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2020 (10) TMI 57 - AT - Service TaxCENVAT Credit - input services - Health Insurance service - Cargo Handling service - Photography Services - period 2009-10 to 2011-12 (up to February, 2012) - denial on the ground of nexus - rejection of refund claim - provisions of Rule 14 ibid at the stage of availment of alleged Cenvat credit not invoked - incorrect application of formula as prescribed under Notification No. 5/2006 – C.E. (N.T.) dated 14.03.2006. CENVAT Credit - denial on account of nexus - HELD THAT:- Insofar as the definition of ‘input service’ is concerned, Rule 2(l) ibid defining the said term undergone an amendment vide Notification No. 3/2011 – C.E. (N.T.), dated 01.03.2011, w.e.f. 01.04.2011. Under the unamended provisions (effective up to 31.03.2011), the phrase ‘activities relating to business’ was specifically finding place in the inclusive part of the definition of ‘input service’. The inclusive definition in a fiscal statute is a well recognized device to enlarge the meaning of the word defined and it expands the meaning of the basic definition - In the present case, since some portion of the disputed Cenvat credit was availed by the appellant after amendment of the definition of ‘input service’ w.e.f. 01.04.2011 for the alleged personal benefit of its employees, as per the statutory provisions, the Cenvat credit shall not be available on the disputed services. The impugned order has not quantified the service tax amount availed by the appellant before 01.04.2011 and the period thereafter. Thus, the matter is required to be examined at the original stage for ascertaining the quantum of Cenvat credit availed by the appellant for the period after 01.04.2011 and if such availment of credit is in context with the services for personal use or consumption of the employees, then the benefit of Cenvat credit should not be available to the appellant - matter on remand. Refund of CENVAT credit - non-invocation of provisions of Rule 14 ibid at the stage of availment of alleged Cenvat credit - HELD THAT:- In the present case, it is an undisputed fact on record that the department had not proceeded against the appellant for effecting recovery of the allegedly availed irregular Cenvat credit, by taking recourse to Rule 14 ibid read with Section 73 ibid. On the other hand, the department had raised the issue of non-establishment of nexus between the input services and exported output service for the first time, while adjudicating the subject refund claims filed under Rule 5 ibid by the appellant - In view of the settled position of law, there is no requirement of establishing one to one correlation between the input services and the output service. Based on adoption of prescribed formula, the refund application alone should be processed and settled by the department and the aspect of direct nexus or correlation between the input service and output service should not be looked into for such purpose - there are no merits in the impugned orders, insofar as the refund benefit was denied to the appellant on the ground of non-establishment of direct nexus between the input services and the output service exported by it - Refund allowed - decided in favor of assessee. Incorrect application of formula as prescribed under Notification No. 5/2006 – C.E. (N.T.) dated 14.03.2006 - HELD THAT:- Since, the specific issue regarding adoption of the formula prescribed under Rule 5 ibid has not been discussed by the authorities below, the matter should be remanded to the original authority for a fresh finding on the issue, whether the requirement of the said rule has actually been complied with by the appellant - matter on remand. Appeal allowed in part and part matter on remand.
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