The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal has held that procedures of Refund under Rule 5 of Cenvat Credit Rules (CCR) and Procedure for Disallowance of Credit under Rule 14 are Similar in Nature
HSBC Electronic Data Processing India Pvt Ltd, the appellant challenged the Impugned Orders and submitted that a similar issue was also involved in the refund proceedings under Rule 5 of CCR read with Notification No.26/2012. He further urged that it has been held by High Courts that the procedure of refund under Rule 5 of CCR and the procedure for disallowance of credit under Rule 14 are similar. Accordingly, there cannot be contrary views taken concerning two different Rules of CCR.
The Commissioner (Appeals) in a batch of Appeals have considered the similar disallowances of Cenvat credit on the nexus theory for the period April 2010 to December 2015, wherein the Commissioner (Appeals) has considered in detail allowing Cenvat credit on certain input services like Advertising Agency service, Air Travel Agent service, Architect service, etc., and have recorded the finding that in the adjudication proceedings, such disallowances were made arbitrarily as a result of inadequate effort to determine justifiably the eligibility or otherwise of the credit of tax on the input services in dispute.
Considering the nature of the activity and relevancy and also considering various judicial rulings, the Commissioner (Appeals) was pleased to hold that the Appellant normally uses the services under dispute to provide output services rendering IT & ITES and accordingly, allowed the benefit of credit to them. It was stated that under the Order of the Commissioner (Appeals), the refunds of unutilised Cenvat credit which were earlier disallowed in part have been now granted to them and there is no further dispute in the matter.
A two-member bench comprising Mr Anil Choudhary (Judicial) and Mr A K Jyotishi, Member (Technical) viewed that proceedings under Rule 14 and Rule 5 of CCR are similar. The CESTAT set aside the Impugned Orders.
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