By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether refund of CENVAT Credit is available with respect to export of exempted services? Held, Yes.
Facts:
The appellant was engaged in exporting taxable as well as exempt business auxiliary services. The appellants had, therefore, filed refund claims for unutilised CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) dated 14th March, 2006. The appellants argued that exempted services shall form part of export turnover as well as total turnover and therefore, they were eligible for 100% CENVAT Credit. However, the department was of the view that while calculating refund claim, exempted services exported shall not be considered as “Export Turnover” though the same is includible in the total turnover and accordingly, CENVAT Credit proportionate to exempted services exported shall not be admissible.
Held:
The Tribunal observed that the definition of “Export turnover of services” under Clause D of Rule 5(1) of the CENVAT Credit Rules, 2004, does not make any distinction with respect to payments received from export services. The logic of giving cash refund of taxes used in relation to export of goods/services is to have “Zero Rated exports.” Therefore, following the decision delivered in case of Zenta Pvt Ltd. 2012 (27) STR 519 (Tri.), it was held that even exempted export services should be added to export turnover of services and the appellants were allowed refund of total unutilised CENVAT Credit.
