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2016 (8) TMI 130 - CESTAT Mumbai

2016 (8) TMI 130 - CESTAT, Mumbai - 2016 (43) S.T.R. 385 (Tri. - 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 1 .....

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s or the notification issued thereunder. - It can be seen that most of 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 .....

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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 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 .....

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s provided they are used for manufacturing and have been used for providing 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 an .....

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dit Rules, 2004 have not been complied with. (vi) Obtain documents for verification 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 an .....

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006. 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 .....

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ere is no co-relation between the services and the goods exported during the 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 se .....

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een held in the case of CCE Vs. Motherson Sumi Electric 2010 (258) ELT 543 (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 .....

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claim is barred by limitation as the services were availed in the year 2004, 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 durin .....

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dit. 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 record. In such case, one to one c .....

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t used for the manufacture of goods which were exported during January to March 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 se .....

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nly required to make a basic scrutiny of the documents and, if found in order, 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 .....

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ters. 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 S .....

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the credit, should be granted if otherwise in order. Such exporters may be 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 expor .....

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