2010 (4) TMI 450 - AT - Service Tax

Refunds and cenvat credit allowed for export-related CHA, head-office invoices and agent-as-pure-agent; consultancy credit denied.

CESTAT allowed the assessee's refund and cenvat-credit claims for June-August 2007 and rejected the revenue's appeals. Credit for CHA services related to ... Refund claims under Rule 5 of Cenvat Credit Rules 2004 - in respect of three months namely June, July and August 2007 - rejection of refund on the ground that invoice was raised by CWC on M/s Passage Cargo Ltd, and not in the name of the assessee; credit of service tax on CHA service was not admissible and credit was not available in respect of exports to SEZ - HELD THAT:- There is no observation by either of the authorities at the lower level that the assessee did not have accumulated credit. Further ratio of export turnover would come only when there are substantial domestic tariff area clearances. On this, it was submitted by the learned advocate for the assessee that this issue was not raised in the show cause notice at all. Turnover details furnished by the assessee were accepted, except stating that in such turnover details clearances to 100% EOUs or SEZ cannot be taken into account. Therefore the appeal filed by the revenue on this ground cannot be considered since it was not at all before the lower authorities. As regards credit of service tax on consultancy services received for acquisition of business out side India, it was fairly admitted by the learned counsel that the company is yet to be acquired and it is not known whether any company would be acquired or not. At this stage in the absence of details of consultancy service, it cannot be said to relate to business activity or mere expansion programme. Therefore he fairly agreed to give up the claim of cenvat credit on this service. As regards the excess credit taken, he submitted that this was on the ground that the invoice was raised on M/s Passage Cargo Pvt Ltd., whereas the credit was taken by the assessee. I agree that in this case, M/s Passage Cargo had acted as a pure agent of the assessee and had discharged the liabilities which would otherwise have been discharged by the assessee. Therefore I find that the appellant assessee cannot be denied credit. As regards CHA service in respect of export, the same are admissible and therefore, I do not find any merit in the appeal with regard to this service. As regards credit taken on documents addressed to assessee's Head Office located at Bangalore, it is the revenue's contention that the assessee has failed to prove that the said cervices were attributable to their unit at Mysore. It was submitted by the learned advocate that in all these cases invoices were raised at Head Office but the activities related to Mysore factory only. In fact in the appeal filed by the revenue, there is no indication or explanation as to which are the services which invoices in respect of such credit or not admissible, A quick perusal of the invoices shows that these relate to various services relating to export of services and therefore in the absence of specific evidence to show that credit is not admissible the revenue's appeal on this issue cannot be allowed. As regards the credit of service tax availed on supply of goods to SEZ, the issue is squarely covered by the decision of the Tribunal in the case of NBM Industries vs CCE Rajkot [2009 (3) TMI 535 - CESTAT, AHMEDABAD] and in the case of CCE Ahmedabad vs Rangdhara Polymers [2010 (1) TMI 637 - CESTAT, AHMEDABAD]. Appeals filed by the revenue are rejected and appeals filed by the assessee are allowed except regarding cenvat credit of service tax paid on consultancy services for acquisition of business outside India. Issues:Refund claims under Rule 5 of Cenvat Credit Rules 2004 for June, July, and August 2007. Revenue's appeal against the refund claims. Assessee's appeal against rejection of refund on various grounds.Analysis:The revenue contended that no refund was admissible to the assessee as cenvat credit was not taken in the same month as the export. They also challenged the Commissioner's observations on revenue neutrality and conditions for refund based on turnover ratios. The revenue further argued against certain credits like the commission for business acquisition outside India and credits on documents addressed to the Head Office without proof of relation to the Mysore unit.The assessee appealed the rejection of refund based on issues like invoices raised by CWC, admissibility of credit on CHA service, and credit availability for exports to SEZ. The Tribunal found that the revenue's contention on the timing of cenvat credit in relation to exports was incorrect. The Tribunal also noted that the relevant notification was not proposed to be amended retrospectively and agreed with the Commissioner that credits could be claimed in the preceding or succeeding month of export.Regarding specific issues, the Tribunal found that credit for consultancy services for business acquisition outside India was not admissible as the business acquisition had not yet occurred. Excess credit taken due to invoice details was allowed as Passage Cargo acted as a pure agent. Credits for CHA services and servicing of Indica car were deemed admissible based on legal precedents. The revenue's argument against credit on documents addressed to the Head Office was rejected due to lack of evidence. The issue of credit for service tax on goods supplied to SEZ was found to be covered by previous Tribunal decisions.In conclusion, the revenue's appeals were rejected, and the assessee's appeals were allowed except for the credit related to consultancy services for business acquisition outside India.