TaxTMI 
TaxTMI 
2007 (3) TMI 36
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....input services were not actually related to exported output service and the documents submitted by them in support of their claim fails to fulfill the conditions prescribed in the Notification No. 12/2005-S.T., dated 19-4-2005. Therefore, four show cause notices were issued to the appellants by the Assistant Commissioner of Service Tax, Division-I, Service Tax Commissionerate, Bangalore as to why the said rebate claims should not be rejected. A Corrigendum to the notice was issued asking them to show cause to the Assistant Commissioner of Customs, Customs Division. The appellants contended that though the services exported by them were exempted during the relevant period they are still eligible for rebate as the services rendered by them, though exempted, were taxable. The lower authority took up the adjudication of these show cause notices in view of Board's Circular No. 828/5/2006-CX, dated 20-4-2006. The lower authority took a stand that the call center Services provided by the appellants were exempt from payment of service tax and therefore it cannot be called a taxable service. He also pointed out that the appellants did not submit the proof of export duly certified by the res....
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....and service providers. The same is reproduced here for ready reference: Para 3: " the claim for refund of such unutilized credit/rebate will be filed with the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise having jurisdiction over the factory of manufacturer or warehouse or EOU or respective maritime Commissioner as the case may be" Secondly all 100% EOU in Bangalore are under Administrative control of customs authorities and appellant being a STP unit who is registered in customs division and exporting the service, come under the jurisdiction of the customs department in terms of Board's Circular No. 31 /2003-Customs, dated 7-4-2003. Further, notification issued under Rule 3 Central Excise Rules 2001, has empowered the customs authorities viz, the Assistant Commissioner/Deputy Commissioner of customs and Commissioner of Customs (Appeals) to act as central excise officers in respect of 100% EOUs/STPI Units in so far as it relates to central excise and service tax matters. In view of this, it is very clear that the jurisdictional central excise officers for all 100% EOU/STPI units are only the Customs authorities in Bangalore and not the Central ....
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....tance, inventory management, evaluation or development of prospective customer or vendor, public relations services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that amounts to "manufacture" within the meaning of clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944). Explanation : For the removal of doubts, it is hereby declared that for the purposes of this clause-. (a) "Commission agent" means any person who acts on behalf of an other person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (b) "information technology service" means any service in relation to designing, developing or maintaining of computer software, or system netwo....
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.... (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or exempted services, except in the circumstances mentioned in sub-rule (2). [Provided that the Cenvat credit on inputs shall not be denied to job worker referred to in, Rule 12AA of the Central Excise Rules 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.] (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or * ], and manufactures such final products or provides such * input services, [ * output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use....
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.... other taxes if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory; (c) the provider of output service shall utilize credit only to extent of an amount not exceeding twenty per cent of the amount of service tax payable on taxable output service. Explanation I. - The amount mentioned in conditions (a) and (b) shall be paid by the manufacturer or provider of output service by debiting the CENVAT credit or otherwise. Explanation II. - If the manufacturer or provider of output service fails to pay the said amount, it shall be recovered along with interest in the same manner, as provided in rule 1t4 for recovery of CENVAT credit wrongly taken. [Explanation III. - For the removal of doubts, it is hereby clarified that the credit shall not be allowed on inputs and inputs services used exclusively for the manufacture of exempted goods or exempted services.] (4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than the final products which are exempt from the whole of the dut....
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....) of Rule 6 by excluding the goods which are exported under bond in terms of the provisions of the Central Excise Rules 2002. In other words, by virtue of sub rule 6, certain removals which are permitted without payment of duty are excluded from the restrictions. One such exclusion is that when the goods are exported under bond without payment of duty as contained in Rule 6(6)(v) of the rules. Here, as the final output service is exempted, exporting of such service under bond does not arise. The appellant is an 100% EOU exporting services and they were allowed to procure inputs/capital goods both imported as well as indigenous without payment of duty and fulfill export obligation for which they execute a bond under the Customs Act/Excise Act for the duty foregone. As they did not export any goods under bond in terms of Central Excise Rules 2002, these provisions will not be applicable to export of output services. However, as per sub-rule (5) of Rule 6, no credit is permitted if the output service is exempted. Once, the credit is not available, question of granting them refund of such unavailable credit does not arise. Therefore, by virtue of these rules, as no goods are exported u....
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.... (e) no CENVAT credit has been availed of on inputs and input services on which rebate has been claimed; and (f) that in case,-. (i) the duty or, as the case may be, service tax and cess, rebate of which has been claimed, have not been paid; or (ii) the taxable service, rebate for which has been claimed, has not been exported; or (iii) CENVAT credit has been availed on inputs and input services on which rebate has been claimed, the rebate paid, if any, shall be recoverable with interest as per the provisions of section 73 and section 75 of the Finance Act, 1994 (32 of 1994) as if no service tax and cess have been paid on such taxable service. 3. Procedure : ………] 3.1 Filing of declaration. - The provider of taxable service to be exported shall, prior to date of export of taxable service, file a declaration with the jurisdictional Assistant Commissioner of Central Excise, or Deputy Commissioner of Central Excise, as the case may be, describing the taxable service intended to be exported with, - (a) Description, quantity, value, rate of duty and the amount of duty payable on inputs actually required to be used in providing taxable service to be exported; (b) Description....
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....ction of evidence on export proceeds realization certificate from the bank and non-availability of input credit on the exempted output services viz, call center services. The interpretation of the lower authority does not appear to be correct inasmuch as it is meant to say that if any service is exempted by virtue of notification, such services will not fall under the category of 'taxable services'. As explained earlier, exempt services are nothing but taxable services and therefore cannot be termed as non-taxable services just because the same is exempt from payment of service tax by virtue of a Notification. Call center service, which is a business auxiliary service is taxable service under clause (105) of Section 65 of the Finance Act, 1994 but exempted under Notification No. 8/2003-S.T. dated 20-11-2003. In other words, all services covered under the Act are "taxable services". Rule 4 of Export of Services Rules, 2005 states that any service which is taxable under clause (105) of Section 65 of the Act, may be exported without payment of Service Tax. Rule 5 speaks about rebate of service tax when any taxable service is exported. The Central Government by a Notification granted r....