2011 (4) TMI 1149 - AT - Service Tax

Whether in the absence of realization of foreign exchange the appellant shall be entitled to the benefit of Notification No.41/2007 dated 06/10/2007 Held that - appellant having failed to produce any evidence of realization of foreign exchange and the appellant not producing any material evidence to show that the free samples otherwise are eligible for rebate for service tax on courier service the relief claimed is not tenable. No claim can be entertained mechanically without fulfillment of mandate of statute the appeal is dismissed

Summary

Issues: Claiming rebate on service tax paid for dispatching free samples without realization of foreign exchange.

Analysis:
1. The appellant claimed a rebate of service tax paid on courier service for dispatching free samples abroad under Notification No.41/2007-ST dated 06/10/2007. The appellant argued that the samples were sent for future exports and not for sale, relying on the decision of the Hon'ble Supreme Court in a different context. The Ld. Counsel emphasized that the tax paid on courier service should be granted as a rebate due to the notification's applicability.

2. The Ld. DR contended that rebate could be granted if the conditions of foreign exchange realization and Notification No.41/2007-ST were met. The appellate authority denied the refund, citing non-fulfillment of notification conditions. The Ld. DR argued that the appeal should be dismissed based on this non-compliance.

3. After hearing both sides and examining the records, the Tribunal noted that the free samples were not sold, and service tax was paid for dispatching them via courier service. The crucial dispute centered on whether the appellant, without realizing foreign exchange, could avail the benefits under Notification No.41/2007 dated 06/10/2007. The notification explicitly required foreign exchange realization from exports, which was absent in this case. Export, as defined by law, involves moving goods from India abroad to earn foreign exchange. The lack of evidence regarding foreign exchange realization and the failure to demonstrate the samples' eligibility for service tax rebate led to the dismissal of the appeal.

4. The Tribunal emphasized that statutory mandates must be fulfilled for any claim to be considered valid. Without concrete evidence of foreign exchange realization and eligibility for the rebate, the relief sought by the appellant was deemed untenable. The decision to dismiss the appeal was based on the failure to meet the essential requirement of foreign exchange realization as mandated by the statute.