TaxTMI 
TaxTMI 
2026 (2) TMI 1015
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....ute. 3. Appellant was having a centralized accounting system. The export proceeds were received in the Bank Account of the appellant held with the Citi Bank for Chennai operations. In such a bank account, the address of the account holder contained the address of the Delhi Office of the appellant. Show Cause Notice Dated 17.08.2011 Dated 22.07.2011 Refund Claim Rejected INR 29,60,879/- INR 30,13,451/- Periods Involved April 2010 - September 2010 October 2009 - March 2010 Order-in-Originals under dispute Order-in-Original No. 113/2011 (hereinafter referred to as "OIO 1") Order-in-Original No. 114/2011 (hereinafter referred to as "OIO 2") Order-in-Appeal under dispute Order-in-Appeal No. 144 & 145/2015(STA-I) (common for Appeal 1 and 2) (hereinafter referred to as 'Impugned OIA" Order-in-Appeal No. 144 & 145/2015 (STAI) (Common for Appeal 1 and 2) (hereinafter referred to as "impugned OIA") Appeal number with CESTAT ST/42200/2015 (hereinafter referred to as "Appeal 1") ST/42201/2015 (hereinafter referred to as "Appeal 2") 4.1 The Appellants were issued with a Show cause Notice No.25 dated 22.07.2011 for the period October 20....
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....the Export of Service Rules and Section 2(n) of the FEMA Act, 1999, the appellant contended that receipt in INR qualifies as convertible foreign exchange. 4.6 However, the Citibank letter dated 26.05.2011 has not evidenced the receipt of export proceeds in convertible foreign exchange from outside India, either by the Delhi head office or branch, and only confirms an INR account for the Chennai branch. Further, vide office letter dated 20.05.2011, the appellant was directed to produce documentary evidence showing realization of the entire export turnover in foreign currency/convertible foreign exchange, which was not complied with. 4.7 The SCN dated 22.07.2011 further stated by concluding that the consideration for the services in question was received in Indian Rupees, as reflected in the FIRCs submitted by the appellant. As Indian Rupees do not qualify as convertible foreign exchange, the essential requirement under Rule 3(2)(b) of the Export of Service Rules, 2005, remains unmet. Accordingly, the services cannot be regarded as exports, and the refund claimed by the appellant is not admissible. 5.1 Thereafter another Show Cause Notice was issued dated 17.08.2011 which is....
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....though the actual remittance for the exports made were realized in foreign currency." 8.2 Further the appellants place their reliance on the Master Circular No.14/2013-14 dated 1st July 2013 issued by RBI which states that on Export of Goods and Services, there is no restriction on Invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act 1999. Further, in terms of Para 2.40 of the Foreign Trade Policy (August 27, 2009 March 31, 2014), "All export contracts and invoices shall be denominated either in freely convertible currency or in Indian Rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees provided it is through a freely convertible Vostro account of a non-resident bank situated in any country, other than a member country of the ACU or Nepal or Bhutan" 8.3 Further the appellants submitted that under the Foreign Trade Policy and the Foreign Exchange Management framework, export proceeds realized in Indian Rupees through a freely convertible Vostro account of a ....
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....ces. The appeal was allowed, except to the extent of the amount already held admissible by the lower authority. 8.5 The Appellant further relied upon the following cases: - The Tribunal has consistently held that receipt of consideration in Indian Rupees does not, by itself, disentitle an assessee from export benefits when the underlying remittance originates in convertible foreign exchange. In Kishore Kumar & Co. (Exports) Pvt. Ltd. v. CCE, Mangalore [2011 (22) STR 57 (Tri-Bang.)], it was held that the essential condition of export of service stood satisfied where payment was received in foreign currency but credited in Indian Rupees by the Indian bank, leading to waiver of pre-deposit and penalty. Similarly, in Nipuna Services Ltd. v. CCE, Customs & Service Tax (Appeals-II), Hyderabad [2009 (19) STT 263 (Tri.Bang.)], the Tribunal held that denial of refund merely because consideration was received in INR, though remitted out of convertible foreign exchange, would violate the fundamental principle that exports should not be taxed, and accordingly allowed the refund of CENVAT credit. Further, in Pam Pharma & Allied Machinery Co. Pvt. Ltd. v. CST, Mumbai [2015 (37)....
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....the present case, expressly certified that the amounts were not received in non-convertible rupees. Relying on Notifications issued under the Foreign Exchange Management Act, 1999, particularly FEMA Notification No. 9/2000-RB and FEMA Notification No. 14/2000-RB, the Tribunal observed that receipt of payment in Indian rupees from the account of a bank situated outside India and maintained with an authorised dealer is deemed to be repatriation of realised foreign exchange. Consequently, such receipt is to be treated as receipt in convertible foreign exchange. Accordingly, the Tribunal concluded that mere receipt of consideration in Indian currency does not disentitle an assessee from export benefits when the remittance originates from abroad through authorised banking channels and is evidenced by FIRCs. The condition prescribed under Rule 3(2) of the Export of Services Rules, 2005 was therefore held to be satisfied. The Tribunal further held that security services and air travel services having a direct nexus with export of services qualify as input services. The appeal was allowed, except to the extent of the amount already held admissible by the lower authority. 9.2 Mitusubishi....