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of <h1>Tribunal grants appellant refund for accumulated CENVAT credit due to export of exempted services</h1> <h3>KPIT CUMMINS INFOSYSTEMS LTD Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-I</h3> KPIT CUMMINS INFOSYSTEMS LTD Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-I - 2013 (32) S.T.R. 356 (Tri. - Mumbai), [2013] 63 VST 171 (CESTAT) Issues:Refund claim eligibility under Rule 5 of CENVAT Credit Rules, 2004 for accumulated CENVAT credit due to export of services.Detailed Analysis:Issue 1: Eligibility of Refund ClaimThe appellant, a registered entity providing various services, filed refund claims totaling Rs. 2,14,45,060 under Rule 5 CENVAT Credit Rules, 2004 due to the inability to utilize accumulated CENVAT credit from exporting services. The department contended that the exported services were taxable and that the appellant had not maintained separate accounts for input services. The adjudicating authority held that the accumulation was due to a cap on credit utilization, not export, but did not order recovery of the credit. The lower appellate authority rejected the refund claims based on the cap under Rule 6(3)(c) of the CENVAT Credit Rules.Issue 2: Appellant's SubmissionsThe appellant argued that as a 100% Export-Oriented Unit (EOU), they exported software services and had accumulated CENVAT credit attributable to these exports, making them eligible for refunds under Rule 5. They contended that the exported services were taxable and not exempted, citing relevant case law and circulars. They emphasized that even if services were exempted, exporters were entitled to CENVAT credit benefits.Issue 3: Judicial AnalysisThe Tribunal noted that the exported services were not taxable during the relevant period but were considered exempted services under Rule 2(e) of the CENVAT Credit Rules. The Tribunal clarified the definition of 'exempted services' and 'output service' under the rules. It highlighted the provisions of Rule 5 allowing credit utilization for exported services and the cap under Rule 6(3)(c), which did not apply to non-taxable output services like those provided by the appellant.Issue 4: Tribunal's DecisionRelying on a High Court judgment and the objective of promoting exports, the Tribunal allowed the appeal, granting the refund of Rs. 2,14,45,060 to the appellant. It emphasized that in the case of exports, the tax burden should not fall on the exporter, aligning with the government's export promotion policies. The Tribunal directed the Revenue to verify compliance with conditions specified in Notification No. 5/2006-CE(NT) dated 14/03/2006.In conclusion, the Tribunal allowed the appeal, granting the refund to the appellant for the accumulated CENVAT credit due to the export of exempted services, emphasizing the promotion of exports and the non-tax burden on exporters in destination-based consumption tax systems.
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