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TMI Blog2013 (2) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Appellate Tribunal remanding the case back to the adjudicating authority for de novo adjudication with the direction that Convergys India case (supra) will not be applicable if the Appellant has not filed the declaration under Notification No.12/2005 dated 19.04.2005 or has filed after completion of export is correct in law in as much as the aforesaid direction is based on erroneous interpretation of the decision of Convergys India (supra)?" 3. In respect of the services provided by the appellant, it was liable to pay service tax under the relevant provisions of Chapter V of the Finance Act, 1994. The Export of Service Rules, 2005 were framed by notification No.9/2005-ST on 03.03.2005. Rule 5 of the said Rules provided for "Rebate of service tax". It provided as follows: - "5. Rebate of service tax - Where any taxable service is exported, the Central Government may, by notification, grant rebate of service tax paid on such taxable service or service tax or duty paid on input services or inputs, as the case may be, used in providing such taxable service and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually required to be used in providing taxable service to be exported. 3.2 Verification of declaration - The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall verify the correctness of the declaration filed prior to such export of taxable service, if necessary, by calling for any relevant information or samples of inputs and if after such verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise is satisfied that there is no likelihood of evasion of duty, or as the case may be, service tax and cess, he may accept the declaration. 3.3 Procurement of input materials and receipt of input services. - The provider of taxable service shall, - (i) obtain the inputs required for use in providing taxable service to be exported, directly from a registered factory or from a dealer registered for the purposes of the CENVAT Credit Rules, 2004 accompanied by invoices issued under the Central Excise Rules, 2002; (ii) receive the input services required for use in providing taxable service to be exported and an invoice, a bill or, as the case may be, a challan issued under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f) additional duty of excise as levied under section 157 of the Finance Act, 2003 (32 of 2003); (g) Education Cess on excisable goods as levied under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004); and (h) the additional duty of excise leviable under clause 85 of the Finance Bill, 2005, which has the force of law by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931)." It would appear that there is no prescribed form of declaration; however, Form ASTR-2 has been prescribed in the notification and the application for filing a claim for rebate of the duty paid on inputs or service tax paid on input services shall be in that form. 4. The appellant lodged two claims claiming rebate in respect of service tax paid on input services. In respect of the services rendered by the appellant between 16.03.2005 and 30.09.2005, the claim for rebate was filed on 15.12.2005 and in respect of the services rendered between 01.10.2005 and 31.12.2005, the claim was filed on 17.03.2006. The input services were mainly the night transportation services, recruitment services, bank charges etc. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual figures given in the rebate claim forms with the documentary evidence that would then be available. It was submitted that since there was substantial compliance with the law and no fault or irregularity having been found in the details furnished in the rebate claims, the rejection of the rebate claims would not be justified. 6. The above submissions of the appellant did not find favour with the Deputy Commissioner, Service Tax, Delhi-II. He passed separate orders- in-original in respect of the two claims on 28.02.2007. He held that since the appellant had not followed the procedure prescribed for obtaining the rebate as laid down in Notification No.12 (supra), it was not entitled to the same. He accordingly rejected the rebate claims which amounted to Rs. 1,98,24,267 and Rs. 1,45,03,718 in respect of the two periods mentioned earlier. 7. Aggrieved by the above orders-in-original passed by the Dy. Commissioner, Service Tax, the appellant preferred appeals to the Commissioner of Central Excise (Appeals), New Delhi who dismissed the appeals by a common order dated 31.10.2007. In substance he agreed with the view taken by the Dy. Commissioner, Service Tax, Delhi-II; he al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, set aside and the matter is remanded to the original adjudicating authority for de novo adjudication of the matter in terms of our above directions. The appeal is disposed off by way of remand." Towards the end of the earlier paragraph, though, the Tribunal had expressed a clear opinion that "The condition prescribed in para 3.1 is for the purpose of preventing the evasion of duty by misuse of this facility and, therefore, if this condition, though a procedural condition, is violated, the rebate would not be admissible". 9. The question for consideration is whether the filing of the declaration in terms of paragraph 3 of the notification No.12 (supra) on 05.02.2007, after the date of the export of the services, amounted to non-compliance with the condition disentitling the appellant from the rebate claims. The case of the appellant is that given the nature of services rendered by it, it is impossible to give the description, value and amount of the input services used in the services that are exported and that in any case, having regard to the object and purpose of the condition which is to prevent misuse of the rebate claim, there cannot be any objection if the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r example could be of a person in USA wanting to book an international air-ticket from an airline; his queries over the phone will be answered by the employee of the Indian call centre, sitting in some place in India. The American manufacturer of the washing machine or the American airline company is the source of revenue for the Indian call centre or BPO centre. 11. Apart from the telephone and computer network, every call centre requires an employee-strength to attend to the calls. First they have to be recruited and then they have to be trained in following and speaking in different accents peculiar to different countries. This involves costs of recruitment and training. Once recruited, the staff has to be brought to the call centres. This involves costs on transportation and since most of the work, as stated earlier, is performed from late evening to the early hours in the next morning, the transportation of the staff is at night and that is the reason why the appellant calls it "night transportation services". When remittances are received from the client-corporations abroad through banks, there are bank charges. All these costs when charged to the appellant also involve ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition to value and specify the amount of service tax/cess payable on the input services actually required to be used in providing the exported service. An estimate is ruled out by the use of the word "actually required"; and unless what was actually required is known, it is impossible to value and specify the amount of service tax or cess payable on the input services. That will be known only when the bill or invoice for the input-services is received by the appellant. The bill or invoice is received after the calls are attended to. Thus, it seems to us that in the very nature of things, and considering the peculiar features of the appellant's business, it is difficult to comply with the requirement "prior" to the date of the export. 13. Let us take the case of a manufacturer-exporter of physical products, say, bicycles. The point of time when the export of bicycles is made is clearly demarcated and known. The export order is executed; the bicycles are manufactured and packed. They are ready for export. The process of export commences with the filing of the shipping bill. The exporter can now comply with the procedure laid down in paragraph 3 of the notification prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined, and if those particulars are not found to be incorrect or false or unauthenticated or unsupported by documentary evidence, we do not really see how it can be said that the object and purpose of the requirement stand frustrated. In the present case, no irregularity or inaccuracy or falsity in the figures furnished by the appellant both on 05.02.2007 and in the rebate claims has been alleged. Moreover, it appears to us somewhat strange that none of the authorities below has demonstrated as to how the appellant could have complied with the requirement prior to the date of the export of the IT-enabled services. 15. We clarify that our decision rests on the facts of the case and on the peculiar nature of the business of the appellant and that we have not decided the broader question whether the requirement of paragraph 3 of the Notification No.12/2005-ST dated 19.04.2005 is merely procedural and hence directory or is substantive and hence mandatory. 16. In the view we have taken, it is deemed not necessary to refer to the authorities cited on behalf of the appellant. 17. We accordingly allow the appeal and direct the respondents to allow the rebate claims. There shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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