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TMI Blog2017 (9) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Indian rupee is nothing but foreign exchange repatriated from foreign country to India. Therefore, such payment in rupees is equal to the foreign exchange. The payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfill the condition of payment (convertible foreign exchange) and therefore, the denial of refund on this ground is not sustainable - appeal allowed - decided in favor of appellant. - ST/20893/2017-SM - Final Order No. 21979 / 2017 - Dated:- 7-9-2017 - Shri S. S. Garg, Judicial Member Mr. Krishnamurthy, Consultant For the Appellant Mr. Naveenkushalappa, AR For the Respondent ORDER Per : S. S. Garg The present appeal is directed against the impugned order dated 22.3.2017 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant. 2. Briefly the facts of the case are that the appellant is registered with the Service Tax Department for providing taxable services under the category of Information Technology Software Support Services (ITSS) and they filed a refund claim seeking refund of unutilized CENVAT credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CESTAT-MUM. * CST, Mumbai vs. M/s. PMI Organisation Centre Pvt. Ltd.: 2015-TIOL-2570-CESTAT-MUM * M/s. AGM India Advisors Pvt. Ltd. vs. CST, Mumbai-I: 2015-TIOL-2775-CESTAT-MUM. * M/s. Affinity Express India Pvt. Ltd. vs. CCE, Pune-I: 2015-TIOL-2441-CESTAT-MUM. * Sun-Areas Real Estate Pvt. Ltd. vs. CST, Mumbai-I: 2015-TIOL-956-CESTAT-MUM. He further submitted that there is no dispute about the export of services and also there is no dispute that the input services, for which the appellant claim refund is not used in providing output service. 5. On the other hand, the learned AR defended the impugned orders and submitted that in the present cases, the remittances have been received in Indian rupee and not in convertible foreign exchange and the same is in violation of the conditions laid under Rule 3(2)(b) of Export of Service Rules, 2005. 6. After considering the submissions of both the parties and perusal of the material on record, and the various judgments relied upon by the appellant, I find that this issue has been considered by various Benches of the Tribunal and it has been consistently held that merely because payment is received in Indian rupe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sides. It is not in dispute that the remittance towards the payment of service was received in Indian rupees. However, though the payment is received in Indian rupees but the bank has issued Foreign Inward Remittance Certificate . Clause 3A.6(i) of the Exchange Control Manual is reproduced below: 3A.6 (i) Authorised dealers should issue certificates in form BCI against receipt of inward remittances or realisation of foreign exchange on security paper if the amount exceeds ₹ 15,000/- in value, bearing distinctive serial numbers and reference numbers. In case the amount of inward remittance or realisation of foreign exchange is upto ₹ 15,000/-certificates in form BCI with serial numbers and reference numbers may be issued on the letter-head of the authorised dealer (with their 'Logo' printed on it). Since inward remittances received for opening of or credit of Non-Resident (External) accounts/FCNR accounts can be repatriated freely, authorised dealers should not issue certificates against such remittances. 6. From the above provision it is clear that Foreign Inward Remittance Certificate (FIRC) is issued only in respect of foreign exchange. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be as mentioned below: Group Manner of receipt of foreign exchange (1) member countries in the Asian Clearing Union (except Nepal) namely, Bangladesh. Islamic Republic of Iran, Myanmar, Pakistan and Sri Lanka a) payment for all eligible current transactions by debit to the Asian Clearing Union dollar account in India of a bank of the member country in which the other party to the transaction is resident or by credit to the Asian Clearing Union dollar account of the authorised dealer maintained with the correspondent bank in the member country; and b) payment in any permitted currency in all other cases (2) all countries other than those mentioned in (1). a) 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; or b) payment in any permitted currency (2) In respect of an export from India, payment shall be received in a currency appropriate to the place of final destination as mentioned in the declaration form irrespective of the count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er institution concerned with the subject-matter - the Reserve Bank of India. In this view, we hold that the proceedings of the Central Board of Direct Taxes dated 11.3.1986, declining to approve the agreements of the appellant with M/s Sedgwick offshore Resources Ltd. London for the purposes of section 80-0 of the Income-tax Act, are improper and illegal. We declare so. we direct the respondent to process the agreements in the light of the principles laid down by us herein above. The appeal is allowed. There shall be no order as to costs. 9. From the above judgment it is observed that out of the total payment to be made by the insurance broker in India to the foreign insurer was reduced to the extent of his brokerage and remaining amount was remitted to foreign insurer in the foreign exchange. The issue was whether the brokerage in Indian rupees retained by the Indian Insurance broker shall be treated as foreign exchange or otherwise. The hon'ble Supreme Court has held that the said amount of brokerage retained by the Indian insurance broker from the total amount due to the foreign insurer shall be treated as foreign exchange. In view of the above judgment, I am of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,077/- is set aside. 6.2 Further, in the case of Nipuna Services Ltd. vs. CCE: 2009 (14) STR 706 (Tri.-Bang.) wherein it is held that Revenue is denying the refund for the simple reason that the appellant themselves had not directly received the payment in foreign currency. In our view, the stand of the Revenue is not sustainable. If Revenue s contention is accepted, it amounts to levying service tax on services exported. It is axiomatic that goods and services exported would not be subjected to local taxes. Denying the refund would violate this fundamental principle of taxation. 6.3 Further, in the case of Sun-Areas Real Estate Pvt. Ltd. cited supra, it has been held that even though the appellant received the payment in Indian rupees but in view of the FEMA Notifications issued by the RBI, the same is deemed to be in convertible foreign exchange and accordingly the condition as provided under Rule 3(2) of Export of Service Rules, 2005 stands complied. 6.4 Further, I find that this Bench, on an identical issue in the case of M/s. Support.com India Pvt. Ltd.: 2017-TIOL-3182-CESTAT-BANG and vide Final Order No.21144-21145/2017 dated 24.7.2017, has decided in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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