Vedic Broadcasting Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Delhi)
The issue under consideration is whether the charges paid for a service provided by Intelsat (situated outside India) to the Appellant covered under the head broadcasting service and tax in the hands of the Appellant under the reverse charge mechanism?
In the present case, the Master Service Agreement entered into between Intelsat and the Appellant is for securing a dedicated 8MHz bandwidth on the transponder of Intelsat satellite IS-10/IS-20, while according to the Department the down linking of the signals from the satellite is transmission of signals covered by the definition of broadcasting‘ and, therefore, liable to service tax.
CESTAT states that, Since the entire activity comprising of production of programme content, encoding, modulating, up-linking and subsequent downlinking on the footprint area completes the activity of broadcasting at the end of the Appellant, on which it is depositing service tax, the limited activity of downlinking cannot be again made liable to tax as ‗broadcasting‘ service in the hands of Intelsat, whose role is limited to leasing of space segment capacity on the transponder of its satellite. It is clear that the intention of the Appellant is to secure a dedicated bandwidth for its use for uplinking and downlinking the programme signals. A dedicated use of bandwidth of the transponder of the satellite ensures that the Appellant is able to broadcast its programme signals and it is, therefore, incorrect to suggest that the transmission of signal is the predominant intention of the parties. A satellite operator leases the space segment capacities of the transponder of the satellite and though it is correct that the lease of the space segment capacity of the transponder is utilized for uplinking and downlinking the programme, but it cannot be said the Intelsat has contracted to broadcast/transmit the programme signals. In case the space segment capacity of a transponder is not leased, a broadcaster would not be in a position to uplink and downlink the programme signals. Intelsat has, it is clear, leased space segment capacity of the transponder and transmission of signals is ancillary to such leasing activity. It also needs to be appreciated that whether or not the Appellant uses the space segment capacity of the transponder for uplinking and downlinking of signals, it has to pay the monthly charge of US$ 40,000 to Intelsat.
Therefore, that follows is that the Commissioner committed an error in holding that Intelsat has provided broadcasting service to the Appellant and so the Appellant has to pay service tax on a reverse charge mechanism.
FULL TEXT OF THE CESTAT JUDGEMENT
1. The order dated November 30, 2015 passed by the Commissioner of Central Excise, Dehradun1 to the extent it confirms the demand of service tax amounting to Rs. 87,05,130/- with interest and penalty, has been assailed in this Appeal filed by M/s Vedic Broadcasting Ltd., Haridwar2. The Commissioner, however, dropped the demand of Rs. 19,38,492/-.
2. The issue involved in this Appeal is as to whether the charges paid by the Appellant to M/s Intelsat Global Sales & Marketing Ltd., UK3 are for a service provided by Intelsat (situated outside India) to the Appellant, that would be leviable to service tax under the head broadcasting service‘ in the hands of the Appellant under the reverse charge mechanism. According to the Appellant, the Master Service Agreement4 entered into between Intelsat and the Appellant is for securing a dedicated 8MHz bandwidth on the transponder of Intelsat satellite IS-10/IS-205, while according to the Department the down linking of the signals from the satellite is transmission of signals covered by the definition of broadcasting‘ and, therefore, leviable to service tax.
3. The Appellant is a Public Limited Company having its corporate office in Noida and its registered office at 7A, Sandesh Nagar, Kankhal, Haridwar. The Appellant claims to be engaged in the business of broadcasting socio, spiritual and cultural television channels, for which it has a network of three 24×7 television channels, namely Aastha, Aastha Bhajan and Vedic.
4. An Agreement was entered into between the Appellant and Intelsat on February 27, 2008. It provides that upon execution of a service order by both the parties under the Agreement, Intelsat shall provide to the Appellant and the Appellant shall purchase from Intelsat, the services described in the service order in accordance with and subject to the conditions stipulated in the Agreement and the Service Order.
5. According to the Appellant, a cumulative reading of the terms of the Agreement as well as the Service Order would demonstrate that the essence of the contract is to secure a dedicated 8MHz bandwidth on the transponder of the satellite belonging to Intelsat and the charges paid for this purpose by the Appellant to Intelsat are not for provision of any service.
6. It was, however, believed by the Officers of the Internal Audit Wing of the Department during the course of audit that the Appellant had received ‘broadcasting services‘ from Intelsat by using the transponder of the satellite owned by Intelsat for up linking and down linking the programme signals through the services of Noida Software Technology Pvt. Ltd.6 and for which the Appellant had been making payments in foreign currency to Intelsat.
