TaxTMI 
TaxTMI 
2010 (3) TMI 327
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....d in this group of twelve appeals have exported various output services. They have taken credit of service tax paid on various services received by them claiming these to be input services used in the export of output services. Accordingly, they have claimed refund of such credit taken by them which has remained un-utilized as no service tax is payable on the export of output services and they have not been able to utilize such credit otherwise. A common feature in these cases is that the original authority has allowed refund in respect of tax paid on some of the services received by the assessees while rejecting the refund claims in respect of some of the other services. On appeal, the lower appellate authority has allowed refund in respect of some more of the services while rejecting the refund claim in respect of remaining services. The department is in appeal in respect of refund claims al lowed by the lower appellate authority whereas the assessees are in appeal against the rejection of the refund claims by the lower appellate authority. 3. The services in respect of which refunds have been allowed by the original authority, the services in respect of which the lower app....
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....ecurity Agency Services 16. Telecommun. Services. 4 Shell Technology (Output Services consulting Engineer' Service). 1. Courier 2. Interior Decorator Services, 3. Management, Maintenance or Repair Services 4. Real Estate Agent Services, 5. Tele Commn. Service 1. Advertising Agency Services, 2. Banking and other Financial Services, 3. Cargo Handling Services, 4. Manpower Recruitment and Supply Agency Services, 5. Security Agency Service 1. Business Support Services 2. Chartered Account's Service, 3. Commercial Traning and Coaching Services 4. Consulting Engineer's Services, 5. Erection Commissioning and Instlln. Services, 6. Event Management Service 7. Management or Business Consultant's Service, 8. Rent a Cab services 9. Tour Operator Services 10. Travel Agent Services 5. Caterpilller Logestic (Out-put service: Business Auxiliary Service) 1. Telephone Services,- 1. Security Services 2. Manpower Re cruitment Service 1. Commercial Coaching Services, 2. Business Auxiliary Services 3. Management Consultant Service, 4. Car hire service for transporti....
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....tside India (including interest thereon)," "(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to the manufacture of excisable goods," "(xviaa) provide for credit of service tax leviable under Chapter V of the Finance Act, 1994 (32 of 1994) paid or payable on taxable services used in, or in relation to, the manufacture of excisable goods," "(xxviii) provide for the lapsing of credit of duty lying unutilized with the manufacturer of specified excisable goods on an appointed date and also for not allowing such credit to be utilized for payment of any kind of duty on any excisable goods on and from such date." 6. Section 94 of the Finance Act, 1994 allows the Central Government to make rules to provide, inter alia, for the following: - "(ee) the credit of service tax paid on the services consumed for providing a taxable service in case where the services consumed and the service provided fall in the same category of taxable service." "(eee) the credit of service tax paid on the services consumed or duties paid or deemed to have been paid on goods used for providing a taxable service. "(g) grant of exemption ....
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....background, we look at the provisions of the Cenvat Credit Rules, 2004, which have been framed invoking the statutory rule making powers conferred under Section 37 of the Central Excise Act, 1944 and Section 94 of the Finance Act, 1994. We find that the said rules define the expression input service under Rule 2(1) to mean any service, - " used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and (clearance of final products, upto the place of removal,) and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control &, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of in-puts or capital goods and outward transportation upto the place of remov....
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....the extent of the ratio of export turnover to the total turnover. 13. The assessee appellants, have brought to our notice that a Circular No. 120/01/2010-S.T., dated 19-1-2010, has been recently issued from Board's File No. 354/268/2009-TRU by the Officer on Special Duty (Tax Research Unit). It is argued on behalf of the appellants that they are entitled to claim the refund of un-utilized credit of service tax in terms of this circular. On a query from the Bench, it could not be confirmed by the department that the Officer on Special Duty who has issued the said circular dated 19-1-2010, is an officer authorized to communicate orders of the Board. Secondly, the said circular does not indicate hat the same has been issued under Section 37B of the Central Excise Act, 1944, as made applicable in relation to service tax under Section 83 of the Finance Act, 1994. Hence, the binding effect of the said circular is in doubt. However, since the appellants are placing reliance on the said circular, we reproduce below para 3 (which is the relevant portion) of the said circular in the context of the issues involved in this group of appeals:- "3. The matter has been examined. At the ou....
