The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), noted that the export of “Information Technology Software Services” is classifiable as Business Auxiliary Service (BAS), and hence is eligible for cenvat credit.
The Appellants, Mentor Graphics India Pvt Ltd, are exporters of “Information Technology Software Services”, who filed a refund claim under Rule 5 of Cenvat Credit Rules (CCR), 2004 read with Sec 11B of Central Excise Act read with Export of Service Rules, 2005, read with Notification No. 09/2005-ST dated 03.03.2005 and Notification No. 05/2006-CE (NT) dated 14.03.2006, for an amount of Rs.28,91,197/-. The period under dispute is from October, 2010 to December, 2010.
After taking into consideration the case laws, as well as the definition of ‘input service’ as laid down in Rule 2(l) of CCR, 2004, Commissioner (Appeals) allowed credit in respect of Rent-a-Cab and also on Renting of Immovable Property services. However, with regard to other services, relying on various judgments, mainly on Maruti Suzuki Ltd (supra), upheld that part of the Order of the Lower Authority which denied the credit in respect of input services.
The Advocate for the Appellant has mainly relied on the definition of ‘input service’ under CCR and various case laws in their support – that there is no need to establish nexus between input service and service exported. In addition, for each of the input services denied by the Commissioner (Appeals), they have relied on various judgments in their support.
The Departmental Representative reiterated the grounds taken by the Adjudicating Authority and Commissioner (Appeals) in denying the refund in part. He submitted that the core issues are not to be decided in this matter before considering whether in the facts of the case and the extent covered by the Rules under CCR, the disputed input services are eligible service for the purpose of providing output service or otherwise.
A Two-Member Bench comprising Anil Choudhary, Judicial Member and AK Jyotishi, Technical Member observed that “In so far as its merit is concerned, the service was in the nature of ‘Business Auxiliary Service’ and the service has been held to be otherwise an eligible service in respect of their company, by this Tribunal vide Final Order dated 02.12.2016. Therefore, on both counts, this is eligible service for the purpose of taking credit.”
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