The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of service tax is admissible in refund proceedings in the absence of any proceedings initiated under rule 14 of CCR.
Siemens Technology & Services Pvt. Ltd, the appellant assessee was an exporter of Information Technology Software Services to overseas clients and the said exports were undertaken without payment of Service Tax. In the process, it had accumulated CENVAT Credit on Service Tax liability discharged under the reverse charge mechanism on the services procured from outside India and under the normal procedure for the services availed within India.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the denial of CENVAT credit of Rs.1,22,29,342/- to the assessee.
Jay Chheda and Shambhavi Dewalkar, the counsels for the assessee contended that Rule 5 of CENVAT Credit Rules, 2004 does not stipulate any condition that one-to-one correlation or nexus has to be established between the inputs received and output services exported to claim benefit of refund.
Ajay Kumar Shrivastava, the counsel for the department contended that the input services had no nexus with output services, the registered office address did not appear in ST-2, storage was beyond the place of removal, invoices of certain services availed were not submitted and in certain invoices Service Tax was either not paid or Service Tax number was not available.
The Bench observed that in the case of Capital India Pvt. Ltd. Vs. CCT, the court held that no recovery proceeding was initiated for the alleged erroneous taking of credit, and denial of the said amount during a refund preceding is not in conformity to the law.
The two-member bench comprising Suvendu Kumar Pati (Judicial) and Anil G Shakkawar (Technical) held that CENVAT Credit cannot be held to be inadmissible in a refund proceeding in the absence of any proceeding initiated under Rule, 14 of the CENVAT Credit Rules.
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