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....d repair of equipment; telecommunication facilities; etc. Further, in the instant example, services like outdoor catering or rent-a-cab for pick-up and dropping of its employees to office would also be eligible for credit on account of the fact that these offices run on 24x7 basis and transportation and provision of food to the employees are necessary pre-requisites which the employer has to provide to its employees to ensure that output service is provided efficiently. Similarly, since BPOs/Call Centres require a large manpower, service tax paid on manpower recruitment agency would also be eligible both for taking the credit and the refund thereof. On the other hand, activities like event management, such as company-sponsored dinners/picnics/ tours, flower arrangements, mandap keepers, hydrant sprinkler systems (that is, services which can be called as recreational or used for beautification of premises), rest houses etc. prima facie would not appear to impact the efficiency in providing the output services, unless adequate justification is shown regarding their need. 3.2 One-to-one co-relation between inputs and outputs and scrutiny of voluminous record [para 2(b) & (c) above]....
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.... Name of service provider/supplier of goods Service tax/Central Excise Regn. No. of service provider/ supplier of goods Details of service/goods provided with classification under FA 1994/Central Excise Tariff Service tax/Central Excise duty payable Date and details of payment made to Service provider 1. 2. Documents attached to evidence the amount of Service tax paid Total export during the period for which refund is claimed Total domestic clearances during the period for which refund is claimed Total amount of input credit claimed as refund (4) (5) (6) (7) The declaration should be certified by a person authorized by the Board of Directors (in the case of a limited company) or the proprietor/partner (in c....
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....n case of incomplete invoices, the department should take a liberal view in view of various judicial pronouncements by Courts. It had earlier been prescribed in Circular No. 106/09/2008-S.T., dated 11-12-2008 [2009 (13) S.T.R. C3] that the invoices/challarts/bills should be complete in all respect. This circular was issued with reference to Notification No. 41/2007, dated 6-10-2007 as specific services eligible for refund under the notification has been specified. Thus, a stricter requirement exists under the said notification for ascertaining the actual service which has been used in the export of goods. In the case of refund under Rule 5, (i) so far as the nature of the service which has been received by the exporter can be ascertained; (ii) tax paid therein is clearly mentioned; and (iii) other details as required under Rule 4(a) are mentioned, the refund should be allowed if the input service has a nexus with the service/goods exported as discussed earlier. In any case, the suggested Chartered Accountant's certificate should clearly bring out the nature of the service and this will assist the officer in taking a decision." 14. In support of their claim for refund of unutiliz....
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....sees have passed the test of eligibility to the credit and therefore, the same cannot be questioned at the time of considering refund of unutiized credit. (15) The extent and scope of the definition of input services has to be ex pounded in a liberal expansive way so as to include all activities relating to business. 15. The appellants are also relying on the following case laws in support of their claim for refund of unutilized credit of service tax:- (a) Mahindra Sona Ltd. v. CCE, Nasik - 2009 (15) S.T.R. 474 (Tri. - Mum.) Cenvat credit of Service tax - Input services - Catering services received by manufacturer in canteen attached to factory - Issue settled by Larger Bench of Tribunal [2008 (12) S.T.R. 468 (Tribunal-LB)] holding that credit available where cost of food shown to be part of expenditure incurred by manufacturer with bearing on cost of production calculated on CAS-4 formula - Aspect not examined by lower authorities - Case fit for remand to ascertain whether Service tax paid formed part of cost of production - Rule 2(l) of Cenvat Credit Rules, 2004. [para 2] (b) CCE, Hyderabad v. Deloitte Tax Services India Pvt. Ltd. - 2008 (11) S.T.R 266 (Tri.-Bang.)....
