Custom, Excise & Service Tax Tribunal
Zenta Private Ltd vs Mumbai V on 13 March, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPLICATION NOS: ST/Stay-1382/2011 & ST/EH-1/2012
APPEAL NO: ST/455/2011
[Arising out of Order-in-Original No: 85/06/V/2011/COMMR/KS/ST dated 18/04/2011 passed by the Commissioner of Central Excise, Mumbai V.]
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri P.R. Chandrasekharan, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Zenta Private Ltd.
Appellant
Vs
Commissioner of Central Excise
Mumbai V
Respondent
Appearance:
Shri Prakash Shah with Mr. Prasad Paranjape, Advocates for the appellant Shri V.K. Agarwal, Additional Commissioner (AR) for the respondent CORAM:
Honble Shri Ashok Jindal, Member (Judicial) Honble Shri P.R. Chandrasekharan, Member (Technical) Date of decision: 13/03/2012 ORDER NO: ____________________________ Per: Ashok Jindal:
The appellant have filed an application for early hearing of their appeal. Considering the facts discussed before us, we find that it is a fit case for grant of early hearing as the revenue involved is more Rs. 1 crore. Accordingly, we grant early hearing of the appeal and take up the appeal today itself for disposal along with stay application.
2. After hearing both the sides, we waive the requirement of pre-deposit of the impugned demands and take up the appeal itself for final disposal.
3. The facts of the case are that the appellant are engaged in the activity of Business Process Outsourcing and Collection of Services. These services are classified by the appellant under the category of Business Auxiliary Services. As the service recipient is located outside India, therefore, the appellant availed input service credit, but as their service was exempt by Notification No. 8/2003 dated 20/06/2003 they could not utilise the CENVAT credit. They filed a refund claim under Rule 5 of the CENVAT Credit Rules, 2004. During the pendency of the refund claim a show cause notice was issued to the appellant for denying CENVAT credit availed by them on input services which has gone into the output services, which are exempt as per Notification No. 8/2003. The adjudicating authority denied the input service credit and confirmed the impugned demand along with interest and penalty. Aggrieved from the said order the appellant are before us.
4. Considering the submissions made by both the sides, we find that as per Rule 5 of the CENVAT Credit Rules, 2004, if the assessee is providing taxable service although they are exempt by way of notification, but have been exported, then the assessee is entitled to take input service credit. Same view was taken by this Tribunal in the case of Dell International Services India Pvt. Ltd. vs. Commissioner of Central Excise, Bangalore 2010 (17) STR 540 (Tri.Bang.) wherein this Tribunal has observed as under:
11. We have gone through the records of the case carefully. In respect of Appeal No. ST/115/2008, the rebate has been rejected on the ground that the service exported is not taxable. However, in the other appeal it has been, held that they are taxable. Only with regard to some of the input services, the Commissioner (Appeals) in his order had expressed certain doubts as to their entitlement for credit and remanded the matter to the Original Authority. Both the orders are under challenge. In terms of the agreement entered by the appellant, the following services are provided to the recipients situated abroad:
a) Call centre services including technical support, customer care contact services and sales facilitation services
b) Back office accounting and transaction processing
c) And IT support services of remote maintenance, trouble shooting, catering to Dell's group companies outside India and their overseas customers.
11.1. According to the appellants, the above services would qualify to be Business Auxiliary Services. In any case, in the light of the' Boards clarification dated 21.08.2003, the above services cannot be categorized under "Information Technology Service" and excluded from the scope of "Business Auxiliary Service." The extract of the Board's Circular is reproduced here:
2. Scope of IT service under Business Auxiliary Service:
.
2.3. It is clarified that there is no contradiction between the clarifications dated 28.02.2003 and dated 20.06.2003. The scope of IT services is explained in the definition of Business Auxiliary Service in the Act itself as any service in relation to designing, developing or maintaining of computer software or computerized data processing or system networking or any other service primarily in relation to operation of computer systems. The last words "primarily in relation to operation of computer systems" make the intention abundantly clear. The words "back office processing" used In the clarification dated 28.02.2003 have to be read in conjunction with the other terms used there in viz. data processing, networking, computer facility management Thus, any service of back office processing primarily in relation to operation of computer system will be covered as IT services and not taxable. Payroll processing, accounts management etc. even by using computer programs, cannot be termed as activities primarily in relation to computer systems. The use of computer in these services is secondary and the primary activity is that of business related work. Thus, these services will be taxable as Business Auxiliary Services. This is exactly the position that has been clarified in the circular dated 20.062003.
12. In any case, the Commissioner (Appeals) in the orders 83 & 83A/2008-ST had already stated that the service rendered by the appellant and exported are taxable services. It is also not in dispute that the appellants utilised the various inputs services, which had already been enumerated in the submission of the appellants. Once the taxable service is exported and various input services have been utilised for providing the output service: the appellants could be entitled for the rebate, which is equal to the service tax paid on the input services. Going by the definition of the input service under Rule 2(1) of the Cenvat Credit Rules, 2004 the service utilised by the appellants for providing output service can indeed be considered as input services. We also take note that the definition of input service indicates that the interpretation should be done in a liberal way in view of the phrase activities relating to business, 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.
5. Going through the above said case law, we find that the appellant are entitled for input service credit which they have availed for providing the service, which is exempt by way of Notification No. 8/2003 but have been exported. Accordingly, we set aside the impugned order and allow the appeal with consequential relief.
(Dictated in Court) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) */as 6