Whether refund of accumulated service tax credit of the last quarter admissible in subsequent quarter to 100% exporter?

PJ/Case law/2013-14/1890

Case:-AMODCS BUSINESS SERVICES PVT. LTD VERSUS COMMISSIONER FO C. EX., PUNE

Citation:-2013(31) S.T.R. 249 (Tri.-Mumbai)

Brief Facts:-The appeal is directed against order-in-appeal No. PIII/RS/165 & 166/2012, dated 16-5-2012 passed by Commissioner of Central Excise (Appeals), Pune.

The appellants, M/s. Amdocs Business Services Pvt. Ltd., Hadapsar, Pune, are engaged in providing "Commercial Training & Coaching, Business Auxiliary Services and Transport of Goods by Road". They filed a refund claim of service tax paid on inputs services under Rule 5 of Cenvat Credit Rules, 2004 for an amount of Rs. 27,46,335/- for the period October to December 2010. The refund claim was filed on the ground that because of continuous export of taxable output services, they are not in a position to utilize the Cenvat credit of Service tax paid on input services used in providing the output services exported. Their claim was examined and an amount of Rs. 16,85,468/- was sanctioned to the appellant and a claim of Rs. 10,60,867/- was rejected. The reason for rejection was that as per Notification No. 5/2006-C.E. (NT.) dated 14-3-2006, issued under the provisions of Rule 5 of Cenvat Credit Rules, 2004, refund of unutilized service tax credit will be restricted to the extent of ratio of export turnover to that of total turnover for the given period to which the claims relates and in the case of the appellant there was no domestic Clearances and therefore, both the turnover were the same. However, while computing the Cenvat credit for the said period, the Assistant Commissioner excluded an amount of Rs. 10,60,625/- on the ground that the invoices for the service tax credit in respect of this amount pertain to the period September 2008 to November 2008 and October 2009 to January 2010 and since the services in respect of which credit is taken could not have been used in the services exported during October 2010, the refund claim is not admissable. The appellant preferred an appeal before the lower appellate authority, who dismissed the appeal on the same grounds and hence, the appellant is before Tribunal.

Appellant Contentions:- The ld. Consultant for the appellant submits that as per Circular No. 120/01/2010 dated 19-1-2010, the C.B.E. & C. has clarified as follows :-

"As regards the quarterly filing of refund claims and its applicability, since no bar is provided in the notification, there should not be any objection in allowing refund of credit of the past period in subsequent quarters. It is possible that during certain quarters, there may not be any exports and therefore the exporter does not file any claim. However, he receives inputs/input services during this period. To illustrate, an exporter may avail of Rs. 1 crore as input credit in the April - June quarter. However, no exports may be made in this quarter, so no refund is claimed. The input credit is thus carried over to the July- September quarter, when exports of Rs. 50 lakhs and domestic clearances of Rs. 25 lakhs are made. The exporter should be permitted a refund of Rs. 66 lakh (as his export turnover is 66% of the total turnover in the quarter) from the Cenvat Credit of Rs. 1 crore availed in April-June quarter. The illustration prescribed under para 5 of the Appendix to the notification should be viewed in this light. However, in case of service providers exporting 100% of their services, such disputes should not arise and refund of Cenvat Credit, irrespective of when he has taken the credit, should be granted if otherwise in order. Such may be asked to file a declaration to the effect that they are exporting 100% of their services, and only if it is noticed subsequently that the exporter had provided services domestically, the proportional refund to such extent can be demanded from him”

He also relies on the judgment of this Tribunal in the case of CCE, Mysore v. Chamundi Textiles (Silk Mills) Ltd., 2012 (26) S.T.R 498 (Tri-Bang.) = 2011 (270) E.L.T. 531 (Tribunal) wherein it was held that accumulated Input Service credit, not pertaining to goods exported during the quarter for which claims were made can be refunded as there is no bar in Notification No. 5/2006-CE. (N.T.) in granting refund of credit accumulated in the past period in subsequent quarter. In view of this, he pleads for allowing the appeal.

Respondent Contentions:-The ld. Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the lower authority.

Reasoning of Judgment:-We have considered the submission from both parties and perused the record, we find that from the Board's Circular dated 19-1-2010, it is abundantly clear that refund of Cenvat credit can be allowed irrespective of when the credit was taken in case of service providers exporting 100% of their services. From the facts narrated in the order dated 13-1-2012, wherein the refund claim has been partly allowed, it is evident that the appellant was continuously undertaking exports during the said period and there were no domestic clearances. Therefore, in terms of the Board circular and also the decision of the Tribunal in the case of Chamundi Textiles (Silk Mills) Ltd., (cited supra), the appellant is eligible for the refund of the entire amount of service tax credit paid by them on the input service irrespective of when the credit was taken.

Thus, the appeal is allowed with consequential relief, if any.

Decision:-Appeal allowed.

Comment:-The essence of this case is that it is clearly stated in Notification no. 5/2006 -C.E. (NT.) dated 14-3-2006 that refund of Cenvat credit can be allowed irrespective of when the credit was taken in case of service providers exporting 100% of their services. Hence, allowing refund of CENVAT credit of past period in subsequent quarter is legal and proper.

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PJ/Case law/2013-14/1890

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