2011 (3) TMI 260 - AT - Service Tax

Appellant eligible for rebate claims under 'Consulting Engineer's Service' category. Various issues remanded for fresh consideration.

The Tribunal held that the service provided by the appellant falls under 'Consulting Engineer's Service,' making them eligible for rebate claims. The ... Refund - 100% EOU - Engineering Design Services - Rule 3 of the Export of Services Rules, 2005 - Notification No. 12/2005-ST, dated 19-4-2005 - it is clear that the assessees are rendering technical assistance in mechanical engineering and automobile engineering - The assessees have also obtained opinions from the Indian Institute of Technology, Chennai, Anna University, Chennai, Software Technology Park of India that the service rendered by them is not “software Engineering Service” and although these opinions were not placed before the Commissioner who passed the impugned order dated 23-7-2007, they were produced prior to the passing of the subsequent impugned orders, but not considered - Decided in the favour of the assessee by way of remand. Issues Involved:1. Classification of the service provided by the appellant.2. Eligibility of rebate when the declaration is incomplete.3. Determination of the location where input services were provided.4. Eligibility of rebate on input services not directly used in the output services.5. Eligibility of rebate on input service charges for telephone and bandwidth.6. Compliance with the condition regarding receipt of payment in foreign currency.7. Eligibility of rebate claim in respect of capital goods.8. Eligibility of rebate claim in respect of Additional Customs Duty.Issue-Wise Detailed Analysis:1. Classification of the Service Provided by the Appellant:The appellant-company, an Export Oriented Unit (EOU) registered with the Software Technology Park India, Chennai (STPI), is engaged in providing 'Engineering Design Services' for customers located outside India. The service was initially classified under 'Consulting Engineering Service,' and the appellant filed rebate claims under Notification No. 12/2005-ST, dated 19-4-2005. The authorities below rejected the claims, asserting that the service was 'Software Engineering Service,' exempt from tax. However, the Tribunal found that the services rendered involved technical assistance in mechanical and automobile engineering, not merely converting 2D drawings to 3D. The Tribunal concluded that the appellant's services fall under 'Consulting Engineer's Service,' making them eligible for the rebate.2. Eligibility of Rebate When the Declaration is Incomplete:The Tribunal remanded the issue to the adjudicating authority to decide afresh, as it was unnecessary to consider this once it was decided that the services exported are taxable.3. Determination of the Location Where Input Services Were Provided:The Tribunal noted that the adjudicating authority must determine whether the input services were provided at the Engineering Design Centre at Taramani or at the factory in Tiruvallur. This issue was remanded for fresh consideration.4. Eligibility of Rebate on Input Services Not Directly Used in the Output Services:The Tribunal remanded this issue to the adjudicating authority to decide afresh, emphasizing the need to consider whether the input services directly contribute to the output services.5. Eligibility of Rebate on Input Service Charges for Telephone and Bandwidth:The Tribunal directed the adjudicating authority to reassess whether the input service charges for telephone and bandwidth, which appeared to be provided at the Tiruvallur factory, are eligible for rebate.6. Compliance with the Condition Regarding Receipt of Payment in Foreign Currency:The Tribunal remanded the issue to determine if the condition regarding the receipt of payment in foreign currency has been met, emphasizing that this is crucial for rebate eligibility.7. Eligibility of Rebate Claim in Respect of Capital Goods:The Tribunal remanded this issue to the adjudicating authority to decide afresh, as it was not considered necessary once the service classification was determined.8. Eligibility of Rebate Claim in Respect of Additional Customs Duty:The Tribunal directed the adjudicating authority to reassess the eligibility of rebate claims concerning Additional Customs Duty, remanding the issue for fresh consideration.Conclusion:The Tribunal held that the service rendered by the appellant is 'Consulting Engineer's Service,' making them eligible for the rebate claims. The Tribunal remanded issues (i) to (vii) for fresh decision to the adjudicating authority, who shall also decide the issue of time bar afresh, ensuring a reasonable opportunity for the appellants to be heard in their defense. The appeals were disposed of in these terms.