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TMI Blog2023 (11) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... t no documents have been produced showing that foreign bank has charged any amount from the appellant directly. The facts as narrated in the impugned order clearly indicate that it is the ING Vyasa Bank who had paid the charges to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no service tax can be charged under Section 66A read with Rule 2(1)(2)(iv) of the Service Tax Rules, 1994. Thus, the issue involved in this case is no longer res-integra. The issue involved in the case is squarely covered by the above referred decisions and other decisions cited by the counsel for the appellant - there are no merits in the impugned orders - appeal allowed. - MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) AND MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Atul Gupta, Advocate Shri Prakhar Shukla, Advocate for the Appellant Shri Manish Raj, Authorised Representative for the Respondent ORDER These appeals filed by the appellant are directed against the order in appeals as detailed in the table below, of the Commissioner (Appeal) Custom and Central Excise Noida. By the impugned orders Commissioner (Appeal) has upheld the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... starting with the first day after due date till actual payment of the outstanding amount of service tax, U/s 76 of Finance Act, 1994 for the reasons discussed above. 4. I impose penalty of Rs 10,000/- (Rupees ten thousand only) upon the party, U/s 77 (c) (i) (ii) of Finance Act, 1994 for their failure to furnish information called by an officer in accordance with the provisions or rules made there under and their failure to produce documents called for by a Central Excise officer in accordance with the provisions of rules made there under. 5. I also impose mandatory equal penalty of Rs 3,19,058/- upon party U/s 78 of the Finance Act, 1994 (ibid) for will suppression of facts from Department with sole intent to evade service tax. 2.1 Appellant is engaged in manufacture of goods falling under Chapter 85 of First Schedule to the Central Excise Tariff Act, 1985. They are also providing/ receiving taxable services, such as management consultant, consulting engineer, market research agency, maintenance and repair, business auxiliary service, IPR, GTA, BSS, renting of immovable property and Information Technology and Software services. 2.2 Appellant export their goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 2.4 was adjudicated by the Additional Commissioner vide his order dated 26.09.2012, referred at A in para 1.2. Appeal filed by the appellant before Commissioner (Appeal) was dismissed as per the impugned order which is subject matter of Appeal No ST/58602/2013. 2.7 The demand cum notice to show cause mentioned in para 2.5 was adjudicated by the Assistant Commissioner vide his order dated 17.04.2014, referred at B in para 1.2. Appeal filed by the appellant before Commissioner (Appeal) was disposed as per the impugned order, modifying order in original to the extent of setting aside the penalty imposed under section 76, which is subject matter of Appeal No ST/51941/2015. 3.1 We have heard Shri Atul Gupta and Shri Prakhar Shukla Advocates for the appellant and Shri Manish raj, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsels submit that: The issue involved in the matter is no longer res-integra and has been decided in the following cases holding that no service tax is payable in respect of these payments made. Greenply Industries Ltd [2015 (12) TMI 80 CESTAT New Delhi. Clywin Knit Fashions [2017 (9) TMI 96 CESTA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be covered under Banking Other Financial Services . Further this office is of the strong opinion that for any service to be covered under reverse charge mechanism, the following two criteria are essential: (i) The services should be provided from an establishment based outside India. (ii) Recipient of such services should be in India. Since the service recipient (the appellant) is in India receiving services from an establishment (foreign bank/ intermediary bank) outside India, the services shall be taxable under reverse charge category under Section 66A of the Finance Act, 1994. For further clarity, I would try and elaborate the arrangements of transactions between the parties involved, namely the appellant, the Indian Bank and the Foreign Bank/ intermediary bank. The appellant in his appeal has submitted copies of the credit advices 7 corresponding invoices. I have gone through them other relevant papers submitted by the appellant. Evidently, the goods have been consigned to the foreign buyers as well as foreign bank. It shows that the appellant has engaged foreign bank in transaction related to export. The foreign bank (intermediary bank) remits the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement between banks in India and foreign banks for providing the said services. In fact, in a typical case of export from India, the exporter submits the documents to a bank in India and the said bank in turn forwards these documents to a foreign bank, which may be the banker of the importer in the foreign country or it may be the intermediary bank, which may in turn contact the banker of the importer in the foreign country. The said banker of the importer and/or the intermediary bank in the foreign country charges certain amounts and normally these charges are recovered by them by deducting from the total amount to be remitted to the Indian exporter. Further, in the case of import transactions, where the Bank in India, at the request of the importer, issues an LC, foreign bank charges are paid to the Foreign Bank. The foreign bank and/or the intermediary bank, as the case may be, deal only with the bank in India, and they only correspond and transact with the bank in India and not with the exporter. It is informed to us that since there is no formal agreement between the banks in India and foreign banks regarding the scope of their activity or the quantum of charges etc., all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of import transactions, if the foreign exporter does not bear the foreign bank charges, the same are recovered by the foreign bank from the bank in India. The combined reading of the relevant articles in the said two internationally accepted conventions, undoubtedly show that services are provided by the foreign bank to the bank in India. Therefore, as per the Service Tax law, as a recipient of service, the bank in India, is required to pay Service Tax under erstwhile Section 66A of the Finance Act prior to 1-7-2012 and under the provisions of Notification No. 30/2012-S.T., dated 20th June, 2012 after 1-7-2012. 5. The views of the banks that services provided by the foreign bank are received by the importer or exporter in India is not factually and legally correct because, for a person to be treated as recipient of service, it is necessary that he should know who the service provider is and there should be an agreement to provide service, which may be oral or written. In the present case, the importer and exporter does not even know who the service provider is, as they are not aware of the identity of the foreign banks which would be providing services. Exporter or im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to pay the service tax. The identical issue has come up before the Tribunal in the case of Greenply Industries Ltd. v. CCE, Jaipur (Final Order No. 50149/2014, dated 3-1-2014) where it was observed that:- 4. We find that no documents have been produced showing that foreign bank has charged any amount from the appellant directly. The facts as narrated in the impugned order clearly indicate that it is the ING Vyasa Bank who had paid the charges to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no service tax can be charged under Section 66A read with Rule 2(1)(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 his 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 appeal is allowed . 5. By following our earlier decision (supra), we allow the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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