TMI Blog2016 (9) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... to non-exigibility. There is no allegation of short-levy of tax against the appellant and the appellant has not made a claim that they are not liable to tax. The liability to pay tax having been accepted and the assertion that the taxable services are exempt only by reason of export having been accepted - Revenue cannot, take a stand that the service for which registration has been taken is not taxable – appeal disposed off. - ST/121 & 122/2009 - A/89227-89228/16/STB - Dated:- 17-8-2016 - Shri M V Ravindran, Member (Judicial) and Shri C J Mathew, Member (Technical) Shri N Anand, Advocate for the appellant Shri VK Singh, Special Counsel for the respondent ORDER Two appeals, both arising from common order-in-appeal no. PI/VSK/45 46/2009 dated 19th February 2009 of Commissioner of Central Excise (Appeals), Pune-I confirming rejection of claim of refund under Rule 5 of CENVAT Credit Rules, 2004, are before us. One refund of ₹ 45,08,047/- pertains to the period between January 2006 and March 2006 while the other for ₹ 4,49,65,933/- pertains to the period between April 2006 and March 2007. Acknowledging that some of the services rendered by appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental finding of ineligibility. Then, the bench was beset by difference of opinion on the eligibility for refund when the applicant renders service that is not taxable and which, on reference to third member, found convergence of opinion that maintenance or repair service rendered by appellant was not ineligible for refund but required to be remanded back for ascertainment that the claim for refund did relate to this activity. We are, in consequence, and regrettably so, bereft of that precedential wisdom in disposing off this appeal. 4. On perusal of the refund claims that are now in dispute we find that details of input services are enumerated therein. The computation has taken into account the proportionality attributable to the taxable services that were exported. Needless to say, the claims were preferred on the assumption that the credit of tax paid on input services used in rendering maintenance and repair service are eligible to be claimed as refund. We have also examined the ST-3 returns. These contain the value of services that are exported and the column for declaring value of service that is exempted is blank. It is interesting and pertinent to note that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exported products or services lacks even that saving grace - by taxing the recipient in another jurisdiction or the incongruity of placing the tax burden on the supplier who is not the intended object of the tax either. Hence, all tax systems provide the wherewithal for neutralizing the tax incidence on exported commodities and, invariably, implement that principle through the taxing statute. Both Central Excise Act, 1944 and Customs Act, 1962 do so. The present dispute, therefore, is attributable either to a lack of clarity in the Finance Act, 1994 or the unwillingness of tax administrators to acknowledge the existence of the wherewithal. Whichever that be, it devolves on us to eliminate the impediment. 7. Appellant is in the business of information technology that, in this era of global operations, enables overseas entities to be serviced from India in furtherance of their business goals. Typically, some aspect of their activities, being programmable, are run from remote locations using hardware at both ends, a communication interface connecting the two and command systems to set a process in motion. It is generally believed to be of mutual advantage to the provider and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification- Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax. Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilised for payment of service tax on any output service. Explanation: For the purposes of this rule, the words output service which is exported means the output service exported in accordance with the Export of Services Rules, 2005. with output service defined in rule 2(p) as any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise Act, 1944. These are the provision that confer general power of rule making on the Central Government. The said Rules are not relatable to any specific section of the two statutes. It is rule 3(4) of the CENVAT Credit Rules, 2004 that affords the contextual perspective thus: 3 . (4) The CENVAT credit may be utilized for payment of - (a) any duty of excise on any final product; or (b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or (c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or (d) an amount under sub rule (2) of rule 16 of Central Excise Rules,2002; or (e) service tax on any output service: CENVAT credit is not the mechanics of implementing an exemption from duty but is a manner of meeting tax obligations. The most obvious method of doing so is payment from accumulated value which, by universal acclaim, is measured as money. In India, money or rupee is accorded that statutory status as exchange for all, and any kind of, transactions by the Reserve Bank of India A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lidated Fund of India is sufficient to reinforce the eligibility of the appellant as provider of taxable service to take and avail CENVAT Credit even if the adjudicating authority has, with unconcealed lack of grace, brushed it aside as lacking sanctity owing to it being a self-assessed act. That same disdain is apparent in the disinclination to acknowledge the registration which is also dismissed as a voluntary act. Apparently, in the mind of the tax administrator empowered under a taxing statute, enacted by the sovereign legislative organ of the State, with a scheme of self-declaration and assessment that the adjudication authority could well have invested his wide-ranging investigating authority into, but did not, registration and payment of tax do not suffice to evince eligibility under CENVAT Credit Rules, 2004. Rejection of entitlement to credit without considering these aspects vitiates the finding of ineligibility. 16. With the legal entitlement to accumulate CENVAT Credit thus firmly and soundly established, the next condition of being unable to utilize the accumulated credit can be examined. The two lower authorities did not even proceed to this step and we, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertion in the context of the refund claim in dispute is certainly in serious doubt. Registration under the scheme of Finance Act, 1994 is the acknowledgment of having transacted in a taxable service ; should such a registrant keep itself out of the purview of the tax net, the obligation to determine liability to tax shifts to the proper officer. Having registered itself under the appropriate provision, discharged its tax liability, such as it was, and complied with the obligation to submit returns, attempting a foray of the fundament by the two lower authorities is not only not sanctified by law but is akin to excavation of the foundation after the superstructure is erected - a pointless exercise that only places impediments in the operations of a contributor to the foreign exchange reserves of the country and a provider of daily bread to thousands. With the registration and subsequent compliance with Finance Act, 1994 and Service Tax Rules, 1994, the appellant is, clearly and undoubtedly, within the ambit of CENVAT Credit Rules, 2004. 19. There is no finding by both lower authorities that the said services have not been utilized by the appellant; nor is there any allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment in deciding the appeals of Apotex Research Pvt Ltd Others v Commissioner of Customs Others [2014-TIOL-1836-CESTAT-BANG], the stand of Revenue was made clear thus 6.12 Learned A.R. on behalf of the Revenue submitted that this decision was given in the case of 100% E.O.U. and therefore applying the same to other units which are not 100% E.O.U. was not correct . The appellant in this dispute being a Software Technology Parks of India unit, which is of the same status as 100% Export Oriented Unit in the Foreign Trade Policy, the contention of Revenue before us is, therefore, not acceptable. In KPIT Cummins Infosystems Ltd v Commissioner of Central Excise, Pune -I [2013 (32) STR 356 (Tri-Mumbai)] also, the Tribunal took note of rule 5 of CENVAT Credit Rules, 2004 and notification no. 5/2006-CE (NT) dated 14th March 2006 to hold that 5.6 The appellant mPortal India Wireless Solutions P. Lt. was also a 100% EOU and the transactions undertaken are also identical in the sense that they relate to export of software. Therefore, the above decision is squarely applicable to the facts of the case before us. In any case, the object of the EXIM Policy of the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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