2017 (9) TMI 1196 - AT - Service Tax

Refund of CENVAT credit - services utilized by the respondent for extraction of iron ore and fines and exporting the same - denial on the ground that these services are not used in or in relation to providing of any output services and respondent is not a manufacturer - Held that - these services are used in or in relation to the extraction of iron ore which are exported by the respondent - reliance placed in the case of COMMISSIONER OF CUSTOMS, BANGALORE Versus ANZ INTERNATIONAL 2008 (6) TMI 155 - KARNATAKA HIGH COURT , where it was held that EOU is entitled to take credit on the duty of the inputs procured indigenously and when they were not in a position to utilize the same, they are entitled for refund - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Refund of service tax paid on services utilized for extraction of iron ore and fines for export
- Eligibility of the appellant for service tax credit on input services and refund claim

Analysis:
The appeal was filed by the Revenue against an Order-in-Appeal regarding the refund of service tax paid on services used for extracting iron ore and fines for export. The adjudicating authority initially denied the refund, stating that the services were not related to providing output services, and the appellant was not a manufacturer. However, the first appellate authority overturned this decision and allowed the appeal. The Revenue contended that as the appellant was not a service provider, they could not have availed CENVAT credit and claimed a refund. The learned counsel referred to a similar case decided by the High Court of Karnataka. The appellate authority found that the services used by the appellant, such as technical inspection, security agency, management, and others, were indeed related to the extraction of iron ore for export. Citing the High Court's decision, the appellate tribunal concluded that the appellant was eligible for the service tax credit based on the services utilized, and the appeal was rejected.

The High Court's decision in the case of ANZ International, upheld by the apex court, was crucial in determining the eligibility of the appellant for the service tax credit. The High Court clarified that as a 100% Export Oriented Unit (EOU), the appellant could avail of CENVAT credit under the Rules for inputs used in manufacturing goods for export. The tribunal applied Rule 6(6) and emphasized that EOUs could claim CENVAT credit and refund if they were unable to utilize the credit due to all products being exported without domestic clearance. Referring to a precedent involving a letter of undertaking accepted for exports, the tribunal affirmed that EOUs were entitled to CENVAT credit on duty paid inputs, supporting the appellant's claim for a refund. The tribunal dismissed the appeal, citing the precedents and rules governing CENVAT credit for EOUs, ultimately upholding the appellant's eligibility for the refund based on the services utilized for export purposes.