Custom, Excise & Service Tax Tribunal
M/S Wns Global Services Pvt. Ltd vs Commissioner Of Central Excise, ... on 6 May, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. ST/71 & 72/12 (Arising out of Order-in-Appeal No. PIII/Rs./291 & 292/2011 dated 30.09.2011 passed by the Commissioner of Central Excise (Appeals) Pune-III.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
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 : Yes 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?
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M/s WNS Global Services Pvt. Ltd.
: Appellant
Versus
Commissioner of Central Excise, Pune-III
: Respondent
Appearance
Shri Bharat Raichandani, Advocate
: For Appellant
Shri S.R. Nair, Examiner Officer (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 06.05.2015 Date of Decision: 06.05.2015
ORDER NO.......................................................
Per: Anil Choudhary:
The appellant is providing, in bound call centre and transaction processing services and is registered under the provisions of service tax under the category of Business Auxiliary Services. The appellant is also listed as a Software Technology Park of India (STPI) under the STPI scheme. The appellant exports 100% of its output services. Under the provisions of Rule 5 of the CENVAT credit rules, in order to promote exports, provision had been made that such accumulated credit can be refunded to the exporter subject to the conditions as provided. Notification No. 5/2006C.E. (N.T.) dated 14/3/2006 provides the conditions, requirements and limitations for the obtaining refund of such accumulated input tax credit. According to the said notification refund of CENVAT credit shall be allowed in respect of inputs & input service used in the manufacture of final product cleared for export under Bond or letter of undertaking, for input or input service used in providing output service which had been exported, without payment of service tax. The appendix to the notification further provides the conditions and limitations for refund.
2. The basic condition is, the final product or the output services is exported in accordance with the provisions laid down under the export of service rules as the case may be. It is further provided that claim for refund be submitted not more than once for any quarter, in the calendar year and further provided that where the average export clearance of the final products or the export services in value terms is 50% or more of the clearances of final products or services as the case may be, in the preceding quarter, or the claim is filed by the Export oriented unit, the claim for such refund may be submitted for each calendar month. The manufacture or the provider of service as the case may be, is required to submit the refund application in Form A before the concerned authority in whose jurisdiction the factory is situated along with the shipping bill or bill of export duly certified by the Customs Officer and in case of the service provider before the authority, the registered premises from which the services exported is situated along with copy of invoice and a certificate from the bank, notifying the realisation of the export proceeds. It is further provided that the refund is to be allowed only in those circumstances where the assessee is not in a position to utilise the input credit or input service credit, allowed under Rule 3 of the said Rules, against goods exported during the quarter or month for which the claim relates. It is further provided that refund of unutilised input service credit will be restricted to the extent of the ratio of export turnover to the total turnover for the given period. Further provided that the refund claim be filed within the limitation prescribed under Section 11B of the Central Excise Act.
3. In view of the representations made by trade and of the service provider, being the difficulties faced in obtaining refund from the Department, the Board appreciating the difficulties, have issued Circular No. 120/01/2010ST dated 19/1/2010, wherein the reasons for delay having been identified like-exercise undertaken by the adjudicating authority as to the nexus in respect of the inputs or input service with the output product or service. Secondly the officer processing refund find it difficult to correlate goods or services, covered under one invoice with respect to the specific consignment of export or specific instance of export of service, for the difficulty with respect to large number of invoices which have to be considered for a particular refund period. Further although the notification provides that refund claim should be filed quarterly in a financial year, it is not clear whether the refund is eligible only of the credit, which is taken during the said quarter or also the accumulated credit of the past period, would also be refunded. Accordingly, appreciating, the Board have clarified that to be eligible for refund, input services should be used in or in relation to the output services exported. That different yardstick for taking of credit and for refund of credit is not permissible. Different phrases used under different rules in CENVAT Credit Rules have to be construed in a harmonious manner. It is further clarified that CENVAT Credit Rules, 2004 also gives vide scope for the input services to provider of output services, by indicating in its ambit services used for providing an output service", and it is further provided in para-3.1.2, the phrase used in mentioned in Notification No. 5/2006C.E. (N.T.) to show the nexus also needs to be interpreted in a harmonious manner in the case of the absence of such input/input service adversely impacts the quality and efficiency of the provision of service exported, it should be considered as eligible input service. In the case of BPO or call centres the services directly related to the export business are renting of premises, right to use the software, maintenance and repair of equipment, telecommunications etc. Further services like outdoor catering or rent a cab for pickup and dropping of its employees to office would also be eligible for credit on account of the fact that these offices run on 24 X 7 basis and as such transportation and provision of food for the employees are necessary, which the employer has to provide to its employees to ensure that output services are provided efficiently. Further it is provided that in view of the larger manpower required by BPO and call Centres, service tax paid on manpower recruitment agency service would be eligible for taking the credit and the refund of the same. On the point of correlation of input with output and Scrutiny of voluminous records, the Board have considered the same in respect of Notification No. 41/2007ST which grants refund of service tax paid on services used by an exporter, after the goods are removed from the factory. The scheme was simplified by making a provision for self certification vide Notification No. 17/2009ST, provision has been made for self certification by an exporter or his Chartered Accountant is required to certify the invoices about the correlation and the nexus between the inputs/input services and the export. The exporters are also advised to provide a duly certified list of invoices. The Department officers are only required to make a basic scrutiny of the documents and, if found in order, sanction the refund within one month. In view of the simplified scheme under Notification No. 41/2007 