Commissioner of Service Tax vs WNS Global Service (P) Ltd.

J.P. Devadhar, J.—Admit on the following question of law.

"Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that under Rule 5 of the CENVAT Credit Rules, 2004 as amended by Notification No. 4/2006, the provider of output service is entitled refund of unutilised CENVAT credit even in respect of exports effected prior to the substitution of Rule 5 with effect from 14-3-2006?"

By consent the appeal is taken up for final hearing.

Rule 5 of the CENVAT Credit Rules, 2004 as substituted by Notification No. 4/2006, dated 14-3-2006 provides that a manufacturer or provider of output service who is unable to utilize the CENVAT credit in respect of input or input service used in the manufacture of final produce which is cleared for export, is entitled to refund of that credit.

In the present case the Respondent Assessee on 26-4-2006 applied for refund of credit in respect of exports effected prior to the substitution of Rule 5 of CENVAT Credit Rules, 2004 on 14-3-2006, on the ground that the credit could not be utilised.

There is no dispute that the Assessee fulfills all other requirements of Rule 5. However, the only dispute raised by the revenue is that Rule 5 of the CENVAT Credit Rules, 2004 as it stood prior to 14-3-2006 permits refund of unutilized CENVAT credit only to a manufacturer and not to a provider of output service.

Rejecting the contention of the revenue the CESTAT held that the substituted Rule 5 nowhere states that the said Rule applies only in respect of exports made after 14-3-2006 and therefore, the refund of credit cannot be denied to the Respondent [ (2008) 13 STJ 156 ].

The above finding of the CESTAT cannot be faulted because substituted Rule 5 of the CENVAT Credit Rules, 2004 does not make any distinction between exports made prior to 14-3-2006 or after 14-3-2006. In other words, as per the substituted Rule 5 refund of unutilized CENVAT credit in respect of exports effected in the past is available to the manufacturer as well as provider of output service. Proviso to Rule 5 as it stood prior to the amendment on 14-3-2006 clearly provides that refund of unutilized credit is available to the manufacturer as also by the provider of output service subject to the conditions set out therein. As noted earlier the Appellant fulfills all other conditions. Thus, reading the Rule 5 as it stood prior to its amendment, as a whole, it is evident that refund of unutilized credit is allowable not only to manufacturers but also available to providers of out put service.

The argument of the revenue that Rule 5 of the CENVAT Credit Rules, 2004 permits refund of unutilised canvet credit only in the case of a manufacturer is without any merit.

For the aforesaid reason we concur with the decision of the CESTAT.

In the result the appeal is disposed of by answering the question in the affirmative i.e. in favour of the Assessee and against the revenue.