount except the credit availed on Building maintenance charges and rent-a-cab service - appeal allowed by way of remand.

Summary

Issues Involved:
1. Eligibility of cash refund of accumulated CENVAT Credit for exported services.
2. Applicability of Rule 4 of the Place of Provisions of Service Rules, 2012.
3. Denial of credit on specific input services (Building maintenance charges and Rent-a-Cab services).

Detailed Analysis:

1. Eligibility of Cash Refund of Accumulated CENVAT Credit for Exported Services:
The appellants provided Scientific & Technical Consultancy Services to an overseas client and claimed a refund of accumulated CENVAT Credit on inputs used for these services under Rule 5 of the CENVAT Credit Rules, 2004. The Revenue rejected the refund claim on the grounds that the services were performance-based in India and did not qualify as export services under Rule 6A of Service Tax Rules, 1994. The Tribunal, however, found that the services provided were indeed export services and eligible for cash refund. This decision was based on the precedent set in the appellant's own case and similar judgments, such as Advinus Therapeutics Ltd., where it was held that services provided in the development of drugs to an overseas recipient are considered export services.

2. Applicability of Rule 4 of the Place of Provisions of Service Rules, 2012:
The Revenue argued that the services provided by the appellants were performance-based in India and thus did not qualify as export services under Rule 4 of the Place of Provisions of Service Rules, 2012. The appellant countered that the goods necessary for the tests were procured independently and not supplied by the overseas client, making Rule 4(a) inapplicable. The Tribunal supported the appellant's contention, citing the CBE&C Education Guide and previous judgments, and concluded that Rule 4(a) applies only if the goods are supplied by the service recipient. The Tribunal emphasized that the services were performed on goods procured by the appellant, making them eligible for export status.

3. Denial of Credit on Specific Input Services:
The Commissioner (Appeals) denied credit on input services related to Building maintenance charges and Rent-a-Cab services. The Tribunal upheld this denial, noting that the necessary evidence for Building maintenance charges was not provided, and Rent-a-Cab services were explicitly excluded from input services after amendments to Rule 2(1) of the CENVAT Credit Rules, 2004, effective from 01.04.2011. The Tribunal remanded the matter to the adjudicating authority to calculate the admissible refund amount, excluding the denied input services.

Conclusion:
The Tribunal concluded that the services provided by the appellant qualify as export services and are eligible for a cash refund of accumulated CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004. However, credits on Building maintenance charges and Rent-a-Cab services were rightly denied due to lack of evidence and explicit exclusion in the rules, respectively. The matter was remanded to the adjudicating authority for recalculating the refund amount.