7. Accordingly, a show cause notice dated September 05, 2014 was issued to the Appellant. The relevant portion of the show cause notice is reproduced below:
“4. Whereas, the noticee in their reply dated 03.10.2013 (RUD -5) has submitted that the proposal for demand of Service Tax on utilization of the transponder of the satellite for the down-linking and up-linking of the programme signals is bad in law and without any basis. The noticee has stated that the services as availed relate to the utilization of the bandwidth on the satellite on IGSML and do not relate to utilization of the transponder of the satellite. They further stated that the service of the utilization of the bandwidth of the satellite do not fall under any of the service categories as laid down under Section 65 (105) of the Finance Act, 1994. The contention of the noticee does not appear to be tenable in view of the fact that the “Broadcasting Service”, as received by the noticee from the service provider situated abroad, is covered under Section 65(105)(zk) of the Finance Act, 1994. The meaning of ‘Broadcasting’ as defined under clause (c) of Section 2 of the Prasar Baharti (Broadcasting Corporation of India) Act, 1990 (25 of 1990) also includes the rights to receive any form of communication like signal by transmission of electro-magnetic waves.
In view of above, the noticee appears liable to pay service tax as per reverse charge basis under Section 66A of the Finance Act, 1994 on the above said amount paid during the period 2009-10 to 2014-15 (upto July 2014)xxxxxxxxxx
5. In view of the above, it appears that the assessee is liable to pay Service tax amounting to 1,06,43,622/- including Edu. Cess and SHE Cess for the period 2009-10 to 2014-15(upto July 2014) at applicable rates on the amount of paid to M/s Intelsat using the transponder of their satellite for down-linking and up-linking of the programme.
[emphasis supplied]
8. The Appellant submitted a detailed reply pointing out that it had not received any ‘broadcasting service‘ from Intelsat, since the activity of using the transponder of the Intelsat satellite for down linking and up linking of the programme signals is not covered under the definition of ‘broadcasting service‘. It was also stated that the Appellant was neither a recipient of ‗broadcasting service‘, nor was Intelsat a service provider.
9. The Commissioner, however, did not accept the contentions advanced by the Appellant and confirmed the demand for the period upto June, 2012 but dropped the demand for the remaining period after June, 2012. The Commissioner observed that the activity would fall within the definition of ‗broadcasting‘ under section 2(c) of the Prasar Bharati (Broadcasting Corporation of India) Act, 19907 and the relevant portion of the order passed by the Commissioner on this issue is reproduced below :
“5.5.3 The Section 2 (c) of the Prasar Bharti Act provides that ―broadcasting” means the dissemination of any form of communication like signs, signals, writing, pictures, images and sounds of all kinds by transmission of electro-magnetic waves through space…‖. As noted by me herein above, M/s Intelsat provided means to uplink the low frequency signals which were then upgraded and transmitted back to the designated footprint area. Here I do not find merit in the plea of the party that the transponders were merely being used for up linking. I find that in this case they were also used, as per commands received from M/s Intelsat, to amplify the low frequency signals/data received through M/s NSTPL to higher frequency and re transmission of these improved signals back to earth. Thus some human effort was put in by the controlling technicians of M/s Intelsat by way of giving commands which leads to retransmission of data back to the earth. The area or the footprint could be altered as per the service order.xxxxxxxxxxxxxxxThus, the activity under taken by M/s Intelsat was very much within the purview of the definition of ‘broadcasting’ as provided under Section 2 (c ) of the Prasar Bharti Act which was pari materia to the Section 65(105) (15) of the Act. Further, as the programme down linked by various MSOs/DTH operator was available for viewing in India, in spite of the encryption of signals or beaming thereof through the satellite being performed by M/s Intelsat outside India, the service was taxable.
10. The Commissioner also observed that Intelsat was a ‘broadcasting agency or organization‘ under section 65(105)(16) of the Finance Act, 19948 and, therefore, the service provided would be taxable under section 65(105)(zk) of the Finance Act. The observations are as follows :
5.5.5 It is clear that the definition under Section 65(16) does not excludes an agency located outside India as long as it is engaged in providing service of broadcasting but the definition brings within its ambit even the branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner. The use of word ,includes‘ expands the ‗persons‘ who can be subjected to levy of tax. In case the ‗person’ located in India, engaged in providing broadcasting service, had its head office outside India, he could not escape the tax on this ground and he too was brought within the ambit of service provider, therefore, the party’s interpretation is wrong to assume that only Indian broadcasting entities could be taxed. The taxing event is the provision of taxable service which in the instant case, though being performed outside India, is very much covered within the definition of taxable service in the light of Explanation to Section 65(105)(zk) of the Act. Further, as the taxable service has been provided by a broadcasting organization not having any branch/subsidiary etc. in India the service tax has to be recovered from the recipient located in India in terms of Section 66A of the Act.
