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TMI Blog2020 (11) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... section 66A of the Finance Act, 1994. They have reflected this payment of service tax in their ST-3 returns. There is nothing on record or in the submissions made by both parties before us to show that the Department has objected to they paying service tax. After paying the service tax the appellant has taken Cenvat Credit of the service tax paid treating the same as input service and showed it in their ST-3 returns. The Department has not objected to the appellant s taking Cenvat Credit. It is evident that the Department has accepted that the Cenvat Credit has been taken on the input service by the appellant. It is now a well established principle that once Cenvat Credit is allowed on any goods or services as inputs or input service they do not cease to be so while processing a refund claim under Rule 5 of Cenvat Credit Rules, 2004. There is no separate definition of input or input service either in Rule 5 of Cenvat Credit Rules, 2004 or in Notification No. 5/2006-CE. Therefore, the definition under Rule 2 of Cenvat Credit Rules, 2004 applies both to taking CENVAT credit and claiming its refund under Rule 5. Whether the input service so used is an input service used for export se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ND Mr. P. DINESHA, MEMBER (JUDICIAL) Shri G. Prahlad, Advocate for the Appellant. Shri C. Mallikarjun Reddy, Superintendent for the Respondent. ORDER This appeal is filed against Order-in-Appeal No. 218/2013 (H-IV) S.Tax dated 24.12.2013. 2. Facts of the case in brief are that the appellant is a 100% Export Oriented Unit (EOU) engaged in providing network management and other services to their clients. They also avail the benefit of CENVAT Credit as per Cenvat Credit Rules, 2004 (CCR, 2004) in respect of the inputs/input services used by them. During the course of business, they imported Netcool suite from M/s Softential Inc, USA which they used in the services which they exported. This imported software being in the nature of a service covered under Section 66A of the Finance Act, 1994 the appellant paid the service tax amounting to ₹ 1,61,47,454/- on 22.02.2010. Service tax is levied on the service provider of taxable service as per Section 66 of the Finance Act, 1994. However, in respect of some services covered under Section 66A, where the service is imported, the service recipient is liable to pay service tax as if he was the one who provided the service. If the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken and the department has not disputed the taking of credit, refund of such credit under Rule 5 of Cenvat Credit Rules, 2004 cannot be denied on the ground that it is not an input service. If the Revenue was of the opinion that the credit has been taken wrongly on ineligible inputs or input services then the credit should be denied after following the procedure under Rule 14 of Cenvat Credit Rules, 2004. He relies on the following case laws to buttress his argument: 1. Virtusa India (P) Ltd., [2020 (4) TMI CESTAT, Hyd] 2. 3D PLM Software Solutions Vs CCE, Mumbai [2017 (2) TMI 152 CESTAT, Mum] 3. Microsoft Global Services Center (India) Pvt Ltd., Vs CCE [2020 (10) TMI 57] 4. Mckinsey Global Services India Pvt Ltd., Vs CCE [2019 (2) TMI 595 CESTAT, Chennai] 5. CCE, Mumbai Vs Toyo Engineering India Ltd., [2006 (201) ELT 513 (SC)] 6. Rawmin Mining and Indus Ltd., Vs CCE [2009 (13) STR 269 (Tri-Ahmd)] He vehemently argued that there is no separate definition for input or input service either under Rule 5 or in the Notification No. 5/2006-CE dated 14.03.2006. Therefore, the definition under Rule 2 of CCR applies to the entire Cenvat Credit Rules including the refund under Rule 5 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echanism under section 66A, they had filed refund ST-3 returns. The Department had not objected to their payment of service tax nor intimated that no service tax was payable on the imported software. After paying the service tax, they took Cenvat credit of the service tax so paid and showed it in their ST-3 returns. The department has not objected to their taking Cenvat Credit. Till now, no show cause notice has been issued seeking to deny Cenvat credit taken by them under Rule 14. It is only the cash refund under Rule 5 of Cenvat Credit Rules, 2004 which has been denied to them without any basis. 6. Lastly, he would argue that although there is no specific provision for payment of interest on refund under Cenvat Credit Rules, 2004, the Hon ble High Court of Gujarat had, in the case of Commissioner of Central Excise Vs Reliance Industries Limited [2010-259-ELT-356-Guj], held that refund of Cenvat Credit under Rule 5 of Cenvat Credit Rules, 2004 is also a refund under section 11B of Central Excise Act and accordingly the provisions of payment of interest under Section 11BB of the Act for delayed refunds fully apply to such refunds as well. Revenue had appealed against this judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used by them cannot be refunded unless it was relatable to the exported service. It was therefore incumbent upon the officers to check the nexus between input service and output service and the appellant failed to establish the same. Therefore, the refund was correctly rejected. 8. On a specific query from the Bench as to whether any notice was issued under Rule 14 of Cenvat Credit Rules, 2004 denying the credit of the input service claimed by the appellant, he replied in negative. He, however, argued that if the Department had failed to take action to deny the appellant credit under Rule 14 within time, it missed the bus. The appellant can continue to enjoy and use the Cenvat credit. Refund of Cenvat Credit under Rule 5 is a different leg of transaction and the notification again stipulates that refund can be allowed only in respect of input service. If it is not an input service no refund can be sanctioned. If the Department had been negligent in not denying Cenvat Credit on the ground that the service in question is not an input service it is not estopped from examining the same at the time of sanctioning the refund as it is an essential requirement of the notification which e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat Credit on input service used in providing output service which was exported was allowed. Therefore, there can be cases where the input service was for output service A which is domestically sold but not an input service for output service B which is exported. However, in this particular case the unit is a 100% export oriented unit and there is no domestic sale. Therefore, there is no scope for such an apprehension. 11. We have considered Revenue s argument that the value of the input service was much higher than the output service exported and no prudent business would spend more on input services than the sale value of output service. This issue has been clarified by the Learned Counsel that they filed a refund claim for only for the period January 2010 to March 2010 whereas the input service was used for exports made thereafter as well. 12. The third argument of the Department was that the so called export proceeds were realised even before the invoices were issued. The FIRCs do not show the invoice numbers and therefore there is doubt whether any foreign exchange has been realised at all against the so called exported services. Learned Counsel clarified that they had got ..... X X X X Extracts X X X X X X X X Extracts X X X X
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