Sutherland Global Services Pvt. Ltd. Vs Commissioner of GST and Central Excise (CESTAT Chennai)
The CESTAT Chennai decided two appeals arising from common facts concerning partial rejection of refund claims filed by the appellant, a 100% Export Oriented Unit (EOU) registered under the Software Technology Park of India (STPI) and engaged in providing Business Auxiliary Services. The appeals challenged Orders in Appeal dated 30.03.2015, which upheld Orders-in-Original partially rejecting refund claims of unutilized CENVAT credit under Rule 5 of the Cenvat Credit Rules, 2004 for the periods April 2010 to September 2010 and October 2010 to December 2010.
The appellant had claimed refund of unutilized input service credit supported by the prescribed documents. The Adjudicating Authority rejected credit relating to rent-a-cab services, insurance, auxiliary services and architectural services, holding that these did not qualify as input services. Credit was also disallowed on the ground that certain input service invoices had not been produced. While determining the refund under Notification No. 5/2006-CE (NT) dated 14.03.2006, the Adjudicating Authority excluded turnover relating to SEZ operations and domestic operations from export turnover, resulting in partial rejection of the refund claim. The Appellate Authority upheld these findings, observing that the appellant had not established maintenance of separate accounts for the SEZ and STPI units as contemplated under Rule 6(3) of the Cenvat Credit Rules.
The appellant contended that the disputed services were integral to its business as a Business Process Outsourcing (BPO)/Information Technology Enabled Services (ITES) provider operating round the clock with approximately 11,000 employees. It submitted that transportation through rent-a-cab services was necessary for employees working night shifts, insurance services formed part of employee welfare, and architectural services related to renovation and modification of office infrastructure required for providing exported output services. The appellant also argued that it had submitted all relevant FIRCs, export invoices, input invoices and statutory auditor certificates, and no deficiency memo had ever been issued alleging non-production of invoices.
On the refund computation, the appellant submitted that no refund had been claimed in respect of input services exclusively attributable to SEZ operations. It argued that the authorities had inconsistently excluded SEZ exports from export turnover while including them in total turnover under the prescribed formula. Alternatively, it submitted that both export turnover and total turnover should be confined only to the STPI unit since separate accounts were maintained for STPI and SEZ units. The appellant further contended that Rule 6 of the Cenvat Credit Rules was inapplicable because it was not engaged in providing exempted services or manufacturing exempted goods. It also disputed the factual finding that separate books of account were not maintained, pointing to its letter dated 20.07.2012 stating that separate unit-wise accounts showing revenue, expenditure, input credit, domestic transactions and service tax collections were maintained.
The Tribunal found that the refund claims related to a period prior to 01.04.2011, when the definition of “input service” under Rule 2(l) of the Cenvat Credit Rules included “activities relating to business.” It observed that the Orders-in-Original were devoid of reasons explaining why the disputed services were treated as ineligible despite acknowledging the appellant’s nature of business as a 100% export-oriented BPO operating continuously. The Tribunal further observed that the Department had not previously disputed that the services were used for business purposes. Referring to the broad scope of the definition applicable during the relevant period and the judicial precedents relied upon by the appellant, the Tribunal held that the findings treating the disputed services as ineligible input services were unsustainable and liable to be set aside.
The Tribunal also held that the authorities had recorded contradictory findings by acknowledging receipt of FIRCs, export invoices, input invoices and statutory auditor certificates while simultaneously holding that invoices had not been produced. In the absence of any deficiency memo and in view of the uncontroverted statutory auditor certificate, the Tribunal held these findings to be unsustainable.
Regarding the refund formula, the Tribunal examined Notification No. 5/2006-CE (NT) and its Appendix. It held that refund under Rule 5 is specific to the registered premises from which output services are exported and that the export turnover and total turnover in the prescribed formula must relate only to the particular registered premises. Since the STPI and SEZ units were separate registered premises and the appellant maintained separate unit-wise accounts, the Tribunal rejected the appellant’s contention that SEZ turnover should be included in both export turnover and total turnover. However, it accepted the appellant’s alternative submission that both export turnover and total turnover for computing refund should be confined to the STPI unit without including SEZ turnover. The Tribunal held that this was the correct method for determining the admissible refund under the formula prescribed in Notification No. 5/2006-CE (NT).
