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TMI Blog2024 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... I 259 - CESTAT HYDERABAD] . Having accepted in SCN OIO, that payments are received and adjusted in running account against the payables in foreign currency to the same foreign party outside India, there are no reason to deviate from the settled law, that set off is sufficient fulfilment of the condition of receipt in convertible foreign exchange. In absence of any other contradiction alleged in the SCN/OIO, the demand raised under BAS category for the subject period does not sustain. Even for the period after 01.07.2012, the above legal position holds good and cannot be made subject to service tax more so when Section 66B, ibid provides no levy for the services rendered outside India. Demand made under renting category - HELD THAT:- Perusal of the agreements and related documents makes it clear that transaction is in the nature of cold storage facility not mere renting. Accordingly, the demand does not sustain under renting category. Demand made under the category of MMRS on services rendered to Navy / coastal guards - HELD THAT:- The Appellant admittedly paid service tax when provided to other service recipient, and claimed exemption when provided to Nav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for M/s. Mercury, in India carrying the business in following three ways: a. Purchase and sale booked in the books of appellant: Based on a specific purchase order from customer(s) in India, the appellant raises specific order on Mercury for purchase, and the goods are supplied to the customer in India. In such cases both purchases and sales are booked in the accounts of appellant and subsequently M/s. Mercury also issues a credit note to the appellant crediting the post sale margin/discount. b. Direct sale by Mercury and only margin booked in the books of the appellant: In these cases, the customers of the appellants raise a direct purchase order on M/s. Mercury and the products are shipped directly to such customers, which is mostly in the cases where the clients have customs concessions/exemptions for direct import. Appellant being exclusive distributor for the Territory of India, is entitled for margin for this direct shipment as well (price difference between sale price in India and distributor price). c. Warranty Repairs : The appellant also undertakes free warranty repairs for the sale of products of Mercury on behalf of Mercury, for a period of 1 year. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013-14 3,77,792 3,42,237 Total 1,76,27,677 1,55,18,638 6. Assailing the impugned order, Ld. Counsel Shri Venkata Prasad for the Appellant urges as follows. Cold storage rent under the category of Renting of immovable property : 7. The demand under this category was confirmed in impugned OIO for not giving the documentary evidence, which were in fact submitted in appeal proceedings. As per the agreement, Appellant has taken the responsibility of providing cold storage facility, its maintenance including temperature and security of the facility. Hence, it is clear case of cold storage facility service which do not fall under the category of renting of immovable property . The observation in the impugned order that sea products is not agriculture but a pisciculture is irrelevant in the present case, in absence of such proposal in the SCN and also considering the ordinary meaning of the term agriculture . Agriculture as defined in Section 65B(3) includes rearing of all forms of animals. Management, Maintenance Repair service (t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is the sole distributor of the M/s Mercury Marine Singapore Pvt Ltd., which is clear from first page of Distributor agreement and also, from Para 3.2; Para 3.1 and 4.1 of the Distributor agreement. Among various activities this appellant purchases and sells the products of M/s Mercury Marine Singapore Pvt Ltd. Appellant gets the products at a particular price and pays the Customs duties thereon and later M/s Mercury Marine Singapore Pvt Ltd., allows additional discount depending on the final sale price to the Indian customer. The purchase and sale are accounted and applicable VAT/CST was remitted. The additional discount was given by the Manufacturer qua M/s. Mercury Marine Singapore Pvt Ltd., by sending credit note after the conclusion of sale (popularly known as post sale discount). The additional discount was accounted as Discount - dealer margin ). 10. He contended that, the appellant in the first instance could have got all his trade margin/discount, but to maintain the actual price of the goods and to maintain competitiveness by giving post sale discounts, the mechanism of post sale discount was adopted. Sample copies of purchase invoice, sale invoice, bill of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eligible for concession/exemption in customs and to facilitate the customs clearance smoothly. Accordingly, the invoice is raised by Mercury on the instructions of the appellant, directly on the customer, and post sale, the margin is credited by Mercury by way of credit note to the appellant. 