The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), set aside denial of refund on non-invocation of Rule 14 of Cenvat Credit Rules, 2004.
M/s PMI Organisation Centre Private Limited, a subsidiary of M/s Project Management Institute, USA, which is an association of members concerned with development of standards for project management, undertakes promotion etc.
The appellant had, in exercise of the privilege of monetization extended by rule 5 of CENVAT Credit Rules, 2004, sought refund of accumulated CENVAT credit of ` 1,71,30,345/- for the two ‘half’ years of October 2013 to September 2014 and for every quarter thereafter till June 2016. The original authority denied them eligibility for credit to the extent of ` 35,71,865/- for alleged lack of nexus and, consequently, access to the credit already taken under rule 3 of CENVAT Credit Rules, 2004.
In the impugned order disposing off challenge to the denial in the nine refund applications, the first appellate authority restricted the denial to 35,34,735 and, in doing so, not only upheld the ground relied upon in the order of the original authority but, in relation to some of the impugned services, also held these to be non-compliant with the definition in rule 2(l) of CENVAT Credit Rules, 2004 as it stood after the deletion of ‘activities related to business’ from 1st April 2011 besides observing that, in certain instances, the appellant had failed to produce evidence of the said services having been consumed towards ‘output service’ having been rendered.
The bench consisting of C J Mathew, Technical Member held that “The order of the original authority, goes a step further and, after questioning the eligibility for inclusion of the tax paid on the impugned services, has set aside the availment of CENVAT credit to that extent. The specific authority for doing so arises only from rule 14 of CENVAT Credit Rules, 2004 which has not been invoked in these proceedings. “
“By denial of refund as a consequence of denial of eligibility for CENVAT credit, the final outcome has traversed beyond the scope of rule 5 of CENVAT Credit Rules, 2004 and which, but for the finding on nexus, was to be attributed to the tax on the ‘input services’ used for rendering ‘output service’, and therefore the order itself is not in accordance with law.”
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