Refund Claim of Cenvat Credit allowable when Input Service is related to Manufacture of Finished Goods: CESTAT upholds Refund in absence of Contrary Evidence [Read Order]

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the refund claim of Cenvat Credit allowable when Input Service is related to manufacture of the finished goods and thereby upheld the refund in the absence of contrary evidence

The appeals are filed by Revenue against allowing refund claims of unutilised cenvat credit where Service Tax was paid on various input services. The Commissioner (A) held that the original authority found that the goods are used in or in relation to the manufacture of finished goods and based on the earlier Orders-in-Appeals.

In the present appeals, the Revenue is aggrieved by these orders of the Commissioner (A) and filed appeals only on the ground that various input services on which credit has been allowed and refund has been sanctioned, is not legal and proper because input services were not used in or in relation to the manufacture. The respondent in the present matter is M/s. Jeans Knit (P) Ltd.

On the other hand, the respondent has submitted that they are eligible to take cenvat credit on the input services and they were rightly eligible for the refund claims under Rule 5 of the Cenvat Credit Rules, 2004. It is also submitted that in their own case for earlier periods where the refunds were rejected, this Tribunal had held in favour of the respondent in the case of Jeans Knit Pvt Ltd vs. CC, Bangalore.

It was also submitted that vide Notification No.5/2006-CE (NT) dated 14.03.2006, the words “used in” was replaced with the words “used in or in relation to” thus enlarging the scope for availing credit. They also placed reliance on the judgment of the Hon’ble High Court of Karnataka in the case of CCE, Bangalore vs. Stanzen Toyotetsu (India) Pvt. Ltd.

A Two-Member Bench comprising observed that “It is seen that various input services are used in the manufacture of export goods and there is no evidence on part of the Revenue to prove that they are not used in the manufacture of export goods except for the fact that the input services did not find a place in the inclusive definition of ‘input service’ under Rule 2 of Cenvat Credit Rules, 2004.”

The Bench also noted that it is also an admitted fact that for the earlier periods in the appellants own case where the Revenue had filed appeal before the Tribunal, the issue was decided in favour of the respondent. In view of the above, the question of denying the refund of accumulated credit does not arise.

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