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TMI Blog2018 (2) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to claim of the appellant regarding export of such service to their foreign principal located in UK. Though the export of such service to UK has been admitted, the tax demand was raised against the appellant on the ground that one of the condition mainly, receipt of consideration in convertible foreign exchange has not been fulfilled in such exports. Accordingly, a demand of Rs. 5,10,23,578/- was confirmed against the appellant. The second issue is relating to such programme producer service with reference to domestic radio stations to whom the appellant gave various programmes for broadcasting. The service tax demand of Rs. 7,79,630/- was confirmed on this account. Penalties under Section 77 and 78 of the Finance Act, 1994 were also imposed. 2. The learned Counsel appearing for the appellant contested the findings of the Original Authority and mainly submitted on the following lines :- (a) the services have been exported to BBC UK is not disputed. The only point of dispute is that for such export the appellant did not receive consideration in convertible foreign exchange. The documentary evidences regarding payment through nostro mechanism was not accepted by the Revenue. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to export of service in the manner done in the present case will satisfy the requirement of receipt of consideration in convertible foreign exchange. (g) On the second issue, the learned Counsel for the appellant submitted that they have produced various programmes without any reference to another person and thereafter whenever requirement arises gave such programmes to other domestic radio stations for broadcast. They received certain considerations for such transfer of programmes on temporary basis. These are specific radio programmes. They have not produced these programmes on behalf of another person, hence, they cannot be considered as programme producer in terms of Section 65 (86b) of the Act. Even otherwise these are copy right materials and if at all to be subjected to service tax, the same will apply only w.e.f. 01/07/2010. The learned Counsel also contested the proceedings on limitation and on imposition of penalties considering the interpretation involved with reference to actual exports undertaken by the appellant only with reference to the nature of receipt of consideration from UK. 3. The learned AR strongly contested the grounds of appeal. He submitted that the Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the various guidelines, more specifically the regulations cited hereinabove, order-in-original as well as guide to the authorized dealers issued by the RBI. We have also perused the relevant extracts of foreign exchange manual. The foreign exchange manual of RBI stipulates the method of foreign exchange transactions with public. It is mentioned that payment of inward remittance in Rules (para 3A.4) is through authorized dealer and the bank receiving the foreign exchange inward remittance in excess of Rs. 15,000/- shall issue a certificate in Form BC-I. In the present case such certificates have been issued by the Standard Chartered Bank. It would appear that the whole dispute arose because of a reference made in such FIRCs issued by Standard Chartered Bank to the effect "foreign currency amount, INR ..." and "rupee equivalent ...". It would appear that FIRCs did not identify the nature and name of foreign convertible currency. Admittedly this is the source of whole dispute. However, we note that the same FIRC categorically certifies that the payment has not been received in non-convertible rupee or under any special trade or payment agreement. Further, the payment has been menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or liability denominated in foreign exchange to the extent and in the manner specified by the Reserve Bank. (2) A person shall be deemed to have repatriated the realised foreign exchange to India when he receives in India payment in rupees from the account of a bank or an exchange house situated in any country outside India, maintained with an authorised dealer." From the sub-Para (2) of Para 4 above it is very clear that, when a person receives in India payment in rupees from the account of a bank situated in any country outside India maintained with an authorised dealer, the payment in rupees shall be deemed to have repatriated the realized foreign exchange to India. In the present case, the payment in Indian rupees was received from foreign country through Deutsche Bank. Therefore, the said 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 manner of receipt of foreign exchange is provided under Notification No.FEMA 14/2000-RB, dated 3-5-2000 issued by Reserve Bank of India. Regulation No.3 of the said Notification is reproduced below : 3. Manner of Receipt in Forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant and the foreign reinsurer, and that the remittance that the amount due to the foreign reinsurers as also the brokerage due to the appellant and the balance due to the foreign reinsurer is remitted (and expressed so) in dollars. It is common ground that the entire transaction effected through the media of the Reserve Bank of India is expressed in foreign exchange and in effect the retention of the fee due to the appellant is dollars for the services rendered. This, according to us, is receipt of income in convertible foreign exchange. It seems to us that a "two way traffic", is unnecessary. To insist on a formal remittance to the foreign reinsures first and thereafter to receive the commission from the foreign reinsurer, will be an empty formality and a meaningless ritual, on the facts of this case. On a perusal of the nature of the transaction and in particular the statement of remittance filed in the Reserve Bank of India regarding the transaction filed in the Reserve Bank of India regarding the transaction, we are unable to uphold the view of the respondent that the income under the agreement is generated in India or that the amount is one not received in convertible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntre Pvt. Ltd. - 2015 - TIOL - 2570 - CESTAT - MUM., AGM India Advisors Pvt. Ltd. vs. CST, Bangalore - 2015 - TIOL - 4035 - CESTAT - MUM., Mount Kellett Management (I) Pvt. Ltd. vs. CST, Mumbai - I - 2015 (40) S.T.R. 165 (Tri. - Mumbai), Perk Com Software P. Ltd. vs. CST, Bangalore - 2017 - TIOL - 4035 - CESTAT - BANG. 9. We also note that in the guide to authorized dealers for compilation of the all returns, Reserve Bank of India stipulated method to be followed by the authorized dealers in reporting the transactions in nostro account. RBI stipulated as below :- "3. Every transaction which causes inflow of foreign exchange into India or outflow of foreign exchange from India and affects the position of foreign currency assets or liabilities, is required to be reported to RBI. As these transactions take place by way of debits and credits to the Nostro Accounts maintained by the ADs and Vostro accounts of non-resident banks maintained with the ADs, every debit and every credit to these accounts (and only every debit and every credit to these accounts) are required to be reported. [Exceptions to this rule are (i) sale /purchase of foreign currency notes and coins where sales (outf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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