13. The impugned order denied the benefit of export of service, on the only ground that there is no receipt of foreign exchange. It is settled law that account adjustment made, itself is considered as payment received in convertible foreign currency, therefore non- realization of the convertible foreign currency does not arise at all. He relied on a. Reserve Bank of India vide RBI/2011-12/264 A.P. (DIR Series) Circular No. 47 which permits set-off of export receivables against import payables. b. RBI Master Circular 14/2013-14 dated 01.07.2013 vide Para No. C 26(B) which clarifies netting is allowed. c. OIA No. TVM-EXCUS-000-APP-172-2016-17 dated 22.11.2016 in case of erstwhile Proprietorship firm (M/s. Esmario Export Enterprises). d. J.B. Boda - 1997 (223) ITR 271 (SC) e. Commr. Of C. Ex., Jaipur-1 Vs. National Engineering Industries Ltd. 2019 (30) G.S.T.L. 211 (Raj.) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined u/s 65(19)(vi) read with 65(105)(zzb)- (vi) Provision of service on behalf of client; or . (zzb) to a client, by any person in relation to business auxiliary service; The present activity is covered under export of service and mere non receipt of convertible foreign exchange cannot disentitle the appellant to claim the benefit of exports as submitted supra. Assuming the above activity is not an export, it is a composite contract and not liable under MMRS category. He also sought benefit of Notification No.12/2003-ST dated 20.06.2003. 18. For the period after July 2012:Service of warranty was provided on behalf of Mercury to the beneficiary in India and no amount is being charged from service beneficiaries. Both Mercury and this appellant have privity of contract. As per Rule 3 of POPS Rules, 2012 place of provision will be the location of the service recipient i.e., on whose account the service is provided i.e., Mercury, thus activity being Export. Reliance is placed on Blue Star Ltd. v. Commissioner 2016 (46) S.T.R. 59 (Tribunal); Samsung India Electronics Pvt. Ltd. Vs. Commissioner of C. Ex., Noida 2016 (42) S.T.R. 831 (Tri. - Del.). Exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entity and Proprietary Concern are two different legal entities having different PAN No s and different Service Tax registrations. That Section 73(1) requires that notice can be served on the person chargeable with the service tax . Accordingly, the person chargeable to service tax was the Proprietary concern and not this appellant. It is to further submit that Section 87 of the Finance Act, 1994 provides the power of recovery from the successor, and did not deal with adjudication/chargeability/levy of service tax of service tax dues of predecessor from the successor. Reliance is placed on a. Freezair India (P) Ltd. v. Commissioner 2014 (304) E.L.T. 360 (Del.) dealt with similar facts circumstances (Para 28). The appeal of the department is dismissed by the Hon ble SC in C.A. No. 006949/2015 vide its order dated 06.02.2019. b. Shabina Abraham v. Collector 2015 (322) E.L.T. 372 (S.C.) c. Commissioner v. Dhiren Gandhi 2012 (281) E.L.T. 64 (Kar.) d. Commissioner v. Press Fab Precision Components Pvt. Ltd. 2007 (207) E.L.T. 207 (Kar.) 24. On the other hand, Ld. DR reiterated the findings of the impugned order and contended that demand was mainly due to non-submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and invoices clearly evidences that services are rendered to Navy/coastal guards only and rightly eligible for the exemption from service tax during the subject period. When the demands were raised after detailed audit of the records, it is inherent that department was in possession of the related work orders, invoices, ledgers and bank statements etc. Viewing from that background, it is incorrect to say that Appellant did not submit the supporting documents for the exemptions claimed. 28. So far the demands made under MMRS category for warranty claims, the main plank of argument is that Appellant being distributor of M/s. Mercury, rendered warranty services on behalf of M/s. Mercury and hence it is classifiable under BAS not under MMRS . In any case, warranty claims were raised for the composite works involving service material portion, the demand cannot be made under service category of MMRS . We find force in both arguments of the Appellant and accordingly set aside the demands. 29. On the issue of limitation, we find strong force in the submissions of the Appellant, that the facts were known to the department as evident from the previous SCN s. The issues are su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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