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M/s BBC World Services India Private Limited Versus CCE And ST, Delhi

2018 (2) TMI 369 - CESTAT NEW DELHI

Export of service to foreign principal located in UKProgramme Producer Service - demand on the ground that one of the condition mainly, receipt of consideration in convertible foreign exchange has not been fulfilled in such exports - whether or not appellant received consideration for exported service in convertible foreign exchange? - Held that: - FIRCs did not identify the nature and name of foreign convertible currency - It is manifestly clear that the amount credited to the account of the ap .....

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has not been received in convertible foreign currency for export of services by the appellant. - Programme producer service with reference to domestic radio stations to whom the appellant gave various programmes for broadcasting - Held that: - a plain reading of the statutory definition for programme producer service makes it clear that such programme producer should produce programmes on behalf of another person - In the present case, the appellants did not produce programmes for another p .....

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va, Advocates For The Respondent : Shri Amresh Jain, Authorized Representative (DR) - Per. B. Ravichandran :- The appellant is aggrieved by the order dated 20/03/2014 of Commissioner of Service Tax (Adjudication), New Delhi. The appellant is engaged in broadcasting service and are registered with the Department to discharge service tax under various categories. The accounts and records maintained by the appellants were subjected on audit by the officers of Service Tax, New Delhi. On conclusion o .....

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sed against the appellant on the ground that one of the condition mainly, receipt of consideration in convertible foreign exchange has not been fulfilled in such exports. Accordingly, a demand of ₹ 5,10,23,578/- was confirmed against the appellant. The second issue is relating to such programme producer service with reference to domestic radio stations to whom the appellant gave various programmes for broadcasting. The service tax demand of ₹ 7,79,630/- was confirmed on this account. .....

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d by the Revenue. Such mechanism of settlement of payment and receipt for cross country transaction has been an accepted mode of remittance of foreign exchange. Due FIRCs from their account holding bank, Standard Chartered Bank, Gurgaon have been submitted to the department; (b) The FIRCs categorically said that the amount is remitted by BBC World Service Boadcasting Main through Lloyd Bank PLC London and the appellant s bank credited the amount in Indian rupee to the appellant. The certificates .....

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d by the Competent Authorities in India and the credit of Indian rupee into the appellant s account is attributable to pound sterling paid by BBC UK which was settled through nostro account between the participated banks ; (d) the Original Authority has also recognized that the amount of ₹ 39 crores has been credited to the appellant s account which are attributable to exports now in question. The only point disputed is that the amount credited to the appellant account is Indian rupees and .....

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exchange remittance shall stand satisfy irrespective of whether the payments are made in Indian currency or convertible foreign exchange as long as they are in accordance with applicable RBI guidelines. The Board was clarifying the scheme under GST regime to recognize export of services or goods. (f) A reference was made to various decided cases to support the submission that the realization of amount attributable to export of service in the manner done in the present case will satisfy the requ .....

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es on behalf of another person, hence, they cannot be considered as programme producer in terms of Section 65 (86b) of the Act. Even otherwise these are copy right materials and if at all to be subjected to service tax, the same will apply only w.e.f. 01/07/2010. The learned Counsel also contested the proceedings on limitation and on imposition of penalties considering the interpretation involved with reference to actual exports undertaken by the appellant only with reference to the nature of re .....

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change. This being a basic requirement to satisfy the export of service in order to not to pay service tax, the appellant has not fulfilled the said condition. Further, he submitted that amount in convertible foreign exchange could have been handled and transferred only by an authorized dealer. In the present case Lloyd Bank, UK Branch, is not recognized as authorized dealer by the RBI. Further Standard Chartered Bank though may have been an authorized dealer, in the particular case did not act .....

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s and perused the appeal record. On the first point regarding whether or not appellant received consideration for exported service in convertible foreign exchange, we note that a total amount of about ₹ 39 crores is credited to the account of the appellant maintained with Standard Chartered Bank, Gurgaon. This money is attributable to the export is not in dispute. The question is whether this money is accounted to the appellant in pursuance of transfer of convertible foreign exchange into .....