11. The Commissioner repelled the submissions advanced by the Appellant that allocation of bandwidth was not a service but supply of goods and the observations are as follows :
5.6.9 I would like to refer to Point 5.1 and 5.3 of the MSA which titled “Confirmed Outage” and “Outage credits’respectively xxxxxxxxxxxx.
The provisions contained herein above not only point that the agreement between the party and M/s Intelsat was for provision of service but also indicate that the fee paid to Intelsat was directly related to the provision of uninterrupted service which enables down linking of signals retransmitted to earth. It nowhere talks about the consideration linked to availability of the space segment in a satellite’s transponder xxxxxxxxxxxx. Thus, it is clear that in the instant transaction service factor is dominant and the transfer of space segment in itself is incomplete to achieve the intended goal of the party. Thus, at best, even after applying the ratio in Antrix Corporation Ltd., the transaction between the party and M/s Intelsat can be said to be a composite transaction involving both sale of space segment as well as for providing broadcasting services.
5.6.11……………..Further, as regards to intention behind the instant contract, the Points of the MSA reproduced in the preceding paras clearly bring out that the consideration paid by the party to M/s Intelsat was in lieu of provision of service of transmitting signals and not for transfer of right to use any goods. The „space segment capacity‟ even if considered as „goods‟ in the light of decision in Antrix Corporation Ltd., was merely a medium through which the end result of transmitting the signals in a designated region was performed. Thus, after giving effect to “dominant nature test”, I am of the opinion that the transaction between the party and M/s Intelsat was that for provision of “broadcasting” services as defined under Section 65(15) of the Act read with Section 2(c) of Prasar Bharti Act. I further hold that the services received by the party were taxable services falling under Section 65(105)(zk) of the Act on which they were required to discharge service tax under Section 66A of the Act.
5.7 In view of the aforesaid observations and the provisions of their MSA I also find no force in the party‟s plea that the contract was merely for allotment of space segment capacity and nothing more and that they did not receive any broadcasting services from Intelsat. Their plea is that whatever is received in form of retransmitted electro magnetic waves (signals) was incidental. This, I find is not correct at all. When the payment is linked to the uninterrupted availability of signals it becomes prime objective and the intention behind entering into the agreement. It is a settled principle of law that sale and purchase of goods is made for cash, deferred payment or other valuable consideration. As already pointed out this is a case where the provider is actively involved throughout the tenure of the MSA and is also governed by the requisition made by the party in a Service Order. The transmission plan too is provided to M/s Intelsat which can be amended from time to time. I find this is not case of simple one time sale where the act of sale occurs in the beginning. It is provided in Point 4.2 of the MSA that the invoices are to be raised on monthly basis, thus it is a case of continuous supply. Therefore, I find that in such case the reason for making the payment or not making a payment or making a part payment for any duration, become the principal aim of the said contract. This reason has clearly been linked with the uninterrupted availability of Signals as per Point 5.1 and 5.3 of the MSA. Accordingly, I reiterate that what has been provided by M/s Intelsat was “broadcasting‘ service only.‖
[emphasis supplied]
12. The Appellant has been depositing service tax under the taxable service category of ‗broadcasting service‘ on its income from advertisement fees and sponsorship fees recovered from third parties desirous of advertising on the channels of the Appellant.