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....n a liberal way in view of the phrase 'activities relating to businesses.' There cannot be any dispute that the input services rendered by the appellants are all activities relating to the output services exported by the appellant. Moreover, on going through the records, we are satisfied that the appellants had fulfilled the five conditions of Notification No. 12/2005 already enumerated in the submission of the appellants. In these circumstances, the impugned orders do not have any merit. The appellants are entitled for the rebate in respect of all the rebate claims filed by them during the relevant period. In view of the above findings, we allow the appeals with consequential relief. (e) CCE, Mumbai v. GTC Industries Ltd. - 2008 (12) S.T.R. 468 (Tri. - LB) Cenvat credit of Service tax - Input service - Outdoor catering service in canteen of manufacturer - Credit denied holding such service not covered under input service definition as not specifically specified in second part of definition under Rule 2(l) of Cenvat Credit Rules, 2004 - Expenses towards canteen and provision of subsidized canteen forms part of cost of production as evident from para 4.1 of CAS—4 - Mandatory on....
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....a 7,8,11] (h) Indian Rayon & Industries Ltd. v. CCE, Bhavnagar - 2006 (4) S.T.R. 79 (Tri. - Mum.) Cenvat credit of Service tax - Service tax paid on mobile phone is available as credit to eligible service providers of output service and manufacturers in absence of any express prohibition under Cenvat Credit Rules, 2004 applicable during the material time - Board's old Circular No. 59/8/2003-S.T., dated 20-6-2003 cannot be pressed into service against appellants - Rules 4(1) and 4(7) ibid. [paras 3,4,5] (i) Capiq Engineering Pvt. Ltd. - 2009 (245) E.L.T. 186 (T) = 2008-TIOL- 1967-CESTAT-Ahm. "There is no requirement of one to one co-relation between the input service and the final product - refund cannot be denied on the ground that the input service is of general nature which could be used for several quarters." (j) CCE, Nasik v. Cable Corporation of India Ltd. - 2008 (12) S.T.R. 598 (T) = 2008-TIOL-1180-CESTAT-MUM. "Service Tax - Scope of inclusive part of definition of 'input service' much larger than just 'being used directly or indirectly in relation to manufacture' Hiring of cars for transportation of employees to the factory - Service is used indirectly i....
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....ers passed by the lower appellate authority are not legal and proper for the following reasons:- (a) The orders do not take into account the conditions laid down under Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006, which are relevant for allowing refund of unutilized credit of service tax. (b) Rule 20) of Cenvat Credit Rules, 2004 deals with what credit is admissible to a provider of output services Only that part of such credit which is attributable to the provision of exported output services can be allowed as refund. The burden is on the assessees to establish which part of the credit is attributable to provision of ex ported output services and also to prove that the conditions set out in the notification are fulfilled. According to her, the assessees have filed the refund claims without complying with the conditions set out under the Notification No. 5/2006. She states that the assessees have also not shown that the claimed services have actually been used in the export of services. 18. The Ld. SDR argues that the lower appellate authority has not examined the restrictive nature of the Notification No. 5/2006 and also the provisions of Rule 5 of Cenvat Credi....
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....esumed intention of the legislature language of explanation V to notification No. 175/86-CE. being clear and not making any distinction between types of payments received by exporters to Nepal, no such distinction is to be made in its interpretation. [para 6] (9) Maruti Suzuki Ltd. v. CCE, Delhi-III, 2009 (240) E.L.T. 641 (S.C.). (i) Cenvat/Modvat - Input, scope of - Crucial requirement that all goods "used in or in relation to the manufacture of final products" qualify as "input" - Expression not a standalone item but to be read in entirety as "used in or in relation to manufacture of final product whether directly or indirectly and whether contained in the final product or not" - Inputs falling in inclusive part must have nexus with manufacture of final product - Functional utility of item would constitute relevant consideration - All the three parts of definition, namely specific, inclusive and place of use to be satisfied before an input becomes an eligible input - Rule 2 of Cenvat Credit Rules, 2002 - Rule 2(k) of Cenvat Credit Rules, 2004. - Unless and until the said input is used in or in relation to the manufacture of final product within the factory of producti....