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6. We have examined the various guidelines, more specifically the regulations cited hereinabove, order-in-original as well as guide to the authorized dealers issued by the RBI. We have also perused the relevant extracts of foreign exchange manual. The foreign exchange manual of RBI stipulates the method of foreign exchange transactions with public. It is mentioned that payment of inward remittance in Rules (para 3A.4) is through authorized dealer and the bank receiving the foreign exchange inwar .....

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e of whole dispute. However, we note that the same FIRC categorically certifies that the payment has not been received in non-convertible rupee or under any special trade or payment agreement. Further, the payment has been mentioned as received under nostro mechanism. Remittance is identified to the foreign remitting bank alongwith reference number for transfer. 7. Dealing with similar type of dispute, the Tribunal in Sun Area Real Estate Pvt. Ltd. Vs. CST, Mumbai - 2015 - TIOL - 956 (CESTAT - M .....

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ion 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 the authorised dealer (with their Logo printed on it). Since inward remittances received for opening of or credit of Non- Resident (External) accoun .....

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foreign exchange. In other words, the payment is in convertible foreign exchange. I have gone through the Notification No.FEMA 9/2000-RB, dated 3rd May, 2000, the relevant para No.4 of the said Notification is reproduced below : 4. Manner of Repatriation. - (1) On realisation of foreign exchange due, a person shall repatriate the same to India, namely bring into, or receive in, India and- (a) sell it to an authorised person in India in exchange for rupees; or (b) retain or hold it in account wi .....

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2) of Para 4 above it is very clear that, when a person receives in India payment in rupees from the account of a bank situated in any country outside India maintained with an authorised dealer, the payment in rupees shall be deemed to have repatriated the realized foreign exchange to India. In the present case, the payment in Indian rupees was received from foreign country through Deutsche Bank. Therefore, the said Indian rupee is nothing but foreign exchange repatriated from foreign country to .....

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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 th .....

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m India, payment shall be received in a currency appropriate to the place of final destination as mentioned in the declaration form irrespective of the country of residence of the buyer. 7. From the above regulation and serial No. (2) of the Table, it is very clear that the payment in rupees from the account of a bank situated in any country (other than a member country of Asian Clearing Union or Nepal or Bhutan) is a manner of receipt of foreign exchange. In the present case, as evident that th .....

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ht out in this case, are clear as to how the remittance to the foreign reinsurance company is made through the Reserve Bank of India in conformity with the agreement between the appellant and the foreign reinsurer, and that the remittance that the amount due to the foreign reinsurers as also the brokerage due to the appellant and the balance due to the foreign reinsurer is remitted (and expressed so) in dollars. It is common ground that the entire transaction effected through the media of the Re .....

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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 pe .....

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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 Insurance broker shall be treated as foreign exchange or otherwise. The Hon ble Supr .....

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utflow of foreign exchange but if the payment is made in Indian rupees, there is a saving of foreign exchange and if the said Indian rupees is received in India, the same is in lieu of foreign exchange which was saved at the time of repatriation of Indian rupees to foreign country. On this logic under the Foreign Exchange Management Act also it provided that if the payment in India rupees is received in India through banking channel it is deemed to be convertible foreign exchange . 8. The ratio .....

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Mumbai), Perk Com Software P. Ltd. vs. CST, Bangalore - 2017 - TIOL - 4035 - CESTAT - BANG. 9. We also note that in the guide to authorized dealers for compilation of the all returns, Reserve Bank of India stipulated method to be followed by the authorized dealers in reporting the transactions in nostro account. RBI stipulated as below :- 3. Every transaction which causes inflow of foreign exchange into India or outflow of foreign exchange from India and affects the position of foreign currency .....

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to be shown as such and (ii) the transactions relating to export bills negotiated, purchased or discounted as mentioned in Paragraph 18 below]. Thus there are two types of R-Returns, viz., RReturn (NOSTRO) and R-Return (VOSTRO). A separate RReturn (NOSTRO) and a separate R-Return (VOSTRO) for each currency is required to be submitted irrespective of number of accounts operated upon in that currency . 10. One more important aspect to be noted here is that the receipt of consideration for the dis .....

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