Exporter entitled to CENVAT credit for service tax on input services used for exports

The Tribunal held that the appellant was entitled to CENVAT credit of service tax paid on input services used for providing exported services, irrespective of the exemption status of the output services during the disputed period. Additionally, the Tribunal ruled that even if the output services were exempted and exported, service tax paid on input services would be eligible for refund. The judgment emphasized exporters' rights to claim credit and refunds for service tax paid on input services used in providing exported services, regardless of the exemption status of the output services.

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Issues involved:
1. Admissibility of CENVAT credit on service tax paid for input services for exported output services without payment of service tax.
2. Eligibility for refund of service tax paid on input services for output services that were exempted.

Detailed Analysis:
Issue 1: The main issue in this case is whether CENVAT credit is admissible for service tax paid on input services used for providing output services like 'call centre' and 'medical transcription centre' services that were exported without payment of service tax during 2005-06. The appellant had taken credit of service tax paid on input services for providing call centre services, which were exempted, and utilized this credit for payment of service tax on exported taxable services. Both lower authorities rejected the claim, ordering recovery of the CENVAT credit availed during the exempted period. The appellant argued that various Tribunal decisions supported their eligibility for credit on exported services. The Tribunal held that the appellant was entitled to CENVAT credit of service tax paid on input services used for providing exported services, irrespective of the exemption status of the output services during the disputed period.

Issue 2: The second issue pertains to the eligibility for refund of service tax paid on input services for output services that were exempted. The Tribunal referred to a High Court judgment where it was held that even if the output services were exempted and exported, service tax paid on input services would be eligible for refund. The Tribunal disagreed with the department's stand and cited various cases where the availability of CENVAT credit for exported services, even if exempted, was upheld. The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The judgment emphasized the entitlement of exporters to claim CENVAT credit and refund for service tax paid on input services used in providing exported services, regardless of the exemption status of the output services during the relevant period.

In conclusion, the judgment clarified the admissibility of CENVAT credit and eligibility for refund of service tax paid on input services for exported output services, even if the output services were exempted during the disputed period. The decision was based on precedents and legal provisions, ensuring exporters' rights to claim credit and refunds in such scenarios.

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