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Renfro India Pvt. Ltd. Versus Commissioner of Central Excise, Respondent Pune-III

2016 (8) TMI 130 - CESTAT, Mumbai

Refund - Rule 5 of the Cenvat Credit Rules, 2004 - eligible input services - proof / evidence that the services were used in respect of exports - Held that:- It can be seen that Notification No.5/2006 provided for refund of Cenvat credit availed in respect of inputs or input services used in or in relation to manufacture of final products which is cleared for export under bond or letter of undertaking. However, prior to 14/03/2006 Notification No.11/2002-CE (NT) dated 01/03/2002 provided for suc .....

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the credit claimed by the appellant pertains to the 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 In .....

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n 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 the export goods. The appellant agitated the matter before the Commissioner (Appeals), who set aside the order-in-original vide order-in-appeal No.PIII/VM/269-275 dated 22/12/2009 and remanded the matter to the original adjudicating authority for determination of foll .....

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input services. The adjudicating authority should examine whether the services related to the business activity in the light of definition of input services as per Rule 2 (1) of Cenvat Credit Rules, 2004. Proper reasoning as to why and how they do not relate to the goods exported may be noted. (iii) Whether the accumulated credit pertains to the inputs gone into the production of goods exported during the same quarter and whether the cost of such services has been included in the Assessable Val .....

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fication as required. (vii) Give copies of the show cause notices and give opportunity of hearing. (viii) To verify from records, as to whether the cost of input services formed part of the assessable value. 2. The matter was adjudicated afresh by the Assistant Commissioner. The Assistant Commissioner complied with the direction of (i) (ii) and came to the conclusion that input credit in respect of services except club and association services would be admissible under the Cenvat Credit Rules. S .....

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een 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 .....

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e quarter January to March 2007. In view of that it was argued that there was no nexus between the input services and the goods exported. The Commissioner (Appeals) set aside the order of the Assistant Commissioner sanctioning the refund and directed the appellant to deposit the primarily sanctioned refund with the applicable rate of interest. This was ordered on the ground that the credit was availed in respect of the services used in 2004, 2005 & 2006 and it had no nexus between the export .....

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(T) and in the case of Capiq Engineering Pvt. Ltd. 2009 (245) ELT 186 (T). She also argued that the decision of Motherson Sumi Electric (supra) has been upheld by the Karnataka High Court 2012 (278) ELT 177 (Kar). She also argued that the requirement of one to one co-relation between inputs and output service has been done away with vide Circular No.120/01/2010-ST dated 19/01/2010 and therefore, no co-relation is required. She also relied on para 3.3 of the said Circular wherein it has been held .....

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4, 2005 & 2006 whereas the refund has been filed in 2007. 6. I have considered the rival submissions. 7. The Commissioner (Appeals) had specifically remanded the matter to the Assistant Commissioner 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 .....

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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 record. In such case, one to one co-relation is not necessary and the credit can be allowed on the basis of r .....

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arch 2007. It is a fact that services are consumed immediately and cannot be stored. Thus, it cannot be said that the condition of the Notification No.05/2006-CE (NT) has been satisfied. The CBEC Circular in para 3.2.1 states as follows: 3.2.1 Similar problem of co-relation and scrutiny of large number of documents was being faced in another scheme [Notification No. 41/2007-S.T., dated 6-10-2007] which grants refund of service tax paid on services used by an exporter after the goods have been re .....

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er, sanction the refund within one month. The reports from the field show that this has improved the process of grant of refund considerably. It has, therefore, been decided that similar scheme should be followed for refund of Cenvat credit under Notification No. 5/2006-C.E. (N.T.). The procedure prescribed herein should be followed in all cases including the pending claims with immediate effect. Para 3.2.1 with reference to one to one co-relation between inputs/input services and the export goo .....

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orts 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 ₹ .....

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asked to file a declaration to the effect that they are exporting 100% of their services, and, only if it is noticed subsequently that the exporter had provided services domestically, the proportional refund to such extent can be demanded from him. The said para lays down that if during a particular period a certain amount of credit is taken on the basis of services/input received during that period and there are no export during that period then the same credit can be considered for the subsequ .....

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