Order date: 17 October 2022

Facts:

• The applicant namely, M/s Project Management Institute, USA, which is an association of members concerned with development of standards for project management, undertakes promotion and marketing of such standards, conducts conferences and conventions aimed at canvassing membership of the parent entity and campaigns among educational institutions to introduce courses on project management for all of which the overseas entity was invoiced at cost incurred therein with the addition of another 15%.
• They had, in exercise of the privilege of monetization extended by rule 5 of CENVAT Credit Rules, 2004 supplemented by notification no. 27/2012-CE(NT) dated 18th June 2012, sought refund of accumulated CENVAT credit of 1,71,30,345/- for the two ‘half’ years of October 2013 to September 2014 and for every quarter thereafter till June 2016. 
• The original authority denied eligibility for credit to the extent of 35,71,865/- for alleged lack of nexus and, consequently, access to the credit already taken under rule 3 of CENVAT Credit Rules, 2004. Further, in relation to some of the impugned services, also held these to be non-compliant with the definition in rule 2(l) of CENVAT Credit Rules, 2004 as it stood after the deletion of ‘activities related to business’ from 1st April 2011 besides observing that, in certain instances, the appellant had failed to produce evidence of the said services having been consumed towards ‘output service’ having been rendered. 
• Aggrieved, this appeal is filed.
• The challenge has been mounted on two grounds, viz., that the denial of credit on alleged lack of nexus of ‘taxable service’ procured by them and the ‘output service’ travels beyond the limited disposal envisaged in rule 5 of CENVAT Credit Rules, 2004 and that, by ascertaining eligibility for refund against the touchstone of rule 2(l) of CENVAT Credit Rules, 2004 as amended with effect from 1st March 2011, the first appellate authority has travelled beyond the scope of the show cause notice.   

Issue:

• Whether the ground raised for rejection of refund is sustainable ?

Order

• The authorities observed that the impugned order that the first appellate authority has traversed beyond the issues raised in the show cause notice by insisting upon filtration through the mesh of the amended definition of ‘input service’ in rule 2(l) of CENVAT Credit Rules, 2004. Furthermore, it is also seen that the first appellate authority appears to have placed undue premium on the necessity of furnishing evidence of ‘input services’ having been directly consumed in rendering eligible output that are exported.
• The authority except to the extent of upholding the order of the original authority on ground of lack of nexus which too has found place in his discussion in relation to each of the service that was sought to be barred from eligibility to avail credit.
• By denial of refund as a consequence of denial of eligibility for CENVAT credit, the final outcome has traversed beyond the scope of rule 5 of CENVAT Credit Rules, 2004 and which, but for the finding on nexus, was to be attributed to the tax on the ‘input services’ used for rendering ‘output service’, and therefore the order itself is not in accordance with law.
• Accordingly, the impugned order is set aside and appeals allowed with consequential relief.