TMI Blog2009 (5) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... and Shri M. Veeraiyan, Member (Technical) (Final Order Nos. 170-171/2009-ST dt. 18.5.2009 certified on 26.5.2009 in Appeal Nos. ST/432-433/2007) Shri Vijai Kumar, DR for Appellant S/Shri Abhishek Rastogi , CA and Dheeraj Srivastava, Associate for Respondents Per M. Veeraiyan: These two appeals are by the Department and relate to the same respondent, M/s Convergys India (P) Ltd. and involve common issues and, therefore, are being dealt with by a common order. 2. Heard both sides. 3. The relevant facts, in brief, are as follows: a) The respondent through their various centres located at Mumbai, Pune, Bangalore and Gurgaon are engaged in rendering customer care services on behalf of foreign clients through the medium of telephone, e-mail and web based interaction. The services fall under the taxable category of business auxiliary service. b) They use several input services like Advertisement Agency Services, Chartered Accountant Services, Management Consultancy Services, Leased Circuit Services, Courier Services, Erection Commissioning and Installation services, Manpower, Recruitment or supply agency services, rent-a-cab operator services, Manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No.12/2005 ST dated 19.4.05 is mandatory and there is no provision for condoning the delay in filing the declaration. As the assessee has filed the declaration only on 9.5.2005, no rebate of service tax for period prior to 9.5.2005 is admissible. b) The services of Mandap Keeper, Outdoor Catering, Real Estate Agent Services, Erection, Commissioning and installation services, rest house services, air/rail services, flower arrangements/rental charges for hiring and maintenance of indoor foliage plants, up keeping of office janitorial services, hydrant sprinkler system and photocopier services are not actually used in providing the services, but are related to the other services required for maintenance of capital assets/goods not actually used in the output services and cannot be considered to be input services actually required to be used in the output services of the nature of the service being provided by the party. c) The assessee did not declare which services were input services for the output services being provided by them. 5. Learned Advocate for the assessee made the following submissions- a) They are into only export of services. All the input services fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005. h) Input services have been used in connection with the export of services and not in procurement of input services (Management Consultancy). The Tribunal in the case of CCE vs. Dynaspede Integrated System Ltd., [2001 (47) RLT 1067 (CEGAT-Che.)=2002 (147) ELT 514]. 5.1 We have carefully considered the submissions from both sides. The Department wants the rebate to be denied on merits on grounds like some services can not be considered as input services, some services are used only in maintenance and repair of capital assets, some of the services have no direct nexus with the out put services etc. The Department also wants the rebate to be denied for part of period on the ground that the required declaration has not been filed before export of the services. 5.2 As the issue involved mainly revolves around the interpretation of the Notification 12/2005-ST, the relevant portions of notification is reproduced below:- "2. Conditions and limitations: (a) that the taxable service has been exported in terms of Rule 3 of the said rules and payment for export of such taxable service has been received in India in convertible foreign exchange; (b) that the duty, reba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit of duty paid on inputs and credit of service tax input services to provider of output services. There is a liberal approach in granting of credit in respect of services mentioned in Rule 6(5) of Cenvat Credit Rules. Credit needs to be disallowed in respect of services mentioned therein only if such services are utilised exclusively in the manufacture of exempted goods or providing exempted services. The said sub Rule is reproduced below: "(5) Notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p) (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of Section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services." 6.2 Export of Services Rules 2005 were notified by the Central Government vide Notification No.9/2005 dated 3.3.2005. Rule 4 provides that any taxable services can be exported without payment of service tax. Rule 5 of the said rules enables the Central Govt. to issue notification "to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond 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 input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of, (i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or (ii) service tax on output service, and where for any 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 a 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put services provided by the respondent. Therefore, such input services used in connection with procurement of other input services has to be treated necessarily as input services. 7.5 The imported "management consultancy services" have been used only in relation to providing services which are exported. Obviously, the cost of such, imported services forms part of the value of export services. Further, the cost of services used in procuring such services from foreign country also necessarily go into the cost of imported input services. The position does not change, even when the service tax on the imported services is paid by the respondent in view of the special legal provision. 7.6 Submissions have been made on behalf of the respondent that the services of real estate agent used in connection with procuring the premises for providing the services are very much input services; that the services relating to advertisement for recruitment of personnel is to be treated as input services as recruitment of personnel is part of the activities in setting up the office; that the services of Chartered Accountant engaged in running the company providing the service are to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as input services. The verification in respect of input services are mainly based on documents unlike in the case of inputs. 8.2 The nature and standard of verification envisaged in the notification, in respect of inputs and input services are different. For example, in respect of inputs even drawing of samples can be considered as could be seen from the following stipulation: If necessary, by calling for any relevant information or samples of inputs and if after such verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise is satisfied that there is no likelihood of evasion of duty, or as the case may be, service tax and cess, he may accept the declaration." 8.3 The document based verification can be at a latter point of time. In this case, we are concerned only about rebate of credit on input services. The non-observance of a procedural condition in this case is of a technical nature and cannot be used to deny the substantive concession. Further, in respect of export, a liberal view requires to be taken. The non-fulfilment of the procedure cannot lead to denial of the benefit under the beneficial legislation providing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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