Super House Limited Shoe Div Vs. Commissioner of Central Excise & Service Tax (CESTAT Allahabad)
CESTAT Allahabad has held that benefit of service tax exemption was available on commission paid by exporter to its foreign based subsidiary for procurement of orders from foreign companies. It noted that denial of exemption would apply only in cases where export was made to own joint venture or wholly owned foreign subsidiary.
Admittedly in the present case the appellant has not exported the goods to its own wholly owned subsidiaries or overseas joint ventures. The appellant has paid only commission to its foreign based commission agents, who happened to be their own subsidiary company and has not made any exports to them. We find that the legislative intent beyond the introduction of the above condition is that no exporter would take undue advantage of the exemption on overseas commission agents in respect of the exports made by them to their own companies inasmuch as the export to their own companies would not require the services of any commission agents etc.. In any case without going to the legislative intent, the meaning of the expression used in the said condition leads us to the inevitable conclusion that the denial of the exemption is only in those cases where the exports stand made by the Indian exporter to its own joint ventures or wholly owned subsidiaries located in a foreign country. As such we are of the view that the benefit of the exemption Notification No.18/2009 is available to the appellant and the demand of Service Tax is unsustainable.
FULL TEXT OF THE CESTAT JUDGEMENT
As per facts on record the appellant is engaged in the manufacture and export of footwear and parts of footwear falling under chapter 64 of the schedule to the Central Excise Tariff Act, 1985. The appellant is also registered with the Service Tax department under the category of “Transport of Goods by Road Services” and “Business Auxiliary Services”.
2. For the purposes of exports and to procure the export order the appellant has established four fully owned subsidiaries in foreign countries. The said subsidiaries of the appellant are working as overseas commission agents and are procuring export orders for the appellant. Inasmuch as the appellant is availing the said commission agent services from the companies located outside India, they are liable to pay Service Tax in respect of the commission paid to them, on reverse charge basis, in terms of Clause (iv) of Rule 2(1)(d) of Service Tax Rules, 1994.
3. However, Notification No.18/2009-ST dated 07.07.2009 exempts the said services used by the exporters for export of their goods subject to certain conditions. The dispute in the present appeal relates to one of such conditions enumerated in the said Notification.
4. For the sake of ready reference to the said Notification, the relevant part of the same is reproduced below:-
Notification No.18/2009-ST dated 07.07.2009
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