100% EOU wins refund appeal for unutilized CENVAT credit on service tax paid for input services

The CESTAT Bangalore allowed the appeal filed by a 100% EOU seeking refund of unutilized CENVAT credit on service tax paid for input services. Revenue had denied the refund claiming no nexus between input services and exported services, and citing non-submission of required documents. The Tribunal noted that the issue was previously decided in appellant's favor in an earlier case, and the matter was no longer res integra. The Board had also issued clarifying circular regarding the matter. Following the established precedent and considering the facts, the Tribunal found no reason to interfere with the earlier ratio and allowed the appeal.

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Issues: Refund claim of unutilised CENVAT Credit for service tax paid on input services used for export of services under Notification No.5/2006-CE(NT); Classification of services rendered by the appellant as 'Business Support Service' or 'Business Auxiliary Service'; Nexus between input services and services exported; Rejection of refund claims by adjudicating authority; Appeal against rejection of refund claims; Previous decisions in appellant's own cases regarding classification of services as exports under 'Business Auxiliary Services'.

Analysis:

1. The appellant, a 100% EOU registered under 'Business Auxiliary service', filed refund claims for unutilised CENVAT Credit of service tax paid on input services used for export of services. Adjudicating authority rejected the claims citing lack of export of service under Export of Service Rules, 2005, and other reasons.

2. The Commissioner (Appeals) rejected the appeals, stating that services provided by the appellant were ultimately used in India, not outside India, as they were related to marketing and promotion of products in India. The issue revolved around whether the services rendered could be considered as export of service.

3. During the hearing, the Appellant argued that the services provided fell under 'Business Support Service' instead of 'Business Auxiliary Service' due to the recipient not being situated outside India. They also highlighted the classification of services under relevant sections of the Finance Act, 1994.

4. The Appellant relied on previous decisions in their own cases and other cases to support their claim that their activity should be classified as exports under 'Business Auxiliary Services'.

5. The Tribunal found that the revenue's classification of services as 'Business Support Service' was incorrect based on previous decisions in the appellant's own case, where it was held that the activity of provision of service in India did not preclude the claim for refund on grounds of export of service.

6. The Tribunal noted that the issue was no longer res integra as previous decisions by the Tribunal had allowed similar appeals. The Board's circular also provided clarification on the issue.

7. Considering the above discussion and the facts of the case, the Tribunal found no reason to interfere with the decisions of the Tribunal in previous cases and allowed the appeals with consequential relief.

8. The appeals were allowed, and the decision was pronounced in Open Court on 03.05.2024.

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