TMI Blog2018 (3) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... ovider is given the benefit to claim refund of the taxes paid on input/input services used for providing output service. In KPIT Cummins Infosystem Ltd. vs. Commissioner of Central Excise, Pune I [2013 (7) TMI 124 - CESTAT MUMBAI], the refund was rejected for the reason that the output services viz. software development and consultancy service during the relevant period was an exempted service. The Tribunal held the availment of credit to be proper even though output services are not taxable. The Commissioner (Appeals) has rightly held that the respondent is eligible for refund of CENVAT credit even though the output services is exempted from the levy of service tax under N/N. 8/2003. Appeal dismissed - decided against Revenue. - ST/426/2010, ST/608/2010, ST/609/2010 - Final Order Nos. 40609-40611 / 2018 - Dated:- 14-3-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri K. Veerabhadra Reddy, JC (AR) for the Appellant Shri Joseph Prabhakar, Advocate for the Respondent ORDER Per Bench Brief facts are that the respondents are 100% EOU and a Software Technology Parks of India (STPI) unit registered wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/2003-ST dated 20.6.2003. The respondent claimed refund of unutilized credit of ₹ 53,44,111/- for the period January 2006, February 2006 and March 2006 under Rule 5 of CENVAT Credit Rules, 2004. As the services rendered by the respondent was exempted vide the notification cited, respondent are not eligible for refund of unutilized credit of service tax taken on input / input services used in providing output services exported without payment of service tax. As the respondent requested to process the refund claim without issuance of show cause notice, vide their letter dated 9.5.2008, they were not issued any show cause notice. The original authority has rightly rejected the refund claim observing that when output services are exempted from levy of service tax, the respondent is not eligible to avail CENVAT credit. The Commissioner (Appeals) has erred in allowing the refund of credit for the period January and February 2006 by accepting the contention of the respondent that though the output services are exempted by the said notification, the services rendered by them continue to remain taxable services under section 66(105) and that only the levy of service tax is exempted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put services provided by respondent were exempted for the period prior to 1.3.2006 under Notification No. 8/2003. That, Rule 5 of CENVAT Credit Rules 2004 does not bar an assessee from claiming refund of unutilized credit even if credit has been availed on exempted input services. He relied upon the following decisions:- a. Zenta Pvt. Ltd. Vs. Commissioner of Central Excise, Mumbai 2012 (27) STR 519 b. IBM Daksh Business Process Services (P) Ltd. Vs. Commissioner of Central Excise, Delhi III 2015 (37) STR 833 c. Commissioner of Central Excise Vs. Jolly Board Ltd. 2017 (50) STR 131 (Bom.) Appeal No. ST/608/2010 5. As regards the above appeal, the respondents had filed refund claim for an amount of ₹ 1,00,03,643/- for the period April 2006 to October 2006. The original authority sanctioned refund to the tune of ₹ 56,48,015/- and rejected the balance amount of ₹ 43,55,628/-. On appeal, Commissioner (Appeals), set aside the rejection and allowed the balance refund of ₹ 43,55,628/-. Hence department has filed this appeal against the order of Commissioner (Appeals) allowing refund of ₹ 43,55,628/-. The break-up of ₹ 43,55,628/- is as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. Claim pertaining to period before 1st March 2006 rejected due to Notification No.8/2003 exempting services by call centre Rs.1,16,29,519/- Total Rs.1,24,93,377/- Out of the above, the respondents are not contesting the claims made under Sl. (b) to (e). 7. Heard both sides. 8. The main issue on which the Revenue has filed appeal is whether assessee is eligible for refund of unutilized credit under Rule 5 of CENVAT Credit Rules, 2004 when Notification No. 8/2003 exempts the levy of service tax on call centre services which are the output services of the respondent. 8.1 The refund claim has been filed under Rule5 of CENVAT Credit Rules, 2004. For better appreciation, Rule 5 of CENVAT Credit Rules, 2004 is reproduced as under:- Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l product / output service . A final product may be both dutiable or exempted. Similarly, an output service may be both taxable service or exempted service. When the rule merely uses the words final product / output service , the only interpretation that is possible is that whatever be the nature of dutiability or taxability of the final product /output service, refund is eligible on the unutilized credit if such final product / output service is exported. Rule 5 is thus a benefit extended to goods / services which go outside the territory of India. The exemption from levy of service tax extended by Notification 8/2003 is an exemption applicable within the territory of India. Goods which are dutiable as well as exempted can be exported. So also, output services which are taxable and exempted can also be exported. In other words, export need not necessarily confine to dutiable products or taxable services. The idea of Rule 5 is to avoid export of duty/taxes. Thus, the output service provider is given the benefit to claim refund of the taxes paid on input/input services used for providing output service. 9. This issue whether the manufacturer/service provider will be eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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