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TMI Blog2022 (12) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... t (AR) for the Respondent ORDER This appeal has been filed by M/s Dishman Pharmaceuticals against the demand of service tax under the category of Banking and other Financial Services on charges paid by them in respect of their foreign currency transaction on reverse charge basis. 2. Learned counsel for the appellant pointed out that the appellant is manufacturer of bulk drugs. In the process of realization of export proceeds from buyers use services of foreign bank as well as Indian Bank. In this process some commission is paid to Foreign Bank by Indian Bank. The Indian Bank charge the reimbursement of the said commission from the appellant. He pointed out that s revenue is seeking to tax this charges paid by the appellant to the Indian Bank for the Services provided by the Foreign Bank on reverse charge basis. Learned counsel pointed out that this issue has been examined in the following judgments : Raj Petro Specialties Pvt Ltd Vs. CCE - 2018 (8) TMI 1179- CESTAT Ahmedabad Cylwin Knit Fashions Others Vs, CCE - 2017 (9) TMI 96 CESTAT Chennai Greenply Industries Ltd Vs. CCE - 2018 (38) STR 605 ( Tri. Delhi) 3. Learned AR relies on the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994. (2) I appropriate an amount of the amount of ₹ 6,27,335/- alsonwith interest of ₹ 1,54,786/- already paid by M/s Raj Petro Specialties Pvt. Ltd, Survey No. 146/2/3, Madhuban Dam, Road, Village-Karad, Silvassa against the demand at Sr. No. (1) Above and order to pay the remaining amount of service tax liability forthewith. (3) M/s Raj Petro Specialties Pvt. Ltd, Survey No. 146/2/3, Madhuban Dam Road Village Karad, Silvassa shall pay the interest at the appropriate rates on the Service Tax demanded at Sr.No (1) above under Section 75 of Finance Act, 1994. (4) I impose penalty of ₹ 2.22,99,2970/- [Rupees Two Crore Twenty Two Lakhs Ninty Nine Thousand Two Hundred Seventy only] on M/s Raj Petro Specialityes Pvt. Ltd, Survey No. 146/2/3 Madhuban Dam Road, Village Karad, Silvassa, under Section 78 of Finance Act, 1994. However, if the above amounts of service tax are along with interest within 30 days of receipt of this order, the said penalty imposed shall be treated as 25% penalty should also be paid amount of service tax provided that the amount of said 25% penalty should also be paid within 30 days of receipt of the order in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries Ltd. Vs. CCE, Jaipur-I 2015 (38) STR 605 (Tri.-Del.) Raymond Ltd. Vs. CST, Mumbai-II 2018-TIOL-1250-CESTAT-MUM. M/s Dileep Industries Pvt. Ltd Vs. CCE, Jaipur 2017-TIOL-3755-CESTAT-DEL. 3. Sh. J. Nagori Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that the service charges paid by the appellant, even though to the Indian Banks, but it is towards the service provided by the Foreign Banks, therefore, the appellant is not liable to pay service tax under Reverse Charge Mechanism. 4. We have carefully considered the submission made by both the sides and perused the records. We find that on the very same issue the Board has clarified in the Circular dated 10.02.2014 as referred by the Ld. Counsel in the said Circular, the relevant para of the Circular is reproduced below: 4. In order to understand the obligations of the foreign banks, the banks in India and importer/exporter, the said URC 522/UCP 600 were examined. Article Nos. 4, 8, 10, 11, 16, 21, 26 of URC 522 and Article Nos. 3, 4, 7, 8, 9, 13, 37 of UCP 600, read with other relevant Articles in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, in view of the above mentioned factual position and also in view of the various articles of URC 522/UCP 600, it is clear that services are provided by the foreign bank to the bank in India. Further, Tribunals have also prima facie held that in such cases, services are provided by the foreign bank to the Indian bank and not to the Indian Exporter. [M/s. Gracure Pharmaceuticals Ltd. v. Commissioner of Central Excise, Jaipur-I - 2013 (32) S.T.R. 249 (Tri.-Del.), M/s. Gujarat Ambuja Exports Ltd. v. Commissioner of Service Tax, Ahmedabad - 2013 (30) S.T.R. 667 (Tri.-Ahmd.)]. 6. It is therefore clarified that, in cases where the foreign banks are recovering certain charges for processing of import/export documents regarding remittance of foreign currency, the banks in India would be treated as recipient of service and therefore required to pay Service Tax. From the above Circular it is abundantly clear that when the Indian Banks are collecting charges including the charges of Foreign Banks toward import and export of the goods of their client. In such case, as regard the service tax liability under Reverse Charge Mechanism, the Indian Banks are recipient of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no Service Tax can be charged from them under Section 66A read with Rule 2(l)(2)(iv) of the Service Tax Rules, 1994. Moreover, we also find that in Appellant s own case for the previous period similar order had been passed by the original adjudicating authority and on appeal being filed against the same, the Commissioner (Appeals), vide order-in-appeal dated 12-11-2008 has set aside that order and as per the appellant s counsel, no appeal has been filed against that order. In view of this, the impugned order is not sustainable. The same is set aside and the appeal is allowed. 5. As per above judgment it was held that when the assessee is not directly making the payment to the Foreign Banker towards any service provided by the said Foreign Banker to the Indian Bank, the assessee is not liable to pay service tax. With this settled position, we hold that any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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