Cenvat credit refund cannot be denied for lack of one-to-one export correlation where input service credit is otherwise admissible.

Mobile phone service tax credit was held admissible, and the Tribunal treated the dispute as settled on that point. Refund under Rule 5 of the Cenvat Credit Rules, 2004 could not be denied merely because the input services were not consumed in a one-to-one correlation with exports in the same quarter. The Tribunal held that such a correlation was not required, that the requirement could not be introduced solely because the assessee was a 100% EOU, and that admissible credit remained refundable even without domestic clearances in the quarter. The rejection of refund was set aside.

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Issues: (i) Whether credit of service tax on mobile phones was admissible; and (ii) whether refund under Rule 5 of the Cenvat Credit Rules, 2004 could be denied on the ground that the input services were not consumed in a one to one co-relation with exports made in the relevant quarter.

Issue (i): Whether credit of service tax on mobile phones was admissible.

Analysis: The dispute on mobile phone credit was treated as settled and the credit was held to be admissible.

Conclusion: Credit of service tax on mobile phones was admissible and was to be allowed.

Issue (ii): Whether refund under Rule 5 of the Cenvat Credit Rules, 2004 could be denied on the ground that the input services were not consumed in a one to one co-relation with exports made in the relevant quarter.

Analysis: The refund claim was rejected by the lower authorities on the premise that the services on which credit had been taken were of a general nature and could not be linked to exports in the same quarter. The Tribunal held that one to one co-relation was not required, that such a requirement could not be introduced merely because the assessee was a 100% EOU, and that once credit was admissible it could not be denied refund merely because there were no domestic clearances in the quarter. The Tribunal also noted that the services could have a continuing utility and need not be tied to immediate export production.

Conclusion: Refund could not be denied for want of one to one co-relation, and the assessee was entitled to refund of the admissible credit.

Final Conclusion: The rejection of refund was set aside and the assessee succeeded on both admissibility of credit on mobile phones and entitlement to refund of the remaining service tax credit.

Ratio Decidendi: Where input service credit is otherwise admissible, refund under the export-oriented Cenvat scheme cannot be refused merely because the services are not directly or immediately co-related to exports of the same quarter.

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