2019 (2) TMI 1252 - AT - Service Tax

Refund of unutilized Credit - export of services - Rule 5 of CENVAT Credit Rules, 2004 - rejection on the ground of nexus and also on the ground of non production of documents - Held that - Appellant admits that they were not able to produce the documents but will be able to do so now. These documents, when submitted by the appellant, need to be considered by the adjudicating authority to decide the admissibility of refund on this count. Denial on account of nexus - Held that - once the credit of CENVAT is allowed, refund of the same cannot be denied. In fact when the CENVAT credit is wrongly availed, the same needs to be recovered from the appellant, by issuing of an appropriate show cause notice. As far as the cases where credit was taken when the specific service clearly excluded from Rule 2(l) of CCR 2004 is concerned, it is true that the credit first be denied. However, where the appellant is not entitled to the credit in the first place, it is inconceivable to refund the same. Denial on the ground that the invoices were not in the name of the appellant - Held that - What is relevant is whether the appellant had received those services in production of their output services, even if there is some error/omission in the name and address in the invoices. As long as the input services/inputs were actually used by the appellant in production of their output services, credit cannot be denied merely on the ground that invoice was not in their name. This requires examination of records in respect of each of such invoices to ascertain factual position - matter remanded. Appeal allowed by way of remand.

Summary

Issues involved:
Refund claims under Rule 5 of CENVAT Credit Rules, 2004 for inputs and input services used in export of services; Denial of refund based on lack of nexus with output services, exclusion of input service credit under Rule 2(l) of CCR 2004, failure to submit necessary documents, and documents not in the name of the appellant.

Analysis:
1. Refund Claims and Denial Basis:
The appellant, engaged in exporting software services, filed refund claims under Rule 5 of CENVAT Credit Rules, 2004 for inputs and input services used in service exports. The original authority partly allowed and partly rejected the claims. The first appellate authority also partially allowed the appeals. The main grounds for denial included lack of nexus with output services, exclusion of input service credit under Rule 2(l) of CCR 2004, failure to submit necessary documents, and documents not in the appellant's name.

2. Appellant's Contentions:
The appellant's consultant argued that once credit is allowed, refund cannot be denied based on nexus with output services. Regarding exclusion under Rule 2(l), it was contended that the services availed were for painting, not construction, thus entitled to credit. The appellant admitted initial lack of documentation but claimed to have found all records now.

3. Revenue's Stand:
The Department reiterated the first appellate authority's findings. They asserted that if credit is inadmissible, refund cannot be granted. They mentioned that some documents were submitted at different stages, and they suggested remanding the matter for document verification.

4. Judgment and Remand:
The Tribunal found that the denial of refund was mainly due to lack of documents. The appellant's commitment to producing the required documentation was noted. The Tribunal clarified that if a specific service is excluded under Rule 2(l), credit cannot be claimed. However, lack of nexus with output services alone cannot be a ground for denial of refund. The matter was remitted back to the adjudicating authority to decide based on these principles.

5. Conclusion:
The Tribunal remitted all appeals to the adjudicating authority for a detailed review. It emphasized that services excluded under Rule 2(l) cannot claim credit, while lack of nexus alone cannot justify denial of refund. The authority was directed to consider the appellant's ability to produce necessary documents and allow credit based on substantiated claims.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, the Tribunal's decision, and the directives for the adjudicating authority, ensuring a clear understanding of the legal intricacies involved in the case.