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....he said circular, note has been taken regarding use of different phrases in the relevant rules and notifications. In addition, we find that the expression used in the Act is also different. As pointed out in para-6 above, the legislature uses the expression services consumed under Section 94(ee) and (eee). The rules made taking recourse to the statutory provisions contained in the Act and the notifications issued there under have to be interpreted in the context of the expression used in the Act. 21. All the rules of procedure are the handmaid of justice as held in Kailash v. Nanku - AIR 2005 SC 2441. In the State of Punjab and Another v. Shamala Murari and Another, (1976) 1 SCC 719, Apex Court approved in no unmistakable terms the approach of moderating into wholesome directions what is regarded as mandatory on the principle that Procedural law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice. In Chanshyam Dass and others v. Dominion of India and Others - (1984) 3 SCC 46, the Court reiterated the need for interpreting a part....
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....n 5 of the Appendix to the Notification has been deleted. We, however, find that neither the Act, nor the Rules have been retrospectively amended. 24. Some prospective amendments have also been made to the said Notification No. 5/2006-C.E. (NT.), dated 14-3-06, requiring certification of details relating to refund claim including certification by a Chartered Accountant, 25. These changes, do not alter the fact that the expression used in the Finance Act, 1994, speaks of services consumed for providing a taxable service and the expressions used in the Cenvat Credit Rules, 2004 and in the Notification issued there under are different. The Rules and Notifications issued under the enabling power under the Act cannot expand the mandate given under the enactment and cannot make provision for allowing credit in excess of what is stipulated under the law. The rule making authority can frame rules covering a lesser area than what it is empowered to do but cannot go beyond the limits provided under the statute and make rules covering a greater area. 26. While we fully appreciate and support the idea that the refunds in respect of unutilized and accumulated credit should be sancti....
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....e in para-3, the original authority has allowed the refund for certain services holding those services to be input services. Since neither side has appealed against the decisions of the original authority in regard to these services, we express no opinion about the same The services listed in column 4 of the Table are the ones in respect of which the lower appellate authority has allowed refund and the department has come in appeal to the Tribunal The services under coloum 5 of the Table are the ones in respect of which neither the original nor the appellate authorities have allowed refund and therefore, the assessee appellants are in appeal claiming refund in respect of those services. 29. We note that certain opinions have been expressed in an illustrative manner in the Circular dated 19-1-10, stating that some of the services named therein can be considered as input services and certain others cannot be so considered We are of the view that no such hard and fast rule can be made nor can the same be binding on the adjudicating and appellate authorities It is a different matter that in respect of export goods, exemption from paying service tax on certain services received and u....
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.... The process undertaken by the appellant assessee to produce the exported output service may also have to be examined to determine what input services have been consumed in the process following the decision of the Hon'ble Supreme Court rendered in the case of CIT New Delhi v. Oracle Software India Ltd. - 2010 (250) E.L.T. 161 (S.C.), though the same was rendered in the context of 'manufacture'. 31. We also note that the services for which refund has been claimed include almost all kinds of services received by the appellants. Some of the appellants have claimed refund of service tax paid on insurance services, chartered accountant's services, courier services, etc. On the other hand, one of the appellants before us has put these services on the negative list stating that they are not claiming refund of service tax paid on such services. In other words, they do not consider these services to be input services consumed for providing output services. Further, the same appellant has claimed refund of service tax paid on security agency services but has put service tax on security charges paid towards deputing security at the accommodation provided by the Company for the executives....