TMI Blog2023 (7) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... ot liable to pay service tax. Thus, it can be seen that the issue is no longer res-Integra. Accordingly, following the above decision, the demand in the present case is not sustainable - appeal allowed. - Service Tax Appeal No. 11036 of 2014- DB - Final Order No. 11449/2023 - Dated:- 6-7-2023 - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. C. L. MAHAR Shri , R. Subramanya , Advocate appeared for the Appellant Shri Tara Prakash , Deputy Commissioner ( AR ) for the Respondent ORDER RAMESH NAIR The issue involved in the present case is that whether, the Foreign Bank charges, charged by Foreign to Indian Bank and the Indian bank collected as reimbursement from the appellant is liable to be taxed under the category of Banking and other Finance Services. 2. Shri. R. Subramanya, Learned Counsel, appearing on behalf of the appellant submits that this issue is no longer res-Integra, as in the appellant s own case the issue has been considered and appeal was allowed. He placed reliance on the following Judgments: 1) 2018 (8) TMI 1179-CESTAT AHMEDABAD-Raj Petro Specialties Pvt Ltd VS CCE 2) 2017 (9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk for the Services provided by the Foreign Bank on reverse charge basis. Learned counsel pointed out that this issue has been examined in the following judgments : Raj Petro Specialties Pvt Ltd Vs. CCE - 2018 (8) TMI 1179- CESTAT Ahmedabad Cylwin Knit Fashions Others Vs, CCE - 2017 (9) TMI 96 - CESTAT Chennai Greenply Industries Ltd Vs. CCE - 2018 (38) STR 605 ( Tri. Delhi) 3. Learned AR relies on the impugned order. 4. We have considered the rival submission. We find that the issue under examination in this case is if the appellant is required to pay service tax on reverse charge basis for the charges paid by them in respect of the foreign currency transaction between their local foreign banks engaged in facilitating the transfer of foreign exchange. It is noticed that the matter has been examined in detail in the case of Raj Petro Specialties Pvt Ltd Vs. CCE - 2018 (8) TMI 1179- CESTAT Ahmedabad. In the said case following has been observed:- The appellant are engaged in the manufacture of excisable goods namely, different type of Industrial Oil, Lubricating Oil and Petroleum Jelly falling under chapter 27 to the first schedule of the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uban Dam Road, Village Karad, Silvassa, under Section 78 of Finance Act, 1994. However, if the above amounts of service tax are along with interest within 30 days of receipt of this order, the said penalty imposed shall be treated as 25% penalty should also be paid amount of service tax provided that the amount of said 25% penalty should also be paid within 30 days of receipt of the order intems of proviso to Section 78 of Funance Act, 1994. (5) I impose penalty of Rs.5,000/- [Five Thousand Only] on M/s Raj Petro Specialties Pvt. Ltd Survey No. 146/2/3/ Madhuban Dam Road , Village-Karad, Silvassa under Section 77 of the Finance Act, 1994. (6) I impose penalty of Rs. 200/- per day for every day during which ffailure in payment of service tax continued or at the rate of 2% of such ta, per month, whichever is higher, strating with the first day after the due date till the date of actual payment of the outstanding amount of service tax on M/s Raj Petro Specialties Pvt. Ltd. Survey No. 146/2/3, Madhuban Dam Road, Village-Karad, Silvassa under Section 76 of Finance Act, 1944 for the period from 01.04.2008 to 09.05.2008 provided that the total amount of the penalty payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant para of the Circular is reproduced below: 4. In order to understand the obligations of the foreign banks, the banks in India and importer/exporter, the said URC 522/UCP 600 were examined. Article Nos. 4, 8, 10, 11, 16, 21, 26 of URC 522 and Article Nos. 3, 4, 7, 8, 9, 13, 37 of UCP 600, read with other relevant Articles in these two brochures are relevant for the present issue. A combined reading of these Articles shows that there is an implied contract between a bank in India and a foreign bank, whereby, the foreign bank recognizes only the Bank in India for providing their services and for collection of their charges. In case of any clarification on any issue regarding their activity, there is always correspondence between the foreign bank and the bank in India. Even the amount of charges collected by foreign bank is informed only to the bank in India. The exporter or the importer in India comes to know about these charges through their own bank in India. In fact the most interesting aspect is that the importer or the exporter in India is not even aware of the quantum of charges which are charged by the foreign bank. Further, in case of export transactions, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay Service Tax. From the above Circular it is abundantly clear that when the Indian Banks are collecting charges including the charges of Foreign Banks toward import and export of the goods of their client. In such case, as regard the service tax liability under Reverse Charge Mechanism, the Indian Banks are recipient of service, therefore, the appellant cannot be held as recipient of service provided by Foreign Banks to the Indian Banks. Accordingly, the appellant is not liable to pay service tax under Reverse Charge Mechanism. This very same issue has been considered by this Tribunal in the case of Greenply Industries Ltd (Supra), wherein Division Bench of this Tribunal passed following order: The appellants are exporters. They receive the export proceeds through ING Vyasa Bank. The foreign bank through which the payment had given channelised charged some amount from the appellant s bank ING Vyasa Bank which in turn recovered the same from the appellant. The department demanded Service Tax on the amount which the foreign bank charged from ING Vyasa Banker which, in turn, was recovered from the appellant. On this basis, Service Tax demand of Rs. 96,392/- was confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not liable to pay service tax. With this settled position, we hold that any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant. However, we are not going into the exact calculation of the service tax and demand, in case any service charges is paid directly by the appellant to Foreign Banker towards the service received by the appellant from the Foreign Bank in such case the service tax liability will be on the appellant. 6. With this observation, we remand the matter to adjudicating authority to verify the quantification and if any service tax liability arises, the same may be demanded from the appellant. The appeal is allowed by way of remand to the adjudicating authority. 4.1 In the instant case there are no allegation that any payment has been made directly by the appellant to the foreign bank. In these circumstances we find that no service tax can be demanded from the appellant. 5. In view of the above the demand cannot be sustain and the same is set aside. Appeal is allowed. 4.2 In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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