13. Shri Vishal Kumar, learned Counsel appearing for the Appellant has made the following submissions :
(i) The Appellant has not received any “broadcasting service‘ from Intelsat situated outside India and, therefore, there cannot be any import of “broadcasting service‘ leviable to service tax. The activity of using the transponder of the satellite for up-linking and down-linking of the programme signals is not covered under the definition of “broadcasting service‘. The activity of up-linking of signals by NSTPL to the satellite of Intelsat and down-linking of such signal by Multi System Operators (MSOs) and cable operators in India is a continuous sequence and, therefore, it cannot be urged that the Appellant is the recipient of “broadcasting service‘ rendered by Intelsat;
(ii) Intelsat is not a “broadcasting organization‘ and hence the Appellant is not engaged in any broadcasting activity;
(iii) Intelsat is not engaged in “broadcasting‘ in terms of section 2(c) of the Prasar Bharti Act. In fact, Intelsat is merely facilitating the broadcast of programme signals in the capacity of a relay station. This is for the reason that Intelsat merely receives the transmitted signals, amplifies it into high frequency and re-transmits the same to the desired footprint area. This activity is not akin to broadcasting;
(iv) In terms of the Agreement, Intelsat has leased the transponder of the satellite to the Appellant for the purposes of up-linking and down-linking of signals using the 8 MHz space segment (bandwidth) on its satellite IS-10/IS-20;
(v) No value addition is undertaken by Intelsat insofar as the programme content of the Appellant is concerned. Intelsat merely converts the low-band frequency into high-band frequency and relates the same over the desired footprint area. In fact, the re-transmission of amplified signals through the transponder belonging to Intelsat completes the ‗broadcasting service‘ provided by the Appellants on its account;
(vi) The definition of “broadcasting‘ under section 65(15) of the Finance Act has been grouped into three categories. It would be evident that the definition of “broadcasting‘ in terms of section 2(c) of the Prasar Bharat Act would only include the actual broadcaster and not the satellite service provider; and the later parts of the definition would include specific activities specified thereunder which would in no manner cover the case of Intelsat as a ‗broadcasting agency or organization‘, as defined under section 65(16) of the Act. In support of this contention, reliance has been placed upon the decision of the Delhi Tribunal in ESPN Software India (P) Ltd. vs CST, New Delhi9;
(vii) If the activity of re-transmission of amplified electromagnetic waves by Intelsat is held to comprise broadcasting, then this would lead to double taxation on the same activity; and
(vii) Intelsat has leased the space segment to the Appellant and this transaction would amount to direct sale of ‗goods‘ within the meaning of article 366(12) of the Constitution and not for providing any service.
14. Shri Vivek Pandey, learned Authorized Representative of the Department, has, however, made the following submissions:
(i) The definition of ‗broadcasting agency or organization‘ under section 65(16) of the Act means any agency or organization engaged in providing services in relation to broadcasting in any manner and so the activity of Intelsat falls under the definition of ‗broadcasting‘ since the definition is very broad. Elaborating this submission, it has been pointed out that the activity of Intelsat in providing a designated band with a frequency of a particular band in a particular transponder of a satellite which is used for transmitting signals at a particular minimum speed and of a particular power means that the activity carried out by Intelsat is nothing but ‗broadcasting‘;
(ii) The Agreement contains features relating to both allocation of bandwidth and transmission of signals. It is clear that the speed and strength of transmission of data/signal has been recognized as crucial factors in forming the provision of service under the Agreement and, therefore, it can be said that the transmission of signals is the predominant character of the service being provided; and
(iii) Even if the test of ‗intention of the parties‘ behind the transaction as laid down by the Supreme Court in Bharat Sanchar Nigam Ltd. & Anr. vs Union of India & Ors.10, is adhered to, the intention of the Appellant is to get its TV programmes in the form of radio waves transmitted from one part of the earth to another and it is not the intention of the Appellant to hire a space on the satellite.
15. The submissions advanced by learned Counsel for the Appellant and learned Authorized Representative of the Department have been considered.
16. In order to appreciate the controversy involved in this Appeal, it will be necessary to examine, in brief, the methodology of broadcasting, as has been explained by the experts who had been asked to assist the Bench. The same is as follows :
A. Introduction to Cable/ Satellite TV Broadcasting:
Cable/ Satellite TV broadcasting is an activity, which serves the purpose of creating audio visual content and then disseminating it to a wide audience for viewing/listening and involves roles of many players. These players are broadcaster, uplink service provider (also known as earth station or teleport operator), satellite operator and Cable/ DTH operators.
1) Broadcaster: A broadcaster produces/ aggregates the program content, which can either be news or non-news content. Non-news content includes general entertainment channels, sports channels, religious channels, music channels, movie channels and infotainment channels. The digital audio-video outputs from these servers are subsequently passed on to the earth station or teleport.
2) Earth station/ Teleport operator: The earth station/ teleport operator takes the audio-video signals from the broadcaster and encodes, modulates and converts the content to high power electro-magnetic waves and up-links it to the allocated/ designated space segment of the satellite, which is located in the geo-stationary orbit of the earth. A geo-stationary orbit is an imaginary orbit located above the earth’s meridian at an approximate height of 36,000 kms. from the surface of the earth. The earth station has a transmit antenna pointing accurately to the satellite to which the signal is to be transmitted/ beamed. This is known as the uplink antenna and is generally 9.3 meters in diameter.
