2017 (3) TMI 21 - AT - Service Tax

Tribunal remands case for foreign exchange verification, grants appellant refund opportunity.

The Tribunal allowed the appeal by remanding the case for verification of foreign exchange receipts and related documentation. The Original Adjudicating ... 100% EOU - Refund claim - Rule 5 of CCR, 2004 - export of services - denial on the ground that the services rendered do not qualify the term Export as well as on the ground that Some of the input services do not qualify the definition of input service - Held that: - the Business Auxiliary Services rendered by the appellant, to their principal in Hong Kong is to be considered as, service provided from India and used outside India - the decision in the case of Gap International Sourcing (India) Pvt. Limited vs. CST, Delhi [2014 (3) TMI 696 - CESTAT NEW DELHI], followed as the issue was similar where the the Tribunal has gone on to decide that the services rendered to principal in USA, who had paid for the services in foreign exchange, has to be considered as export of service. Input services - Held that: - the Tribunal decision in the case of Convergys India Pvt. Limited [2009 (5) TMI 50 - CESTAT, NEW DELHI], relied in which identical issue had also been examined and was held that that there cannot be two different yardsticks, one for permitting credit and the other for eligibility for granting rebate. Whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible there is provision for grant of refund or as rebate - refund allowed. The appellant will be entitled to refund under Rule 5 of Cenvat Credit Rules, 2004. However, for verification of receipt of foreign exchange and connected matters, the case is remanded to the Original Adjudicating Authority - appeal allowed by way of remand. Issues:Refund claim disallowed for services not qualifying as export under Export of Services Rules, 2005 and input services not meeting Cenvat Credit Rules definition.Analysis:The appeal challenged the rejection of a refund claim under Rule 5 of Cenvat Credit Rules, 2004 due to services not meeting export criteria and input services not qualifying. The appellant, engaged in product sourcing and inspection services, argued that services provided to a foreign principal met export conditions under Business Auxiliary Services. Citing relevant case laws, the appellant contended that the input services availed were valid under Rule 2(a) of Cenvat Credit Rules. The appellant emphasized the need for a nexus between input services and exported services, supported by legal precedents like CST, Delhi vs. Convergys India Pvt. Limited. The Revenue, however, highlighted discrepancies in correlating payment receipts with export invoices.The Tribunal analyzed the export criteria, emphasizing the location of service provision and usage outside India. Relying on the Gap International Sourcing (India) Pvt. Limited case, where services to a US principal were considered exports, the Tribunal concluded that the appellant's services to Hong Kong qualified as services provided from India and used outside India. Regarding input services, following the Convergys India Pvt. Limited case, the Tribunal held that eligibility for refund cannot be questioned if credit was validly taken. Discrepancies in correlating foreign exchange receipts with export invoices led to a remand for further verification.The judgment allowed the appeal by remanding the case for verification of foreign exchange receipts and related documentation. The Tribunal directed the Original Adjudicating Authority to finalize the matter within two months, granting the appellant an opportunity to provide certified documents to support their claim. The decision affirmed the appellant's entitlement to a refund under Rule 5 of Cenvat Credit Rules, subject to satisfactory verification of foreign exchange receipts.