2019 (7) TMI 906 - AT - Service Tax

100% EOU - Refund of CENVAT Credit - export of services or not - services of identification and evaluation of potential investment opportunities in Indian real estate companies - Para 2 of CBEC Circular No.141/10/2011 dated 13.05.2011 - reverse charge mechanism - rule 5 of CENVAT Credit Rules read with Notification No.27/2012 CE dated 18.06.2012 - period April 2012 to June 2012, July 2012 to Sept 2012 and Oct. 2012 to Dec. 2012 - HELD THAT - It has already been held by the court below that the Appellant have exported the services. Further under the scheme of the refund, there is no requirement of one-to-one co-relation of the input services or input credit with the export of service. The reasons for rejection by the authorities below are erroneous and the same are set aside - Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund denial under CENVAT Credit Rules with Notification No.27/2012-CE.

Analysis:
The appeal addressed the issue of the denial of refund of CENVAT Credit under rule 5 of CENVAT Credit Rules in conjunction with Notification No.27/2012-CE. The appellant, a 100% EOU exporting services, filed refund claims for different periods. The Department issued a show cause notice questioning the export of services, citing CBEC Circular No.141/10/2011 and Rule 9 of Provision of Service Rules, 2012. The Department alleged discrepancies in service descriptions, period matching, and eligibility for refund.

The show cause notice was contested, and the Assistant Commissioner rejected the refund claims, going beyond the notice's scope by examining Foreign Inward Remittance Certificates (FIRC) and service descriptions. The Commissioner (Appeals) held that Rule 9 was inapplicable, determining that the services qualified as exports under Rule 6A(1)(d) of Service Tax Rules, 1994. The rejection was upheld due to improper tabulation of export turnover.

The appellant appealed to the Tribunal, arguing that services were exported, and errors were made in assessing FIRCs and export turnover. The Tribunal found that services were exported, and a direct link between input credit and service export was unnecessary, overturning the lower authorities' rejection reasons.

Consequently, the Tribunal allowed the appeal, granting the refund and instructing the Adjudicating authority to process it within 45 days with interest. The decision emphasized the lack of necessity for a direct input-export correlation under the refund scheme, invalidating the previous rejection grounds.