2024 (2) TMI 670 - AT - Service Tax

Textile exporters paying overseas agency commission eligible for service tax exemption under Notification 14/2004-ST

CESTAT Chennai held that textile exporters paying overseas agency commission to promote exports are eligible for exemption under Notification No. ... Exemption from service tax - commission paid to foreign agents - Benefit of Notification No. 14/2004-ST dated 10.09.2004 - denial of benefit on the ground that the appellant is involved in export of fabrics and not in textile processing - HELD THAT:- The issue is no more res integra as in a catena of judgments which are identically placed, the Tribunal Chennai has held that textile exporters who have paid overseas agency commission to promote their exports are eligible for the benefit of the exemption Notification No. 14/2004-ST dated 10.09.2004. In the cases Arvind A Traders and Others Vs. Commissioner of Central Excise and Service Tax, Trichy [2015 (11) TMI 1176 - CESTAT CHENNAI], Texyard International and Others Vs. Commissioner of Central Excise, Trichy [2015 (8) TMI 794 - CESTAT CHENNAI] and Aruppukottai Sri Jayavilas Ltd. and Others Vs. Commissioner of Central Excise, Madurai [2015 (9) TMI 732 - CESTAT CHENNAI] the demands were set aside on merits as well as on limitation. Further, the Department’s appeal filed against the decision in the case of CCE (A) TRICHY VERSUS ARVIND A TRADERS, ANARTEX EXPORTS & OTHERS [2015 (11) TMI 1176 - CESTAT CHENNAI] before the Hon’ble Apex Court has been dismissed. Thus, the appellant is eligible for the benefit of the Notification No. 14/2004-ST dated 10.09.2004 and the impugned Order-in-Appeal No. 720/2016 (STA-I) dated 29.12.2016 cannot be sustained and so ordered to be set aside - appeal allowed. Issues:Whether the appellant is eligible for the benefit of Notification No. 14/2004-ST dated 10.09.2004 or notRs.Analysis:The appeal was filed by a textile manufacturer challenging the demand for Service Tax on commission paid to overseas agents. The Adjudicating Authority confirmed the demand, interest, and penalties. The appellant contended for exemption under various notifications and argued against the imposition of penalties. The appellant failed to make pre-deposits leading to dismissal of the appeal. The appellate authority rejected the appeal citing a pending case in the Supreme Court. The issue revolved around the eligibility of the appellant for the benefit of Notification No. 14/2004-ST dated 10.09.2004.The consultant for the appellant argued that similar cases decided by the CESTAT favored the appellants and set aside the demands. The Department's appeal against a related case was dismissed by the Supreme Court. The authorized representative for the Department maintained the findings of the lower authorities. The Tribunal considered the submissions and past judgments to determine the eligibility of the appellant for the exemption under the said notification.The Tribunal referred to previous judgments where textile exporters paying overseas agency commission were deemed eligible for the exemption. The Tribunal analyzed the notification's language and the nature of the appellant's business to conclude that the appellant fell under the category of 'textile processing' in the notification. The commission paid to overseas agents was considered as an activity incidental to textile processing, making the appellant entitled to the exemption. The Tribunal also noted that the appellant, being an exporter, was not expected to export taxes and had no deliberate intention to evade payment.Additionally, the Tribunal highlighted that the demand for service tax was set aside, making the question of penalties irrelevant. The Tribunal emphasized the revenue-neutral aspect of the case, where the appellant could claim refunds and cenvat credit, ensuring no additional cost to exports. Finally, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief as per the law.In conclusion, the Tribunal found the appellant eligible for the benefit of Notification No. 14/2004-ST dated 10.09.2004, set aside the Order-in-Appeal, and allowed the appeal with consequential relief.