Custom, Excise & Service Tax Tribunal
M/S. Kpit Cummins Global Business ... vs Cce Pune I on 9 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. ST/209, 210/09 Mum
Arising out of Order-in-Appeal No. P1/VSK/163 & 164/09 dated 29.6.2009 passed by the Commissioner of Central Excise (Appeals), Pune I.
For approval and signature:
Shri. M.V. Ravindran, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
M/s. KPIT Cummins Global Business Solutions Ltd.
:
Appellant
Versus
CCE Pune I
Respondent
Appearance Shri Ashok Deshpande, Advocate for appellant Shri Devendra Nagvenkar, Addl. Commissioner (A.R.) For Respondent CORAM:
Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 09.01.2015 Date of Decision : 09.01.2015 ORDER NO.
Per : M.V. Ravindran These appeals are filed against Order-in-Appeal No. P1/VSK/163 & 164/09 dated 29.6.2009.
2. Since the issue as well as the assessees being the same, both the appeals are disposed of by a common order.
3. The relevant facts that arise for considerations are the appellant herein filed refund claims with the authorities for unutilized CENVAT Credit in terms of Rule 5 of the Cenvat Credit Rules, 2004. On scrutiny of the refund claims, some discrepancies were noticed and accordingly show-cause notices were issued to the appellant for rejection of such refund claims. Appellant contested the show-cause notices before the adjudicating authority. Adjudicating authority did not agree with the contention raised and rejected the refund claims on various grounds. Appellant preferred an appeal before the first appellate authority wherein they contested the order-in-original on the ground that the services are exported; unit though not registered under centralized registration but were registered under the STPI scheme and the appellants refund claim has been wrongly rejected by invoking Rule 6(3)(c) of the Cenvat Credit Rules, 2004. First appellate authority after following the due process of law did not agree with the appellant upheld the order-in-original rejecting the refund claims. He recorded the findings wherein he has held that non-registration of the appellant cannot be a ground for rejecting the refund claims.
4. Learned Counsel appearing on behalf of the appellant, after giving the Bench overall view of the facts, submitted that in an identical issue in respect of their sister concern KPIT Cummins Infosystems Ltd. was before the Bench, and finally disposed. He would submit that this Bench vide final order No.A/533/2013-WZB/C-I (CSTB) dated 01.04.2013 has allowed the appeal and set aside the impugned order. He would produce the copy of the said case law as reported in 2013 (32) STR 356 (Tri. Mum).
5. Learned Departmental Representative reiterated the findings of the first appellate authority.
6. After considering the submissions made by both sides and perusal of the records, we find that the issue involved in this case is regarding rejection of refund claims of the service tax paid on input services which could not be utilized by the appellant. It is undisputed that the appellant is a service provider registered under STPI scheme.
6.1 On perusal of this Tribunals order in respect of their sister concerns case i.e. KPIT Cummins Infosystems Ltd. (supra) it is noticed that identical issue was before us and we have held in favour of the assessee. The ratio of the judgement is in paragraphs 5 to 5.6 which we reproduce.
5.?We have carefully considered the rival submissions.
5.1?From the records of the case it is seen that during the impugned period the appellant had exported the following goods/services:
(i) Software Maintenance Service, classifiable under the category of Management, Maintenance or Repair Service;
(ii) Software Development Service; and
(iii) Software Consultancy Service.
5.2?As regards the management, maintenance or repair of computer software service, the same is classifiable under the taxable service category of management, maintenance or repair service as defined in Section 65(64) of the Finance Act, 1994. As regards the development of software and software consultancy, the same became taxable under service tax only w.e.f. budget 2008 when Information Technology Software Service was brought under the tax net for the first time. Therefore, as far as these two services are concerned, they were not a taxable service during the impugned period.
5.3?Nevertheless, they were exempted services as defined in Rule 2(e) of the Cenvat Credit Rules, 2004 as per which:
exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act. In other words, exempted services included both taxable services as well as non-taxable services. As regards output service as per Rule 2(p) of the Cenvat Credit Rules - output service means any taxable service provided by the provider of a taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions provider and provided shall be construed accordingly. Under Rule 5 of the Cenvat Credit Rules:
where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the Cenvat credit in respect of the input or input service so used shall be allowed to be utilised by the manufacturer or provider of output service towards payment of duty of excise on any final product cleared for home consumption or for export on payment of duty or service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification. 5.4?Accordingly, Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 has been issued. Rule 6 of Cenvat Credit Rules, 2004 deals with obligation of the manufacturer of dutiable and exempted goods and provider of taxable and exempted services. Under Rule 6(3)(c), the provider of output service shall utilise credit only to the extent of an amount not exceeding 20% of the amount of service tax payable on taxable output service. In the present case, the services provided by the appellant and exported is not a taxable output service inasmuch as software development software service and software consultancy service become taxable only in the Budget 2008. Therefore, the cap of 20% prescribed under Rule 6(3)(c) have no application whatsoever. Therefore, there was no bar on the appellant in availing full credit in respect of IT software services during the material period.
5.5?The appellant has received input/input services for rendering of taxable services during the material period, which has been exported. The Honble High Court of Karnataka in mPortal India Wireless Solutions P. Ltd. (supra) case, in a similar situation, held as follows :
6.?The assessee is a 100% export oriented unit. The export of software at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. According to the assessee a sum of Rs. 4,36,985/- is accumulated Cenvat credit. The Tribunal has categorically held that even though the export of software is not a taxable service but still the assessee cannot be denied the Cenvat credit. The assessee is entitled to the refund of Cenvat credit. Similarly insofar as refund of Cenvat credit is concerned, the limitation under Section 11B does not apply for refund a accumulated Cenvat credit. Therefore, bar of limitation cannot be a ground to refuse Cenvat credit to the assessee.
7.?Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed as serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside. 5.6?The appellant mPortal India Wireless Solutions P. Ltd. was also a 100% EOU and the transaction undertaken are also identical in the sense that they relate to export of software. Therefore, the above decision is squarely applicable to the facts of the case before us. In any case, the object of EXIM Policy of the Government of India is to promote exports of goods and services and not export of taxes. Service Tax being a destination based consumption tax, in the case of exports there should not be any tax burden and the tax burden, if any, is to be imposed by the Government of the country where the services are consumed. Otherwise, it would render the exports of software uncompetitive. Keeping in view of above policy objective of the government, it is appropriate to hold that the appellants are eligible for the refund of the amount claimed by them of Rs. 2,14,45,060/- during the impugned period on account of export of exempted services subject to the satisfaction of other conditions prescribed in Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 and the Revenue shall verify the same. As has been recorded earlier the issue involved in the case in hand and in case of sister concern i.e. KPIT Cummins Infosystems Ltd. (supra) being the same, we hold that the impugned order is unsustainable and liable to be set aside and we do so.
7. Impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Dictated in open Court) (P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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