2022 (7) TMI 91 - AT - Service Tax

Refund of CENVAT credit - rejection on the ground that exporter is an intermediary and place of provision of service is India - N/N. 27/2012-CE(NT) dated 18.06.2012 - HELD THAT - In view of the judgments referred in the preceding paragraph namely EASTERN PACIFIC SHIPPING (INDIA) P. LTD. VERSUS COMMR. OF CGST MUMBAI EAST 2019 (10) TMI 1324 - CESTAT MUMBAI that had set the ratio on the issue that seafarer s recruitment service provider who processes the entire selection medical test insurance transportation training etc. to the overseas client and received convertible foreign exchange is not an intermediary. Appellant is entitled to get the refund of CENVAT credit claimed by it from the period from October 2016 to June 2017 amounting to Rs.12, 01, 918/- alongwith applicable interest and the Respondent-Department is directed to pay the same within two months of communication of this order - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Rejection of refund claim based on intermediary status and place of provision of service.

Analysis:
1. The appellant, engaged in Ship Management service, sought a refund of CENVAT credit as per Notification No. 27/2012-CE(NT) but was rejected on grounds of being an intermediary with services provided in India.
2. The appellant argued that it provided independent recruitment services to its foreign associate, not intermediary services, supported by judicial decisions.
3. The Respondent-Department contended that the Commissioner (Appeals) had given reasoned findings and sought no interference in the order.
4. The Tribunal analyzed the nature of the appellant's services based on Rule 2(f) of the POPS Rules, 2012, defining an intermediary as one who arranges services between two parties, excluding those providing the main service.
5. The Tribunal found that the appellant provided trained manpower to its overseas client on a principal-to-principal basis, indemnifying the client against claims, indicating a non-intermediary relationship.
6. The Commissioner (Appeals) incorrectly held the appellant as providing crew management services only, overlooking the principal-to-principal nature of the agreement and the absence of an intermediary relationship.
7. The Tribunal referenced judicial precedents to support the appellant's position that seafarer recruitment service providers are not intermediaries if they provide comprehensive services and receive foreign exchange.
8. Consequently, the appeal was allowed, the order of the Commissioner (Appeals) was set aside, and the appellant was granted the refund of CENVAT credit claimed, with applicable interest, to be paid by the Respondent-Department within two months.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal interpretation of relevant rules, and the reasoning behind the Tribunal's decision to allow the appeal and grant the refund claim.