P.R. Chandrasekharan, Member (T) - (1.) THERE are two appeals, two stay petitions and one cross -objection arising from Order -in -Appeal Nos. 189 & 190, dated 22 -12 -2012 passed by Commissioner of Central Excise & Service Tax (Appeals -IV), Mumbai. Vide the impugned order, the learned lower appellate authority allowed the refund claims of the respondent, M/s. Exxon Mobile Company India Pvt. Ltd. amounting to Rs. 2,22,30,502/ - for the period April 2008 to March 2009 and April 2009 to September 2009 by setting aside the order of the adjudicating authority rejecting these refunds. The learned lower appellate authority observed that the transactions undertaken by the respondent qualified to be exports under Export of Services Rules, 2005 and therefore, the appellants were eligible to claim refund of the Service Tax paid on various input services under Rule 5 of Cenvat Credit Rules, 2004. Aggrieved of the same, the Revenue is before us. The brief facts of the case relevant for consideration are as follows: 1.1 The respondent, M/s. Exxon Mobile Co. India Pvt. Ltd. provided services under the category of "Scientific and Technical Services" and "Business Auxiliary Services" (BAS) for their holding companies and affiliated companies situated in abroad. They undertook testing of the products manufactured by the foreign entities and gave advice with regard to improving the quality of the product. Similarly, they also undertook identification of potential customers in India, market potential for products in India and similar activities for the sale of the products in India manufactured by the foreign affiliates and thereafter, they filed the refund claim towards refund of input service credit taken by them. The Revenue was of the view that since the activity is undertaken in India, there is no export of service and therefore, the question of sanction of any refund would not arise. The Revenue also took objection to refund of input service credit on the ground that in respect of some input invoices, the respondent is not the party mentioned therein or there is no co -relation between the input service on which credit is taken and the output service rendered. Accordingly, a show -cause notice was issued for denial of refund and the adjudicating authority on these two grounds rejected the refund claim. In appeal, the lower appellate authority held the view that since the recipient is located outside India and the payments were received in convertible foreign exchange, the transaction amounted to export and therefore, the respondent is rightly eligible for the refund of the input service credit and it is against this order passed by the lower appellate authority, the Revenue is before us.
(2.) THE learned Additional Commissioner (AR) appearing for the Revenue submits that the activity of testing of samples received from abroad has been carried out by the respondent in India. Similarly, the activity of promoting the foreign entity's products is with respect to the Indian market and therefore, the services provided by the respondent have taken place in India. He also relies on the C.B.E. & C. Circular No. , dated 13 -5 -2011 wherein the Board had issued certain clarifications. In para 2 of the said Circular, it has been clarified that in a situation where the consultancy though paid by a client located outside India is actually used in respect of a product for the activity in India, the service cannot be said to be used outside India. Adopting this logic, it is submitted that in the present case also when the testing is done in India and the market survey/works have been carried out in India, it cannot be said that the services have been delivered outside India. It is his further contention that in respect of input services, on which the refund has been claimed, the documents were examined by the adjudicating authority and it was found that the invoices were not in the name of the respondent. No nexus could be established between the input service taken and the output service rendered. This aspect has been completely overlooked by the lower appellate authority who has not given any findings in this regard. Therefore, the impugned order is bad in law and deserves to be set aside and the appeal allowed. The learned Counsel appearing for the respondent on the other hand submits that to qualify as exports, two conditions are required to be satisfied for the period involved in the present appeal. These conditions are (i) such services should be provided in India and used outside India and (ii) payments for such services outside India is received by the service provider in convertible foreign exchange. With respect to the second condition, there is no dispute at all inasmuch as the appellant has received the consideration for the services rendered in convertible foreign exchange, which is evidenced from the foreign inward remittance certificates issued by the banks. He also showed a few of the services where the remittance certificate and the export invoices in respect of which these remittances were made. Therefore, there is no dispute with regard to the receipt of foreign exchange for the services rendered. As regards the first issue as to whether the services provided in India and used outside India, he submits that the service provider is situated in India and the services have been undertaken in India; therefore, the first condition that service is provided in India is clearly satisfied. As regards the second condition of used outside India, it is his