Tribunal allows refund of unutilized CENVAT credit for input services in garment export

The Tribunal upheld the Commissioner's decision to allow the refund of unutilized CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 for various input services used in the manufacture and export of readymade garments by a 100% EOU. The Tribunal found that the services availed by the respondent had a nexus with the goods exported, as per guidelines provided by the CBEC. Therefore, the Tribunal dismissed the Revenue's appeals, affirming the refund of all services claimed by the respondent.

---

---

Issues:
- Refund of unutilized CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 for various input services used in the manufacture and export of readymade garments.

Detailed Analysis:
The appeals were filed by the Revenue against the Order-in-Appeal No.86/2010, seeking refund of unutilized CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 for services like freight forwarders, port service, recruitment service, test and certification service, bank processing charges, maintenance service, consultancy service, security service, and courier services used in the manufacture and export of readymade garments by a 100% EOU. The Commissioner (A) allowed the refund of all the services, stating that they had a nexus with the goods exported. The Revenue contended that many of the services were related to business expenses and not exclusively used in the manufacture and export of readymade garments.

The dispute revolved around whether the services on which credit was availed were indeed utilized in the manufacture and export of readymade garments. The CBEC had issued Circular No.120/01/2010/ST, providing guidelines for processing such refund claims under Rule 5, stating that tax paid should be clearly evidenced, and the refund should be allowed if the input services have a nexus with the goods exported. The Commissioner (A) found that all the services utilized by the respondent had a nexus with the goods exported, including services like freight forwarder service, port service, test and certification, among others.

After considering the nature of services and the findings of the Commissioner (A), the Tribunal upheld the impugned order, stating that it merits no interference. The Tribunal found no merit in the appeals filed by the Revenue and dismissed them accordingly. The order was dictated in Open Court on 12/12/2017.

---