Appellants qualify for cash refund under CENVAT Credit Rules

M/s Chevron Phillips Chemicals India Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Mumbai East

M/s Chevron Phillips Chemicals India Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Mumbai East - 2021 (53) G. S. T. L. 268 (Tri. - Mumbai) Issues Involved:
1. Whether the appellants are an 'intermediary' and hence the services rendered by them fall outside the scope of export service, making them ineligible for cash refund of accumulated credit under Rule 5 of the CENVAT Credit Rules, 2004.
2. Whether certain input services have no nexus with the output services, making them ineligible for cash refund under Rule 5 of the CENVAT Credit Rules, 2004.

Detailed Analysis:

1. Intermediary Status and Export Service:

The appellants provided sales promotion services to an overseas entity, CPC Global, under an agreement dated 14.09.2009. They received commissions in convertible foreign exchange and claimed refunds of accumulated CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004. The Department alleged that the appellants acted as an 'intermediary' as defined under Rule 2(f) of the Place of Provision of Services Rules, 2012 (POPS Rules), rendering their services non-exportable and denying their refund claims.

The Tribunal examined the agreement and found that the appellants were engaged in sales promotion exclusively for CPC Global without any interaction with CPC Global's clients or third parties. The Tribunal noted that the definition of 'intermediary' was amended on 01.10.2014 to include 'goods'. For the period before this amendment, the Tribunal held that the appellants could not be considered intermediaries as the definition did not encompass goods. This was supported by the Tribunal's previous decision in Croda India Co. Pvt. Ltd. Vs. CST, Mumbai.

For the period after 01.10.2014, the Tribunal analyzed the agreement and concluded that the appellants did not act as intermediaries because they did not negotiate prices or facilitate transactions between CPC Global and its clients. The Tribunal referenced its decisions in Lubrizol Advanced Materials India Pvt. Ltd. and R.S. Granite Machine Tools Pvt. Ltd., which supported the view that the appellants' services were not intermediary services. Consequently, the Tribunal determined that the appellants' services qualified as export services, making them eligible for cash refund of accumulated credit under Rule 5 of the CENVAT Credit Rules, 2004.

2. Nexus of Input Services with Output Services:

The Commissioner (Appeals) had denied credit on various input services, including Management and Business Consultant services, Business Auxiliary Service, Business Support Service, Membership of Club or Association, Convention Services, Renting of Immovable Property, and Telecommunication services, claiming they had no nexus with the output services provided.

The Tribunal disagreed with this finding, citing various judgments that supported the appellants' position. For instance, Management and Business Consultant services were deemed necessary for efficient business operations, and Business Support Services were related to legal, market, and product research activities. Membership of Club or Association services was considered essential for obtaining trade memberships, and Convention Services were necessary for organizing business events. Renting of Immovable Property and Telecommunication services were integral to conducting business operations.

The Tribunal concluded that these input services met the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004, and thus, the appellants were entitled to cash refunds for these services.

Conclusion:

The Tribunal set aside the impugned orders and allowed the appeals, granting consequential relief as per law. The decision was pronounced in court on 20.12.2019.