2017 (9) TMI 96

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.... Respondent ORDER Per Bench All the appeals involve a common issue, hence they are heard together and are disposed by this common order. 2. Brief facts are that the appellants who are manufacturers and exporters of knitted readymade garments have been receiving the sale proceeds of exports remitted by the foreign purchaser in the bank located in the foreign country and thereafter collected and remitted to the appellant s account through the Indian bank. The department was of the view that the foreign bank has been providing taxable service from a non-taxable territory to the appellant which is located in taxable territory for which the appellant as a service recipient is liable to discharge service tax under reverse charge mecha....

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....er of goods to remit the sale proceeds. The appellant has no say in choice of the foreign bank and the remittances made by the foreign purchasers. On the portion of the charges deducted by the Indian bank while payment is made to the appellant, the appellant has discharged service tax and there is no dispute in this regard. Since there is no relationship of service provider and service recipient between the foreign bank and the appellant, the charges deducted by the foreign bank wile transferring the proceeds to the Indian bank cannot be considered as consideration paid to foreign bank for the purpose of levy of service tax under reverse charge mechanism. He also argued on the issue of limitation and submitted and all such documents were av....

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....r reverse charge mechanism. Further, such short-payment would not have come to light but for the verification conducted by the department and therefore the extended period invoked is right and proper. He relied upon the decision in the case of Lupin Ltd. Vs. Commissioner of Central Excise 2015 (39) STR 249. 5. Heard both sides. 6. The case of the department is that when the foreign bank deducts the charges towards transfer of foreign exchange to the Indian bank, since the same is deducted from the sale proceeds, it is a service rendered by the foreign bank to the appellants and that there is a service provider and service recipient relationship between the foreign bank and the appellant. It is to be noted that the foreign bank deducts....

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....iding services. Exporter or importer in India does not have any formal or informal agreement with the foreign bank. Importer or exporter in India does not even know the quantum of charges which the foreign bank would be recovering. Therefore, in view of the above mentioned factual position and also in view of the various articles of URC 522/UCP 600, it is clear that services are provided by the foreign bank to the bank in India. Further, Tribunals have also prima facie held that in such cases, services are provided by the foreign bank to the Indian bank and not to the Indian Exporter. [M/s. Gracure Pharmaceuticals Ltd. v. Commissioner of Central Excise, Jaipur-I -2013 (32) S.T.R. 249 (Tri.-Del.), M/s. Gujarat Ambuja Exports Ltd. v. Commissi....