TMI Blog2017 (10) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... though the appellant received the payment in Indian rupees but in view of the FEMA Notifications issued by the RBI, the same is deemed to be in convertible foreign exchange and accordingly the condition as provided u/r 3(2) of Export of Service Rules, 2005 stands complied. The payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfill 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/20460/2017-SM, ST/20461/2017-SM, ST/20462/2017-SM - Final Order No. 22355-22357 / 2017 - Dated:- 18-9-2017 - Shri S. S. Garg, Judicial Member Mr. S. Thirumalai, Advocate For the Appellant Mr. Pakshirajan, AR For the Respondent ORDER Per : S. S. Garg The appellants have filed these three appeals against the common impugned order dated 5.1.2017 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant. 2. Since the common issued is involved in these three appeals, they are being disposed of by this common order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement 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 Express India Pvt. Ltd. vs. CCE, Pune-I: 2015-TIOL-2441-CESTAT-MUM. * Sun-Areas Real Estate Pvt. Ltd. vs. CST, Mumbai-I: 2015-TIOL-956-CESTAT-MUM. He further submitted that there is no dispute about the export of services and also there is no dispute that the input services, for which the appellant claim refund are not used in pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai-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 of foreign exchange on security paper if the amount exceeds ₹ 15,000/- in value, bearing distinctive serial numbers and reference numbers. In case the amount of inward remittance or realisation of foreign exchange is upto ₹ 15,000/-certificates in form BCI with serial numbers and reference numbers may be issued on the letter-head of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve 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 other party to the transaction is resident or by credit to the Asian Clearing Union dollar account of the authorised dealer maintained with the correspondent bank in the member country; and b) payment in any permitted currency in all other cases (2) all countries other than those mentioned in (1). a) payment in rupees from the account of a bank situated in any country other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold 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 laid down by us herein above. The appeal is allowed. There shall be no order as to costs. 9. From the above judgment it is observed that out of the total payment to be made by the insurance broker in India to the foreign insurer was reduced to the extent of his brokerage and remaining amount was remitted to foreign insurer in the foreign exchange. The issue was whether the brokerage in Indian rupees retained by the Indian Insu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7.1 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 Revenue s contention is accepted, it amounts to levying service tax on services exported. It is axiomatic that goods and services exported would not be subjected to local taxes. Denying the refund would violate this fundamental principle of taxation. 7.2 Further, in the case of Sun-Areas Real Estate Pvt. Ltd. cited supra, it has been held that even though the appellant received the payment in Indian rupees but in view of the FEMA Notifications issued by the RBI, the same is deemed to be in convertible foreign exchange and accordingly the condition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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