2015 (2) TMI 271 - AT - Service Tax

Refund of cenvat creidt under Notification No. 5/2006 CE(NT) dt. 14.3.2006 - Denial of admissibility of CENVAT Credit on input services - Held that - It is strange that the ground of appeal stats that the use of input services has not been examined by the adjudicating authority when the matter has been discussed very clearly by the Commissioner (Appeals). It would serve no purpose to remand the impugned order in such circumstances. However, on merits, we have seen the list of above services and we find absolutely no ground to reject the admissibility of cenvat credit on them. All these input services do have a nexus with the business of providing output services by the respondent. Cenvat credit on inadmissible input services must obviously be deducted, but in the present case all the input services are used for providing output services. Therefore this objection has no relevance. The second amount which is sought to be deducted is the input credit on account of domestic service tax liability. We find no logic in deducting this amount. The formula does not allow for such deduction and by its very nature, the formula has already factored this amount in the manner it has been formulated. If Revenue s contention is accepted, the word Total in the formula would become irrelevant. Therefore, the grounds of appeal relating to this order-in-appeal are rejected and the impugned order-in-appeal is upheld. In exactly similar cases of this very respondent for different periods, the adjudicating authority has sanctioned refund claims without raising any objection. The Ld. A.R. inform us that the two orders-in-original have been passed by different authorities. We note from the records as shown to us by both sides and as agreed by the Ld. Counsel, in this case certain records namely Balance Sheet and Profit and Loss Account had not been submitted to the adjudicating authority. We are not very clear as to what the adjudicating authority wants to examine from these Accounts but, at the same time, in our view these accounts could indicate the export turnover of services which the adjudicating authority may have liked to correlate with the Service Tax returns where such turnover figures ought to have been given. - matter remanded back - Decided partly in favour of Revenue.

Summary

Issues:
Revenue's appeal against the order-in-appeal sanctioning refund under Notification No. 5/2006 CE(NT) - Nexus of input services with output services - Correct application of refund formula - Submission of required documents for refund.

Analysis:
1. Nexus of Input Services with Output Services:
The Commissioner (Appeals) examined various input services availed by the respondents, establishing a clear nexus with the output services provided. Input services such as Business Auxiliary Service, Outdoor Catering Service, Chartered Accountant Service, among others, were deemed eligible under Rule 2(l) of Cenvat Credit Rules, 2004. The Tribunal upheld the admissibility of cenvat credit on these services, citing relevant judgments and emphasizing the use of every input service in providing output services. The grounds of appeal challenging the use of input services were rejected.

2. Correct Application of Refund Formula:
Regarding the application of the formula under Notification No. 5/2006 for refund calculation, the Tribunal addressed Revenue's objections to deduct certain amounts from the total Cenvat Credit. It was noted that all input services were utilized for output services, rendering objections on inadmissible input services irrelevant. Additionally, the deduction of input credit on domestic service tax liability was deemed illogical as the formula already accounted for such amounts. The Tribunal rejected Revenue's contentions and upheld the impugned order-in-appeal.

3. Submission of Required Documents for Refund:
In a separate appeal, it was observed that certain records, specifically the Balance Sheet and Profit and Loss Account, were not submitted to the adjudicating authority. While the purpose of examining these documents was not entirely clear, they were deemed crucial for verifying export turnover and correlating it with Service Tax returns. As a result, the Tribunal decided to remand the case to the adjudicating authority for further examination. The respondent was directed to produce the necessary records within a specified timeframe, and the adjudicating authority was instructed to pass the order promptly due to the case's age.

In conclusion, the Tribunal upheld the admissibility of cenvat credit on input services with a nexus to output services, rejected objections to the refund calculation formula, and remanded the case concerning the submission of required documents for further review by the adjudicating authority.