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2016 (9) TMI 691 - CESTAT CHENNAI

2016 (9) TMI 691 - CESTAT CHENNAI - 2017 (48) S.T.R. 137 (Tri. - Chennai) - Refund of cenvat credit - 100% EOU - export of services - appellant is a 100% EOU engaged in the service of information technology service named E publishing of books , they are exporting output service namely information technology software service which is covered under section 3(iii) of the Service Tax Rules, 2005 - Held that:- renting of immovable property service is having direct nexus in the manufacture of goods. R .....

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e, such services are directly related to output service and fully satisfy the definition of input service as given in Section 2 (l) of the CCR, 2004, and accordingly shall be eligible for refund (except for meal charges/food coupon). - Rejection of refund on procedural grounds / lapses - Held that:- the impugned O-in-As to the extent of rejection of refund, on grounds of non availability of service tax registration numbers, is not maintainable and the same is liable to be set aside and appea .....

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with the principles laid down by the Supreme Court in the case of Ramala Sahkari Chini Mills Ltd. [2016 (2) TMI 902 - SUPREME COURT] - Decided in favor of assessee. - Appeal Nos. ST/42508/2015 & ST/42509/2015, Appeal Nos. ST/42510/2015 to ST/42518/2015 , Appeal Nos. ST/42519 to 42536/2015 - Final Order No. 41497-41525/2016 - Dated:- 7-9-2016 - Shri P. K. Choudhary, Judicial Member Shri S. Ramachandran, Consultant For the Appellant Shri A. Cletus, ADC (AR) For the Respondent ORDER All the 29 app .....

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Bank Charges, Consultancy, Courier charges, Maintenance, Renting of Immovable property, Security Software, Telephone, Training and foreign Outsourcing service etc and used them for rendering the output services exported and had filed refund claims on various dates under Rule 5 of the CCR 2004 read with Notifn.No.5/2006CE(NT) dt.14.03.2006. 3. While the original adjudicating authority had granted refund, revenue had preferred an appeal before the Commissioner (Appeals) stating that certain servi .....

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In respect of certain input credit invoices, service tax was not mentioned in the invoices 55,578 284 & 285/2015 dated 25.09.2015 176/2013 dated 31.12.2013 and 01/2014 dated 06.01.2014 Certain credits did not satisfy input service definition and not eligible 2,98,594 In certain invoices details like nature of service, value of service, service tax regn. number etc were not found mentioned 1,18,427/- service tax was not claimed in invoices 78,508 2. ST/42510 to ST/42527/2015 August, 2010 to M .....

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.15 Order in Original No.53 to 58/2012-RF dt.02.05.2012,59/2012(RF) dt.11.05.2012 & 71 & 72 (RF) dt. 14.06.12 The break up of denial on account of ineligible input service is given below: Particulars ST /42508 & 42509/2015 (Note) ST/42510 TO ST/42527/2015 ST/42528 42536/2015 Renting of Immovable Property Services 9,18,340 4,79,065 Rent-a Cab Services 33,167 12,714 Consultancy Service 6,95,429 83,260 Food Pass 111 25 House Keeping Services 76,639 Antecedent Charges 9,765 3,589 Profess .....

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ice has not been provided. But since the order deals only with two issues namely management consultancy and sewage treatment, I am giving my observations for these two services. 4. Shri S. Ramachandran, learned consultant for the appellant, as regards denial of input service, submitted that the learned Commissioner (Appeals) had given a narrow interpretation of inclusive part of definition and rejected refund on certain input services, which is totally incorrect since the services specified in i .....

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CBEC circular No.120/01/2010-S.T. dated 19.01.2010 which states as follows:- 3.1 Use of different phrases in rules and notification [para 2(a)] : 3.1.1?The primary objection indicated by the field formations is that the language of Notification No. 5/2006-C.E. (N.T.) permits refund only for such services that are used in providing output services. In other words, the view being taken is that to be eligible for refund, input services should be directly used in the output service exported. As rega .....

