Custom, Excise & Service Tax Tribunal
M/S. Mapal India Private Limited vs The Commissioner Of Central Excise on 12 August, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No: ST/12/2009 (Arising out of Order-in-Appeal No: 206/2008 dated 30.6.2008 passed by the Commissioner of Central Excise (Appeals-II), Bangalore.) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes M/s. Mapal India Private Limited Appellant Vs. The Commissioner of Central Excise Bangalore. Respondent
Appearance S/Shri K. S. Naveen Kumar & N. Anand, Advocates for the appellants.
Shri M. M. Ravi Rajendran, JDR for the revenue.
CORAM SHRI M. V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) SHRI P. KARTHIKEYAN, HONBLE MEMBER (TECHNICAL) Date of Hearing: 12.08.2010 Date of decision: 12.08.2010 FINAL ORDER No._______________________2010 Per Shri P. Karthikeyan, This appeal filed by M/s. MAPAL India Pvt. Ltd. (MIPL) Bangalore seeks to vacate Order-in-Appeal No.206/2008 dated 30.6.2008. Vide the impugned order, the Commissioner of Central Excise (Appeals-II) upheld the Order-in-Original No.94/2007-ST dated 20.12.2007 passed by the Deputy Commissioner of Service Tax, Division - I Bangalore and rejected the appeal filed by MIPL impugning in the Order-in-Original.
2. Facts of the case in brief are that the appellant engaged in the manufacture of precision tools is also registered with the department as a provider of services classifiable under the category Business Auxiliary Services (BAS). The assessee identified customers for certain high-end tools manufactured by MAPAL, Germany and extended support till the Indian customer placed purchase orders on the German Company. The assessee received commission for the above services from MAPAL, Germany in convertible foreign exchange. During the period 1.7.2003 to 20.11.2003 and from 15.3.2005 to 30.11.2006, MAPAL paid Service Tax to the tune of Rs.19,65,702/- and Rs.5,88,927/- respectively. Subsequently, on realizing that the services rendered by them were either exempted and / or exported in terms of provisions of the Export of Service Rules, 2005, MAPAL claimed refund of the above amounts under two separate refund claims. The Original Authority rejected the claims for refund on the ground that assessee had rightly paid the Service Tax and no refund was due. The Deputy Commissioner had found that the assessee had been engaged in promoting the sale of goods manufactured by MAPAL, Germany in India and had received commission. MAPAL had rendered the services in India which were consumed in India. Therefore, the claim of the assessee that impugned services had been exported abroad was incorrect. The lower appellate authority agreed with the Deputy Commissioner and held that the impugned transactions did not involve Export of Services. Moreover, the assessee was not a commission agent of MAPAL, Germany to qualify for exemption from payment of Service Tax for the period 1.7.2003 to 9.7.2004.
3. We have heard both sides.
4. We find that there is no dispute that during the material period, the appellant promoted sale of precision tools manufactured by MAPAL, Germany and received consideration in convertible foreign exchange. Notification No.6/1999-ST dated 9.4.1999 exempted taxable services from Service Tax in respect of which consideration was received in convertible foreign exchange. This Notification was rescinded on 1.3.2003. Vide circular No.56/5/2003-ST dated 25.4.2003, the CBEC clarified that export of services would continue to remain tax free even after rescinding of Notification No.6/1999-ST dated 9.4.1999.
4.1 As per Notification No.13/2003-ST dated 20.6.2003, a commission agent is a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase. The revenue has no case that MIPL was not a commission agent as per the above definition. Therefore, during the period 1.7.2003 to 20.11.2003, the services rendered by MIPL could not have been validly found to be liable to Service Tax paid by the assessee. As per the Circular also, since the assessee received consideration in foreign exchange, the impugned services continued to be exempt during the period 1.3.2003 to 20.11.2003. As for the period 15.3.2005 to 30.11.2006, the recipient of the impugned services involved was located outside India. As per Circular No.111/5/09-ST dated 24.2.2009 clarifying the scope of Export of Services Rules, 2005, inter-alia, BAS provided to a recipient located outside India was services exported in terms of Sub-Rule (1) of Rule 3 of Export of Services Rules, 2005. In ABS India Ltd. Vs. Commissioner of Service Tax, Bangalore - 2009 (13) STR 65 (Tri.-Bang.) relied on by the appellant, the Tribunal held that booking of orders for sale of goods manufactured by the subsidiary of the appellant therein located in Singapore was services exported and the appellant was not required to pay Service Tax. The Tribunal allowed the appeal filed by ABS India Ltd. accepting the claim that services delivered to a company located abroad was also utilized abroad as the beneficiary was a foreign company. In Blue Star Ltd. Vs. CCE, Bangalore 2008 (11) STR 23 (Tri.-Bang.), the Tribunal held in a case of similar facts where the appellant had canvassed orders for the products manufactured by its foreign principal, the services involved were exported and the appellants therein were entitled for refund of the Service Tax already paid on the said services.
4.2 We have also considered the judgment of the Honble High Court in Delhi in the case of Microsoft Corporation (India) Pvt. Ltd. Vs. Commissioner of Service Tax - 2009 (16) STR 545 (Delhi) cited by the learned SDR in support of the impugned order. We note that the High Court rejected the writ petition filed by the appellants therein holding that the dispute involved had to be decided by the Tribunal first. The order impugned before their lordships was a stay order of the Tribunal which had taken a prima facie view on the dispute. The Honble High Court of Delhi did not find it appropriate to interfere with the order impugned in exercise of their jurisdiction under the Article 226 of the Constitution.
5. We find that the impugned order is not sustainable in view of the legal position obvious also from the case laws cited by the assessee. We set aside the same and allow the appeal.
(Operative portion of this Order was pronounced in open court on conclusion of hearing) (P. KARTHIKEYAN) Member (T) (M. V. RAVINDRAN) Member (J) /rv/ 6