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TMI Blog2024 (6) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... nd generic pharmaceuticals products. For the purpose of exporting their product to the regulatory markets the appellants are required to comply with certain regulatory requirements of countries like USA, France etc. This requirement inter alia include:- (i) Product Filing (ii) Facility inspection and product approval by regulatory authorities (iii) Product registration in the regulatory markets to sale and market their products. 1.3 In order to obtain the above certifications/approval the appellants are required to submit the requisite applications with all relevant details/ documents along with the prescribed fees to the relevant regulatory authority of the country of export where the products are required to be registered. The appellants have representative office/subsidiary companies in several countries for the purpose of sale, promotion and distribution of the product manufactured by them in the countries of export. The appellant had entered into agreement with their subsidiary companies additionally, as per the said agreements the subsidiary companies were also required to coordinate with the local government thereby facilitating the appellants in obtaining the necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants vide which the department propose to recover service tax amounting to Rs.2,55,78,773/- by invoking the extended period of limitation under the proviso to Section 73 (1) of the Finance Act, 1994. The show cause notice also propose to recover interest from the appellant under Section 75 of the Act and to impose penalty under Section 78 of the Act. After considering the reply of the appellant the Adjudicating Authority namely the Principal Commissioner confirmed the demand of Service tax along with applicable interest and penalty vide OIO No. AHM- EXCUS- COM- 034-2020-21 dated 19.03.2020. The appellant aggrieved by the said impugned order preferred the present appeal. 2. Shri Jigar Shah, Learned Counsel with Ms. Raksha Bhandari, Advocate appearing on behalf of the appellant submits that the issue involved in the present case is no more res- integra and is settled in favour of the appellant by the decision of the Hon'ble Delhi Tribunal in the case of Sidmak Laboratories India Pvt Ltd vs. CCE & ST , Dehradun - 2023(11) TMI 64 -CESTAT New Delhi. Therefore, in view of the said decision the fees paid by the appellant to the foreign regulatory authorities is lieu of activity performe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount paid as product registration fees is not liable to service tax under Section 68 (2) of the Finance Act, 1994. 2.4 He further submits that if at all any service tax is leviable on the fees paid by the appellant the same is available as cenvat credit to the appellant, therefore, the entire exercise is revenue neutral and on this count also service tax is not recoverable. He placed reliance on the following judgments:- M/s. Stahl India Pvt Ltd - 2023 (6) TMI 498 - CESTAT Chennai Chiripal Polyfilms Ltd - 2021 (3) TMI 1345 - CESTAT Ahmedabad M/s. NCR Corporation India Pvt Ltd - 2021 (4) TMI 810 - CESTAT Bangalore M/s. Ashima Microfin Ltd - 2019 (9) TMI 122 - CESTAT Ahmedabad 2.5 He further submits that there is no suppression of fact, the show cause notice dated 11.10.2019 issued for the period 2014-2015 is time bar. As evident from the facts that revenue neutrality is involved, for this reason also no suppression of fact can be alleged. Accordingly, the entire demand is time bar. 3. Shri Rajesh Nathan, Learned Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the Commissioner (Appeals) in the impugned order except to the extent of reduction of penalty. 4. Learned counsel submitted that the demand of service tax is not sustainable for several reasons as follows :- (1) The payment was made to USFDA, which is a sovereign authority and amounts paid as fees to sovereign authorities are not chargeable to service tax. In identical cases, the Tribunal has held that payments made to USFDA are not liable to service tax in Vidhi Dyestuff Mfg. Ltd. versus Raigad [vide order dated 11.02.2016] ; Roha Dyechem Pvt. Ltd. versus Commissioner of Central Excise [in ST/626 and 629/2012 dated 26.10.2016] ; (2) There is no reason/justification for invoking extended period of limitation. The appellant is registered with the Service Tax Department and has been filing returns regularly and there cannot be any allegation of intent of the appellant to evade payment of duty or even suppression of facts. It was open for the officers to scrutinize the returns and call for any records which they deem necessary for the purpose. Evidently, the information regarding the payments made to the USFDA were available in the records of the appellant itself ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he certification is nothing but a statutory requirement and the amounts paid by them to US FDA are nothing but fees. 5. With regard to the contentions raised by them learned counsel that in order to market the goods in USA the products needs to be certified by US FDA for which they have to pay a fee which have been charged under reverse charge mechanism, we find that in similar set of facts the Tribunal in the case of K.G. Denim Ltd. versus Commissioner of Central Excise, Salem - 2015 (37) STR 140 had held that payment of charges for textile processing to M/s Testex, Swiss will not fall under the category of reverse charge mechanism. The ratio of the said judgment squarely covers the issue in the case in hand". 9. We have also considered the Board's Circular relied upon by the Revenue. It reads as follows :- "Subject : Applicability of service tax on fee collected by Public Authorities while performing statutory functions /duties under the provisions of a law - regarding A number of sovereign/public authorities (i.e. an agency constituted/set up by government) perform certain functions/ duties, which are statutory in nature. These functions are performed in terms of spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be exigible to service tax. There cannot be any two opinions that USFDA is a statutory authority mandated by the US laws to regulate the import of pharmaceuticals into the country. It is the counterpart of the Drugs Controller General of India without whose approval pharmaceuticals manufactured abroad cannot be imported into India. We have no doubt in our mind that US FDA is a statutory authority and its approval of pharmaceuticals to be exported to that country is the statutory function. Therefore, any fees paid to obtain the approval will get squarely covered even as per the CBEC Circular. The distinction drawn by the lower authorities between statutory authorities within India and the statutory authorities outside India has no legal basis. We, therefore, respectfully following the decisions of this Tribunal in the case of Vidhi Dyestuff Mfg. Ltd. versus Raigad ; Roha Dyechem Pvt. Ltd. versus Commissioner of Central Excise, hold that no service tax was payable on the amounts which the appellants had paid to US FDA to obtain their approval for export of their drugs. 11. As we have found in favour of the appellant on merits itself, the submissions on the limitation and penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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