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as given in Rule 2(l)(ii) of CENVAT Credit Rules, 2004, includes within its ambit all services used in or in relation to the manufacture of final products and includes services used directly or indirectly . Similarly Rule 2(l)(i) of Cenvat Credit Rules also gives wide scope to the input services for provider of output services by including in its ambit services used.... for providing an output service . Similar is the case for inputs. 3.1.2 Therefore, the phrase, used in mentioned in Notificatio .....

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by the appellants since in the absence of use of these input services, it would adversely affect the quality and efficiency of the provision of output service. 6. As regards, denial of credit on account of non availability of registration, details of input service providers, The learned counsel for the appellants submitted the registration details of such input service providers, which had been collected from the CBEC official website and had been provided before the Ld. Commissioner (Appeals), .....

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ejection of refund on ground that service tax was not claimed in invoices, the learned counsel submitted that they had made service tax payments under reverse charge. They also produced copies of invoices in support of their claim. 9. Shri A. Cletus, ADC (A.R), representing the Department had re-iterated the Order in Appeal. 10. I have carefully gone through the records and heard both sides. The brief facts of the case is that the appellant is a 100% EOU engaged in the service of information tec .....

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the issues to be addressed in this appeal: a) Whether the appellants are eligible for refund under Rule 5 of the Cenvat Credit Rules 2004 for the input service under dispute? b) Whether rejection of refund is valid for reasons such as non mention of service tax registration number on the invoice, description of input service not mentioned properly, service tax not claimed in invoices? Now, I take up the first issue in detail: i) RENTING OF IMMOVABLE PROPERTY SERVICES: 11. With regard to the eli .....

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ate the staff & employees. 12. It is an undisputed fact that the appellants are engaged in providing output service namely E publishing of books, and it is impossible for the appellants to provide the service without building or a proper premises, absence of which would adversely affect the quality and efficiency of the provision of service exported. Therefore, as clarified by CBEC vide circular dated 19.01.2010, I find that rent has a direct nexus with the output service provided by the app .....

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ervice 13. With regard to rent a cab service, it was submitted by the appellant that they have incurred expenses of transportation/rent-a-cab service for providing their output service and for rendering qualitative service which has a direct relation to the provision of their service and hence cannot be construed as a mere welfare measure and placed reliance on the following case laws:- 1. CCE Bangalore-I vs. Interplex Electronics India Pvt. Ltd - 2015 (039) STR 0578 Kar. 2. CCE NASIK Vs CABLE C .....

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the Rent-a-Cab service. iii) CONSULTANCY SERVICES 14. As regards management consultancy service, the appellants submitted that they had provided expert guidance by conducting seminars in the area of sales, marketing and business promotion activities and consultancy support services by way of demonstration of capabilities of the company in rendering of service to the foreign clients, strategic support in finalization of price, delivery schedules and marketing strategies etc. I find that no busin .....

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ent verification through specialized agencies helps them in recruiting required manpower as per the specifications and technical requirement of the client. 16. I find that the recruitment of employees and their background verification is very essential in providing efficient and quality output. Hence the antecedent charges are in relation to their providing of output service and credit cannot be denied to the appellants. Reference was also invited to the decision in the case of CCE Hyderabad-IV .....

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safe and healthy atmosphere to its employees. I find that it is essential for a service provider to keep its premises clean and hygienic for the smooth running of its business and hence is in relation to their output service. Therefore, the credit on this service is eligible. Reliance was placed on the decision in the case of CCEx, Chennai vs. Rotork Control (India) Pvt Limited reported in 2010 (277) ELT 217. vi) PROFESSIONAL CHARGES 18. I find that these charges were paid to Man Power Recruitme .....

