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2018 (6) TMI 340 - AT - Service TaxRefund of unaccumulated CENVAT credit - export of services - Rule 5 of CCR, 2004 - rejection on the ground of time bar - payment for export services received in convertible currency - Held that - the applications for refund claims for impugned period were filed on 07.11.2016 (The date of application seeking refund). Respective invoices are of 31.10.2015, 30.11.2015 and 30.12.2015. Thus, it is the application only of 31.10.2015, which is beyond one year of the invoice. Hence, the order of original authority to this aspect was wrong. Receiving payment for export services in convertible currency - Held that - It is very clear that the payment in rupees from the account of a bank situated in any country (other than a member country of Asian Clearing Union or Nepal or Bhutan) is a manner of receipt of foreign exchange - In the present case, it is evident that the Indian rupees were received through the account of Deutsche Bank which is situated in foreign country. Therefore, in terms of Regulation 3 made under Section 47 of the Foreign Exchange Management Act, 1999, in the present case the foreign remittance in Indian rupees through Deutsche Bank is the receipt of payment in convertible foreign exchange. The Commissioner (Appeals) has rightly overruled the decision of Additional Commissioner rejecting the claim of refund for the export services to the claimant for want of remittance in convertible currency - refund allowed - appeal dismissed - decided against Revenue.
Issues Involved:
1. Time-barred refund claims. 2. Eligibility of input services for Cenvat credit. 3. Receipt of payment in convertible foreign currency for export services. Issue-wise Detailed Analysis: 1. Time-barred Refund Claims: The primary issue was whether the refund claims filed by the claimant were time-barred. The original authority rejected the refund claims as they were filed beyond the one-year period stipulated under Section 11B of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this decision only for the invoice dated 31.10.2015, while allowing the refund for the remaining invoices. The Tribunal observed that the refund applications were filed on 07.11.2016, and the respective invoices were dated 31.10.2015, 30.11.2015, and 30.12.2015. Consequently, only the invoice dated 31.10.2015 was beyond the one-year period, and the Commissioner (Appeals) rightly modified the original order to this extent. 2. Eligibility of Input Services for Cenvat Credit: The Tribunal examined whether the input services used by the claimant were eligible for Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The claimant provided consultancy services, which were exported. The services rendered by PHG India to PHG US were considered consultancy services and were taxable since they did not fall under the negative list in Section 66D of the Finance Act, 2012. These services qualified as input services under Section 2(l) of the Cenvat Credit Rules, 2004. The Tribunal upheld that the total Cenvat credit taken on inputs and input services during the quarter should be refunded, as per Notification No. 27/2012-CE (NT). 3. Receipt of Payment in Convertible Foreign Currency: The Tribunal addressed the requirement of receiving payment in convertible foreign currency for export services under Rule 6A of the Service Tax Rules, 1994. The claimant received payments in Indian Rupees through their foreign bank, Wachovia Bank N.A., USA. The Tribunal referred to the case of Sun-Area Real Estate Pvt. Ltd. vs. Commissioner of Service Tax, Mumbai-I, which held that Indian Rupees received against export services through a foreign bank is considered convertible foreign exchange. The Tribunal found that the Foreign Inward Remittance Certificate (FIRC) issued by HDFC Bank certified the remittance as convertible foreign exchange. Thus, the Commissioner (Appeals) correctly overruled the Additional Commissioner's decision, rejecting the refund claim for export services due to the remittance being in Indian Rupees. Conclusion: The Tribunal upheld the Commissioner (Appeals)'s order, confirming that the refund claim for the invoice dated 31.10.2015 was time-barred, while the remaining claims were valid. It also affirmed that the input services used were eligible for Cenvat credit and that the payments received in Indian Rupees through a foreign bank constituted convertible foreign exchange. The appeal was rejected, and the order of the Commissioner (Appeals) was upheld in its entirety.
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