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TMI Blog2018 (3) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... . Appeal No. ST/426/2010 2. The period of refund claim filed by respondent is January 2006 to March 2006. Subsequently respondent filed revised refund claim for the period March 2006 only and requested to process the refund claim. Vide letter dated 3.5.2007, respondents had stated that Notification No. 8/2003 dated 20.6.2003 exempted services rendered by call centres till 28.2.2006 and in view of that exemption restricted their claim to March 2006 alone. It is also stated that the respondents requested to process the refund claim in this appeal without issue of any show cause notice. Thus, after adjudication, the refund sanctioning authority rejected the refund to the extent of Rs. 51,44,441/- pertaining to services for the period January 2006 and February 2006 and also Rs. 9,167/- being the ineligible credit on input services namely Air Travel Agent Service for the period March 2006. The refund sanctioning authority allowed the balance claim to the extent of Rs. 1,99,670/- for the period March 2006. Against the said rejection, the respondent filed appeal before Commissioner (Appeals) and vide order impugned herein, the Commissioner (Appeals) held that respondents are eligible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice. Consequently, an output service provider is barred from availing CENVAT credit irrespective of the fact that the said service is provided to DTA or exported. If such output service provider takes such credit then it is wrong availment of credit and such credit is ab initio void. In the present case, output service provided by the respondent was exempted from payment of service tax vide the aforesaid notification 8/2003 and accordingly the respondent is not entitled to take CENVAT credit. Even though the output service was exported, the credit being ab initio void, there is no question of refunding the unutilized credit. That the Commissioner (Appeals) erred in allowing refund without examining the provisions of Rule 6 of CENVAT Credit Rules, 2004. He therefore requested to set aside the sanction of refund ordered by the Commissioner (Appeals). 4. The ld. counsel Shri Joseph Prabhakar appeared on behalf of the respondent and argued the matter. The break-up of the details of refund claim rejected by the original authority in Appeal No. ST/426/2010 is given by him as under:- a. Claim pertaining to period before 1st March 2006 rejected due to Notification No.8/2003 exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d filed refund claim for an amount of Rs. 2,47,43,758/- for the period November 2006. The original authority sanctioned refund to the tune of Rs. 1,22,50,381/- and rejected the balance amount of Rs. 1,24,93,377/-. On appeal, Commissioner (Appeals), set aside the rejection and allowed the balance refund of Rs. 1,24,93,377/-. Hence department has filed this appeal against the order of Commissioner (Appeals) allowing refund of Rs. 1,24,93,377/-. The break-up of Rs. 1,24,93,377/- is as follows:- a. Certain input services like Rent-a-cab, Event Management, Video Production Agency, Real Estate Agency, Packaging Activity, Clearing and Forwarding Agency, Maintenance / Repair Services were held to be ineligible Rs.6,14,934/- b. Original Invoices Rs.1,79,070/- c. Invalid claim Rs.7,102/- d. Arithmetical error Rs.61,044/- e. Other ground Rs.1,708/- f. Claim pertaining to period before 1st March 2006 rejected due to Notification No.8/2003 exempting services by call centre Rs.1,16,29,519/- Total Rs.1,24,93,377/- Out of the above, the respondents are not contesting the claims made under Sl. (b) to (e). 7. Heard both sides. 8. The main issue on which the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8.2 Rule 5 does not use the word exempted goods/ services . Thus, when Rule 6 of CENVAT Credit Rules specifically uses the word exempted goods / exempted service in order to explain eligibility to avail credit, Rule 5 which precedes the said Rule does not make any such distinction. It merely states that the manufacturer of the final product or service provider of a taxable service which is exported is eligible for refund of unutilized credit. The Rule has consciously used the words final product / output service . A final product may be both dutiable or exempted. Similarly, an output service may be both taxable service or exempted service. When the rule merely uses the words final product / output service , the only interpretation that is possible is that whatever be the nature of dutiability or taxability of the final product /output service, refund is eligible on the unutilized credit if such final product / output service is exported. Rule 5 is thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 10. From the above discussions and following the ratios laid in the above decisions, we are of the considered opinion that 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 Notification No. 8/2003. 11. With regard to other issue of ineligibility of credit / refund, the Commissioner (Appeals) has merely remanded the matter to the adjudicating authority for verification of eligibility of credit on various services. The said services are rent-a-cab service, outdoor catering service, mandap keeper service etc. The period involved is prior to 1.4.2011. The definition of input service had a wide meaning prior to 1.4.2011 as it included the words activities relating to business . The High Courts as well as the Tribunal in various decisions have held that such services would be eligible for input credit if it falls within the phrase activit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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