TMI Blog2017 (6) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... ible foreign exchange. Further, it is also clearly certified in the FIRC issued by the Standard Chartered Bank that remittances are in convertible foreign exchange. Reliance placed in the case of Commissioner of Service Tax, Mumbai Versus M/s PMI Organization Centre Pvt. Ltd. [2015 (12) TMI 414 - CESTAT MUMBAI], where it was held that It is clear that payment received in Indian Rupees for which FIRC issued by the bank and payment is routed through foreign bank qualifies the condition of payment 'convertible foreign exchange', therefore on this ground refund cannot be rejected. Payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfil the condition of payment (convertible foreign exchange) and therefore, the denial of refund on this ground is not sustainable - appeal allowed - decided in favor of appellant. - ST/20175 to 20184/2017-SM; ST/20914/2016 - Final Order No. 20964 - 20974 / 2017 - Dated:- 27-6-2017 - Shri S.S Garg, Judicial Member Mr. K. Krishnamurthy, Consultant For the Appellant Mr. Parasivamurthy N.K, AR For the Respondent ORDER Per : S. S. Garg The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard Remittances issued by their banker. He also submitted that in view of the exchange rate fluctuations, the appellants have instructed their bankers to convert the foreign exchange realisation into Indian rupees and credit their account in Indian rupees. Appellants have also referred to various provisions of The Foreign Exchange Management Act, 1999 to canvass their argument that the Reserve Bank of India permits the appellant to receive the remittances in Indian rupee. He further submitted that this issue has been considered by the Tribunal in various decisions and it has been consistently held that if the payment is received in Indian rupee for which FIRC issued by the Bank and the payment is routed through foreign bank, then in that case it satisfies the condition of payment in convertible foreign exchange. In support of this submission, he relied upon the following decisions: * BNY Mellon International Operations (I) Pvt. Ltd. vs. CCE, Pune-III: 2016-TIOL-2828-CESTAT-MUM. * CST, Mumbai vs. M/s. PMI Organisation Centre Pvt. Ltd.: 2015-TIOL-2570-CESTAT-MUM * M/s. AGM India Advisors Pvt. Ltd. vs. CST, Mumbai-I: 2015-TIOL-2775-CESTAT-MUM. * M/s. Affinity Expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through their foreign bank i.e. Wachovia Bank N.A. USA receipt of Indian Rupees shall be treated as 'convertible foreign exchange'. It also clearly certified in the FIRC issued by the HDFC Bank that remittance is in convertible foreign exchange. This Tribunal in the case of Sun-Area Real Estate Pvt Ltd vs. Commissioner of Service Tax, Mumbai-I - 2015-TIOL-956-CESTAT-MUM giving detailed findings held that Indian Rupees received against export of services through foreign bank is convertible foreign exchange and the same is in compliance of the condition provided in the Export of Services Rules, 2005. The relevant paras of the order of Sun-Area Real Estate Pvt Ltd case are reproduced below: 5. I have carefully considered the submissions made by both the sides. It is not in dispute that the remittance towards the payment of service was received in Indian rupees. However, though the payment is received in Indian rupees but the bank has issued Foreign Inward Remittance Certificate . Clause 3A.6(i) of the Exchange Control Manual is reproduced below: 3A.6 (i) Authorised dealers should issue certificates in form BCI against receipt of inward remittances or realisation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from foreign country through Deutsche Bank. Therefore, the said Indian rupee is nothing but foreign exchange repatriated from foreign country to India. Therefore, such payment in rupees is equal to the foreign exchange. The manner of receipt of foreign exchange is provided under Notification No. FEMA 14/2000-RB dated 03/05/2000 issued by Reserve Bank of India. Regulation No.3 of the said Notification is reproduced below: 3. Manner of Receipt in Foreign Exchange:- (1) Every receipt in foreign exchange by an authorised dealer, whether by way of remittance from a foreign country (other than Nepal and Bhutan) or by way of reimbursement from his branch or correspondent outside India against payment for export from India, or against any other payment, shall be as mentioned below: Group Manner of receipt of foreign exchange (1) member countries in the Asian Clearing Union (except Nepal) namely, Bangladesh. Islamic Republic of Iran, Myanmar, Pakistan and Sri Lanka a) payment for all eligible current transactions by debit to the Asian Clearing Union dollar account in India of a bank of the member country in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a formal remittance to the foreign reinsures first and thereafter to receive the commission from the foreign reinsurer, will be an empty formality and a meaningless ritual, on the facts of this case. On a perusal of the nature of the transaction and in particular the statement of remittance filed in the Reserve Bank of India regarding the transaction filed in the Reserve Bank of India regarding the transaction, we are unable to uphold the view of the respondent that the income under the agreement is generated in India or that the amount is one not received in convertible foreign exchange. We are of the view that the income is received in India in convertible foreign exchange, in a lawful and permissible manner through the premier institution concerned with the subject-matter - the Reserve Bank of India. In this view, we hold that the proceedings of the Central Board of Direct Taxes dated 11.3.1986, declining to approve the agreements of the appellant with M/s Sedgwick offshore Resources Ltd. London for the purposes of section 80-0 of the Income-tax Act, are improper and illegal. We declare so. we direct the respondent to process the agreements in the light of the principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of security services and air travel services, first of all, this issue of admissibility as input service was not raised in the show cause notice. Therefore, denial of refund of ₹ 7,747/- and ₹ 1,051/-respectively is not correct. Secondly, the appellant is providing export services and for which they are using security services and air travel services, which in my view, has a direct nexus with the export services, accordingly the same are admissible input services. 12. In view of my above discussion, I am of the considered view that the impugned order deserves to be modified inasmuch as the impugned order in respect of ₹ 1,64,081/- is upheld and the order rejecting refund of an amount of ₹ 10,98,077/- is set aside. 6.1 Further, in the case of Nipuna Services Ltd. vs. CCE: 2009 (14) STR 706 (Tri.-Bang.) wherein it is held that Revenue is denying the refund for the simple reason that the appellant themselves had not directly received the payment in foreign currency. In our view, the stand of the Revenue is not sustainable. If Revenues contention is accepted, it amounts to levying service tax on services exported. It is axiomatic that goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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