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Commissioner of Service Tax, Bangalore V/S MAPAL India Pvt. Ltd.

    ST/424/2012-SM (Arising out of Order-in-Appeal No. 432/2011 dated 20/10/2011 passed by the Commissioner of Central Excise (Appeals-II), Bangalore) and Final Order No. 22450/2017

    Decided On, 13 October 2017

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore

    By, THE HONORABLE JUSTICE: S.S. GARG
    By, MEMBER

    For Petitioner: Naveen Kushalappa, AR And For Respondents: N. Anand, Advocate



Judgment Text


1. The present appeal has been filed by the Revenue against the impugned order dated 20.11.2011 passed by the Commissioner (A), whereby the Commissioner (A) has allowed the appeal of the assessee and set aside the Order-in-Original.

2. Briefly the facts of the present case are that the respondent-assessee are manufacturers of precision tools and components. On gathering information and on scrutiny of the balance sheet and other financial records of the respondent unit, the Preventive Unit of the said Commissionerate had noticed that an amount of Rs. 1,74,72,621/- has been received by them from M/s. MAPAL D.R. Kress K.G. G

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ermany towards promotion of their goods in identifying the customers in India during the period from July 2003 to November 2006, but no service tax is found to be paid by them for having rendered such service. As contended by the Revenue, the said activity falls under the category of Business Auxiliary Service with effect from 01/07/2003 and the amount so received by the respondent is chargeable to service tax with applicable rate prevailing on the date of receipt. Accordingly, during the course of investigation of the case, the respondent have agreed and paid the service tax totaling to Rs. 19,65,701/- under Challan dated 13.01.2007, but subsequently preferred a refund claim with the department, claiming that the service (BAS) so rendered by them falls under the category of export of service and no service tax is payable by them in view of the provision, as envisaged under Export of Service Rules, 2005. On these allegations, a show-cause notice was issued proposing to reject the refund and after following the due process of law, refund was rejected and the penalty under Section 76, 77 and 78 was imposed along with interest under Section 75 by invoking the extended period alleging suppression. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner (A), who allowed the appeal and set aside the Order-in-Original, hence the present appeal.

3. Heard both the parties and perused the records.

4. The learned AR for the Revenue submitted that the impugned order setting aside the Order-in-Original is not sustainable in law as the same has been passed contrary to the provisions of Export of Service Rules, 2005. He further submitted that the Commissioner (A) has misconstrued the definition of Export of Service as provided in the Export of Service Rules, 2005. He also submitted that the assessee has rendered the services in India for the promotion of the products of their holding company and has received commission and therefore, there is no export of service. He also submitted that the assessee has failed to provide any evidence to the effect that there was export of service by way of any agreement or invoices to prove this point. He also submitted that the recipients of the services are located in India and hence, the benefit of Export of Service Rules, 2005 cannot be extended. He also submitted that the decisions relied upon by the learned Commissioner (A) are not applicable in the facts and circumstances of the case.

5. On the other hand, the learned counsel for the assessee defended the impugned order and submitted that the Commissioner has analyzed the facts and circumstances and has passed a reasoned order based upon the decisions rendered by the Tribunal on identical issue. He further submitted that in the respondents own case, the Division Bench of this Tribunal as reported in: 2011 (22) S.T.R. 454 has allowed the refund holding that it is export of service.

5.1 He further submitted that the learned Commissioner (A) has also relied upon the decision of the Tribunal in the case of Blue Star Ltd. vs. CC : 2008 (11) S.T.R. 23 wherein it has been held as under:

6. On a very careful consideration of the matter, I find that the appellants have produced documentary evidence to show that they had rendered the services to their foreign principals by booking orders in India for their goods. I have also perused the details of the refund application. They all relate to the goods supplied by the foreign principals based on the orders booked by the appellant. Moreover, in the Agreement relied on by the Revenue, para 9 relates to the services rendered by the appellant. This para has not been referred to by the Commissioner (Appeals) in his order at all. On the basis of the records, I am convinced that the services rendered have been exported in terms of Rule 3(2) of the Export of Services Rules, 2005. Hence, the appellants are entitled for the refund of the Service Tax already paid. Therefore, I allow the appeal with consequential relief, if any.
5.2 Similarly, in the case of ABS India Ltd. vs. CST : 2009 (13) STR 65 (Tri.-Bang.), it was held as under:

4. The appellant, who is the Indian Company, booked certain orders for the Singapore Company. It cannot be said that these booking of the orders indicate service being rendered in India. It is not correct. And also because the appellant books the orders for the Singapore Company, we have to consider that the service is delivered only to the Singapore Company. The recipient of the service is a Singapore Company. When the recipient of the service is Singapore Company, it cannot be said that service is delivered in India and the benefit of the service is derived only by the recipient company. Because of the booking of the orders, the Singapore Company gets business. Therefore, the service is also utilized abroad. In terms of Rule 3(2) of the Export of Services Rules, 2005 the service rendered is indeed a service, which has been exported. In such circumstances, the appellant is not required to pay the service tax. There is absolutely no merit in the impugned order. Hence, we allow the appeal with consequential relief.

6. After considering the submissions of the parties, I am of the considered opinion that there is no infirmity in the impugned order which is based upon the various decisions rendered by the Tribunal on the same issue. Moreover, the Division Bench of the Tribunal in the assessees own case vide decisions cited supra, has allowed the appeal of the assessee. Therefore, by following the ratios of the said decisions, I am of the opinion that there is no infirmity in the impugned order. Hence, I dismiss the appeal of the Revenue by upholding the impugned order
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