2017 (4) TMI 1132 - AT - Service Tax

Tribunal decision: CENVAT credit partly denied, export turnover issue remanded

CENZA Technologies Pvt. Ltd. Versus Commissioner of Service Tax, Chennai

The Tribunal partly allowed the appeals, upholding the denial of certain CENVAT credits but allowing the credit for housekeeping services. Regarding the ... Refund claims - unutilized CENVAT credit - Online Information and Database access/retrieval service - Renting of Immovable Property services - Held that: - services have been availed after the amendment to rule 2(l) of CCR, 2004 w.e.f. 1.4.2011. In respect of availment of input service credit towards internet devices for directors, insurance, club membership and meal pass there is no evidence put forth by appellants, either in the adjudication order or before the lower appellate authority that they are not for the personal use or consumption of any employee - denial of cenvat credit in respect of these inputs / input services upheld. CENVAT credit - housekeeping services - Held that: - housekeeping services is very much required for the proper upkeeping of the appellant's premises and in any case the same is not barred from the exclusion clauses of Rule 2(l) of CCR 2004 - credit allowed. In the case of export of services as provided by Rule 5 of the CCR itself, inward remittances/FIRCs/payments received either directly or through legal and accepted channels of remittances including by NEFT, received during a particular quarter even though related to invoices issued or export services provided for the period prior to that quarter, will definitely required to be included in the export turnover of services for that quarter. Matter is remanded back to the original authority for the limited purpose of re-quantification of the export turnover and resultant revision in quantum of refund of cenvat credit under Rule 5 ibid - appeal allowed in part and part matter on remand. Issues Involved:1. Rejection of part of the export turnover.2. Ineligibility of certain CENVAT credits.Detailed Analysis:1. Rejection of Part of the Export Turnover:The appellant filed refund claims under Rule 5 of the Cenvat Credit Rules, 2004, which were partially rejected by the original adjudicating authority. The rejection was based on the grounds that export invoices related to FIRCs (Foreign Inward Remittance Certificates) received beyond one year were hit by limitation under Section 11B of the Central Excise Act. The lower appellate authority upheld this decision.The appellant argued that for export of services, the relevant date is the receipt of inward remittances during the quarter, not the date of the export invoices. They referred to the distinction between the definitions of Export Turnover of Goods and Export Turnover of Services in Rule 5 of the Cenvat Credit Rules, 2004. They cited the case law of Bechtel India Pvt. Ltd. Vs CCE Delhi and the judgment of the Madras High Court in CCE Coimbatore Vs GTN Engineering (I) Ltd., arguing that the latter pertains to goods, not services.The Tribunal found merit in the appellant's argument, noting that Rule 5(D) defines Export Turnover of Services as payments received during the relevant period for export services, regardless of when the services were provided. The Tribunal emphasized that for refund claims under Rule 5, the relevant period can include payments received for services exported in earlier periods. The Tribunal also cited the Tribunal's decision in Bechtel India Pvt. Ltd. and Oceans Connect India Pvt. Ltd., which held that the date of receipt of foreign exchange is the relevant date for export services.The Tribunal concluded that inward remittances received during a particular quarter, even if related to earlier export invoices, should be included in the export turnover for that quarter. Consequently, the appeals related to the rejection of part of the export turnover were allowed, and the matter was remanded to the original authority for re-quantification of the export turnover and the resultant revision in the quantum of refund.2. Ineligibility of Certain CENVAT Credits:The original authority and the lower appellate authority held some of the CENVAT credits availed by the appellants as ineligible. These included credits for internet devices for directors, insurance, club membership, meal pass, and car maintenance, which were deemed not directly used for providing the output service.The appellant contended that these credits were permissible under the Cenvat Credit Rules, 2004. However, the Tribunal found that the appellant failed to provide evidence that these services were not for personal use or consumption of employees. Therefore, the Tribunal upheld the denial of CENVAT credits for these services.However, the Tribunal allowed the credit for housekeeping services, stating that such services are necessary for the proper upkeep of the appellant's premises and are not barred by the exclusion clauses of Rule 2(l) of the Cenvat Credit Rules, 2004.Conclusion:The appeals were partly allowed. The Tribunal upheld the denial of certain CENVAT credits but allowed the credit for housekeeping services. The Tribunal also allowed the appeals regarding the rejection of part of the export turnover and remanded the matter to the original authority for re-quantification of the export turnover and the resultant revision in the quantum of refund. The decision was dictated and pronounced in open court.