Case: GRACURE PHARMACEUTICALS LTD. VERSUS COMMISSIONER OF C.EX., JAIPUR-I Citatio : !"#$%$!& S.T.R. !'( %T)i.-De*.

& Iss+e: Whether appellant has liable service tax when he has received banking and financial services from foreign bank? ,)ie- Fa.ts: The appellant, a manufacturer of pharmaceuticals, had made some exports. The exports had been made against letters of credit issued by their bankers, M/s. ! ! "td. and the sale proceeds of the goods exported were received through ! ! #ank. $ show cause notice dated %&'%(')((* was issued to the appellant on the ground that they have made certain payments to foreign banks for collection of export proceeds on which service tax chargeable is +s. ,%,(-./'. The department was of the view that the appellant have received the services of banking and financial services from the foreign banks and hence, as service recipient they were liable to pay service tax on the amount paid by them to the foreign bank. t is on this basis that a show cause notice dated %&'%(')((* was issued to them for demand of service tax amounting to +s. ,%,(-./' along with interest and also for imposition of penalty under /ections ,0$, ,, and ,* of the 1inance $ct, %..-. The show cause notice was ad2udicated by the $sstt. !ommissioner vide 3rder'in'3riginal dated ),'%(')((. by which the service tax demand as made in the show cause notice was confirmed along with interest and besides this, penalty of e4ual amount was imposed under /ection ,* of 1inance $ct, %..- and also another penalty of +s. )((/' per day under /ection ,& ibid. 3n appeal to the !ommissioner 5$ppeals6, the $sstt. !ommissioner7s order was upheld by the !ommissioner 5$ppeals6 vide order'in'appeal dated %0'%(')(%(. $gainst this order of the !ommissioner 5$ppeals6, this appeal along with stay application has been filed.

A//e**a t Co te tio : $ppellant pleaded that the appellant have not received any 0a 1i 2 o) -i a .ia* se)3i.es -)o4 t5e 0a 1s a0)oa6, that the exports had been made against the letters of credit issued by ! ! #ank "td. and it is through M/s. ! ! "td. that the export proceeds had been received, that amount, in 4uestion, had been paid by them to ! ! against the bills raised by them and in these bills, M/s. ! ! have also charged service tax, that the service tax charged by ! ! has been paid by them to the 8overnment, that in view of this, no service tax is payable by the appellant, that since the appellant have a strong prima facie case, the re4uirement of pre'deposit of service tax, interest and penalty may be waived for hearing of the appeal and recovery thereof may be stayed till the disposal of the appeal.

Res/o 6e t Co te tio : The d. /9+, opposed the stay application reiterating the findings of the !ommissioner 5$ppeals6 in the impugned order and emphasi:ed that the amount paid by the appellant is for the service received from the foreign banks and hence, they are liable to pay service tax on the same as service recipient. ;e, therefore, pleaded that this is not a case for waiver.

Reaso i 2 o- J+624e t: We have carefully considered the submissions from both the sides and perused the records. There is no dispute that the amount on which the ser vice tax is demanded had been paid by the $ppellant to ! ! #ank "td. against the bills raised by the bank. We also find that there is a letter from ! ! #ank addressed to the 2urisdictional +ange /uperintendent informing that in respect of the amount recovered from the appellant, they had paid the service tax to the 8overnment. When the appellant had received the service of opening letter of credit from ! ! #ank "td. and it is through ! ! #ank "td. that they had received the export proceeds and the charges for

the services availed had been paid to the ! ! #ank "td., we are, therefore, of the prima facie view that there is no banking and financial services, which have been received by the appellant from any foreign bank and as such, the impugned order confirming service tax de mand is not correct. n view of this, the re4uirement of pre'deposit of service tax demand, interest and penalty is waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal. The stay application is allowed.

De.isio : $ppeal allowed. Co44e t: The essence of this case is that export is made against letter of credit and then after sales proceeding reali:ed through M/s ! ! bank "td. 1or opening of letter of credit and rendered services to appellant, they has issued bill along with service tax. ;ence, prima facie appellant has not received any king of #anking and financial services from abroad bank. Thus, no re4uirement of pre'deposit of service tax demand, interest and penalty.