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2018 (3) TMI 771 - AT - Service TaxRefund claim of unutilized CENVAT credit - export of services - rejection on the ground that the output services of the appellant, which is call centre services is exempted from levy of service tax in terms of Notification No. 8/2003 dated 20.6.2003 - whether assessee is eligible for refund of unutilized credit u/r 5 of CCR 2004 when N/N. 8/2003 exempts the levy of service tax on call centre services which are the output services of the respondent? Held that - a service provider who provides an output service which is exported without payment of service tax shall be allowed refund of unutilized CENVAT credit used for providing the output service. The N/N. 5/2006-CE(NT) dated 14.3.2006 lays down conditions and limitations. This notification does not put forward any condition as alleged by the department. The only condition provided in Rule 5 is that the facility of refund will not be available if the manufacturer or service provider claims rebate of duty / service tax. The idea of Rule 5 is to avoid export of duty/taxes. Thus, the output service provider is given the benefit to claim refund of the taxes paid on input/input services used for providing output service. In KPIT Cummins Infosystem Ltd. vs. Commissioner of Central Excise, Pune I 2013 (7) TMI 124 - CESTAT MUMBAI , the refund was rejected for the reason that the output services viz. software development and consultancy service during the relevant period was an exempted service. The Tribunal held the availment of credit to be proper even though output services are not taxable. The Commissioner (Appeals) has rightly held that the respondent is eligible for refund of CENVAT credit even though the output services is exempted from the levy of service tax under N/N. 8/2003. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Eligibility for refund of unutilized CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004. 2. Impact of Notification No. 8/2003 on the eligibility for refund. 3. Eligibility of specific input services for CENVAT credit. 4. Verification of documents and data for refund claims. Detailed Analysis: 1. Eligibility for Refund of Unutilized CENVAT Credit: The core issue revolves around whether the respondent is eligible for a refund of unutilized CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004, despite the output services being exempt from service tax under Notification No. 8/2003. The tribunal referred to Rule 5, which allows a service provider who exports output services to claim a refund of unutilized CENVAT credit. The rule does not distinguish between exempted and non-exempted services. The tribunal emphasized that Rule 5 is designed to prevent the export of duties/taxes and thus allows refunds for both dutiable and exempted goods/services when exported. 2. Impact of Notification No. 8/2003: Notification No. 8/2003 exempts the levy of service tax on call centre services, which were the output services of the respondent. The department argued that since the services were exempted, the respondent should not avail of CENVAT credit. However, the tribunal observed that Rule 5 does not use the term "exempted services" and allows refunds for exported services, regardless of their tax status within India. The tribunal cited various precedents, including Zenta Pvt. Ltd. and Jolly Board Ltd., to support its stance that refunds are permissible for exported exempted services. 3. Eligibility of Specific Input Services for CENVAT Credit: The tribunal addressed the eligibility of specific input services like rent-a-cab, air travel agency, event management, video production agency, real estate agency, packaging activity, clearing and forwarding agency, maintenance/repair service, and club or association services. The Commissioner (Appeals) had remanded the matter to the adjudicating authority for verification. The tribunal noted that prior to 1.4.2011, the definition of input service included "activities relating to business," and various judicial decisions have held such services eligible for input credit if they relate to the business activities of the assessee. 4. Verification of Documents and Data for Refund Claims: The Commissioner (Appeals) remanded the matter for verification of documents and data to the satisfaction of the original authority. The tribunal upheld this decision, stating that the adjudicating authority should verify the eligibility of credit based on the recent judicial decisions. The tribunal found no merit in the department's appeals against the remand for verification. Conclusion: The tribunal concluded that the respondent is eligible for a refund of unutilized CENVAT credit even though the output services were exempt from service tax under Notification No. 8/2003. The tribunal dismissed the department's appeals, affirming the decisions of the Commissioner (Appeals) and remanding the matter for verification of specific input service credits. The judgment underscores the principle that Rule 5 of CENVAT Credit Rules, 2004, facilitates refunds for exported services, irrespective of their tax status within India.
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