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2023 (5) TMI 562 - AT - Service TaxEOU - Import of Capital Goods without payment of Customs Duty in terms of Notification No. 52/2003-CUS - procurement of consumables indigeneously in terms of Central Excise Notification No. 22/2003-CE. - export of services - first proviso Rule 3(ii) of Exports Services Rule, 2005 - Time Limitation - HELD THAT - As can be seen from the Para 6 of the Show Cause Notice, the allegation of the Department at the Show Cause Notice stage is on the count that services being rendered by the Appellants were not fully rendered within India. The Hon ble CESTAT, Ahmadabad in the case of COMMISSIONER OF SERVICE TAX VERSUS BA RESEARCH INDIA LTD. 2009 (11) TMI 213 - CESTAT, AHMEDABAD was seized of the very same issue and it has held that delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. These facts also fortify the views taken hereinabove that the service provided by the appellants was export of service and I am inclined to them such taxable service as export of service and therefore not taxable. The issue of Second Proviso to Rule 3 (ii) was not brought out in the Show Cause Notice or in the Order-in- Original. However without going into the merits as to whether the goods were situated outside at that point of time or not and whether even the sample brought into India for testing can be considered as the goods being present in India, the issue decided only on the ground that no such allegation was made in the Show Cause Notice. Appeal allowed.
Issues involved:
The issues involved in this case are whether the services provided by the Appellant qualify as export of service under the Export of Service Rules, 2005, and whether the Customs/Central Excise duty exemption availed by the Appellant is irregular. Issue 1 - Export of Service Qualification: The Appellant, an EOU providing Technical Testing and Analysis Services, imported Capital Goods without payment of Customs Duty and procured consumables indigenously. The Department alleged that the services provided did not qualify as exports since they were entirely rendered in India. The Appellants argued that even if the services were partly performed outside India, they should be considered as exported from India. They cited relevant case laws to support their position. The Adjudicating Authority confirmed the demand, stating that the services were not liable to be classified as export of services. The Tribunal referred to previous judgments, including one by the Hon'ble High Court, which held that mere delivery of reports outside India qualifies as export of services. The Tribunal, therefore, allowed the appeal on merits, relying on the cited case law. Issue 2 - Second Proviso to Rule 3(ii): The Learned AR contended that services under certain clauses would qualify as export of services only if the goods or materials were situated outside India during the provision of services. Since the samples for testing were in India, the services could not be considered as exports. The Appellant argued that this point was not raised in the Show Cause Notice or the Order-in-Original, and thus, should not be considered at this stage. The Tribunal decided the issue based on the lack of mention in the Show Cause Notice and upheld the appeal on merits, in line with the case law cited by the Appellant. Issue 3 - Limitation Plea: The Appellant raised a plea of limitation, claiming that the demand was hit by time bar as the Show Cause Notice was issued in 2010 for goods imported between 2005-2010. However, the Tribunal noted that the Notifications were conditional, requiring the Appellants to pay Customs/Excise duty if the export obligation was not fulfilled. Consequently, the Tribunal found no merit in the Appellant's limitation plea and allowed the appeal on merits. This judgment by the Appellate Tribunal CESTAT HYDERABAD addressed the issues of export of service qualification, the application of the Second Proviso to Rule 3(ii), and the limitation plea raised by the Appellant. The Tribunal relied on relevant case laws to decide in favor of the Appellant on the grounds of export of services qualification, while rejecting the arguments related to the Second Proviso and the limitation plea.
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