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TMI Blog2024 (12) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... herein Chennai Tribunal has allowed 22 appeals of the exporters by setting aside the demand of service tax. Further, it is found that the service of remittance by a foreign bank to Indian bank of the exporter is not liable to service tax at the hands of the exporter. In this regard, reference made to the decision of Chennai Bench of the Tribunal in the case of M/s. SKM EGG Products Export [ 2023 (3) TMI 1384 - CESTAT CHENNAI] wherein the Tribunal after relying upon the decision of M/s. Dileep Industries Pvt Ltd vs. CCE, Jaipur [ 2017 (10) TMI 1231 - CESTAT NEW DELHI] , has observed ' From the record, it appears that while exporting their goods, they lodged their bills for collection to the Indian Bankers who in turn send the same to the foreign banks. The foreign banks while remitting the money to the Indian Bank, deduct their charges for collection of bills which in turn are charged by the Indian Banks from the appellants. When it is so, then the appellant are not entitled to pay the service tax.' The demand raised cannot sustain and requires to be set aside - Since the demand itself does not sustain, the invocation of extended period and imposition of penalties does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Being, aggrieved, the appellant has filed the present appeal before this forum. 3. The main contentions of the appellant as cullet out from the Grounds of Appeal are summarized below: - i. That there was no service provider and service receiver relationship between AFL and the Appellant and hence the allegation of appellants having received services from AFL was devoid of merits and not sustainable. ii. That the value of demand alleged on the payments made to AFL represented the actual trade discount on the price of the goods, involving pure sale and there was no service element involved and hence the services received by the overseas buyer of the Appellant could not form part of service tax liability. iii. With regard to demand of service tax on amount charged by banks, it was contended that the foreign banks collect export proceeds and in turn remit the proceeds to the banks located within India and as the entire transaction was within India only and as the service providing banks were within taxable territory, demands are not sustainable. iv. It was contended that the foreign banks acting on instructions from overseas buyer remit export proceeds to the Appellant and that act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the department and hence there was no wilful suppression of facts with an intent to evade payment of service tax. Reliance in this regard was placed on the following judgements: - (a) Hindalco Industries Ltd. Vs. CCE [2003 (161) ELT 346 (Tri.-Del.)] (b) Indian Oil Corporation Ltd. Vs. CCE, Kolkata [2005 (191) ELT 996 (Tri.-Kolkata)] (c) Pushpam Pharmaceuticals Vs. Collector [1995 (78) ELT 401 (SC)] (d) Apex Court decision in Padmini Products and Chempar Drugs (e) Tamilnadu Housing Board Vs. Commissioner of Central Excise [1994 (74) ELT 9 (SC)] 4. The Ld. Counsel for the Appellant Mr. M.N. Bharathi reiterated the grounds of appeal and also submitted that the issue is no more res integra in view of the following decisions on the identical issue. a. AKR Textiles and Others Versus Commissioner [2020 (10) TMI 479 CESTAT CHENNAI] b.Eastman Exports Global Clothing Private Ltd. [2024 (5) TMI 417 CESTAT CHENNAI] c. Carona Knitwear Versus Commissioner of GST and Central Excise, Coimbatore [2024 (6) TMI 624 - CESTAT CHENNAI] It was submitted that the entire demand was based on erroneous presumptions and contrived interpretation and hence stressed that the demand confirmed in the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms, Central Excise Service Tax, Coimbatore [final order no. 41819- 41832/2017 dated 29th August 2017], to be unsustainable in law. On perusal of the said order at '6. The case of the department is that when the foreign bank deducts the charges towards transfer of foreign exchange to the Indian bank, since the same Is deducted from the sale proceeds, it is a service rendered by the foreign bank to the appellants and that there is a service provider and service recipient relationship between the foreignbank and the appellant. It is to be noted that the foreign bank deducts such charges and transfers the foreign exchange to the Indian bank from where the appellant receives the money. The foreign bank in which the overseas buyer deposits the sale proceeds is chosen by the foreign buyer and not by the appellant, who is situated in India. By no stretch of imagination can such foreign bank be considered as a service provider for the appellant who in most cases would not even be aware of the identity of such foreign bank. The act of deduction of an amount as charges for transfer of the foreign exchange to the Indian bank from thesale proceeds of the appellant is only a facility for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7. We have to say that the decision relied upon by the Id. AR in the case of Lupin Ltd. (supra), was rendered on 12.2,2013 which is much before the clarification issued by the Trade Notice and also the decision in the case of Greenply. Industries (supra). Therefore, following the judicial discipline in the case of Greenply Industries (supra), and the facts being identical, the levy of service tax is unsustainable. The impugned orders are set aside and the appeals are allowed with consequential relief, if any.' we find that the issue is no longer res integra and that demand pertaining to 'other financial services' has been erroneously confirmed in the orders impugned before us. 6. On the amounts retained by M/s Amsco Finance Ltd, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial service rendered by M/s Amsco Finance Ltd., and they are person who is making the payment of service fee for the service received. M/s C A is neither receiving the service of M/s Amsco Finance Ltd nor paying the payment. It is M/s. AKR Textile (who are having a permanent establishment in the taxable territory) who are making the payment actually, hence, they are liable to pay service tax under Section 68 (2) of the Finance Act, 1994 for the receipt of service from the non-taxable territory to the taxable territory i.e. in India. Further it Is held that it is not the mere transfer of money is involved the issue to attract the negative list. What M/s. AKR Textile is receiving the comprehensive Banking and Financial Service with effect from 1.7.2012 i.e. as stated earlier processing of export Invoices, making the prompt payment through assistance of customized portal created with the help of foreign banks etc. Hence, it is held that it is not the mere transfer of money to attract the exemption but the comprehensive Banking and Financial Service is involved in the issue in hand. Hence, it is held that M/s. AKR Textile are liable to pay service tax Under Section 68 (2) of the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to. 8. It appears to us that, while 'consideration' is passed from appellants to the overseas entity, it is the overseas customer who is, contractually, bound to repatriate value of exports to the appellant and, instead of doing so, authorises M/s Amsco Finance Ltd as delegate to effect that responsibility. It is not the contractual responsibility of the appellants to collect the dues and, therefore, by no stretch can it be held that the mediation of M/s Amsco Finance Ltd is a substitution for the task that would, otherwise, fall to the appellants. If at all, the Hong Kong entity is an 'intermediary' within the meaning assigned in Place of Provision of Service Rules, 2012 to render the service, it has been performed in Hong Kong and, thus, not in the taxable territory. The demand for the period after 1 st July 2012 also fails. Consequently, the liability for allegedly having received services provided by M/s Amsco Finance Ltd also does not sustain. 9. With the findings supra pertaining to the appeal of M/s AKR Textiles applicable equally to the several other appeals, the demands impugned therein also do not sustain. 10. Accordingly, all the orders impugned befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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