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2019 (1) TMI 1429 - AT - Service TaxRefund of unutilized CENVAT Credit - export of services - Rule 5 of Cenvat Credit rules, 2004 - rejection of refund on the ground that certain input services such as Event Management service, Clearing & Forwarding Agency service, Insurance service, Real Estate services were not related with the output service - Refund claims were also restricted by excluding the value of exports made by SEZ units while arriving at the proportionate credit - Held that - The issues in dispute are no longer res integra. The services like Event Management , Clearing & Forwarding Agency service, Insurance service etc. have been held, by various appellate forums, to be very much eligible input services for the purpose of 2(l) of the CCR 2004. So also, it has been consistently held that value of SEZ exports should be included in computing the export turnover for the purpose of working out the quantum of refund in Rule 5 of the CCR 2004. Respondent-assessee has correctly relied upon the decision of the Tribunal in Cognizant Technology Solutions 2016 (2) TMI 580 - CESTAT CHENNAI which inter alia, held that the exclusion of SEZ exporter turnover in computing the export turnover for the purpose of Rule 5 ibid was not sustainable. Refund allowed - appeal dismissed - decided against appellant-Revenue.
Issues:
1. Eligibility of input service credit for exporters of taxable services. 2. Inclusion of SEZ export turnover in computing the export turnover for refund claims under Rule 5 of Cenvat Credit Rules, 2004. Analysis: 1. The respondents, exporters of taxable services, filed refund claims for unutilized cenvat credit on services provided under Business Auxiliary Service (BAS). The original authority partially rejected the claims, citing certain input services as not related to the output service. The Commissioner (Appeals) allowed the appeals, stating the eligibility of input service credit and inclusion of SEZ export turnover in the proportionate credit calculation under Notification No.5/2006-CE. The department appealed against this decision. 2. The Revenue contended that as per a Tribunal decision, exporters are not entitled to refund cenvat credit on inputs used for services provided to SEZ units. They argued that the term 'export' under SEZ Act benefits only SEZ units, not DTA units. The export turnover for calculating proportionate credit should exclude the value of services provided to SEZ units. During the hearing, the Revenue reiterated their grounds of appeal. 3. On behalf of the respondent, it was argued that they are eligible for input service credit as availed during business activities. Reference was made to a Bombay High Court decision stating that business activities qualify as input services. They emphasized that SEZ export revenue should be included in both numerator and denominator for proportionate credit calculation. The Tribunal's decision in a similar case supported the inclusion of SEZ export value in export turnover. 4. After considering the arguments, the Tribunal found that the disputed issues were settled by previous decisions. Input services like Event Management, Clearing & Forwarding Agency service, and Insurance service were deemed eligible. It was established that SEZ export turnover should be included in computing export turnover for refund calculations. The Tribunal relied on the precedent set by the decision in Cognizant Technology Solutions case, where exclusion of SEZ export turnover was deemed unsustainable. Consequently, the impugned orders were upheld, and the Revenue's appeals were dismissed. 5. In conclusion, the Tribunal affirmed the eligibility of input service credit for exporters and the inclusion of SEZ export turnover in refund calculations under Rule 5 of Cenvat Credit Rules, 2004. The decision was based on established legal precedents and interpretations, resulting in the dismissal of the Revenue's appeals.
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