2014 (5) TMI 541 - AT - Service Tax

Denial of refund claim - CENVAT Credit - nexus between output service being Pre publishing services and input services - Revenue contends that services used have not been proved to be used in relation to output services exported by the respondent. Held that - It is noted that there is no dispute that cenvat credit is eligible on the input service used in the output service. The Commissioner (Appeals) had given a detailed finding of use of the input service for output service. I find that Revenue has not placed any material to prove that the above services were not used in relation to output service - Decided against Revenue.

Summary

Issues:
Refund claim of cenvat credit on input services for a 100% EOU engaged in software manufacturing under Chapter 85 of Central Excise Tariff Act, 1985.

Analysis:
The respondent, a 100% EOU engaged in software manufacturing, filed a refund claim under Rule 5 of CENVAT Credit Rules, 2004 and Notification No.5/2006-CE(NT) for credit availed on input services like rent-a-cab service, security service, courier service, business support/auxiliary services, telephone services, and housekeeping services. The adjudicating authority rejected the claim, stating that the services were not utilized for providing export services. The Commissioner (Appeals) overturned this decision and allowed the refund claim with consequential relief.

The Revenue contended that cenvat credit on input services could only be allowed if consumed for providing output services. They argued that none of the input services were used in the output service, making the Commissioner (Appeals) decision unsustainable. The respondent's consultant supported the findings of the Commissioner (Appeals).

The Commissioner (Appeals) provided detailed findings on the use of input services: Rent-a-Cab service was used for employee transportation, security services were for premises safety, courier service for sensitive content handling, business support services for 24x7 operations, telephone services for business communication, and housekeeping for maintaining a conducive work environment.

The Revenue's appeal claimed that the services were not proven to be used for output services. However, the Tribunal noted that cenvat credit is eligible for input services used in output services and that the Commissioner (Appeals) had detailed the use of input services for output services. The Revenue failed to provide evidence that the services were not related to output services, leading to the rejection of their appeals.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, rejecting all appeals by the Revenue. The operative part of the judgment was pronounced on 06-09-13.