The Tribunal distinguished the decision in CCE, Thane-I v. Tiger Steel Engineering (India) (P.) Ltd., observing that it related to refund of accumulated CENVAT credit on inputs supplied to SEZ units and further noted that the decision had subsequently been quashed upon remand in Tiger Steel Engineering (India) Pvt. Ltd. v. Union of India.
Accordingly, the Tribunal held that the impugned appellate orders were unsustainable to the extent they disallowed the refund claims, set aside those findings, allowed the appeals, and remanded the matter to the jurisdictional Original Authority solely for redetermination of the refund amount and sanction of the admissible refund together with interest as permissible in law. The Original Authority was directed to complete the exercise within 90 days from receipt of the order.
Cases Discussed
- Tiger Steel Engineering (India) Pvt. Ltd v. Union of India (Bombay High Court), (2025) 26 Centax 125 (Bom)
- Johnson Lifts Pvt. Ltd. Vs. AC of Cus. (Refunds, Chennai), 2020, 374 (851) (MAD.)
- P.P. Products Ltd v CC, Customs (Madras High Court), 2019 (367) ELT 707 (Mad)
- PP Products Ltd. Vs. CC, Chennai, 2019 (367) ELT 707 MAD
- Infosys Ltd. Vs. CST, 2015 (37) STR 862 (TRI – BANG.)
- KPMG Vs CCE, 2014 (33) STR 96 (Tri – Del)
- Aeigis Limited Vs. CCE, C & ST, 2014-TIOL-1970-CESTAT-BANG
- KPMG v. CCE, 2014 (33) STR 96 (Tri-Del)
- Thiru Arooran Sugars Limited vs CCE, 2013 – TIOL – 1270 – CESTAT – MAD
- CCE, Bangalore III Vs. Tata Auto Compystems Ltd., 2012 (27) STR 338 (Kar)
- CCE, Bangalore I Vs. Graphite India Limited, 2012 (27) STR 130 (Kar)
- CCE v Stanzen Toyotetsu India (P) Ltd, 2011 (23) STR 444- Kar HC
- CCE Nagpur v Ultratech Cement Ltd, 2010 (20) STR 577 (Bom)
- Dell International Services India Pvt. Ltd. Vs. CCE, 2010 (17) STR 54 (Tri – Bang)
- CCE, Thane I Vs. Tiger Steel Engineering (India) (P.) Ltd., 2010 (7) TMI 324 – CESTAT, Mumbai
FULL TEXT OF THE CESTAT CHENNAI ORDER
These two appeals involving common facts and the same issue decided vide a common order passed have been heard together and are disposed of by this common order.
2. Sutherland Global Services Pvt. Ltd., the Appellant herein, is aggrieved by the Orders in Appeal No.93 and 94/2015 (STA-I) dated 30.03.2015 (impugned order) passed by the Commissioner of Service Tax (Appeals – I), Chennai. By the impugned order, the Appellate Authority has rejected the appeals preferred by the Appellant against the partial rejection of their refund claims vide Order in Original No.168/2011 dated 08.07.2011 pertaining to the period April 2010 to September 2010 and the Order in Original No.197/2012 dated 14.09.2012 pertaining to the period October 2010 to December 2010.
3. The common facts are that the Appellant is a 100% Export Oriented Unit (EOU) under the Software Technology Park of India (STPI) and is registered for providing Business Auxiliary Services (BAS). The Appellant filed refund claims under Rule 5 of the Cenvat Credit Rules, 2004 (CCR) claiming the refund of unutilized input services credit for the aforesaid periods. In support of their claim, the Appellant had provided copies of requisite documents. After due process of law, the Adjudicator rejected an amount of Rs.13,05,517/- being the input service credit taken on rent a cab service on the ground that the said input service was not used for providing output service pertaining to the refund claim for the period during October 2010 to December 2010. Further, an amount of Rs.43,846/- was disallowed as the input service invoices were not produced. It was thus found that a Cenvat credit of Rs.12,49,363/- was required to be excluded from the claim amount. Likewise, for the refund claim pertaining to the period April 2010 to September 2010 the Adjudicator held that the Appellant is not entitled to input services under the category of rent a cab service, insurance, auxiliary service and architectural service though the Appellant has stated that these were input services for their business activities. An amount of Rs.58,33,313/- was disallowed finding that the said service do not qualify as input services and are to be excluded from the refund claim.
