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TMI Blog2017 (10) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... D.B. Central/Excise Appeal No. 9/2012 - - - Dated:- 6-10-2017 - JUSTICE K.S. JHAVERI AND JUSTICE VIJAY KUMAR VYAS, JJ. For The Appellant (s) : Mr. Kinshuk Jain For The Respondent (s) : Mr. Priyesh Kasliwal for Mr. P.K. Kasliwal And Mr. Mahesh Sharma Judgment 1. In all these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the tribunal whereby tribunal has allowed the appeal preferred by the assessee. 3. This court while admitting the appeals framed following substantial question of law:- 3.1 Appeal No.7/2009 admitted on 27.7.2011 Whether as per the facts and circumstances of the case, the learned Tribunal is correct in law in deciding the issue in favour of the assessee regarding export of services even after the assessee had not received the payment on convertible foreign currency in contravention to Rule 3(1) (b) of the Export of Service Rules, 2005? 3.2 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays that portion of price which represents commission, directly to assessee in that case NEI do not get commission from seller in foreign currency but gets from the Indian buyer in Indian rupee. 4.2 It is therefore, very clear that the Commission to NEI is practically paid by the Indian buyer either directly or through the route of foreign seller. The commission received by NEI in foreign currency from the foreign seller is from foreign currency remitted by the Indian buyer. The orders for import are procurred in India and goods against such orders are imported into India and the portion of commission in foreign currency gets remitted from India which is received back in India. Thus the cycle of service starts from India and finishes in India. In other words it is the same foreign currency remitted out of India is rotating back to India. Such a service cannot qualify to be the export of service for exemption from service tax. 5. He was required to receive a commission of 5% where the term of agreement which has been reproduced by the tribunal which reads as under:- Agency Commission-5% i.e. USD 60433.73 shall be paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (i) of this rule except when the provision of taxable services specified in subclauses (d), (zzzc), (zzzr) and (zzzzm) does not relate to immovable property; and ( c) those specified in clause (ii) of this rule, when provided in relation to business or commerce, be provision of such services to a recipient located outside India and when provided otherwise, be provision of such services to a recipient located outside India at the time of provision of such service: Provided that where such recipient has commercial establishment or any office relating thereto, in India, such taxable services provided shall be treated as export of service only when order for provision of such service is made from any of his commercial establishment or office located outside India: Provided further that where the taxable service referred to in subclause (zzzzj) of clause (105) of section 65 of the Act is provided to a recipient located outside India, then such taxable service shall be treated as export of taxable service subject to the condition that the tangible goods supplied for use are located outside India during the period of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation must be given effect to. By way of an interpretation or construction, the Court cannot add or substitute any word while construing the notification either to grant or deny exemption. The Courts are also not expected to stretch the words of notification or add or subtract words in order to grant or deny the benefit of exemption notification. In Bombay Chemicals (P) Ltd. vs. CCE - (1995) Supp (2) SCC 646, a three Judge Bench of this Court held that an exemption notification should be construed strictly, but once an article is found to satisfy the test by which it falls in the notification, then it cannot be excluded from it by construing such notification narrowly. 9. He further contended that even assuming that first condition in clause c is fulfilled, the payment was never received in foreign exchange and in that view of the matter the view taken by the tribunal is required to be considered very strictly. 10. However, counsel for the respondent contended relying upon decision of Mumbai Tribunal in Pam Pharma Allied Machinery Company Pvt. Ltd. vs. CST Mumbai, 2015 (37) STR 958 decided on 20.10.2014 where the tribunal has observed as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice Tax of ₹ 17,88,542/-, the appellant had actually paid, as per records submitted, only ₹ 16,53,240/- under four challans on 6- 2-2007. The differential amount of ₹ 1,35,302/- (17,88,542 - 16,53,240), which pertains to their invoice No. 7/2006-07, had not been paid by them at all. For the remaining two invoices, 3/2006-07 and 6/2006-07, issued by them, the Service Tax works out to ₹ 8,43,035/- (8,09,881 + 33,154) for which the appellant had respectively received payments of ₹ 66,16,676/- on 6-1-2007 and ₹ 2,70,883/- on 22-4-2006, referred in the impugned order, vide para 3(iii) above. But the appellant have not produced copy of FIRC certificate for ₹ 66,16,676/- and in respect of all these payments, the services were not delivered outside India and used outside India, and thereby not satisfying the conditions for being treated as export, as laid down under Rule 3(2)(a) 85(b) of the Export of Services Rules, 2005, vide para 10 above. ( ii) However, the appellant are eligible for refund of the balance amount of ₹ 8,10,205/- (16,53,240 - 8,43,035) paid by them under above referred challans on 6-6-2007, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of service when the following conditions are satisfied, namely:- ( a) such service is delivered outside India and used outside India; and ( b) payment of such service provided outside India is received by the service provides in convertible foreign exchange . 7. In order to avail the benefit of Rule 4, the assessee has to fulfil the conditions of Rule 3(2) of the said Rules. I agree with the submission of the Ld. DR that the purpose of Rule 3(2) of the said Rules is to earn convertible foreign exchange and then benefit of exemption of service tax would be extended to the assessee. In the present case, it is revealed from the Purchase Order that payment would be made to the appellant by convertible foreign exchange from USA company through Indian Railways, who paid in Indian Rupees as the same amount of foreign exchange was not released by them. It is well settled that machinery of a statue should be interpreted so as to promote the object and purpose of the scheme. Further, once the legislative intention is properly understood, then the case should be decided in fulfilment with the legislative intention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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