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TMI Blog2022 (10) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, 1994 - Rule 5 of CENVAT Credit Rules, 2004 is a mechanism specifically designed and comprehensively formulated for reimbursement of tax/duties paid on procurement of inputs/input service to the extent of these are attributable to service that are exported by the appellant. The consequences of denial of refund is not erasure from the CENVAT credit account but restoration therein for utilization in discharge of taxes/duties of services/goods cleared domestically. The procedure for claiming such refund, enshrined in notification no. 27/2012-Central Excise Act, 1944 (NT) dated 18 th June 2012, must necessarily be in conformity with the boundaries within which the claim of refund is initiated as per rule 5 of CENVAT Credit Rules, 2004. Neither of these provide for any option other than sanction of refund, subject of course, to eligibility of amount in accordance with the formula prescribed therein, and denial of the refund - By denial of refund as a consequence of denial of eligibility for CENVAT credit, the final outcome has traversed beyond the scope of rule 5 of CENVAT Credit Rules, 2004 and which, but for the finding on nexus, was to be attributed to the tax on the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to introduce courses on project management for all of which the overseas entity was invoiced at cost incurred therein with the addition of another 15%. According to them, this constitute the value of services that are exported from the country and that the income earned as delegate fee has been offered up for levy under Finance Act, 1994. They had, in exercise of the privilege of monetization extended by rule 5 of CENVAT Credit Rules, 2004 supplemented by notification no. 27/2012-CE(NT) dated 18th June 2012, sought refund of accumulated CENVAT credit of Rs. 1,71,30,345/- for the two half years of October 2013 to September 2014 and for every quarter thereafter till June 2016. The original authority denied them eligibility for credit to the extent of Rs. 35,71,865/- for alleged lack of nexus and, consequently, access to the credit already taken under rule 3 of CENVAT Credit Rules, 2004. In the impugned order disposing off challenge to the denial in the nine refund applications, the first appellate authority restricted the denial to Rs. 35,34,735/- and, in doing so, not only upheld the ground relied upon in the order of the original authority but, in relation to some of the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 3 read with Rule 14 ibid. In other words, since Rule 5 ibid itself is a self contained provision, designed with the sole objective of consideration of the refund application for the limited purpose of exportation of goods/services, the department is only confined to look into the aspect, whether the formula prescribed there under has been duly complied with by the claimant or not. 6. On careful examination of the above statutory provisions, it transpires that the reasons assigned by the authorities below in this case for denial of the refund benefit to the applicant shall not stand for judicial scrutiny inasmuch as other than the allegation of non-establishment of nexus, the department had never questioned nor pointed out any discrepancy, alleging that the ingredients mentioned in Rule 5 ibid have not been complied with by the appellant. Hence, I am of the considered view that refund benefit shall not be denied to the appellant. I find that entirely on the identical set of facts, this Tribunal in the case of Warburg Pincus India Pvt. Ltd.(Supra) has allowed the refund benefit to the exporter of service. The relevant paragraph in the said order is extracted herein bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, there is no requirement of satisfying the nexus between the input services and the output service provided by the service provider. Consequent upon substitution of the said Rule in the Union Budget 2012, the Tax Research Unit (TRU) of CBEC vide letter dated 16.03.2012 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 3. 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, the establishing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 27/2012-Central Excise Act, 1944 (NT) dated 18 th June 2012, must necessarily be in conformity with the boundaries within which the claim of refund is initiated as per rule 5 of CENVAT Credit Rules, 2004. Neither of these provide for any option other than sanction of refund, subject of course, to eligibility of amount in accordance with the formula prescribed therein, and denial of the refund. 10. The order of the original authority, goes a step further and, after questioning the eligibility for inclusion of the tax paid on the impugned services, has set aside the availment of CENVAT credit to that extent. The specific authority for doing so arises only from rule 14 of CENVAT Credit Rules, 2004 which has not been invoked in these proceedings. By denial of refund as a consequence of denial of eligibility for CENVAT credit, the final outcome has traversed beyond the scope of rule 5 of CENVAT Credit Rules, 2004 and which, but for the finding on nexus, was to be attributed to the tax on the input services used for rendering output service , and therefore the order itself is not in accordance with law. 11. This is in line with the decisions of the Tribunal in re PMI Organis ..... 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