Refund allowed on export of scientific consultancy services under Rule 5 of Cenvat Credit Rules 2004

CESTAT Ahmedabad allowed the appeal regarding refund on export of scientific and consultancy services received from two companies for manufacture of final product under Rule 5 of Cenvat Credit Rules, 2004. The Tribunal found that in an identical case involving the same appellant, refund was previously allowed, establishing that the services were actually received and consumed during technology development supervision. The Tribunal held that revenue's argument regarding service provision timing was fallacious and illogical, ruling the issue was no longer res-integra based on the previous decision, thereby setting aside the impugned orders.

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Issues involved:
The issue involved in the present case is whether the appellant is entitled to a refund on the export of scientific and consultancy services received from M/s. SPIL and M/s. SPARC for the manufacture of the final product under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2017-CE (NT) dated 18.06.2012 issued thereunder.

Judgment Details:

Issue 1: Entitlement for Refund on Export of Services

The appellant, represented by Shri A.B Nawal, argued that a similar issue in the appellant's own case had been settled by the Tribunal previously, where a refund was allowed for the same input service. The Revenue, represented by Shri Rajesh Nathan, reiterated the findings of the impugned order. The Tribunal noted that in the appellant's previous case, a refund was allowed for the same input service, as the service was exported after being received and used by the appellant. The Tribunal referred to the agreement between the parties, highlighting the appellant's right of supervision and monitoring during the development of technology by the service providers. It was concluded that the services were indeed used by the appellant, as evidenced by their active involvement in the supervision and monitoring of the service development. Therefore, the Tribunal held that the appellant was entitled to avail the credit of the service tax paid by SPIL & SPARC, and the appeal was allowed accordingly.

Issue 2: Application of Cenvat Credit Rules

The Tribunal analyzed the agreement between the appellant and the service providers, noting the appellant's active role in supervising and monitoring the development of technology. It was observed that the service was not provided and consumed on the same day, as argued by the Revenue, but rather over a specific time duration during which the appellant actively participated in the service development. The Tribunal rejected the Revenue's argument that the service was not used by the appellant and was exported without any consumption. It was held that the services provided by SPIL and SPARC were indeed used by the appellant through their supervision and monitoring activities, making them eligible for the Cenvat Credit. The Tribunal referred to its previous decision in a similar case involving the appellant, where the issue was settled in favor of the appellant, reinforcing the decision in the present case.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders and granting consequential relief to the appellant in accordance with the law. The judgment was pronounced in the open court on 15.12.2023.

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