Custom, Excise & Service Tax Tribunal
Mr. Ravi Chander, Dr For vs None For The on 2 December, 2011
IN THE ,CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, FKCCI COMPLEX, K.G. ROAD,
BANGALORE 56009.
COURT Ii
DATE OF HEARING : 2/12/2011
DATE OF DECISION : 2/12/2011
COD Application No. 303/2011
Stay Application No. 1505/2011
Service Tax Appeal No. 2453 of 2011
[Arising out of Order-in-Appeal No. 258 & 259/2011 dated 31.3.2011, passed by the Commissioner of Central Excise (Appeals-II), Bangalore)
For approval and signature:
Honble Shri M. Veeraiyan, 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 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
Commissioner of Central Excise,
Bangalore.
Versus
M/s RSA Security India Pvt. Ltd.
Appellant
Respondent
Appearance Mr. Ravi Chander, DR for appellant None for the respondent CORAM : Honble Shri M. Veeraiyan, Member (Technical) ORDER No..Dated 2/12/2011 None appeared on behalf of the respondent. Heard the learned DR on the application for condonation of delay. Considering the grounds disclosed, I condone the delay of 29 days in filing the appeal.
2. Heard the learned DR on the stay petition filed by the department. Considering the nature of dispute, I decline the prayer for staying the operation of the impugned order and take up the appeal for final disposal.
3. The respondent-assessee exported IT software services during the period April 2008 to June 2008 and filed a refund claim for a sum of Rs. 3,87,583/- under Rule 5 of CENVAT Credit Rules 2004 read with Notification No. 5/2006 dated 14.3.2006 on input services used in the export of output services. The original authority rejected the claim holding that the services on which credit has been availed did not have nexus with the output service exported. On appeal by the party, the Commissioner (Appeals) has set aside the order of original authority. Therefore, the department is in appeal.
4. The learned DR submits that the Commissioner (Appeals) has no powers of remand and therefore, the order of the Commissioner (Appeals) should be set aside and the matter remanded to the Commissioner (Appeals) for fresh consideration. In this regard, he relies on the decision of the Honble Supreme Court in the case of MIL India Ltd. Vs. Commissioner of C. Ex., Noida [2007 (210) E.L.T. 188 (S.C.)] and also the decision of the Tribunal in the case of Commissioner of Central Excise, Noida Vs. Orient Crafts Ltd. [2001 (21) S.T.R. 302 (Tri.-Del.)].
6.1 I have carefully considered the submissions made by both sides and perused the records. The disputed services are 11 (eleven) in numbers. The Commissioner (Appeals) has examined the nexus between the input service and the output service exported by the assessee and recorded his findings in detail, which are as follows :
Man power Recruitment service : In a service industry, manpower is directly used in provision of services. Employees play an important role of a Companys business operations. To hire such employees, the Company procures services of manpower recruitment agencies. Without such services, the Company may not be able to render its output services and are thus very essential, Their BPO industry always requires employees to cater to the growing demand for their services. It is submitted that these services are also required because of the attrition rate prevalent in their industry. These services are inextricably linked to rendering of their output services in as much as without employees the output service cannot be rendered. These services have a direct nexus with the provision of output service and quality to be input service eligible for refund as these services are essential.
Commercial Training & Coaching service : The competitive environment has necessitated the companies to provide the facility of coaching and training services to its employees. This is an essential service for the Company in rendering its output service effectively by training the employees and enhancing the employees technical knowledge and presentation skills. Hence, the said services are an essential requirement to the business activities and are in relation to the output services.
Security Agency services : The protection and safety of the office premise, assets and employees is necessary and required to be maintained round the clock. Thus, these services are directly related to the services provided by the company. Further, the unit being an STP unit, security of the building, computers, networking equipment, all assets and all that is within it is an essential requirement. It is submitted that the appellant also has to deal with confidential data of their clients and the security personnel are therefore essential to secure the precincts of their building from outside as well as inside and this service is eligible restricted to the registered office premises only.
Business Auxiliary Service/Business Support Service : Identification of vendors for supply to party abroad and operational assistance provided in execution of export orders and ensuring receipt of sales proceeds are covered under Business Support Service. The services received regarding these works are essential for companys administration and qualify for refund. Hence, these are essential service for companys export proceedings and hence eligible for refund.
Chartered Accountant Services : Assuming the professional fees for the Chartered Accountants Services are in relation to various accounting and auditing aspects of the business of the Company. As per the statutory requirement, every Company has to get their accounts audited. Further, the services in relation to accounting and auditing are clearly understood to be related the business of a service provider.
Management Consultancy Service : Management of any organization needs a lot of technical knowledge on various laws, procedures, process of development in the field of business. In this regard, services received by the Company from management or business consultants who are experienced in handling such issues are necessary for provision of output services by the Company.
Customs House Agent : Software industry requires many hardware and software which are not available in our country. Sometimes because of the foreign client/customer agreement conditions, imports are required. To facilitate such import of goods, help of CHA, freight & forwarding agents services is a must to handle the customs and sea/air/land port works. Hence these input services are essential for output service and qualify for refund.
Outdoor catering : Outdoor catering services are essential for providing necessary food at regular intervals to employees in the office cafeteria. However these expenses should not be the part of the expenditure of the employees remuneration.
Rent a cab service : Transport/cab facilities provided to the employees are for the employees to commute between their places of residence to the place of work. Such services are not only for the welfare of the employees but also in the Companys interest to carry out its business activities effectively. Hence the same is important from the companys business activities perspective and the input services are essential for the provision of output service. However these expenses should not be the part of the expenditure of the employees remuneration. However expenses towards Air ticket are not eligible as is not essential for output service.
Maintenance or Repair services (other than electrical & computer) : Other than various software purchased and used in the software development, there are certain software for which the Company needs to have maintenance arrangements for bug fixes or future upgrade at free of cost. These services are not essential service and hence not eligible for refund.
Renting of immovable property (car parking & maintenance of building) : Rent is paid for the premises registered under Service Tax in which the activities for export are carried on. Therefore the service tax paid on rent on the registered premises is an eligible input service & other than registered premises not eligible. 6.2 He has also given reasons for accepting the registration certificate for Consulting Engineer Service taken by the assessee which was subsequently amended as sufficient for seeking the refund claim. In effect, the Commissioner (Appeals) has not remitted any issue on merits to be decided by the original authority. It is basically for quantification purposes based on the Chartered Accountants certificate as envisaged in the Boards Circular dated 19.1.2010. In these circumstances, the grounds taken by the department that the Commissioner (Appeals) has no power of remand has no relevance to the present case. No other valid grounds have been adduced to interfere with the order of the Commissioner (Appeals).
7. The appeal of the department is, therefore, rejected. Stay petition and application for condonation of delay are also disposed of.
(Pronounced and dictated in the open court) (M. Veeraiyan) Member (Technical) /vc/