Refund of Cenvat Credit

[Rakesh Chandra]

We are a company registered under Business Auxiliary Services. We receive commission for local services provided in india and services provided abroad i.e export of services. Till date we were claiming 20% of cenvat credit available to pay service tax realised on local commission. Now we had a balance of Rs. 9.0 Lakh in our cenvat credit account. We would like to know wheteher we can claim this cenvat credit as refund from the service tax deptt.

[Surender Gupta]

First of all the method of utilizing 20% of cenvat credit for making payment of service tax is incorrect. 

You must note that export of services are not at par with exempted services and therefore, even if you export the services without making payment of service tax, you can utilize the cenvat credit on input services towards export of services for making payment of service tax on domestic services.

Any how, since you have balance in your credit account, by applying the provisions of rule 5 of CCR, 2004, you can claim refund of unutilized balance of cenvat credit.

AI Summary

Cenvat credit refund: unutilized input service credit claimable under CCR rules after correct utilization for export and domestic services. The taxpayer incorrectly used a flat 20% rule to discharge service tax. Export of services is not the same as exempted services; input service credit must be utilized per Cenvat rules and may be applied against domestic service tax liabilities where allowable. Any genuine unutilized Cenvat credit remaining after correct application can be claimed as a refund under rule 5 of the Cenvat Credit Rules, 2004, subject to applicable procedural requirements.