Relief for Dell India: CESTAT Rules Marketing and Support Services to Foreign Affiliates Constitute Export of Services [Read Order]
CESTAT held that Dell India’s marketing and support services to its foreign affiliates qualify as export of services and remanded the case only for verification of supporting documents.
Dell - India - Taxscan
Dell - India - Taxscan
The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the marketing and support services provided by Dell India Pvt. Ltd. to its foreign affiliates qualify as export of services.
Dell India Pvt. Ltd., engaged in marketing and promotional activities in India for Dell Global BV and Dell Asia Pacific, Malaysia, received payment on a cost-plus basis in convertible foreign exchange.
The company classified its services under “Business Auxiliary Service” and claimed rebates under Notification No. 11/2005-ST dated April 19, 2005, read with Rule 5 of the CENVAT Credit Rules, 2004, for April 2007 to March 2009.
The Commissioner (Appeals) rejected the claims, holding that the services were not exports as the marketed goods were consumed in India and that the CENVAT credit taken was ineligible. Dell appealed to the Tribunal.
The appellant’s counsel argued that the services met all the conditions for export since the recipients were located outside India and payments were received in foreign exchange. It was further argued that the show-cause notice never questioned the eligibility of the credit, and denial on that basis went beyond its scope.
The counsel relied on the Supreme Court’s decisions in Toyo Engineering India Ltd. and Brindavan Beverages Pvt. Ltd., and on the Larger Bench ruling in Arcelor Mittal Stainless (I) Pvt. Ltd., which held that the location of the service recipient, not the place of use, determines export status.
The department’s counsel argued that since the goods were delivered to customers in India, the services could not be treated as export of services and sought verification of the correlation between invoices and foreign inward remittance certificates (FIRCs).
The two-member bench comprising P.A. Augustian (Judicial Member) and R. Bhagya Devi (Technical Member) observed that the issue was already settled in Arcelor Mittal Stainless (I) Pvt. Ltd.
The tribunal explained that services rendered to a foreign entity for which payment is received in foreign exchange qualify as exports. It pointed out that the Commissioner (Appeals) exceeded the show cause notice by questioning credit eligibility.
The tribunal held that Dell’s services were exports and allowed the appeal, remanding the matter only for verification of supporting documents.
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