Custom, Excise & Service Tax Tribunal
M/S Arm Embedded Technologies Pvt Ltd vs Commissioner Of Central Excise ... on 28 July, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE
Appeal(s) Involved
ST/630/2012-SM
[Arising out of Order-in-Appeal No. 449/2011 dated 14/12/2011 passed by Commissioner of Central Excise (Appeals-II) Bangalore-I]
For approval and signature
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER
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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
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
M/s Arm Embedded Technologies Pvt Ltd
Level II & III, Salarpuria Touchstone,
Marathahalli, Sarjapur Outer Ring Road,
Varthur Hobli, Bangalore-560 103
Appellant(s)
Versus
Commissioner of Central Excise ,Customs and Service Tax
POST BOX NO 5400...CR BUILDINGS,
BANGALORE, - 560001
Respondent(s)
Appearance:
Mr B.G. Chidananda Urs, Adv For the Appellant Mrs.Uma Banawalkar, A.R. For the Respondent Date of Hearing: 04/05/2016 Date of Decision:
CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20591/ 2016 Per : S.S GARG The present appeal is directed against order-in-appeal No. 449/2011 dated 14th December 2011 passed by Commissioner (Appeals).
2. Briefly the facts of the present case are that the appellant is a 100% EOU registered with STPI for exporting IT services and is registered with the service tax department among others under the category of information technology software services and business auxiliary services. The appellant rendered services to ARM Ltd., U.K. as per their research and development service agreement dated 01.08.2005 and in the course of rendering taxable output services, the appellant consumes various input services and pay service tax on those input services. Since the appellant is exporting entire taxable services in terms of Export of Service Rules 2005, the CENVAT credit on input services got accommodated in their books and the same could not be utilized. Thereafter the appellant filed a refund claim on 30th June 2010 for Rs 46,69,544/- for the quarter July 2009 to September 2009 towards refund of unutilized CENVAT credit of input service tax by availing the benefit of Notification No. 5/2006 dated 14.03.2006. Thereafter the appellant received a show-cause notice dated 29.09.2010 to show cause as to why the refund claim of Rs 46,69,544/- should not be rejected. The appellant filed detailed reply to the show-cause notice. But the learned Assistant Commissioner rejected the entire claim of the appellant vide order-in-original dated 08.03.2011 and thereafter the appellant filed appeal before the Commissioner who vide order dated 14.12.2011 ordered for allowing the refund on few input services namely i) telecommunication service ii)management consultancy service iii) management maintenance and repair service iv) consulting engineer service v) renting of immovable property service vi) rent a cab operator service vii) security agency service and viii) commercial training and coaching service considering that these services are essential for rendering output service but rejected the refund of CENVAT credit on i) air travel agents service ii) architect service iii) banking and financial service iv) business auxiliary service v) chartered accountants service vi) club or associations membership service vii) company secretarys service viii) courier service ix) information technology software service x) insurance business services xi) internet telephony services xii)manpower recruitment or supply of agency service xiii) online information and data base access and/or retrieval services xiv) outdoor caterers services and xv) sponsorship services. The CENVAT credit relating to these services amounts to Rs 8,05,119/-. Aggrieved by the said order, the present appeal has been filed against the disallowance of refund of service tax on input services amounting to Rs 8,05,119/-. Learned counsel for the appellant submitted that the impugned order is wholly unjustified and non-speaking and therefore unsustainable in law in view of the judgements rendered by various Tribunals and the High Courts. He further submitted that Commissioner (Appeals) has not given any cogent reason as to why service tax paid on the services cited supra is not considered as having nexus with the output services rendered. He further submitted that the definition of input service as prescribed in Rule 2(l) of CENVAT Credit Rules 2004 include all the services which are rendered in relation to business and the various courts have given very vide interpretation to the definition of input service. He further submitted that the input services in relation to which the refund has been claimed are integral to the business operation of the appellant and are required by the appellant to provide output service. In support of his submission he places reliance on the following judgements allowing credit on various input services as mentioned below:-
1) Air travel agents service:
