The Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a rebate is not allowable without proving the correlation between exported services and Foreign Inward Remittance Certificate (FIRC).
M/s. I Gate Global Solutions Ltd, the appellant is an exporter of information technology software and they are registered with Service Tax. The appellant filed a claim for a rebate of Rs.5,44,51,121/- under the provisions of Notification No. 11/2005 dated 19.04.2005 in respect of services exported by them for the period from October 2008 to December 2008. The said notification was issued under Rule 5 of Export of Service Rules, 2005.
The said rebate claim was filed on 26.08.2009. They declared in the said rebate claim that they had received payment against said services exported and also enclosed a copy of the service tax return filed for the period from October 2008 to March 2009 disclosing payment of service tax on exported services. The appellant was issued with a show cause notice dated 15.12.2009.
It was alleged in the show cause notice that though the appellant had produced copies of invoices along with a copy of FIRC for the period of export proceeds, there was no correlation between the exported services and the Foreign Inward Remittance Certificate (FIRC).
The show cause notice was for verification of the fact that the services were provided outside India. The appellant submitted a correlation of export invoices and FIRC and also explained the delay in amending registration for certain services. The original authority through the said order has held that the appellant was not eligible for availing and utilizing Cenvat credit because of a delay in the amendment of registration. He has also held that documentary evidence to show that the services were rendered outside India was not furnished with documentary evidence. On appeal, the Commissioner (Appeals) upheld the order passed by the original authority.
The Tribunal observed that there are only two conditions stipulated in the said Notification No. 11/2005-ST dated 19.04.2005. The said conditions are that the taxable service is required to be exported payment of the export should be received in India in convertible foreign exchange and the service tax and cess have to be paid on taxable services exported to be eligible to claim a rebate of the said paid taxes.
A two-member bench comprising Dr Suvendu Kumar Pati, Member (Judicial) and Mr Anil G Shakkarwar, Member (Technical) observed that the only condition that needs to be satisfied is whether the appellant had received convertible foreign exchange in respect of the claims made by them.
It was viewed that unless convertible foreign exchange has been received, the rebate in respect of such invoice cannot be granted to the appellant. The said circular also clarifies that wherever FIRCs are issued on a consolidated basis, the exporter should submit self-certified statements along with FIRC showing the details of export in respect of which a particular FIRC pertains.
It also required the exporter to maintain a register showing a running account which should be reconciled between the export and the remittance received periodically. It, therefore, emerged that unless it is established that against every invoice convertible foreign exchange has been received, the rebate of service tax paid in respect of that invoice cannot be allowed to the exporter.
The CESTAT remanded the matter to the original authority with a direction not to raise any other issue and examine receipt of convertible foreign exchange against individual invoices or set of invoices covered by the rebate claim and if such foreign exchange is received, then to that extent to allow the rebate.
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