By TIOL News Service

MUMBAI, JUNE 01, 2016: THE appellants, engaged in exporting services, filed refund claim under Rule 5 of CCR, 2004. A major amount of the refund claimed was sanctioned but a portion was rejected on the ground that the services could not be considered as "Input Services".

The Commissioner (A) allowed part of the refund and rejected the balance pertaining to services of Works Contract Services, Short Term Accommodation Services etc..As regards Works Contract Services, the lower appellate authority held that the said services was excluded from the definition of the input service under Rule 2(l) of CCR, 2004 and as regards ‘short term accommodation service' the refund was disallowed on the ground that the accommodation is for employees of the company and, therefore, is not input service.

The appellant is before the CESTAT.

It is informed that they were withdrawing the claim of refund in respect of short-term accommodation. However, as regards Works contract service, it is submitted that credit has been correctly taken as this service is related to monthly maintenance of photocopier, computer and building premises of the appellant. Inasmuch as the exclusion of ‘Works contract service' as provided in the definition of input service (rule 2(l) of CCR, 2004) is only in respect of works contract which is used for construction services, whereas in the present case the subject works contract service is for maintenance of various equipment and building and not for building construction. The appellant also seeks interest for the delay in sanctioning the refund. Reliance is placed on the decisions in Reliance Industries Ltd. - 2010-TIOL-928-HC-AHM-CX, which was upheld by the Supreme Court - 2011-TIOL-123-SC-CX-LB.

The AR reiterated the findings of the impugned order.

The Bench observed that pursuant to the withdrawal made by the appellant on the count as indicated, the issues that remain to be decided are -

(a) Whether the appellant is entitled for Cenvat Credit and consequential refund under Rule 5 in respect of Works Contract Service which is for maintenance of office equipment and building.

(b) Whether appellant is entitled for interest on delayed sanctioned of refund claim.

After extracting rule 2(l) of the CCR, the Bench held -

++ From the rule it is clear that Works Contract Services are excluded only when it is used for construction service, whereas in the present case input services were used for maintenance of office equipment and building, therefore, this particular works contract service does not fall under the exclusion category in the definition of input service, therefore, works contract service in the present case is input service and eligible for refund.

++ Irrespective of any circumstances whatsoever, if there is delay beyond three months from the filing of refund, the department is duty bound to grant the interest for the delayed period in sanctioning the refund.

The appeals were partly allowed.

(See 2016-TIOL-1300-CESTAT-MUM)