4. The Adjudicating Authority was also of the opinion that the export turn over shown as a “total turnover” includes exports from SEZ Unit the Chartered Accountant Certificate also certified certain amount as pertaining to domestic operations. The Adjudicator held that as the domestic income and SEZ exports do not form part of the export of service income in respect of the output service provided by the Appellant, they are required to be excluded for the said period while working out the refund amount as per the procedure and formula for calculation laid down in Appendix 5 of Notification No.5/2006 CE (NT) dated 14.03.2006. After rejecting the claim to the extent of ineligible credit and after determining the refund amount as per the formula upon excluding the amounts towards SEZ unit and domestic operations as stated above, the eligible refund amount was worked out. Aggrieved by such redetermination that has resulted in partial disallowance of their refund claim made by the Appellant, the Appellant filed appeals before the Appellate Authority who has however, vide the impugned order, rejected the appeals. The Appellate Authority found that the ineligible credit was correctly determined by the Adjudicator. As regards the difference in the refund amount worked out the Appellate Authority relied on the observation made in the impugned Order in Original No.197 of 2012 dated 14.09.2012 in para 18, and held that since the Appellant has not proved on record that they have maintained separate account for the SEZ and STPI unit as stipulated under Rule 6 (3) of the CCR, the formula adopted by the Adjudicator was correct for sanctioning the refund. Consequent to rejection of the appeals, the Appellant have preferred these appeals.
5. Shri Joseph Prabhakar, Ld. Counsel appearing on behalf of the Appellant, contended that the Ld. Appellate Authority has erred in denying refund of Cenvat credit relating to various input services received by the Appellant and used for providing output services, the eligibility in respect of which having found to be tenable and on which Cenvat credit has been allowed as per various judicial precedents. The Appellant being a Business Process Outsourcing (BPO) / Information Technology Enabled Services (ITES) employing around 11000 people, including a vast number of female employees, was providing service 24 X 7, continuously. Since the Appellant working hours are aligned to that of the Appellant’s customers in USA, the employees also work in shifts. As per industrial norms, the Appellant provides transportation to these employees, including at odd hours in night without no public transport is available. Hence the input services related to rent a cab service incurred for providing transportation to the Appellant’s employees is a input service integral to the provision of the Appellant’s output service. Reliance is placed on the decisions in CCE, Bangalore III Vs. Tata Auto Compystems Ltd. 2012 (27) STR 338 (Kar), CCE, Bangalore I Vs. Graphite India Limited, 2012 (27) STR 130 (Kar), KPMG Vs CCE, 2014 (33) STR 96 (Tri – Del), Aeigis Limited Vs. CCE, C & ST 2014-TIOL-1970-CESTAT-BANG, Thiru Arooran Sugars Limited vs CCE, 2013 – TIOL – 1270 – CESTAT – MAD and Dell International Services India Pvt. Ltd. Vs. CCE , 2010 (17) STR 54 (Tri – Bang) in this regard. Likewise, the insurance related services is to cover the medical bill of employees and is an integral part of the employee’s salary and is essential input services. Reliance is placed on the decisions in CCE v Stanzen Toyotetsu India (P) Ltd, 2011 (23)STR 444- Kar HC, KPMG v. CCE, 2014 (33) STR 96 (Tri-Del). The Ld. Counsel submits that architect service was in connection with the renovation / modification / alteration of their existing facilities which are necessary to create a proper working conditions and office infrastructure required for providing the output services exported by the Appellant. Reliance is placed on the decisions in Infosys Ltd. Vs. CST, 2015 (37) STR 862 (TRI – BANG.).
