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2018 (2) TMI 1185 - AT - Service TaxRefund of unutilized CENVAT credit - N/N. 5/2006-CE (NT) dated 14.3.2006 - denial on the ground that the condition that the payment for export service is to be received by the service provider in convertible foreign exchange was not satisfied - Held that - one of the conditions for allowing refund is that the proceeds for export of service should have been received in convertible foreign currency - In respect of the present refund claims the proceeds for export of service were not received directly in foreign exchange but the same was routed by the Foreign Service receiver through M/s. Wells Forgo NA USA through HSBC Bank. Ultimately the amount was received by the appellant in rupees. The issue has been decided in favour of the appellant by this Tribunal in the case of BBC World Services India Pvt. Ltd. vs. Commissioner of Service Tax Delhi 2018 (2) TMI 369 - CESTAT NEW DELHI where it was held that It is manifestly clear that the amount credited to the account of the appellant in India is in consequence of a debit of pound sterling account maintained by participated bank in nostro mechanism in UK. The said debit of foreign exchange by the UK bank and consequent credit in Indian rupee in Indian bank as part of nostro transaction is reported to RBI and necessarily forms part of foreign exchange earning in India. Refund allowed - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Change of name in the cause title. 2. Refund claims under Rule 5 of CENVAT Credit Rules, 2004. 3. Receipt of payment in convertible foreign exchange. 4. Classification under programme producer service. Detailed Analysis: 1. Change of Name in the Cause Title: The appellant filed miscellaneous applications to change the name in the cause title from Novell Software Development (India) Pvt. Ltd. to Micro Focus Software India Pvt. Ltd. The Tribunal, after reviewing the petitions, allowed the change of name in the cause title. 2. Refund Claims under Rule 5 of CENVAT Credit Rules, 2004: The appellant filed nine appeals covering various periods from January 2009 to June 2011, seeking refunds of unutilized CENVAT credit of service tax availed in respect of services used in providing output services. These claims were made under Notification No. 5/2006-CE (NT) dated 14.3.2006. The refund claims were rejected by the lower authorities on the grounds that the payment for export services was not received in convertible foreign exchange. 3. Receipt of Payment in Convertible Foreign Exchange: The Tribunal examined whether the proceeds for export services, which were routed through M/s. Wells Forgo NA, USA, and ultimately received in rupees, satisfied the condition of being received in convertible foreign exchange. The Tribunal referenced the case of BBC World Services India Pvt. Ltd. vs. Commissioner of Service Tax, Delhi, which dealt with a similar issue. The Tribunal noted that the Foreign Inward Remittance Certificate (FIRC) issued in respect of foreign exchange establishes that the payment received in rupees is deemed to be in convertible foreign exchange. The Tribunal cited various decisions, including Sun Area Real Estate Pvt. Ltd. vs. CST, Mumbai, which supported the view that payment received in rupees through a foreign bank is considered as received in convertible foreign exchange. The Tribunal also referred to the Supreme Court judgment in J.B. Boda and Company, which held that retaining brokerage in Indian rupees from a foreign transaction is equivalent to receiving income in convertible foreign exchange. 4. Classification under Programme Producer Service: The Tribunal addressed the second issue regarding the classification of services under the programme producer service. It clarified that the statutory definition requires the programme producer to produce programmes on behalf of another person. In this case, the appellant produced programmes for themselves and later provided them to other broadcasters for a consideration. Therefore, such transactions were not covered under the programme producer service as the appellant did not produce the programme for a third party. Conclusion: The Tribunal found merit in the appeals filed by the appellant. It concluded that the payment received in rupees through the foreign bank mechanism is deemed to be in convertible foreign exchange. Additionally, the Tribunal held that the appellant's activities did not fall under the programme producer service. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief. Order Pronouncement: The order was pronounced and dictated in Open Court on 14/02/2018.
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