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TMI Blog2022 (8) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... essee (10, 11 of the Form A). Whatever taxes are paid utilizing the cenvat credit availed during the period will automatically get deducted because if an assessee has utilized certain portion of the credit, then that amount would not be available as a balance on the close of the month/quarter in which the refund is sought. This Balance of CENVAT Credit is stated at Sl No 12 in the Form A. It is also clear that that while filing the refund claim claimant has to debit the amount claimed by him as refund under Rule 5 from his CENVAT Account. Above prescriptions clearly show that the lower authorities have been in error while deducting the amount of the credit that would have been utilized for payment of the taxes/duties in respect of the domestic clearances from the total CENVAT Credit taken while determining the Net CENVAT Credit for application of formula as per Rule 5. Appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 85676-85677 of 2016 - A/85809-85810/2022 - Dated:- 26-8-2022 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND MR. AJAY SHARMA, MEMBER (JUDICIAL) Shri Prasad Paranjape, Advocate, for the Appellant Shri Prabhakar Sharma, Superin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cenvat credit. For this purpose reliance is placed on the following:- Circular No.120/01/2010-ST, dated 19.01.2020 Morgan Stanley Advantage Services Ltd. [2015 (37) STR 639 (Tri.-Mum)] Convergys India Pvt. Ltd. [2009 (16) STR 198 (Tri.- Del.)] Cross Tab Marketing Services Pvt. Ltd. [2021 (55) GSTL 29 (Tri.-Mum)] BNP Paribas India Solution Pvt. Ltd. [2022 (58) GSTL 539 (Tri.-Mum)] BNP Paribas India Solutions Pvt. Ltd. [2020 (2) TMI 224-CESTAT-Mumbai. Accordingly modification of refund claim on this ground cannot be sustained. On the second issue, by referring to formula as prescribed by Notification No.05/2006, it is seen that the formula is based on the total cenvat credit availed during the period for which refund claims have been filed. Any deduction from that will be contrary to the prescription by the formula. There is no bar in discharging the service tax liability from the opening balance available with them. If the formula is correctly applied, there cannot be any reason for modification of the refund from what has been availed by the appellant. 3.3 Learned Authorised Representative reiterates the findings recorded in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Cenvat credit. Its only Rule 14 ibid which provides for recovery of irregularly availed Cenvat credit. I find force in the submission of Learned Counsel that since availment of credit has not been questioned by the department in terms of Rule 14 ibid, the refund benefit cannot be denied on the ground of non-establishment of nexus between input and the output services. This Tribunal in Appellant s own case on an identical issue, for the period April, 2012 to March, 2013 and April, 2016 to September, 2016 in the matter of M/s. BNP Paribas India Solutions Pvt. Ltd. v. Commissioner of CGST, Mumbai East reported in 2020 (2) TMI 224-CESTAT Mumbai, set aside the denial of refund by the department to the Appellant on the ground of non-establishment of nexus between the input and output services, after discussing Rule 5 ibid in detail. The relevant extract of the said order is as under : xxxx xxxx xxxx 6. Rule 5 of the Cenvat Credit Rules was substituted by Notification No. 18/2012-C.E. (N.T.), dated 17-3-2012 (w.e.f. 1- 4-2012). Under the said substituted rule, it has been provided that the manufacturer or the service provider has to claim the refund as per the formula presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C vide letter dated 16-3-2012 has clarified as under :- F.1 Simplified scheme for refunds : 1. A simplified scheme for refunds is being introduced by substituting the entire Rule 5 of Cenvat Credit Rules, 2004. The new scheme does not require the kind of correlation that is needed at present between exports and input services used in such exports. Duties or taxes paid on any goods or services that qualify as inputs or input services will be entitled to be refunded in the ratio of the export turnover to total turnover. 2. xx xx xx 4. On perusal of the statutory provisions read with the clarifications furnished by the TRU, it transpires that under the substituted Rule 5 of the rules, there is no requirement of showing the nexus between the input service and the output service provided by the assessee. Since the refund under the said amended rule is governed on the basis of receipt of export turnover to the total turnover, establishing the nexus between the input and output service cannot be insisted upon for consideration of the refund application. 8. In view of above, the impugned order, insofar as it has denied the refund benefit on the ground of non-esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was denied to the assessee-appellant on the sole ground that there was no nexus between the input services and the output service exported by the appellant. Further, in Revenue s appeal, it has been contended that certain disputed services are not conforming to the definition of input service provided under Rule 2(l) ibid. Insofar as taking of irregular Cenvat credit is concerned, Rule 14 ibid clearly mandates that in case of irregular availment of credit or its utilisation, such credit can be recovered from the assessee and for effecting the recoveries, the provisions of Section 11A of the Central Excise Act, 1944/Section 73 of the Finance Act, 1994 shall apply mutatis mutandis. It is an admitted fact on record that the department has not invoked the provisions of Rule 14 ibid for effecting recovery of the alleged irregular Cenvat credit availed by the assessee-appellant. Thus, under such circumstances, it can be said that taking of Cenvat credit on the disputed services by the appellant is in conformity with the Cenvat statute. Rule 5 ibid nowhere specifies that Cenvat credit can be denied on the ground of irregular availment or utilisation of the same. Thus, in absence of spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucts and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking; (D) Export turnover of services means the value of the export service calculated in the following manner, namely:- Export turnover of services = payments received during the relevant period for export services + export services whose provision has been completed for which payment had been received in advance in any period prior to the relevant period advances received for export services for which the provision of service has not been completed during the relevant period; (E) Total turnover means sum total of the value of (a) all excisable goods cleared during the relevant period including exempted goods, dutiable goods and excisable goods exported; (b) export turnover of services determined in terms of clause (D) of sub-rule (1) above and the value of all other services, during the relevant period; and (c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed. (2) This rule shall apply to exports made on or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount [shall be equal to the Amount claimed as refund (14)] 4.6 On perusal of the above Form A at Sl No 3, it is quite evident that for computation of the Net CENVAT Credit is done on the basis of total cenvat credit taken on inputs and input services. From the total CENVAT Credit taken deductions is made of the amounts reversed under Rule 5C of the CENVAT Credit Rules, 2004. The formula is very clear on this aspect that no deduction from the total cenvat credit taken will be made on any other account while computing the Net CENVAT Credit. The s formula under Rule 5 determines the maximum eligible refund to the assessee (10, 11 of the Form A). Whatever taxes are paid utilizing the cenvat credit availed during the period will automatically get deducted because if an assessee has utilized certain portion of the credit, then that amount would not be available as a balance on the close of the month/quarter in which the refund is sought. This Balance of CENVAT Credit is stated at Sl No 12 in the Form A. The Form A at 13 asks for the Balance Amount available in the CENVAT account of the claimant on the date of filing the refund claim and as per 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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