6. Ld. Counsel also submits that the lower authorities after recording that the appellant has submitted all the copies of FIRCs, Export Invoices, Input invoices based on which they have taken credit along with certificate by their statutory auditor has then erred in holding that for certain amounts the invoices were not submitted. It is contended that no deficiency memo had been issued in this regard and moreover it is on record that the Appellant had submitted the requisite certificate regarding the taking and availment of cenvat credit duly certified by the appellant’s statutory auditor which as per extant instructions are required to be accepted by the Department as sufficient proof of statutory compliance.
7. Ld. Counsel further argues, that the Appellate Authority erred in denying refund of a sum of INR 3,10,26,311 on the ground that refund envisaged under the Refund Notification is not available to export of services from SEZ units of the Appellant. It was contended that the refund of unutilized Cenvat credit claimed by the Appellant does not include input services received exclusively for SEZ unit and no refund is claimed under Rule 5 of Cenvat Credit Rules as regards such input services. The Appellant had included the turnover of SEZ Unit in the export turnover and total turnover in the formula under Rule 5 under the bonafide belief that export turnover and total turnover should include all the services exported by it as the Appellant was having a Centralised Registration.
8. It is further contended that the Learned Commissioner (Appeals) has erred in holding that the formula adopted for sanctioning the refund by the Learned Assistant Commissioner in the Order in Original was correct. Ld. Counsel points out that in the formula applied by the Learned Assistant Commissioner, the value of services exported from SEZ unit was excluded from ‘export turnover (numerator) and included only in the ‘total turnover’ (denominator). The Learned Commissioner (Appeals) and the Learned Assistant Commissioner has erred in treating the same transaction differently for the purpose of numerator and denominator in the formula prescribed under Refund Notification.
9. It is therefore contended that the Learned Assistant Commissioner is not justified in including the services exported from SEZ unit in the ‘total turnover’ and excluding the same from ‘exported turnover’ even after accepting that the services are exported from SEZ unit. Ld. Counsel argues that the Ld. Appellate Authority ought to have appreciated that having considered turnover of SEZ Units in the total turnover, the Learned Assistant Commissioner has however inconsistently and unjustly excluded export turnovers pertaining to the SEZ units in the ‘export turnover’ formula under Rule 5 of Cenvat Credit Rules. The Learned Commissioner (Appeals) ought to have seen that a differential approach cannot be applied in respect of export turnover vis-a-vis the turnover as has been done in the instant case. Alternatively, the total turnover and export turnover for the purpose of formula prescribed under Rule 5 of Cenvat Credit Rule read with Refund Notification shall be confined to the STPI unit’s turnover without including SEZ unit’s turnover.
10. Without prejudice to the above, it is also contended that the Ld. Appellate Authority is also not justified by taking only that part of export turnover which has been exported from STPI. Rule 5 of the Cenvat Credit Rules provides for refund of Cenvat credit of input services used in providing the “output service which is exported”. The refund notification does not deny refund of input services relating to exports done by an SEZ unit. Thus, the service exported from SEZ unit should be included in the ‘total turnover’ as well as ‘export turnover’ of the formula prescribed in the Refund Notification. In the absence of such restriction, the conclusion to the contrary by the said authority is patently incorrect and liable to be set aside.
11. It is further argued that the reason for exclusion of SEZ turnover from the export turnover for calculation of refund under Rule 5 of Cenvat Credit Rules is not clearly stated either in the OIO or in the OIA. The Learned Commissioner (Appeals) in his order merely state that the Appellant has not endeavoured to prove on records that they have maintained separate account for the SEZ and STPI unit as stipulated under Rule 6(3) of Cenvat Credit Rules and that the formula adopted by the respondent (Assistant Commissioner) was correct for sanctioning of the eligible refund. Neither the OIA nor the OIO states the reason as to why the exports made from SEZ unit should be excluded from the export turnover for calculation of refund under Rule 5 of Cenvat Credit Rules.
