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TMI Blog2017 (9) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be in convertible foreign exchange and accordingly the condition as provided under Rule 3(2) of Export of Service Rules, 2005 stands complied. Payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfil 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/20821/2017-SM, ST/20822/2017-SM - Final Order No. 21144-21145 / 2017 - Dated:- 24-7-2017 - Shri S. S. Garg, Judicial Member Mr. Krishanmurthy, Consultant For the Appellant Mr. K. T. Pakshirajan, AR For the Respondent ORDER Per : S. S. Garg These two appeals have been filed by the appellant directed against the impugned order passed by the Commissioner (A) dated 17.4.2017 vide which the Commissioner (A) has rejected the appeals of the appellant. 2. Briefly the facts of the present case are that the appellant is engaged in providing taxable service i.e., Information Technology Software Services and Business Auxiliary Services and is a 100% EOU under Software Technology Park of India ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 are 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 exchangeand 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 held consistently held that merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange as provided in Export of Service Rules, 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved 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 present case, FIRCs were issued and there is a specific certification that the payment has not been received in non-convertible rupees, which establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies 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 country of residence of the buyer. 7. From the above regulation and serial No. (2) of the Table, it is very clear that the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 the view that when a foreign bank is maintaining Indian rupees in their account obviously, such Indian rupees was obtained in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Revenues 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. 7. From the above decisions of the Tribunal, it is clear that payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfil the condition of payment (convertible foreign exchange) and therefore, the denial of refund on this ground is not sustainable. In view of my ..... X X X X Extracts X X X X X X X X Extracts X X X X
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