The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the denial of the CENVAT credit on information technologies software services on the grounds of credit eligibility.
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 the 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 (CCR), 2004 and as no recovery proceeding was initiated for the alleged erroneous taking of credit, denial of the said amount during a refund preceding is not in conformity to the law.
Ajay Kumar Shrivastava, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was not entitled to get the CENVAT credit.
The Bench observed that since the input services were used in or concerning the provision of output service exported by the assessee, the benefit of refund provided under Rule 5 of the CCR should be available to it.
The two-member bench comprising Suvenda Kumar Pati (Judicial) and Anil G Shakkarwar (Technical) held that so long as it is not established that services are not utilized, CENVAT Credit cannot be denied.
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