2010 (7) TMI 117 - AT - Service Tax

Refund STPI - Scientific or Technology Consultants/Repair & Maintenance Services revenue contended that that the issue involved in this case is regarding refund claim during the period from September 2004 to March 2006. It is the submission that the provisions of Rule 5 of the Cenvat Credit Rules, 2004 during the material period will be applicable and it is for the appellant to conform to the relevant rules. It is the submission that the appellant has not conformed to the provisions of Rule 5 of the Cenvat Credit Rules Held that - that the points which have been raised by the appellant that they are manufacturers of software and they have been granted Central Excise Registration have not been considered by the lower authorities. It is also seen that there are various judgments of the Tribunal which would indicate the provisions of Rule 5 of the Cenvat Credit Rules would be applicable even if the amount of credit is accumulated before the notification is issued. All the issues have not been considered in a proper perspective by the lower authorities. matter remanded back.

Summary

Issues:
1. Additional grounds of appeal considered in a Miscellaneous application.
2. Rejection of refund claim by the adjudicating authority.
3. Applicability of Rule 5 of the Cenvat Credit Rules, 2004.
4. Eligibility of the appellant to claim Cenvat credit on service tax paid.
5. Consideration of manufacturer status and software production in refund claim.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Bangalore dealt with various crucial issues. Firstly, the appellant filed a Miscellaneous application seeking consideration of additional grounds of appeal not included in the appeal memorandum. The Tribunal allowed the application as the new grounds were deemed significant to the case.

Secondly, the main issue revolved around the rejection of the refund claim by the adjudicating authority and subsequently upheld by the Commissioner (Appeals). The appellant, a STPI unit registered under Service Tax, had filed a refund claim for accumulated Cenvat credit used in exported services. The Commissioner (Appeals) partly upheld the claim, leading to an appeal against the rejected portion.

Thirdly, the Tribunal examined the applicability of Rule 5 of the Cenvat Credit Rules, 2004 during the period from September 2004 to March 2006. The appellant was required to adhere to the relevant rules, which the authorities claimed were not followed.

Fourthly, the eligibility of the appellant to claim Cenvat credit on service tax paid was contested. The appellant argued that as a manufacturer of software, they were entitled to such credit under specific provisions. They cited Foreign Trade Policy and relevant procedures to support their claim, emphasizing their eligibility for credit on services used in software production.

Lastly, the judgment highlighted the importance of considering the appellant's manufacturer status and software production activities in the refund claim. The lower authorities had not adequately addressed these aspects, leading the Tribunal to set aside the rejection of the refund claim before 1.5.2006. The case was remanded to the adjudicating authority for a fresh review following principles of natural justice, indicating a favorable outcome for the appellant based on unconsidered perspectives and legal precedents.