2017 (12) TMI 836 - AT - Service Tax

Appellant granted CENVAT credit for input services, procedural errors rectified, refund calculation method reconsidered.

Robert Bosch Engineering And Business Solutions Limited Versus Commissioner of Central Excise, Customs and Service Tax

The Tribunal allowed the appellant's claims for CENVAT credit on various input services, overturning the Commissioner's decision. Procedural errors in ... Refund of unutilized CENVAT credit - various input services - denial on the ground that there is no nexus with the output service of the appellant i.e., the Information Technology Software Service - Held that: - all the services have been held to be eligible input services as per the decisions cited by the appellant - CENVAT credit allowed. Procedural errors in documentation CENVAT credit stand disallowed for the reason that the appellant has not submitted copies of the relevant documents such as invoices at the time of claiming refunds - Held that: - learned consultant asserts that the appellant is in a possession of such documents and in a position to submit the same to make good the deficiency in the documentation - matter remanded to the original adjudicating for a de novo decision on this subject after considering the documents submitted by the appellant. Export Turnover Ratio and Apparent error and double disallowance - whether the maximum refund allowable is to be calculated on the basis of gross or net CENVAT credit which has been taken by the appellant? - Held that: - we set aside the findings of the lower authorities on the subject matter of export turnover ratio and remand the issue back to the original authority for redetermination of the same and also re-determine such refund amounts keeping in view the amended definition of exports turnover services from 1.4.2012. Credit availed in particular quarter and payment made in next quarter - Held that: - even though the payment was not made by the appellant for the services within the quarter for which the refund was claimed, the same has been made in the subsequent quarter. If that is so, then it becomes only a procedural lapse for which the substantial benefit of refund cannot be denied to the appellant - the original authority is directed to verify the fact of payment for such services in subsequent quarter and then allow the refund. Appeal allowed by way of remand. Issues Involved:1. Eligibility of various input services for availing CENVAT credit.2. Procedural errors in documentation.3. Calculation of maximum refund amount based on export turnover ratio.4. Refund eligibility when payment for input services is made in subsequent quarters.Issue-wise Detailed Analysis:1. Eligibility of Various Input Services for Availing CENVAT Credit:The appellant, engaged in developing and exporting software, claimed refunds of accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules (CCR) for various input services. The Commissioner (A) disallowed several input services, arguing they had no nexus with the appellant's output service, Information Technology Software Service. The appellant contested this, citing several Tribunal and higher appellate decisions that favored their claim. The Tribunal reviewed the records and the cited decisions and concluded that all 24 disputed services were eligible for CENVAT credit. Consequently, the impugned orders were set aside, allowing the CENVAT credits for the disputed period.2. Procedural Errors in Documentation:CENVAT credit was disallowed due to the appellant's failure to submit copies of relevant documents, such as invoices, at the time of claiming refunds. The appellant asserted they possessed the necessary documents and could submit them to rectify the documentation deficiencies. The Tribunal set aside the findings on this ground and remanded the matter to the original adjudicating authority for a de novo decision after considering the submitted documents. The appellant was to be granted an opportunity for effective hearing to present the documentation.3. Calculation of Maximum Refund Amount Based on Export Turnover Ratio:The appellant argued that the authorities incorrectly calculated the maximum refund amount by considering the net CENVAT credit (gross credit minus utilized credit) instead of the gross CENVAT credit. The Tribunal supported the appellant's view, referencing the case of J.P. Morgan Services (I) Pvt. Ltd. vs. CST, Mumbai, which upheld the consideration of gross CENVAT credit for maximum refund calculation. Additionally, the Tribunal noted the need to verify the amended definition of export turnover services from 1.4.2012, as specified by Notification No.18/2012-CX (NT) dated 17.3.2012, which bases the calculation on the realization of export proceeds rather than invoice value. The findings on this issue were set aside, and the matter was remanded to the original authority for redetermination, considering the relevant decisions and amended definitions.4. Refund Eligibility When Payment for Input Services is Made in Subsequent Quarters:The appellant was denied a refund for the quarter October-December 2008 because payments for input services were made in the subsequent quarter. The appellant contended that the refunds should be allowable in the subsequent quarter when the payments were made. The Tribunal agreed, noting that the delay in payment was a procedural lapse and should not result in the denial of substantial refund benefits. The original authority was directed to verify the payment facts and allow the refund accordingly.Conclusion:The appeals were disposed of by allowing the CENVAT credits for the 24 disputed services, remanding the issues of procedural documentation errors and export turnover ratio calculations to the original authority for reconsideration, and directing the verification of subsequent quarter payments to allow refunds.