IND SWIFT LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant is a manufacturer of medicaments. They export their products to countries outside India and they have appointed agents abroad for getting products registered in the said countries and to comply with the legal requirements in each such country and also for selling their products in those countries. They have to incur some expenditure towards fees and statutory levies in such countries. In respect of commission paid by them to their agents, they have been paying Service Tax. Revenue's contention is that the appellant should have paid Service Tax on the expenditure for complying with statutory requirements, in countries to which goods are exported, incurred by their agents on their behalf. On such basis an amount of Rs. 25 lakhs (approx.) has been confirmed against the appellant. In respect of this component of the demand the Counsel for appellants submits that C.B.E. & C. has clarified vide Circular No. dated 18 -12 -2006 that fees paid for statutory compliance cannot be considered as value of service. There is another component of demand which is confirmed on the ground that exemption under Notification No. , dated 7 -7 -2009 claimed by the appellants for exemption on services rendered by commission agents rendered abroad cannot be extended to them. The exemption has been denied on the ground that they have not filed half yearly returns as required in the notification. The appellant submits that they have filed regular statutory returns but separate returns under the notification have not been filed. Counsel for the appellant submits that this is not a major default justifying confirmation of demand.

(2.) IN the matter of exemption under Notification No. , he submits exemption cannot be extended since condition in the Notification are not complied with. Revenue also raised an issue that the sovereign authority has provided the service to the appellant and though the payment has been made through agents, the appellants are liable to pay Service Tax for the services received from the sovereign authority abroad.

(3.) WE have considered arguments from both sides and we are not convinced that payments made to the agents abroad who incurred expenditure as pure agents of the appellants, can form part of the value of the service of the agent. Prima facie there cannot be any Service Tax demand on that count.