Tribunal overturns order, grants refund for export services. Appellant directed to fulfill conditions for tax exemption.

The impugned order rejecting the refund claim for export of services was set aside by the Tribunal. The appellant's appeal was allowed, directing the original authority to consider the refund claim as admissible in law. The Tribunal emphasized the need for the appellant to fulfill the conditions of the Export of Services Rules to qualify for the exemption of service tax, ultimately ruling in favor of the appellant, M/s National Engineering Industries Ltd.

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Issues:
Refund of service tax for export of services rejected.

Analysis:
The case involved an appeal by M/s National Engineering Industries Ltd. against the rejection of a refund amounting to Rs. 11,11,899 for export of services in the Order-in-Appeal No. 351/2010 dated 27.9.2010. The appellant acted as agents for M/s Electro Motive Diesel (EMD), USA, procuring orders from Indian Railways for EMD under Business Auxiliary Service. The appellant received commission through Indian Railways, claiming the services provided to EMD as export services.

During the proceedings, the appellant's counsel argued that since M/s EMD, USA did not have an office in India and the appellant procured orders from Indian Railways for EMD, the service tax charged under Business Auxiliary Service should be considered admissible for refund due to the export of services. The Tribunal referred to its own previous decision in the appellant's case, directing the Revenue to consider the refund claim as per law.

Additionally, the Tribunal cited a previous case involving the appellant where it was observed that for the benefit of Rule 4, the assessee must fulfill the conditions of Rule 3(2) of the Export of Services Rules, 2005. The Tribunal agreed with the Revenue's submission that the purpose of Rule 3(2) is to earn convertible foreign exchange to qualify for the exemption of service tax. In this case, it was found that the equivalent amount of foreign exchange payable to the appellant was not released to Indian Railways, leading to the conclusion that the appellant complied with the provision of Rule 3(1)(b) of the Rules.

Ultimately, the impugned order rejecting the refund claim was set aside, and the original authority was directed to consider the appellant's refund claim as admissible in law, resulting in the appeal being allowed in favor of the appellant.

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