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CENVAT credit — Appellant service provider to SEZ units/developer — Issue — Appellant of the opinion that provision of service to SEZ units is export of service and cannot be considered as exempted service — Demand raised on ground that service provided was exempted service and the availment of CENVAT credit of input service credit would fall under restriction/ demand under Rule 6 of CENVAT Credit Rules, 2004 — Noted that supplies to SEZ were free of all the taxes considering them at par with exports — Appeal allowed with consequential relief.
Facts:
The appellant provided services to SEZ units/ developers and contended that services provided should be considered as export of service and the demand raised through impugned orders should be set aside. Whereas, according to the Revenue the two basic conditions to hold a service as exports are that service should be provided outside India and payment for such services be received in convertible foreign exchange are not fulfilled. The appellant relied upon the decision in the case of Shyamraju & Co (I) Pvt. Ltd. V. UOI, 2010 (256) ELT 193 (Kar) wherein it was clearly noted that provision of services to SEZs are free of all taxes and this could be done by treating them at par with exports. In this case the issue does not, relate to whether the tax is to be levied or not but to decide whether the appellant is eligible to utilise CENVAT credit and whether they are eligible to pay an amount equal to 8% for the period prior to 1-4-2008.
Held:
By applying ratio of the decisions laid down in the various cases cited which inter alia included Bajaj Tempo Ltd. v. Collector, (1994) 69 ELT 122 and Steelite Industries Ltd., (2009) 244 ELT A89 (Bom.), it was held that the provisions of service to SEZ units were to be made applicable either on payment of tax or without tax and which cannot be equated with exempted services. Also, that services provided to SEZ units were covered by Rule 6 of the CENVAT Credit Rules, 2004, and hence, there stood no inconsistency between the Special Economic Zones Act, 2005 and the Finance Act, 1994. Therefore, considering all the arguments it was held that the restriction under the CENVAT Credit Rules, 2004, would not apply and services would be considered at par with exports and all the appeals were allowed.
