2016 (12) TMI 1449 - AT - Central Excise

Cenvat credit - Business Auxiliary Service, Consultancy Engineering, IT enabled services - Held that - the impugned order is not sustainable in law as the same has been passed without appreciating the definition of input services as contained in Rule 2(l) of CCR, 2004 and also without considering the judgments passed by higher judicial fora holding these services as input services - the impugned order is not sustainable in law and all the services on which Commissioner (A) has rejected the refund fall in the definition of input services - Decided in favor of the assessee.

Summary

Issues:
Refund claims under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.5/2006 dated 14.3.2006.

Analysis:
The appellant filed four appeals against the Orders-in-Original regarding refund claims. The appellant, engaged in providing taxable services, availed CENVAT credit on service tax paid on input services periodically. The original authority partially sanctioned one refund claim and rejected the remaining claims. The Commissioner (A) allowed the appeal partially, directing refund for eligible services after verification. However, refund for certain input services like IT software service, Business Support Service, Management consultancy service, legal consultancy service, technical testing and analysis service was disallowed. The appellant challenged this denial of refund in the present appeal.

The appellant argued that the impugned order failed to appreciate the definition of input services as per Rule 2(l) of CCR, 2004 and disregarded higher judicial judgments recognizing these services as input services. The appellant contended that the disallowance was based on a lack of nexus, which was not raised in the show-cause notice. The appellant asserted that the services in question were directly linked to their business and fell within the definition of input services.

Specifically, the appellant highlighted the importance of IT software service, essential for their technical and engineering design services, and Management Consultancy Service, crucial for effective business operations. The appellant also emphasized the necessity of Legal Consultancy Service for compliance with legal requirements, Business Support Service, and Technical Testing and Analysis Service for business operations. The appellant supported their arguments with various legal authorities confirming these services as input services with a direct nexus to the output service.

Considering the arguments and legal precedents cited, the Tribunal concluded that the impugned order was not sustainable in law. The Tribunal held that all services for which the Commissioner (A) had rejected the refund fell within the definition of input services. Consequently, the Tribunal set aside the impugned order and allowed the appeals, subject to verification by the original authority sanctioning the refund amount. The appeals were allowed based on the recognition of the services as input services with a direct nexus to the output service.