i) CCE Vs Fine Care Biosystems [(2009) 244 ELT 372]
ii) Semco Electrical Vs CCE [(2010) 24 STT 508 (Tri-Mum)]
2) Architects service:
i) Bharat Fritz Werner Ltd Vs CCE [2011-TIOL-1065-CESTAT-BANG]
3) Banking and financial services:
i) CCE Vs Hindustan coca cola beverages Pvt Ltd [2011-TIOL-762-CESTAT]
4) Business Auxiliary service:
i) ITC Ltd Vs CCE [2010(17)STR 148]
ii) Mangalam Cement Ltd Vs CCE [2010(24)STT 315]
iii) Lanco Industries Ltd Vs CCE [2009-TIOL-1209]
5) Chartered Accountants services:
i) Utopia India Pvt Ltd Vs CST Bangalore[2011(23)STR 25 (Tri-Bang)]
ii) Heartland Bangalore Transcription Services (P) Ltd Vs CST Bangalore [2011(21)STR 430(Tri-Bang)]
iii) CCE Visakhapatnam Vs M/s Andhra Pradesh Paper Mills Ltd [2010-TIOL-904-CESTAT-Bang]
iv) CST Vs Convergys India Pvt Ltd [2009(92)RLT 1017]
6) Company Secretary Services:
i) Narmada Gelatines Ltd Vs CCE [2009(13)STR 506(T.Delhi)
7) Courier agencys services:
i) Faber Heatkraft Industries Ltd [2008(12)STR 252]
ii) Metro Shoes Pvt Ltd Vs CCE [2008(10)STR 382]
iii) CCE Vs Deloitte Tax Services India (P) Ltd [2008(11)STR 266]
8) Club or Association membership service:
i) Dell International services India Pvt Ltd Vs CCE [2009-TIOL-1957-CESTAT-Bang]
9) Insurance auxiliary services:
i) CCE Vs CCL Products India Ltd [(2009) 22 STT 36 (Tri-Bang)]
10) Information Technology software service:
i) Dell International services India Pvt Ltd Vs CCE [2009-TIOL-1957-CESTAT-Bang]
11) Internet telephone services:
i) Mundra Port & Special Economic Zone Ltd Vs CCE [2009(13)STR 178]
ii) Metro Shoes Pvt Ltd Vs CCE [2008(10)STR 382]
12) Manpower recruitment agencys services:
i) Utopia India Pvt Ltd Vs CST Bangalore [2011(23)STR 25 (Tri-Bang)]
ii) CCE Vs Deloitte Tax Services India (P) Ltd [2008(11)STR 266]
13) Outdoor catering services:
i) CCE Vs Deloitte Tax services (P) Ltd [2008(11)STR 266
ii) Millipore Vs CCE [2009(22)STT 536(Tri-Bang)]
14) Online information and database access and/or retrieval services & sponsorship services:
i) Dell International Services India Pvt Ltd Vs CCE [2009-TIOL-1957-CESTAT-Bang] He further submitted that in terms of the provisions of Rule 5 of Cenvat Credit Rules 2004, the assessee is eligible for refund of unutilized portion of CENVAT credit on export of services and such refund cannot be denied when the availment of CENVAT credit has not been questioned. In support of this he relied upon the decision in the case of CST Delhi Vs Convergys India Pvt Ltd [2009-TIOL-888-CESTAT-DEL] wherein it was held that without questioning the availment of CENVAT credit, the eligibility to rebate/refund cannot be denied and that there cannot be two different yardstick, one for permitting credit and the other for eligibility for granting rebate. Whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible there is provision for grant of refund or rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned. He further submitted that CEBC vide its circular No 120/01/2010-ST dated 19.01.2010 clarified that the condition of nexus should be read liberally and in a harmonious manner, consistent with the intention of the legislature to provide refund to the exporters and the said intention was further reflected in the Notification No. 5/2006. On the other hand learned A.R. reiterated the findings of the Commissioner.
3. I have heard both sides and perused the material on record and has also gone through the judgments cited by the appellant wherein CENVAT credit has been allowed in respect of various input services used by the appellant for discharge of export services and here it is pertinent to mention the definition of input services as contained in Rule 2(l) of the CENVAT Credit Rules.
2(l) input service means any service,-
(i) Used by a provider of taxable service for providing an output service, or
(ii) Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal.
And includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement of sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; The Honble Bombay High Court in the case of CCE Vs Ultratech Cement Ltd [2010(260)ELT369(Bom)] has observed as under:
29.?The expression activities in relation to business in the definition of input service postulates activities which are integrally connected with the business of the assessee. If the activity is not integrally connected with the business of the manufacture of final product, the service would not qualify to be a input service under Rule 2(l) of the 2004 Rules.
4. On a careful consideration of the judgements cited above, I am of the considered opinion that the impugned order is not sustainable in law in view of the fact that all the services for which CENVAT credit of service tax has been denied are in fact input services and the appellant is entitled to get refund of CENVAT credit lying unutilised in the CENVAT credit account and therefore I set aside the impugned order by allowing this appeal.
(Order pronounced in open court on )
S.S GARG
JUDICIAL MEMBER
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