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2015 (9) TMI 732 - CESTAT CHENNAI

2015 (9) TMI 732 - CESTAT CHENNAI - TMI - Demand of service tax - Reverse charge mechanism - commission paid to the overseas agents sale of yarn - whether the term "textile processing" covers yarn - benefit of Notification No.14/2004-ST, dated 10.09.2004 - Held that:- the situation is revenue neutral exercise since service tax as demanded would become input service and eligible for cenvat credit - Decision in the case of Texyard International, Sree Angalamman Exports, Atlas Export Enterprises, M .....

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r Nos.40733-40755/2015 - Dated:- 24-6-2015 - Shri R. Periasami, Technical Member and Shri Pradeep Kumar Choudhary, Judicial Member , JJ. For the Petitioner : S/Shri M. Kannan, ShriS.Durairaj, Advs. For the Respondent : Shri R. Subramaniyan, AC (AR) ST/176/2011, ST/676/2011, ST/40173/2013, ST/582/ 2010, ST/588/ 2010 ORDER Per R. Periasami All the appeals are taken up together as the issue are of common nature. 2. The issue relates to the demand of service tax under reverse charge mechanism. The a .....

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pheld by Commissioner (Appeals) under respective Order-in-Appeals as appended in the above table. The appellants claimed the benefit of Notification No.14/2004-ST, dated 10.09.2004 and the same was denied by the adjudicating authorities and lower appellate authorities. 4. The learned counsels representing appellants submit that this Tribunal has already decided the issue vide Final Order Nos.41051-41055/2014, dated 31.12.2014 in the case of Texyard International & four Ors. and Final Order N .....

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e of yarn and the textile processing does not cover yarn. 6. After hearing both sides, we find that on an identical issue this tribunal vide its Final Order Nos.41051 41055/2014, dated 31.12.2014 at paragraphs 6.1 to 8 of the order already decided the issues in favour of the appellants. The same is reproduced below:- 6.1 We have carefully considered the submissions of both sides and also examined the records.The assessees filed appeals contesting the service tax demanded under reverse charge on .....

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appellants are manufacturer-exporters and they manufacture textile made ups and export to overseas.They have engaged overseas agents and paid commission for procurement of export orders and the commission agency service is covered under the Business Auxiliary Service.The appellants claimed the exemption under Notification No.14/2004-ST dt.10.9.2004 as applicable during the relevant period before appellate authority and he rejected their plea on the ground that the said exemption is applicable to .....

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eby exempts taxable service provided to a client by any person in relation to the business auxiliary service, insofar as it relates to, - (a) procurement of goods or services, which are inputs for the client; (b) production or processing of goods for, on behalf, of the client; (c) provision of service on behalf of the client; or (d) a service incidental or auxiliary to any activity specified in (a) to (c) above. and provided in relation to agriculture, printing, textile processing or education, .....

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turer and exporters. The word textile processing referred in the notification is to be understood in a broader sense. The dictionary meaning of textile processing means sequence of operations or changes undergone and the definition of textile includes fabrics, fibre, yarn suitable for weaving into fabric. The exemption of service tax under BAS was allowed in relation to four industries namely agriculture, printing, textile processing and education. Therefore, the appellant being textile industry .....

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uxiliary to the activity of production as is meant by Section 65 (19) of Finance Act, 1994. Appellants are accordingly entitled to the benefit of exemption Notification No.14/2004 and not liable to the payment of service tax under reverse charge. 7. It is also relevant to state that appellants being the exporter of textile made ups as per the Foreign Trade Policy are not expected to export the taxes. Appellants pleaded that there was no suppression of facts with deliberate intention to evade pay .....

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from India, services received/ rendered abroad wherever possible shall be exempted from service tax. Therefore, the demand is also hit by limitation and the extended period cannot be invoked. 8. It is further pertinent to mention that appellants are manufacturer-exporters. Service tax if any payable under reverse charge is permissible to be availed as cenvat credit and that may be refundable under Notification No.41/2007 unless otherwise deniable by law. The provision made in Central Excise Rul .....

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