submission that the service recipient is situated in outside India and it is the service recipient, who has utilised the service provided. For example, when a product is tested and results are obtained and advice for the improvement of quality of the product is given, the use of the advice is made by the service recipient abroad and therefore, the service is used outside India. Similarly, when a market research is done in India and the results are communicated, the use of the data generated is by the recipient situated outside India and therefore, it is used outside India. So is the case in respect of market promotion of the products of the foreign affiliates. Thus, the usage is by the recipient who is located outside India and therefore, the services have to be construed as used outside India. The learned Counsel relies on the decision in the case of GAP International Sourcing (India) Pvt. Ltd. v. CST , wherein a question arose relating to services rendered to a foreign entity in respect of procurement of goods, recommending usage of the products in further manufacture, analyzing the reports of samples and giving recommendations about the product integrity and so on. It was held that when the services provided by a person in India is consumed and used by a person abroad, it is treated as export. Similarly, in the case of Simpra Agencies Pvt. Ltd. v. CCE, Delhi -II - : 2014 -TIOL -687 -CESTAT -Del. : 2014 (36) S.T.R. 430 (Tri. - Del.), a question arose whether the activity of an agent for several foreign companies in procuring supply orders for which commission was paid in foreign exchange would amount to export of service or not. This Tribunal held that these services are covered by the definition of "Business Auxiliary Service" and since the recipient of the service is situated abroad, the services rendered has to be construed as export of service and the service provider in India would be entitled for rebate of service tax under Rule 5 of the Cenvat Credit Rules, 2004. Similarly a question arose before the Hon'ble Bombay High Court in the case of SGS India Pvt. Ltd. - : 2014 -TIOL -580 -HC -MUM -ST : 2014 (34) S.T.R. 554 (Bom.), wherein the appellant therein provided import worthiness certificates of the sample goods in India and the consideration for the services paid was received in convertible foreign exchange. The question for consideration was whether such services are taxable in India. The Hon'ble High Court held that the services rendered would amount export and would not be liable to tax in India. The ratio of these decisions would apply squarely to the facts of the case and therefore, the order of the lower appellate authority deserves to be upheld.
(3.) WE have carefully considered the submissions made by both the sides. 4.1 We note that the services rendered by the appellant, namely, "Business Auxiliary Service" and "Scientific and Technical Consultancy Service" come under Rule 3(i)(iii) of the Export of Service Rules. To qualify as exports, two conditions are required to be satisfied, that is, such services should be provided from India and used outside India and the payments for the service is received in convertible foreign exchange. As regards the receipt of the payment in convertible foreign exchange, there is no dispute. As regards the first condition, when the service provider is located in India and the service recipient is located in abroad, use of the service rendered by the service provider is by the recipient located abroad and therefore, the services can said to be used outside India. This is the view taken by this Tribunal in the case of GAP International Sourcing (India) Pvt. Ltd., Simpra Agencies and by the Hon'ble Bombay High Court also in the case of SGS India Pvt. Ltd. Since the usage has to be by the service recipient who is located outside India, the condition of use of outside India is clear and therefore, the transactions clearly amount to export of service which is not liable to tax in India. We also note that the respondent herein undertakes only exports of services and is not rendering any services in India. Therefore, all the input services on which he has taken the credit is in relation to the exports made by him. Consequently the appellant would be eligible for refund of the input service tax paid under Rule 5 of the Cenvat Credit Rules, 2004. The only objection raised by the Revenue is that in respect of some services, the invoices are not in the name of the respondent but in the names of parent company. It is not the contention of the Revenue, the appellant is not entitled for the credit. The objection is only in respect of claiming of refund/rebate. This Tribunal in the case of CST, Delhi v. Converges India Pvt. Ltd. - : 2009 (16) S.T.R. 198 (Tri. - Del.) observed that there cannot be two different yardsticks, one for permitting the credit and the other for eligibility for granting rebate. Whatever credit has been permitted to be taken, the same is permitted to be utilised. When the same is not possible, there is provision for grant of refund or rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned. In view of the above position, we do not find any merit in the contention of the Revenue that the appellant is not entitled for the rebate. Thus, we do not find any merit in the appeal filed by the Revenue; accordingly we dismiss the same. Since the appeal itself has been taken up for consideration, the stay petition has become infructuous and is accordingly dismissed. (Dictated in Court);