12. It was also contended that the Ld. Appellate Authority has erred in rejecting the refund on the ground that Appellant have not maintained separate accounts for the SEZ and STPI units, as stipulated under rule 6(3) of the Cenvat Credit Rules. That Rule 6 of Cenvat Credit Rule is not applicable in the Appellant’s case. Rule 6 of Cenvat Credit Rules deals with Obligation of a manufacturer of dutiable and exempted good and provider of taxable and exempted services’. It is submitted that the Appellant is not engaged in manufacturing exempted goods or providing exempted services. Hence, the provisions of Rule 6 of Cenvat Credit Rules is not applicable.
13. Ld. Counsel would submit that the Commissioner Appeals has erred in relying on OIO dated September 14, 2012 to hold that the Appellant has not maintained separate account for the SEZ and STPI units as stipulated under Rule 6(3) of Cenvat Credit Rules. It is contended that the facts recorded in the Order-in-Original No.197/2012(R) dated September 14, 2012 is grossly incorrect to the extent it states that the Appellant has informed that no separate books of account have been maintained for SEZ and STPI units. The Appellant has in fact to the contrary stated in the letter dated July 20, 2012 that separate accounts are maintained for STPI and SEZ units by way of separate books showing revenue, expenditure, input credit taken, domestic transactions, service tax collection etc. The Commissioner ought to have dismissed both the contentions of the Assessing Officer firstly, that separate books are not maintained and secondly, that the Appellant had informed that separate books of account have not been maintained, on the grounds that the facts are to the contrary.
14. It was also argued that the OIA and OIO has failed to appreciate the fact that, an unduly strict interpretation of a benevolent law/ provision resulting in the deprivation of a benefit to exports/exporters cannot be countenanced in the eye of law. Specifically, export of taxes along with an export of services cannot be countenanced in the eye of the law. Reliance was also placed on the decisions in Johnson Lifts Pvt. Ltd. Vs. AC of Cus. (Refunds, Chennai), 2020, 374 (851) (MAD.), PP Products Ltd. Vs. CC, Chennai, 2019 (367) ELT 707 MAD in support of the aforesaid contentions.
15. Shri Anoop Singh, Ld. Authorised Representative reiterated the findings of the Appellate Authority. Ld. A.R. places reliance on the decisions in CCE, Thane I Vs. Tiger Steel Engineering (India) (P.) Ltd.2010 (7) TMI 324 – CESTAT, Mumbai.
16. We have heard both sides, perused the appeal records and the case laws submitted.
17. The two issues that arise for our determination are:
a. Whether the denial of refund of Cenvat credit relating to various input services received by the Appellant was correct and
b. Whether the Appellate Authority erred in holding that the formula adopted by the refund sanctioning authority was correct ?.
18. We find that the refund claims of the Appellant are for the period prior to 01.04.2011. It is also seen that both the Order in Originals treating the input services as ineligible input services under Rule 2(l) of the Cenvat Credit Rules, 2004, are bereft of any reasoning as to how and why the Adjudicating Authority has arrived at such a conclusion, and that too despite noticing the nature of the appellant’s activity as a 100% export oriented unit (BPO/Call Centre) registered with the Software Technology Park of India, working on a 24×7 basis. The Appellate Authority has gone on to improvise on the aforesaid findings that were appealed against by holding that the Appellant had not established the nexus with their output services and emphasising that the input services should be directly used for providing taxable service. With regard to the availment of Cenvat credit on the input services prior to the period 1-4-2011, the definition of “Input Service” contained in Rule 2(l) ibid provided that “activities relating to business” should be considered as input service. In this case, the Department has not raised any prior objections that the appellants had not availed the input services for accomplishing their business purpose. We find that the definition of ‘input services’ during the relevant period had a wide ambit as it included the words “activities relating to business.” In various decisions, the Tribunal as well as higher judicial fora have repeatedly held that the said services are eligible for credit if it is established from records that assessee has used the said service for providing the output services. The decision in CCE Nagpur v Ultratech Cement Ltd, 2010 (20) STR 577 (Bom) refers. We are also satisfied with the justifications as contended above by the Appellant and find that the judicial precedents relied upon by the appellant are apposite in this regard.
