Member orders re-calculation of refund after agreeing with appellants' argument on incorrect input services calculation.

The appeals were allowed by the Member (Technical) following a re-calculation of the eligible refund for the appellants. The Member agreed with the appellants' argument on the incorrect calculation by the original authority and ordered a re-calculation based on all input services and total credit taken, as per the correct formula. The previous decisions favored the appellants regarding the eligibility of input services, leading to a direction for re-calculation of the refund amount.

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Issues:
Refund claims under Rule 5 of CENVAT Credit Rules, 2004 for service tax on input services used for IT export.

Analysis:
The appellants filed refund claims for service tax paid on input services for IT export between July 2010 to December 2010 under Rule 5 of CENVAT Credit Rules, 2004. The original authority partially granted the refunds, citing non-compliance with Rule 5. On appeal, the Commissioner (Appeals) upheld the original orders, leading to the current appeals.

The appellants argued that except for security and travel services, the eligibility of input services had been decided in their favor in a previous Tribunal order. They contended that the original authority incorrectly calculated the refund amount by using unutilized credit instead of total credit on input services. They also cited a Tribunal decision regarding the computation of refund credit based on total credit taken.

The department's representative opposed the appeals, stating that applying the erstwhile provisions of Rule 5 would lead to undue benefits for the appellants, but acknowledged the applicability of these provisions for the period before 01.04.2012.

After hearing both sides, the Member (Technical) noted that previous decisions favored the appellants regarding the eligibility of input services, including security and air travel agent services. The Member agreed with the appellants' argument on the incorrect calculation by the original authority and ordered a re-calculation of the eligible refund based on all input services and total credit taken, as per the correct formula.

Consequently, the appeals were allowed by way of remand, directing the original authority to re-calculate the eligible refund for the appellants.

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