Custom, Excise & Service Tax Tribunal
Apotex Pharmachem India Pvt. Ltd vs Commissioner Of Central Excise, ... on 9 November, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/23120/2014-SM [Arising out of Order-in-Appeal No. 383/2014-C.E dated 30/06/2014 passed by Commissioner of Central Excise, BANGALORE-I (Appeal).] Apotex Pharmachem India Pvt. Ltd. Plot No.1a, Bommasandra Industrial Area, 4th Phase, Bammasandra Industrial Estate, Jigani Link Road BANGALORE - 560099 Karnataka Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax Bangalore-I POST BOX NO 5400, CR BUILDINGS, BANGALORE, - 560001 KARNATAKA Respondent(s)
Appearance:
Shri. S.SIVAKUMAR ADV #1/1, 7TH MAIN, 2ND STAGE, INDIRANAGAR, BANGALORE-560 038 For the Appellant Dr. J.Harish, DR For the Respondent Date of Hearing: 09/11/2016 Date of Decision: 09/11/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21113 / 2016 Per : S.S GARG The present appeal is directed against the order dated 30.6.2014 passed by the Commissioner (A) vide which the Commissioner (A) has partially allowed the appeal of the appellant by holding that the appellants are eligible for refund of unutilised CENVAT credit under Rule 5 of CENVAT Credit Rules in respect of business support service, C & F Agency service, courier agency services and practising CA services and not eligible for refund of unutilised service tax credit in respect of erection, commissioning and installation service, legal consultancy service, management, maintenance and repair service and project management consultancy services and input service attributable to deemed export for the period January 2012 to March 2012.
2. Briefly the facts of the present case are that the appellant is a 100% EOU manufacturing pharmaceutical products and filed a refund claim of Rs.9,75,687/- under Rule 5 of the CENVAT Credit Rules, 2004 towards accumulated refund of unutilised CENVAT credit towards export and other input services during the quarter January 2012 to March 2012. The adjudicating authority rejected the claim partially to the tune of Rs.1,17,974/- alleging that towards input service on which CENVAT credit was taken are not directly used in the manufacture of final product or for providing output service, and the claim attributable to the Inter Unit Transfer (IUT) clearances during the period to other EOUs, for which the details of the export by the recipient unit is not furnished amounting to Rs.4,93,864/- vide Order-in-Original dated 29.3.2013. Aggrieved by the said order, the appellant filed appeal before the first appellate authority and the first appellate authority granted refund for four input services vide order dated 30.6.2014 and rejected the refund for four services viz., erection, commissioning or installation charges; legal consultancy service; management, maintenance and repair service; and project management consultancy service. The first appellate authority also concurred with the rejection of refund claim attributable to the IUT clearances during the period to other EOUs. The total rejection of refund claim amounts to Rs.5,97,815/-. Aggrieved by the said order, appellant has filed the present appeal.
3. Heard the learned counsel for both the parties and perused the records.
4. The learned counsel for the appellant submitted that IUT from one EOU to another EOU is considered as deemed export. The input service credit attributable to such IUT has been rejected on the ground of interpretation of the adjudicating authority that deemed export cannot be considered at par with the physical export and the same has been concurred by the first appellate authority. He further submitted that other four services for which the refund has been rejected is on the ground that the said services are not directly used in the manufacture of final product or for providing output services and there is no nexus between the input service and the final product. The learned counsel further submitted that there is no requirement either in the Central Excise Act or in the CENVAT Credit Rules to produce proof / record of exports from one 100% EOU to another 100% EOU. He further submitted that with regard to other four input services, there are judgments in favour of the appellant which clearly hold that the said services are input services as the same has been used in or in relation to the business.
5. On the other hand, the learned AR fairly conceded that deemed exports are being considered for the purpose of refund under Rule 5 of the CCR Rules but he submitted that in Order-in-Original in para 14 it has been observed by the original authority that the claimants letter dated 15.3.2013 has furnished details in a statement showing the ultimate export of goods cleared on IUT basis by the claimant from the recipient 100% EOU incorporating details of export invoice, buyer name, product name, quantity and sale value, for the relevant period, raised by the said recipient 100% EOU, evidencing the final export of the goods received from the claimant which were further processed for export by the said 100% EOU. However, on detail scrutiny of the said particulars furnished, it is found that the unit has furnished details of further exports only to the extent of Rs.5,23,52,929/- out of the total deemed export amounting to Rs.15,36,45,962/-. Accordingly the amount of Rs.5,23,52,929/- only is taken for consideration of export turnover along with physical export turnover, while computing the eligible credit for sanction of refund and the balance amount is added to DTA turnover. The learned AR further submitted that in view of this finding, which has also been upheld by the Commissioner (A), matter needs to be remanded to the original authority with a direction to the appellant to produce the requisite documents to satisfy the deemed export.
6. With regard to legal consultancy service, I hold that the same fall in the definition of input service under Rule 21 of CCR, Rules and with regard to management maintenance and repair service and project management consultancy service, though both fall in the definition of input service but the appellant has to produce sufficient document before the original authority to prove that the same are used in or in relation to the business of the appellant. Further with regard to erection, commissioning and installation services also fall in the definition of input service.
7. In view of my discussions above, I allow the appeal of the appellant by way of remand by holding that the deemed exports are considered at par with the physical export and with regard to management, maintenance and repair service and project management consultancy, though in principle they fall in the definition of input service but for quantification purpose, the appellant is directed to appear before the original authority and produce the requisite documents for the purpose of quantification.
8. With this, the appeal is allowed by way of remand. The original authority is directed to dispose of the matter within a period of three months after affording an opportunity of hearing to the appellant and giving him an opportunity to produce the documents.
(Operative portion of the Order was pronounced in open court on 09.11.2016.) S.S GARG JUDICIAL MEMBER rv 2