19. We also find merits in the submissions of the Ld. Counsel that the lower authorities after recording that the appellant has submitted all the copies of FIRCs, Export Invoices, Input invoices based on which they have taken credit along with certificate by their statutory auditor have then erred in holding that for certain amounts the invoices were not submitted. Since the Appellate Authority has upheld the impugned orders refraining from interfering with these findings, we are constrained to hold that such dichotomous findings as was made by the original authorities are unsustainable, particularly when it has not been shown that there has been any deficiency memo in this regard issued putting the Appellant to notice of the alleged non-availability of invoices and also when the Appellant has submitted a chartered accountant’s certificate in support of its refund claim, which has not been controverted in any manner. The reliance placed by the appellant on the decision of the Jurisdictional High Court in P.P. Products Ltd v CC, Customs, 2019 (367) ELT 707 (Mad) wherein it has been held that disbelieving CA Certificate without any material against it is not justified, is wholly apposite in this regard. The said decision is seen relied on by the Jurisdictional High Court yet again in Johnson Lifts Pvt Ltd v. Asst Commr of Cus. (Refunds), Chennai, 2020 (374) ELT 519 (Mad). For the aforesaid reasons, we are therefore of the considered view that the findings in the impugned order holding that these services are ineligible to be considered as input services under Rule 2(l) of the Cenvat Credit Rules, 2004 are unsustainable and liable to be set aside.
20. As regards the second issue, we find that the Appellate Authority has at para 11 of the impugned common OIA recorded the appellant’s contention that they make export of services and claim the unutilised input credit as refund from the STPI facilities and any turnover attributable to STPI facilities alone had to be included under the ‘Total Turnover’ on the basis of the separate accounts for the STPI facilities. It is also recorded that it was the contention of the appellant that therefore the formula prescribed be based on the total turnover of the STPI facilities only.
21. Yet, on the basis of the observation in the OIO No.197/2012 (R) dated 14.09.2012 at para 18, namely, that the Appellant had vide their letter dated 20.07.2012 informed that they have not maintained separate account for the SEZ and STPI Unit and that therefore the ratio of credit attributable to the STPI Unit has to be taken and adopted for arriving at the value of input credit eligible for refund; and stating that the Appellant had not endeavoured to prove on record that they had maintained separate accounts, the Appellate Authority has held that the formula adopted by the Refund Sanctioning Authority was correct.
22. It is the contention of the Appellant that in the letter dated July 20, 2012, in fact the Appellant has stated to the contrary, namely, that separate accounts are maintained for STPI and SEZ units by way of separate books showing revenue, expenditure, input credit taken, domestic transactions, service tax collection etc.
23. We find from the letter dated July 20, 2012 that the Appellant had annexed to the Appeal that the said contention is correct. It is seen that in the said letter the Appellant has stated that the Appellant maintains separate accounts for our facilities as per the provisions of Rule 6(2) of the Cenvat Credit Rules, 2004. The appellant went on to contend that hence the question of including the Export turnover from their SEZ facilities, to arrive at the total turnover does not arise. It was also contended that the appellant operates from facilities both registered under STPI and SEZ and are exporters of services both from the STPI and SEZ approved facilities. It was further contended in the said letter that the appellant maintains Unit-wise Accounts separately for the STPI and SEZ facilities in the books showing revenue, expenditure, input credit taken, domestic transactions, service tax collections etc. separately.
24. We notice that in the Notification No.5/2006-CE (NT) dated 1403-2006, which stipulates that refund of cenvat credit shall be allowed, inter-alia, of input service used in providing output service which has been exported without payment of tax, has, in the Appendix to the said Notification, set out the safeguards, conditions and limitations subject to which the aforesaid refund of cenvat credit shall be allowed.
25. Condition 1 of the Appendix, inter alia, provides that output service is to be exported in accordance with Export of Service Rules, 2005. Condition 3(b), stipulates inter alia that the provider of output service is to submit Form A to the Assistant/Deputy Commissioner of Central Excise in whose jurisdiction the registered premises of the service provider from which output services are exported is situated, along with a copy of the invoice and a certificate from the bank certifying realization of export proceeds. Condition 4 stipulates, inter alia, that the refund is allowed only in those circumstances where a provider of output service is not in a position to utilize the input service credit allowed under rule 3 of the said rules against taxable services exported during the quarter or month to which the claim relates, (referred to as the ‘given period’. Condition 5 stipulates as under:
26. The refund of unutilised input service credit will be restricted to the extent of the ratio of export turnover to the total turnover for the given period to which the claim relates i.e. Maximum refund = Total CENVAT credit taken on input services duringth e given period × export turnover ÷ Total turnover.
