2021 (9) TMI 979 - AT - Service Tax

Refund of accumulated credit - Input services - Banking and Financial Services - Cab Operator Services - Courier Services - Maintenance and Repair Services - Market Research Agency Service - Rule 5 of the CENVAT Credit Rules, 2004 as amended by the Notification No 18/2012 -CX (NT) dated 07.03.2012 - HELD THAT - From the plain reading of the said rule it is evident that the amended rule 5, does not require establishment of any nexus between the input services and the exported services. The rule only provides that the admissible refund will be proportional to the ratio of export turnover of goods and services to the total turnover, during the period under consideration, of the Net CENVAT credit taken during that period. Undisputedly in the refund proceedings under Rule 5 of CENVAT Credit Rules, 2004 as amended any such attempt whereby credit availed during the period under consideration is sought to be denied or varied, is not permissible. If the quantum of the Cenvat Credit is sought to be varied, by holding that certain services do not qualify as input services then the same could have been done by invoking the provisions of Rule 14 of the CENVAT Credit Rules, 2004. Since the Commissioner (Appeals) has by the impugned order held the refund to be admissible, to the extent of CENVAT Credit held admissible by him subject to verification of the documents by the original authority, his order is modified to this extent i.e. that entire credit as claimed by the Appellant for determining the refund amount is held admissible if not held admissible in proper proceedings initiated under Rule 14 of the CENVAT Credit Rules, 2004. The appeal filed is thus allowed subject to verification of the subject documents by the adjudicating authority, for which the matter is remanded to original authority - appeal allowed by way of remand.

Summary

Issues:
- Admissibility of CENVAT credit for refund claim on various input services
- Rejection of refund claim by Deputy Commissioner
- Partial allowance of appeal by Commissioner (Appeals)
- Appeal before CESTAT challenging impugned order
- Interpretation of Rule 5 of CENVAT Credit Rules, 2004
- Nexus between input services and exported services for refund claim

Analysis:

The judgment involves the admissibility of CENVAT credit for a refund claim on multiple input services by an appellant engaged in service exports. The appellant sought a refund of accumulated credit for the quarter July-September, 2012, which was rejected by the Deputy Commissioner. Subsequently, the Commissioner (Appeals) partially allowed the appeal, leading to the appellant appealing before CESTAT.

In the detailed analysis, the Tribunal considered the impugned order, submissions made during the appeal, and the nexus between input services and exported services for refund purposes. The Commissioner (Appeals) had held certain services, including air travel agent services, banking services, and courier services, as inadmissible for CENVAT credit. However, the Tribunal highlighted that Rule 5 of CENVAT Credit Rules, 2004, as amended, does not necessitate establishing a direct nexus between input services and exported services for claiming a refund.

Citing precedents such as Accelya Kale Solutions Ltd. and TPG Capital India Pvt Ltd, the Tribunal emphasized that any attempt to deny or vary the CENVAT credit availed during the period under consideration is impermissible in refund proceedings under Rule 5. The Tribunal noted that the amended rule allows for a simplified scheme for refunds without the need for a strict correlation between exports and input services used.

Consequently, the Tribunal found that the Commissioner (Appeals) had misdirected himself by disallowing certain input services for the refund claim. The Tribunal modified the impugned order to hold the entire credit claimed by the appellant as admissible for determining the refund amount, subject to verification by the original authority under Rule 14 of the CENVAT Credit Rules, 2004. The appeal was allowed, and the matter remanded to the original authority for further proceedings within a specified timeframe.

In conclusion, the Tribunal's judgment clarified the interpretation of Rule 5, emphasizing the permissible scope for claiming CENVAT credit for a refund without stringent requirements of establishing a direct nexus between input services and exported services, ultimately providing relief to the appellant in this case.