2015 (9) TMI 689 - AT - Service Tax

Denial of refund claim - unutilized CENVAT Credit - nexus between input service and export service - Held that - There cannot be two yardsticks that in one hand availability of Cenvat credit is not under dispute but for granting the refund dispute was raised. - the ratio of the judgment of previous case MORGAN STANLEY ADVANTAGE SERVICES LTD 2014 (12) TMI 330 - CESTAT MUMBAI is directly applicable in the present case. - Commissioner(Appeals) have considered the issue in detail and given findings which is found to be absolutely correct and legal and same does not require any interference. - Decided in favour of Assessee.

Summary

Issues Involved:
1. Refund of unutilized Cenvat Credit.
2. Nexus between input services and exported output services.
3. Interpretation of Rule 5 of the Cenvat Credit Rules, 2004.
4. Application of previous judgments and legal precedents.

Comprehensive, Issue-wise Detailed Analysis:

1. Refund of Unutilized Cenvat Credit:
The respondent, a provider of taxable services under the categories of Business Support Service and Management, Maintenance & Repair Service, claimed a refund of unutilized Cenvat Credit amounting to Rs. 36,61,517/- for the period from July 2011 to September 2011. This claim was made under Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 5/2006-CE(NT) dated 14/3/2006. The ground for the claim was that the output services provided during the relevant period were exported, and the respondent could not utilize the Cenvat Credit of service tax paid on the input services used for providing such output services.

2. Nexus Between Input Services and Exported Output Services:
The initial rejection of the refund claim by the lower adjudicating authority was based on the respondent's failure to demonstrate that the input services, for which the refund was claimed, were actually consumed in the provision of the exported output services. The Revenue argued that the respondent did not establish a direct nexus between the input services and the export services, thereby making the refund claim improper and illegal.

3. Interpretation of Rule 5 of the Cenvat Credit Rules, 2004:
The Commissioner (Appeals) examined the case in detail and concluded that all the services listed by the respondent fell within the definition of input services under Rule 2(l)(i) and were used for providing output services, which had been exported. The Commissioner (Appeals) allowed the appeal with consequential relief, emphasizing that the services used by the respondent were essential for their business activities in providing output services.

4. Application of Previous Judgments and Legal Precedents:
The respondent cited a previous judgment in their own case (Morgan Stanley Advantage Services Ltd. Vs. Commissioner of Service Tax Mumbai-II [2014-TIOL-2289-CESTAT-MUM]) where the Tribunal allowed the appeal by way of remand and dismissed the Revenue's appeal. The Tribunal in the present case found that the ratio of the previous judgment was directly applicable. It was noted that there could not be two yardsticks: one for allowing the input credit and another for granting the refund of the credit taken. The Tribunal referenced several cases (e.g., Commissioner of Service Tax, Delhi vs. Convergys India Pvt. Ltd., CCE, Tirunelveli V/s. DCW Ltd., and others) to support the view that the credit taken should be eligible for refund without questioning the credit itself.

Judgment:
The Tribunal upheld the order of the Commissioner (Appeals), finding it to be correct and legal. The Tribunal dismissed the Revenue's appeal, reinforcing that the services used by the respondent were indeed input services essential for their business activities in providing exported output services. The Tribunal directed the refund sanctioning authority to dispose of the refund claims within one month from the date of receipt of the order, emphasizing the principle that there should not be different yardsticks for taking credit and for refunding the credit. The Tribunal's decision was in line with the legal precedents and the interpretation of the relevant rules and notifications.