TMI Blog2016 (8) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... e period prior to 1/03/2006, during which period credit of service tax paid on services used for manufacture of goods exported was not permissible at all. Refund denied - Decided against the assessee. - APPEAL No.E/1470/11 - ORDER NO. A/87041/2016-WZB/SMB - Dated:- 12-4-2016 - Mr. Raju, Member (Technical). Ms.Manasi Patil, Advocate for the appellant. Shri.Ajay Kumar, Jt. Comm. (AR) for the respondent. ORDER: 1. The appellant, M/s.Renfro India Pvt. Ltd. filed a refund claim under Rule 5 of the Cenvat Credit Rules, 2004 on 17/09/2007. A show-cause notice was issued proposing to deny the refund claim on the grounds that the appellants have not given any evidence that the services were used in respect of exports during the given period as required under Rule 5 of the Cenvat Credit Rules. The refund claim was rejected by the Deputy Commissioner on 23/07/2009 on the ground that the appellant had failed to establish that the claim was in respect of services used in manufacture of goods which are ultimately exported during the quarter. It was also observed that the appellants have failed to give documentary evidence regarding the availment of credit and the use in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instead he claimed that since the assessee is entitled to avail credit and he had taken credit for the past period, during the given period i.e. during the quarter and/or months to which the claim relates. Therefore, he held that the appellants satisfied the conditions of the Notification No.5/2006-CE(NT) dated 14/03/2006. As regards the use of services during the periods and co-relation between inputs and outputs he relied on para 2.3 of the Circular No.120/01/2010-ST dated 19/01/2010 which according to him clarified that an exporter or his Chartered Accountant is required to certify the invoices about the co-relation and the nexus between the input/output service and the exports. He did not go into this issue (iii) at all. 3. In view of the above, he did not examine the documents as were required under the order of the Commissioner (Appeals). In respect of the observation (iv) and (viii) there were no findings. The Assistant Commissioner sanctioned the refund claim of ₹ 37,70,628/- under Rule 5 of the Cenvat Credit Rules, read with Section 11B of the Central Excise Act, 1944. Aggrieved by this order, the Revenue challenged it before the Commissioner (Appeals) on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner to examine certain points listed in his order. Point No. (iii) specifically asked the Assistant Commissioner to examine whether the accumulated credit pertains to the inputs gone into production of the goods exported during the same quarter and whether the cost of such services has been included in the assessable value. I find that the Assistant Commissioner has not answered the question at all. Instead he has held that there is no need for any one to one co-relation between the input service and the export goods. It seems that the Assistant Commissioner has not appreciated the issue in proper perspective. While there are plethora of judgements which way one to one co-relation is not necessary while availing credit. However, the issue of nexus between the inputs and services used for export goods is a different issue altogether. The issue of one to one co-relation pertains to co-relation between the inputs used during a particular period with the products manufactured during that period. In other words, if 100 Kgs pipes are used to manufacture five structures then it is not possible to co-relate which pipe has been used in which structure without maintaining detailed rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar is provided in the notification, there should not be any objection in allowing refund of credit of the past period in subsequent quarters. It is possible that during certain quarters, there may not be any exports and therefore the exporter does not file any claim. However, he receives inputs/input services during this period. To illustrate, an exporter may avail of ₹ 1 crore as input credit in the April-June quarter. However, no exports may be made in this quarter, so no refund is claimed. The input credit is thus carried over to the July-September quarter, when exports of ₹ 50 lakh and domestic clearances of ₹ 25 lakh are made. The exporter should be permitted a refund of ₹ 66 lakh (as his export turnover is 66% of the total turnover in the quarter) from the Cenvat credit of ₹ 1 crore availed in April-June quarter. The illustration prescribed under para 5 of the Appendix to the notification should be viewed in this light. However, in case of service providers exporting 100% of their services, such disputes should not arise and refund of Cenvat credit, irrespective of when he has taken the credit, should be granted if otherwise in order. Such expor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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