Receipt in Convertible Foreign Exchange treated as realized when routed through authorised banking channels, enabling refund of input service credit.

Whether receipts credited in Indian rupees but originating from abroad through authorised dealers and evidenced by FIRCs qualify as receipt in convertible foreign exchange under Rule 3(2)(b) of the Export of Service Rules, 2005: the analysis concludes that realization routed via authorised banking channels (including repatriation through vostro accounts) constitutes receipt in convertible foreign exchange even if credited to a head office or rupee account, and centralized collection does not defeat export character; consequence: refund claims of input service credit under Rule 5 of the Cenvat Credit Rules, 2004 were allowed.

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Issues: Whether the appellant satisfied the requirement of receipt in convertible foreign exchange under Rule 3(2)(b) of the Export of Service Rules, 2005 for purposes of claiming refund of input service credit under Rule 5 of the Cenvat Credit Rules, 2004.

Analysis: The Tribunal examined whether payments evidenced by Foreign Inward Remittance Certificates (FIRCs) and routed through authorised banking channels but ultimately credited in Indian rupees qualify as receipt in convertible foreign exchange under the relevant FEMA and export of service regulations. The Tribunal relied on binding and persuasive authorities holding that where payment originates from outside India through an authorised dealer and is repatriated to India (including via a freely convertible vostro account), the rupee credit to the exporter is to be treated as realization of convertible foreign exchange. The analysis recognized that Rule 3(2)(b) requires receipt in convertible foreign exchange but does not mandate that such receipt be in the bank account of the particular service-providing unit; centralized accounting and receipt in a head office account do not negate export character if realization is evidenced through authorised banking channels and FIRCs.

Conclusion: The condition under Rule 3(2)(b) of the Export of Service Rules, 2005 is satisfied; the impugned orders denying the refund are set aside and the appellant's refund claims are allowed with consequential reliefs as per law.

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