Appeal granted for refund claim on CENVAT credit denied, payments in Indian rupees via foreign bank qualify.

The tribunal allowed the appeal, setting aside the denial of the refund claim for unutilized CENVAT credit. It held that payments received in Indian rupees, routed through a foreign bank and certified by FIRC, qualify as convertible foreign exchange. The appellant met these conditions, leading to the conclusion that the denial of the refund was unsustainable. The impugned order was overturned, and the appeal was granted with consequential relief.

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Issues Involved:
1. Refund claim of unutilized CENVAT credit on input services used for providing output services exported.
2. Compliance with Rule 3(2)(b) of Export of Service Rules, 2005 regarding payment in convertible foreign exchange.
3. Validity of payments received in Indian rupees for exported services.

Issue-wise Detailed Analysis:

1. Refund Claim of Unutilized CENVAT Credit:
The appellant, registered under the category of Information Technology Software Support Services (ITSS), filed a refund claim for unutilized CENVAT credit on input services used in providing exported output services. The claim was made under Rule 5 of the CENVAT Credit Rules, 2004, read with Notification No. 27/2012-CE dated 18.6.2012. The Assistant Commissioner rejected the refund claims on the ground that the export was shown in Indian currency. The Commissioner (A) upheld this rejection, leading to the present appeal.

2. Compliance with Rule 3(2)(b) of Export of Service Rules, 2005:
The core issue was whether the payments received in Indian rupees met the requirement of Rule 3(2)(b) of Export of Service Rules, 2005, which mandates payment in convertible foreign exchange. The appellant argued that the receipt of payments in Indian rupees, as permitted by the Reserve Bank of India (RBI) and certified by the Foreign Inward Remittance Certificate (FIRC), should be considered as payment in convertible foreign exchange. The appellant cited multiple tribunal decisions supporting this view, including cases such as BNY Mellon International Operations (I) Pvt. Ltd. vs. CCE, Pune-III and CST, Mumbai vs. M/s. PMI Organisation Centre Pvt. Ltd.

3. Validity of Payments Received in Indian Rupees:
The tribunal considered various precedents and statutory provisions under the Foreign Exchange Management Act, 1999. It was consistently held that payment received in Indian rupees, if routed through a foreign bank and certified by FIRC, should be treated as convertible foreign exchange. The tribunal referred to several judgments, including CST vs. PMI Organization Centre Pvt. Ltd. and Sun-Areas Real Estate Pvt. Ltd. vs. CST, Mumbai-I, which established that Indian rupees received from a foreign bank account are deemed to be convertible foreign exchange.

Conclusion:
The tribunal concluded that the mere receipt of payment in Indian rupees does not disqualify it from being considered convertible foreign exchange if it is routed through a foreign bank and certified by FIRC. The tribunal found that the appellant's case met these conditions and thus, the denial of the refund was not sustainable. The impugned order was set aside, and the appeal was allowed with consequential relief.

Operative Portion:
The operative portion of the order was pronounced in open court on 07/09/2017, allowing the appeal and setting aside the impugned order.

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