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TMI Blog2018 (5) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of ‘Export of Service’ and the fact that Site Transfer activity fall in the definition of "Business Auxiliary Service", we are of the considered opinion that the impugned order rejecting the rebate claim on the ground of technical violation is not sustainable in law - appeal allowed - decided in favor of appellant. - ST/85918/2013-DB - A/86057/2018 - Dated:- 18-4-2018 - SHRI S.S GARG, JUDICIAL MEMBER AND SHRI C.J. MATHEW, TECHNICAL MEMBER Shri S.S. Gupta, CA, For the Appellant Shri R. Kapoor, Commissioner (AR), For the Respondent Per: S.S GARG The present appeal is directed against the impugned order dated 24.072012 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the appeal of the appellant and upheld the Order-in-Original. Briefly the facts of the present case are that the appellant is wholly owned subsidiary of Watson Laboratories Inc., USA. They are engaged in the business of manufacturing of drugs on behalf of Watson USA at various locations and for providing various services. The appellant is carrying out the function termed as site transfer activity for Watson USA. Watson USA is the holder of ANDA (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer amounts to production or processing of goods not amounting to manufacture, the same were taxable under the category of Business Auxiliary Service . As per the Export of Service Rules, 2005 the said service is classifiable under sub rule (iii) of rule 3B The appellant has provided the said services to the recipient viz Watson USA which is located outside India and the amount has also been received in convertible foreign currency. The said service has also been used outside India and therefore the appellant was eligible for rebate of service tax as per the provisions of Notification No. 11/2005 dated 19.04.2005. Accordingly the appellant filed application under Form ASTR-1 as prescribed under Notification No. 11/2005 ST dated 19.04.2005 along with all the requisite documents for rebate claim on 19.03, 2008 for ₹ 2,01,84,195/- (Rupees Two Crore One Lakh Eighty Four Thousand One Hundred and Ninety Five only), Both the authorities below have rejected the rebate claim on the following grounds: The appellant has conducted R D work and therefore service is appropriately classifiable under the category of 'Technical Testing or Analysis Services'. Further the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the production the exhibit batches are not in accordance with the parameters, then the entire production process is required to be repeated with certain modifications. The production activities are repeated numerous times until the final product confirms to the required parameters. Therefore the activity Site Transfer cannot be regarded as testing. He further submitted that normally testing is done for existing products, However the activities of the appellant are not limited to the evaluation of any goods supplied but involve ascertaining the correctness of the manufacturing facility and therefore the said activities cannot be treated as a testing service. The approval report received from US FDA also substantiated this fact. The learned counsel further submitted that the nature of services under Site Transfer Activity involved host of activities as discussed above, Therefore it is his submission that the appellants are correctly taxable under the category of Business Auxiliary Service as the essential characteristic and the economic utility of the service is the process of production of the goods and not by the activity of testing. It is his submission that taking into consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch and Development still the benefit of rebate of service tax paid on the same is available to the appellant. In support of this submission, appellant relied upon the following decisions: a. CCE, Bhopal Vs. Mahakoshal Potteries - 2005 (183) E.L.T. 289 (Tri. -Del.) b. Phoel Industries - 2005 (183) ESL. T. 192 (Tri, -Del.) 3.3, The consultant further submitted that the rebate claim cannot be rejected on the ground of procedural lapses such as non-payment under correct category, filing of ST-3 return under another category and not mentioning export under claim for rebate as there is substitution complied and the procedural lapses are condonable. In support of this submission, he relied upon the various decisions: a. M/S. Madhav Steel vs. UOI - 2010-TIOL-575-HC-CX b. Mangalore Chemicals Fertilizers Ltd - 1991 (55) E.L.T. 437 c. Formika India V. Collector of Central/ Excise - 1995 (77) EL, T. 511 d. Coftab Exports, - 2006 (205) E.L.T. 1027 (G.O.I) 4. On the other hand the learned AR defended the impugned order and submitted that the impugned order has rightly rejected the rebate claim because the appellants themselves has classified their s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2010 (18) S.T.R. 439 (Tri.-Ahmd.) in para 10 Tribunal has observed as under: 10. From the above provision it is clear that the said services came under Rule 3(1)(2) (sic) of the Rules. It is very much clear that the performance of the service is not complete until the testing and analysis report is delivered to its client. In the present case, when such reports were delivered to the clients outside India it amounts to taxable service partly performed outside India. The performance of testing and analysing has no value unless and until it is delivered to its client and the service is to be complete when such report is delivered to its client. Thus, delivery of report to its client is an essential part of the service report was delivered outside India and same was used outside India. This is not the disputed fact. We hold that the respondent satisfied the conditions of Rule 3(2) and accordingly the respondents are eligible for the exemption under Notification No. 11/2007-S.T. dated 1-3-2007. We do not find any force in the argument made by the learned DR. With this observation, the impugned order is upheld and the appeal filed by the Revenue is rejected. Stay petition is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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