TaxTMI 
TaxTMI 
2026 (9) TMI 188
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....cation and export of services, they are taken up together for disposal by this common order. 2. The appellant, engaged in the manufacture of industrial valves, valve actuators, enclosed gears and other engineering products, also rendered engineering-related services to M/s. Xomox International GmbH & Co., Germany ("Xomox Germany"), in relation to goods manufactured by M/s. Sanmar Foundries Limited, Viralimalai ("SFL"), for which it received USD 2,000 per month in convertible foreign exchange and treated the receipts as export of services. The first Show Cause Notice dated 16.10.2014, covering April 2009 to March 2014, alleged the activity to be Technical Inspection and Certification Service and, from 01.07.2012, invoked Rule 4 of the Place of Provision of Services Rules, 2012. Order-in-Original No.18/2015 dated 18.05.2015 confirmed service tax of Rs.6,91,329/-, with interest and penalties, which was upheld by Order-in-Appeal No.27/2016 dated 04.05.2016. The second Show Cause Notice dated 07.09.2015, covering April 2014 to March 2015, resulted in Order-in-Original No.06/2016 dated 31.03.2016, confirming service tax of Rs.14,476/-, with interest and penalties, upheld by Order-in-A....
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....Foundation Joint Venture v. CCE, 2007 (216) E.L.T. 177 (S.C.) and others. 4. The Ld. Authorized Representative Ms. G. Krupa reiterated the findings in the impugned orders and submitted that the appellant had deputed specially trained personnel to SFL for inspection and examination of castings and related quality activities. According to Revenue, the actual activity performed in India and the physical availability of the goods were determinative. Reliance was placed upon Commissioner of Central Excise, Mangalore v. SGS India (Pvt.) Ltd., 2010 (17) S.T.R. 92 (Tri.-Bang.), besides the provisions relied upon in the respective show cause notices. 5. Upon rival submissions and scrutiny of the appeal papers, the following questions arise for determination: - i. Whether the services rendered by the appellant were classifiable as Consulting Engineer Service or as Technical Inspection and Certification Service? ii. Whether the services qualified as export of services during the respective periods and, consequently, whether the demands of service tax, interest, limitation and penalties are sustainable? 6. We now proceed to examine the issues framed for determination....
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.... technical issues. Under "Development", it refers to prototype casting inspection/approval, material specification clarification and PED requirements. Under "Quality", it refers to development of inspection plans, bulk/series inspection approval, inspection-report coordination and corrective-action reporting. Under "Dispatch", it refers to packing methods, alternate packing materials, rust-protection methods, coordination, documentation and dispatch details of critical items. 12. The email correspondence dated 23.03.2005 concerning the "Job Description & Activity Status", and the response from the German side, is significant because it predates the dispute and demonstrates that the assignment was understood by the foreign customer as an engineering role. The letter dated 05.05.2009 from Xomox Germany is even more specific. It records payment of USD 2,000 per month for the services of Mr. G. Saravanan, or another person performing the same role, for engineering services towards development of castings, pattern development, pattern rectification and other engineering assignments. Debit Note No.009 dated 31.12.2007 describes the consideration as "Service Engineer Charges". 13. T....
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....e provisions then in force, including Section 66B, Rule 6A of the Service Tax Rules, 1994 and the Place of Provision of Services Rules, 2012. The classification issue is therefore decided in favour of the appellant. Issue No. (ii): Export, Limitation, Interest and Penalties 16. Having determined the nature of the service, the question whether the same qualified as export has to be examined separately for the different statutory periods, namely April 2009 to 26.02.2010, 27.02.2010 to 30.06.2012 and 01.07.2012 onwards, since the statutory provisions governing export of services underwent material changes during these periods. 27.02.2010 to 30.06.2012 17. The Ld. Counsel has placed particular reliance upon the judgment of the Hon'ble Supreme Court in Commissioner of Service Tax-III, Mumbai v. Vodafone India Ltd., 2025 INSC 914; 2025 (8) TMI 938; (2025) 33 Centax 152 (S.C.). We have examined the said judgment. The Hon'ble Supreme Court considered the successive versions of Rule 3 of the Export of Services Rules, 2005 and the distinction between the different categories of services. The Court noted the legislative changes governing export of services and, in particul....
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....evant documents describe the assignment as engineering services relating to development of castings, patterns, pattern rectification and related engineering requirements. SFL was not the contractual recipient and did not make payment for the service. 22. The Department has not established from the contractual documents or other material on record that SFL was the recipient or user of the engineering service. On the contrary, the contractual engagement was with Xomox Germany, which made the payment in convertible foreign exchange, and the documents describe the assignment as engineering services undertaken for the foreign customer's requirements relating to development of castings, patterns, pattern rectification and other engineering matters. SFL was not the contractual recipient and did not make payment for the service. On the material available on record, we therefore find that the Department has not established that the service was used in India so as to deny the appellant the benefit of export treatment. 01.07.2012 onwards - Rule 6A and Place of Provision 23. For the period from 01.07.2012 onwards, Rule 6A of the Service Tax Rules, 1994 governs the determination of....
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....ax demands of Rs.6,91,329/- for April 2009 to March 2014 and Rs.14,476/- for April 2014 to March 2015 are therefore unsustainable on merits. Limitation 28. The first Show Cause Notice dated 16.10.2014 covering April 2009 to March 2014 invoked the extended period on the allegation that the appellant had not disclosed the true nature of the services and had wrongly treated the receipts as export. However, the record shows that the Department had raised an audit query in 2008 regarding the applicability of service tax to the amount received from Xomox Germany and that the appellant, by letter dated 29.02.2008, furnished details of the activities undertaken under the arrangement, together with the relevant Debit Note and balance-sheet particulars. 29. The appellant has relied upon Anand Nishikawa Co. Ltd. v. CCE, 2005 (188) E.L.T. 149 (S.C.); Pahwa Chemicals Pvt. Ltd. v. CCE, 2005 (189) E.L.T. 257 (S.C.); and Continental Foundation Joint Venture v. CCE, 2007 (216) E.L.T. 177 (S.C.). We find the principles in Anand Nishikawa, Pahwa Chemicals and Continental Foundation particularly relevant. Extended limitation requires the statutory ingredients of wilful suppression, misstateme....