2017 (4) TMI 1660 - AT - Central Excise

CENVAT Credit - export of services - output service provider as per Rule 2(p) of CCR 2004 or not - input service - Rule 2 (1)(i) and rule 6 (1) of CCR 2004 - HELD THAT - Had such Cenvat credit been not admissible the Revenue could have issued show cause notice for recovery of such inadmissible Cenvat credit whereas the fact is that no such show cause notices were issued for recovery of said Cenvat credit. It is found that the ground here is misconceived as the refund of Cenvat credit taken by the manufacturer or provider of taxable service is admissible to both. Thus there are no merits in the grounds of appeal filed by revenue and the same is dismissed.

Summary

The Appellate Tribunal (CESTAT Allahabad) dismissed the revenue's appeal against the Order-in-Appeal dated 29/04/2009, which had allowed refund claims filed by M/s Free Scale Semiconductors India (P) Ltd., a 100% EOU and STPI unit, for Cenvat credit on input services used in exporting business auxiliary services to its USA parent company. The revenue contended that the respondent was not providing any taxable service under the Finance Act, 1994 during the relevant period and thus could not claim Cenvat credit under Rule 2(p), Rule 2(1)(i), and Rule 6(1) of the CCR, 2004. The Tribunal rejected this ground, noting that if the credit were inadmissible, the revenue would have issued a show cause notice for recovery, which it did not. Crucially, the Tribunal held that "refund of Cenvat credit taken by the manufacturer or provider of taxable service, is admissible to both." Therefore, the appeal lacked merit and was dismissed, with the respondent entitled to consequential benefits "in accordance with law."