2017 (2) TMI 898 - AT - Service Tax

Refund claim - export of services - Rule 5 of the CCR, 2004, along with N/N. 5/2006-CE(NT) dated 14.03.2006 - Held that - It is evident from the record that the appellant failed to produce FIRC certificate issued from the Bank that remittance is convertible Foreign Exchange - appeal rejected - decided against appellant.

Summary

Issues:
Refund of unutilized Service Tax and Cess under Rule 5 of Cenvat Credit Rules, 2004 denied based on contravention of Export of Service Rules, 2005.

Analysis:
The appellant provided support services to its parent company outside India, classifiable as 'Export of Service.' The Adjudicating Authority rejected refund claims as evidence of payment in convertible foreign exchange was not provided. The appellant argued that payments were routed through a foreign bank and converted to Indian currency, citing Foreign Exchange Management Regulations and RBI Circulars.

Rule 3 of Export of Service Rules, 2005 requires payment for taxable services in convertible foreign exchange. The appellant's bank clarified that inward remittances were received in Indian Rupees but qualified as convertible foreign exchange under FEMA 14 Notification. The Commissioner(Appeals) examined the bank's letter and ruled that while payments in Indian Rupees were allowed, Export of Service Rules mandated payment in convertible foreign exchange.

The appellant failed to produce Foreign Inward Remittance Certificate (FIRC) certifying payment in convertible foreign exchange. Previous case laws emphasized the importance of FIRC for proving payment in convertible foreign exchange. As the appellant did not provide FIRC, the Tribunal upheld the denial of refund, rejecting the appeal.

In conclusion, the Tribunal upheld the denial of refund, emphasizing the requirement of payment in convertible foreign exchange under Export of Service Rules. The appellant's failure to produce FIRC led to the rejection of the appeal. The judgment highlights the importance of proper documentation to substantiate claims for refund under relevant regulations.