Illustration : If total credit taken on input services for a quarter = Rs.
100
Export turnover during the quarter = Rs. 250
Total turnover during the quarter = Rs. 500
Refund of input service credit under Rule 5 of the CENVAT Credit Rules,
during the quarter = 100*250/500 i.e. Rs. 50.
Explanation : For the purposes of condition no. 5, –
1. “Export turnover” shall mean the sum total of the value of final products and output services exported during the given period in respect of which the exporter claims the facility of refund under this rule.
2. “Total turnover” means the sum total of the value of, –
a. all output services and exempted services provided, including value of services exported;
b. all excisable and non-excisable goods cleared, including the value of goods exported;
c. The value of bought out goods sold, during the given period.
26. From a reading of the Notification and the aforesaid conditions in the Appendix, it is evident that the refund of cenvat credit is specific to the registered premises in respect of which a provider of output service is not in a position to utilize the input service credit allowed under rule 3 of the said rules against taxable services exported. As a corollary, the export turnover and total turnover referred to in the Formula provided in condition 5 would also be only with reference to that particular registered premise. Concededly, the registered premises for STPI and that for SEZ are different. It is also the categorical averment of the Appellant that the appellant maintains Unit-wise Accounts separately for the STPI and SEZ facilities in the books showing revenue, expenditure, input credit taken, domestic transactions, service tax collections etc. separately. Therefore, we do not find any merits in the plea of the appellant that the refund notification does not deny refund of input services relating to exports done by an SEZ unit and that therefore the service exported from SEZ unit should be included in the ‘total turnover’ as well as ‘export turnover’ of the formula prescribed in the Refund Notification.
27. On the other hand, we concur with the alternate plea of the Appellant, namely, that the total turnover and export turnover for the purpose of formula prescribed under Rule 5 of Cenvat Credit Rule read with Refund Notification shall be confined to the STPI unit’s turnover without including SEZ unit’s turnover. In our considered view, in the aforesaid circumstances, that would be the correct course of action in order to determine the quantum of unutilized cenvat credit to which the refund is to be restricted as per the formula prescribed in condition 5 of the Notification, and to which the appellant would be entitled in so far as the STPI unit is concerned.
28. We also find that the decision in CC, Thane -I v Tiger Steel Engineering (India) (P) Ltd, 2010 (7) TMI 324-Cestat, Mumbai, relied upon by the Ld. A.R. is wholly distinguishable as it pertained to the claim of refund of accumulated cenvat credit on the inputs used in relation to the manufacture of ‘prefabricated buildings’ supplied by the appellant therein to SEZ units and the Tribunal had held that the term export used in Rule 5 of the CCR, 2004 stand for physical exports. Hence the facts and circumstances therein is different from that of the instant case. In any event the said decision in Tiger Steel Engineering is no more good law as it is noticed that the same has been quashed when the matter was remanded for consideration afresh as reported in Tiger Steel Engineering (India) Pvt. Ltd v. Union of India, (2025) 26 Centax 125 (Bom).
29. In light of our aforesaid discussions and reasons, we hold that the impugned Orders in Appeal No.93 and 94/2015 (STA-I) dated 30.03.2015, to the extend it has disallowed the refund claim in terms of the findings therein, are unsustainable and liable to be set aside. Ordered accordingly. Resultantly the appeals are allowed and the matter is remanded to the jurisdictional Original Authority only for the limited purpose of redetermining the quantum of refund to which the appellant is entitled and to sanction the same along with interest as entitled in law. The Original Authority is directed to complete the proceedings expeditiously and in any event within 90 days from the date of receipt of this order.
The appeals are allowed and disposed of in the above terms.
(Order pronounced in open court on 10.03.2026)
