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The appellants received services from AFL, Hong Kong during export realization, including a 3% fee and specified charges for transferring money to their accounts. Service tax was demanded on various charges deducted by foreign banks from export proceeds for remitting foreign exchange to appellants' accounts in India. The Tribunal held that the service of remittance by a foreign bank to an Indian exporter's bank is not liable to service tax under reverse charge mechanism. Relying on previous decisions, it observed that when foreign banks deduct charges for collecting export bills and remitting proceeds to Indian banks, exporters are not liable to pay service tax. Consequently, the demand, invocation of extended period, and penalties were set aside.
The appellants received services from AFL, Hong Kong during export realization, including a 3% fee and specified charges for transferring money to their accounts. Service tax was demanded on various charges deducted by foreign banks from export proceeds for remitting foreign exchange to appellants' accounts in India. The Tribunal held that the service of remittance by a foreign bank to an Indian exporter's bank is not liable to service tax under reverse charge mechanism. Relying on previous decisions, it observed that when foreign banks deduct charges for collecting export bills and remitting proceeds to Indian banks, exporters are not liable to pay service tax. Consequently, the demand, invocation of extended period, and penalties were set aside.
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