Cenvat credit for R&D services used in export development upheld where active supervision showed real service consumption.

Cenvat credit on service tax paid for research and development services received from group entities is available where the assessee actively supervises and monitors the work, including methodology, results and timelines, so that the services are used in the development process rather than merely received and passed on. The mere fact that the invoice date and export date coincide does not, by itself, show that the services were unused. The credit position also aligns with the principle that exported services should not bear domestic tax burden. On these facts, receipt and use of the services were established and the Revenue's objection was rejected.

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Issues: Whether Cenvat credit of service tax paid on research and development services received from group entities was admissible when the developed technology was exported on the same day, and whether the services were used by the assessee for the purposes of credit entitlement.

Analysis: The assessee had contractual rights of supervision and monitoring over the research and development activity, including oversight of methodology, results, and time schedule. On the facts, the services were not merely received and passed on untouched; they were simultaneously engaged with and consumed during the development process through active supervision and monitoring. The mere coincidence of the invoice date and export date did not establish that the service was unused. The credit position was also consistent with the principle that exported services should not suffer domestic tax burden.

Conclusion: The credit was admissible and the assessee's receipt and use of the services was established; the Revenue's objection was rejected.

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