Commissioner Of Central Excise vs Power Link Systems Pvt. Ltd

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No.ST/40307/2013

[Arising out of Order-in-Appeal No.CMB-CEX-000-APP-312/12 dt. 26.11.2012 passed by the Commissioner of Central Excise (Appeals), Coimbatore]

Commissioner of Central Excise Coimbatore Appellant

Versus

Power Link Systems Pvt. Ltd. Respondent

Appearance:

Ms. Indira Sisupal, AC (AR) For the Appellant

Shri G. Natarajan, Advocate For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member

Date of Hearing/Decision : 24.3.2015

FINAL ORDER No.41066/2015

Revenue filed appeal against order dt. 26.11.2012 passed by Commissioner (Appeals). The issue relates to rebate under Rule 5 of Export of Service Rules, 2005 read with Notification No.11/2005- dt. 19.4.2005. Respondent filed rebate claim on the service tax paid on output services. Adjudicating authority has rejected the rebate claim. Respondent preferred appeal and the Commissioner (Appeals) has allowed the appeal with consequential relief. The said order was reviewed by the department and Revenue preferred the present appeal seeking to set aside the OIA and to restore OIO dt. 10.2.2012.

2. Ld .A.R for the Revenue reiterated the grounds of appeal and submitted that as per Rule 4 of Export of Service Rules, any service which is taxable service may be exported without payment of service tax and the respondents have exported the service i.e. Business Auxiliary Service which is clearly exempted under Rule 4 whereas they have paid service tax through debit of cenvat credit and availed rebate claim. He submits that service exported was exempted from service tax which is a unconditional exemption under Export of Service Rules. They are not required to pay service tax. He submits that respondent also failed to produce document evidences of input service to claim cenvat credit.

3. On the other hand, Ld. Advocate for the respondent submitted that they are rendering export of commission agent services which falls under "Business Auxiliary Service" and also paid service tax under reverse charge mechanism. They also used domestic input service consumed in the output service and claimed rebate by paying service tax on output services under Rule 5 read with Notification No.11/2005 for rebate of service tax paid on output services exported. He further submits that adjudicating authority issued SCN rejecting the claim on several grounds. The Commissioner (Appeals) in the impugned order has discussed all the grounds made out by the adjudicating authority and set aside the impugned order and allowed the appeal.

3.1. Whereas the Revenue has filed appeal only on two grounds (i) the input documents not produced (ii) respondent should have opted for refund under Rule 5 of CCR instead of rebate route under Rule 5 of Export of Service Rules. He submits that there is no restriction on payment of service tax under Rule 5 of Export of Service Rules which clearly provides that such facility. When options are available, it is always open to the respondent to opt any one of the provisions. Therefore Commissioner (Appeals) has rightly discussed the issue in detail and allowed the appeal.

4. Heard both sides. The Revenue's appeal mainly relates to only on two grounds. As per Rule 4 of Export of Services, taxable services which are exported, are exempted from payment of service tax and respondent was not required to pay service tax. The second ground that respondent failed to produce input documents. After perusal of records and the relevant rules, I find that there is no dispute on the fact that respondent have exported Business Auxiliary Service on payment of service tax. The LAA has discussed the issue in detail at para 5 to 14 and discussed all the issues in detail, particularly, paras-7 to11 where he discussed the grounds agitated by Revenue. Export of Service Rules facilitates the service provider with intention to avoid tax burden to be exported. Rule 4 of Service Rule only stipulates that any service which is taxable may be exported without payment of service tax. This cannot be construed as exemption from payment of service tax. The words used exported without payment of duty is different from exempted from service tax . Rule 4 is not exemption from service tax. It is only a provision that where the exporter may export services without payment of duty. Rule 5 of the Export of Services Rules clearly stipulates that where the taxable service is exported, the company can claim rebate of service tax paid on such taxable service by issue of specific notification. Therefore, notification No.11/2005 was specifically issued for this purpose which clearly says that exporter of service who discharges service tax is allowed to claim rebate under Rule 5 of Export of Services Rules. There is no restriction for exporter that he should avail only Rule 4 and not Rule 5 of Export of Service Rules when there are two options available in the statute / rules, it is the right of the respondent to choose any of the provisions of the rules. Therefore, since in the present case payment of tax on the export of service is not disputed, the respondents are rightly eligible for rebate under Rule 5 of Export of Service Rules.

6. As regards the contention of Revenue that respondent have not submitted input service credit document, I find that the issue is not related to admissibility of cenvat credit on input invoices under CCR but relates to rebate claim on the service tax paid on the service exported under Rule 5 of Export of Service Rules. Lower appellate authority has clearly recorded his findings at paras 10 & 11. Therefore, payment of tax is not on dispute.

7. In view of the foregoing discussion, I do not find any infirmity in the impugned order in allowing the rebate of service tax paid on export services under Rule 5 of Export of Service Rules. Accordingly, the impugned order is upheld and Revenues appeal is rejected.

(Operative part of the order pronounced in open court on 24.3.2015)

(R. PERIASAMI) TECHNICAL MEMBER

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