read with Notification No. 17/09 it was decided that similar scheme shall be followed for refund of CENVAT credit under Notification No. 5/2006C.E. (N.T.). The said procedure was also prescribed to be followed in all cases including the pending claim with immediate effect, and accordingly form was prescribed for giving the details of shipping bill or the bill of export, details of input credit on which a refund is claimed, documents attached to evidence amount of service tax paid, total export during the period for which refund is claimed, total of domestic clearances during the period for refund, and total amount of input credit claimed as refund. The declaration be certified by a person authorised by the board of directors or the proprietor or partner as the case may be. It is further prescribed that where refund is more than Rs. 5 lakhs, the declaration should also be certified by the Chartered Accountant who audits the account of the exporter for the purposes of Companies Act or under the Income Tax Act, as the case may be. Further provision is made that the Asst. Commissioner or Dy. Commissioner may after verification of the fact that the input credit has been correctly claimed, sanction the refund on the basis of declaration. Also in case there is a doubt about the correctness of the claim of CENVAT credit on any service, the undisputed amount may be refunded and the balance claim may be decided after following the dispute settlement process. It is further provided that 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 export and therefore the exporter does not file any claim. However it is seen that the exporter receives input services or inputs during this period. For example, an exporter may avail of Rs. one crore input credit in the quarter April-June. However there is no export made in this quarter, so no refund is claimed. The input credit is thus carried by the exporter to the July to September quarter, when export of Rs. 50 lakhs and domestic clearance of Rs. 25 lakhs are made. Thus exporter should be permitted refund of the Rs. 66 lakhs, on his export turn over is 66% of the total turnover, in the quarter. Further provided that in case of the service provider exporting hundred percent of the services, such disputes should not arise and refund of CENVAT credit, irrespective of when credit was taken, should be granted, if otherwise is in order. Such exporter may be asked to file a declaration to the effect that they are exporting 100% of the services, and, only if it is noticed subsequently that the exporter had provided services domestically, the proportional refund to such extent can be demanded back from him. As regards the incomplete invoices, the Department shall take a liberal view in view of the various judicial pronouncements. It is further stated that strict correlation is not required in case of refund under Rule 5. The refund shall be allowed if the input service has nexus with the service/goods exported. Further provided that Chartered Accountant's certificate should clearly bring out the nature of the service and this will assist the officer in taking a decision. Further the Revenue Officers were directed to implement the directions with immediate effect, also made applicable to the pending claims.
4. The main ground of the appellant in these appeals is that the aforementioned instructions have not been followed, and part of the refund have been rejected in each of the period for the reasons- amount of CENVAT credit not considered by the auditor and input invoices were not available for verification. As regards this the appellant contends that the same needs to be allowed subject to the invoices as produced during the re-adjudication or remand proceedings. The other ground being, amount of CENVAT credit restricted as per service tax return for the quarter. The appellant urges that this is not the mandate under the law. The refund is to be allowed on the basis of accumulated CENVAT credit available (unutilised amount) on the last date of the quarter for which the refund is claimed. It is further urged that the appellant is and was an export-oriented unit, and as such the disallowance by restrictions on the refund claim to the amount of CENVAT credit availed in a particular quarter or half-year is bad and untenable. The learned Counsel urges that services are received at different offices, but no separate books of accounts are maintained in each and every office. Although services are received at its various offices, but the whole accounting and payment is done at the registered office and as such the disallowance on this ground is bad and fit to be set aside. The next ground is - service tax in respect of meal coupons (Sodexo) is allowable, as provided to ensure canteen facility for employees. Learned Counsel for the appellant urges, some invoices are missing or were missing, which may be allowed to the extent of invoices as available. It is further urged that the adjudicating authority have not applied its mind and rejected the refund in a summary manner without following the mandate of law and the instructions of the CBEC issued from time to time, more specifically vide Circular No. 120/01/2010-ST and accordingly prays to remand the matter for a fresh decision in accordance with law.
5. The learned A.R. relies on the impugned order passed by the Commissioner (Appeals) who have been pleased to uphold the disallowance of the part refund, upholding the disallowance on the basis of the credit availed, as disclosed in the ST-3 returns for the quarter. Refund is given for the CENVAT credit availed during the period, to which the refund relates but could not be utilised. The appellant is under obligation to keep the records maintained in order.
6. Having considered the rival contentions, I find that the matter needs to be re-considered in the light of the directions contained in the Circular/Notifications as noted hereinabove. Further I hold that the CENVAT credit cannot be restricted to the amount availed & as shown in the ST-3 returns for a quarter. It is refundable to the extent of accumulated credit lying at the end of the period for which the refund relates. This will include the amount of brought forward credit as well from the earlier quarter(s). So far the issue of address on the invoices being not that of the registered premises, I hold that the claim rejected on this ground is bad. I direct to verify to the extent, if the services have been received in any of the offices of the appellant and duly accounted for in the books of accounts, the credit is allowable. So far issue of missing invoices is concerned, the appellant is given opportunity to produce the invoices which shall be considered, as per Rules, at the time of hearing in the remand proceedings. The appellant during the course of hearing have also produced a copy of ST-3 return, filed on 23.07.09 relating to the period under consideration. That the adjudicating authority shall peruse his records as well as the documents produced in support of the balance refund claim and shall allow the same in accordance with law.
7. Thus, the appeal is allowed by way of remand. The adjudicating authority shall pass a reasoned order on balance refund within a period of three months from the date of receipt or service of a copy of this order. The appellant is also directed to appear before the concerned authority and seek an opportunity of hearing.
(Pronounced in open Court) (Anil Choudhary) Member (Judicial) Sp 9