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ants is not acceptable for the reason that meal coupon is one of a welfare activity for the employees and definition under Rule 2 (l) cannot be stretched too far to make the welfare activities also within the purview of the input service definition and hence the credit is not eligible for such services. viii) DG HIRE CHARGES 20. With regard to the DG HIRE CHARGES, it was submitted by the appellant that for rendering of continuous service to their clients located abroad, continuous power supply w .....

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sonal benefits and was availed for the appellant's electronic systems and appliances which are in relation to their output service and hence is covered under the definition of input service as provided under Rule 2(l) of CCR 2004. Reliance is placed on the decision of this Tribunal in Final Order no 41321/2015 dated 01.10.2015 in the matter of M/s Sterilite Industries. x) SUBSCRIPTION CHARGES 22. With regard to the SUBSCRIPTION CHARGES, I find that it is very much essential to keep abrest of .....

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ms House agents services are very pivotal for the appellants services since they are engaged into export of services hence the credit cannot be denied to the appellants. xii) SEWAGE TREATMENT 24. I also find that the learned appellate authority had also rejected the refund covered by certain invoices pertaining to maintenance of sewage treatment plant which were as per the statutory requirement imposed under the Water Consent Order issued by the Puducherry Pollution Control Committee in pursuant .....

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protect the environment and maintenance of sewage treatment had already been accepted by the Hon ble Supreme Court in the case of Indian farmers and Fertiliser Coop Ltd vs. CCE Ahmedabad, reported in 1996 (86) ELT 177 (SC) at para 9, it has held as follows:- It is too late in the day to take the view that the treatment of effluents from a plant is not an essential and integral part of the process of manufacture in the plant. The emphasis that has rightly been laid in recent years upon the enviro .....

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of sewage treatment plant. xiii) AIR TRAVEL AGENT 26. I find that the services of the air travel agent was availed for making travel arrangements of employees to meet clients in connection with marketing and accordingly shall be eligible for refund. xiv) CHARTERED ACCOUNTANT SERVICE 27. With regard to the Chartered Accountant service, I find that it is part of the auditing activity and is done to ensure accuracy of financial and other records which are vital for the business of the appellant. Fu .....

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egard to manpower recruitment and supply agent, reference was placed on the decision in Garware Polyster Ltd Vs. CCE Aurangabad 2012 (26) STR 215 (Tri. Mum.). credit was also denied by the LAA on the services of manpower recruitment and supply agent also which they had availed to secure skilled and qualified man power to perform the output services. Accordingly, credit is allowed for the same and shall be entitled for refund. xvii) LEGAL CONSULTANCY SERVICES 30. With regard to the credit availed .....

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cal Inspection services, I find that both the services play significant role in the export of services and hence, the credit availed by appellant is very much in order and consequently appellant would be very much eligible for the refund. 32. It is evident that without availing all these services, the appellant would not be in a position to provide the output service of E Publication of Books. Absence of it would adversely affect the provision of output service. Hence, such services are directly .....

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ilability of registration details of input service providers 34. As regards denial of credit on account of non availability of registration details of input service providers, it is seen from the order of the Ld. Commissioner(Appeals), that a credit of ₹ 55,578/- had been rejected for the reason that the invoice copies did not contain the registration number of the service provider. The learned counsel for the appellants submitted that the registration details of such input service provide .....

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same, the impugned O-in-As to the extent of rejection of refund, on grounds of non availability of service tax registration numbers, is not maintainable and the same is liable to be set aside and appeal is liable to be allowed. ii) Description of input service not mentioned properly 36. With regard to the rejection of refund covered by certain invoices on grounds that description of input service not mentioned properly, it is seen that the appellant gave clear evidences before Commissioner (Appe .....

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37. As regards the rejection of refund of ₹ 78,508/- on the ground that service tax was not claimed in invoices, the appellant had proved with documentary evidences, that for such invoices they had made service tax payments under reverse charge and had also produced copies of invoices and accordingly they were very much eligible for refund. In view of the same, the rejection of refund of ₹ 78,508/- covered by such input service invoices are totally incorrect and the impugned O-in-As .....

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