By TIOL News Service

BANGALORE, JUNE 16, 2017: THE appellants are manufacturing and exporting two wheeler motor vehicles and motorcycle spare parts. The service tax paid on courier services used for exporting motorcycle parts were refunded to the appellant in two cases by the original authority.

Subsequently, show-cause notices were issued to recover the said refund amounts alleging that the same was sanctioned erroneously and on the ground of non-realization of foreign exchange.The third show-cause notice was issued proposing to deny the refund of service tax paid on the courier services.

The adjudicating authority upheld the allegations leveled in the demand notices and the appeals filed before the Commissioner(A) met with rejection.

The appellant is before the CESTAT.

After considering the submissions made by both sides, the Bench observed -

++ Orders-in-original sanctioning the refund have already attained finality and the Revenue has not filed any appeal against the sanctioning of the refund order and the Revenue wants to recover the erroneously sanctioned refund by parallel proceedings by issue of show-cause notice which is not permitted under law. [Eveready Industries India Ltd = 2016-TIOL-676-HC-MAD-CX & Panyam Cements & Minerals Industries Ltd = 2015-TIOL-2127-HC-AP-CX relied upon.]

++ Appellants have exported the spare parts to their dealers abroad by way of free warranty replacement as per their contract which is placed on record and for exporting the said components they have availed the services of courier agency for which they have paid the service tax.

++ Findings of the Commissioner(Appeals) that the appellants have not produced any evidence to prove that the goods are exported within the warranty period of replacement free of cost is wrong because the appellant has produced invoices on record which clearly shows that it is free warranty replacement.

++ The appellant has also produced a copy of the agreement between his dealers by which the appellants are under obligation to supply parts under free warranty replacement then in that case, no monetary consideration flows from the buyer and, therefore, the department's view that bank realization certificate has not been produced is not justified ground for denial of refund .

+ The export proceeds have already been received when the main product was exported.

Holding that the impugned order is not sustainable in law, the same was set aside.

All the appeals were allowed with consequential relief.

(See 2017-TIOL-2043-CESTAT-BANG)