3) Satellite Operator: Satellites are used for many purposes including broadcasting. The satellite operator owns the satellite and leases out space segments on the satellite to customers as per their requirement. The satellite operator can either be a government organization or a private organization. In India, only Indian Space Research Organization owns and operates Indian owned satellites. The radio frequency or electro-magnetic waves uplinked from the earth station are reflected back to the earth by the satellite. The satellites are designed in such a manner that the radio frequency up-linked with a particular power are automatically reflected back as it is, i.e. without any alteration/ modification of the program content, through the help of internal process of set on-board equipments, i.e. without any human intervention, whatsoever. The availability and the strength of the reflected signal will vary on the basis of the geographical footprint of the satellite.
4) Cable Operators or DTH (Direct-to-Home) Operators: The radio frequency signal sent back to the earth by the satellite is received by the cable operator/ DTH service provider through a downlink antenna, which points towards the satellite. The cable/ DTH operators aggregate the received signals comprising of multiple channels, which would emanate from various satellites.
B. Regulators and Permissions for each player :
There are many regulatory agencies of the Government, which have framed rules and regulations on different aspects with respect to different players in the business. These Government agencies charge license fees, spectrum charges, monitoring charges, etc. from the different players and also play a vital role in regulating and monitoring the activities of the players, at all times. The mandatory permissions/ rules/ regulations/ fees required by each player are as under:
1) Broadcaster:
a) A broadcaster who desires to launch a channel first approaches a satellite operator for leasing space segment on a satellite. The satellite chosen would depend on the target audience which is based on the footprint area of the satellite. The satellite operator then allocates the required space segment on the appropriate transponder of the satellite and thereafter the broadcaster and the satellite operator enter into an agreement for the charges towards the space segment allocation on the transponder of the satellite to be paid by the broadcaster.
b) Simultaneously, the broadcaster also enters into an agreement with an earth station (i.e. uplink service provider) with respect to up-linking of the proposed television channel.
c) Thereafter, the broadcaster approaches the Ministry of Information and Broadcasting for obtaining uplink and downlink permission/ license.
d) After the broadcaster receives the license for a particular TV Channel, it approaches the uplink service provider for up-linking of the TV channel. The Uplink Service Provider also has to take certain permissions from Wireless Planning Commission, Wing of Department of Telecom (DoT), Ministry of Communication and Network Operation and Control Centre for Uplink of that particular TV channel. After obtaining the requisite permissions from the concerned Regulatory Authorities, the teleport owner i.e. uplink service provider starts the uplink of the channel. The satellite operator provides the technical parameters related to the allocated space segments/ bandwidth on the particular transponder of the satellite on which the earth station is required to uplink the radio frequency signals.
e) Based on the technical parameter provided by the satellite operator, a detailed carrier plan giving all the technical details about the uplink is prepared by the earth station operator and sent to Wireless Planning Commission and Network Operation and Control Centre for necessary approvals.
f) The earth station can only uplink Radio frequency to the satellite, as per the carrier plan approved by the Government of India, on payment of annual spectrum charges to them.
g) In the present case, the Appellant as broadcaster has entered into an agreement with Noida Software Technology Park Ltd. (―NSTPL‖) i.e. earth station/ teleport operator for up-linking the program signals and has agreed to pay a fixed amount for rendering the said activity. The Appellant broadcaster also pays annual up-linking and downlinking fees to the Ministry of I&B.
2) Teleport/ Earth Station Owner or Uplink Service Provider:
a) A teleport operator is purely a technical service provider having the required regulatory permissions from concerned regulatory authorities to provide up-linking service to the broadcasters and has a functioning teleport or earth station with all the necessary equipments to provide un-interrupted uplink service.
b) A teleport operator is also required to seek permission from the Ministry of Information and Broadcasting for setting up an up-linking teleport. Prior to commencement of operations, the earth station is also required to obtain permission from Standing Advisory Committee on Radio Frequency Allocation under the Department of Telecommunications for site clearance with respect to setting up of a teleport. The teleport operator is also required to seek permission from the concerned department for setting up a teleport called Letter of Intent.
c) After obtaining the Letter of Intent the teleport operator has to seek import license with respect to import of required uplink equipments. After obtaining import license for equipments, the teleport operator imports the equipments and installs the same.
d) After installation, the concerned departments issue clearance certificate called the Mandatory Performance Verification Testing Certificate.
3) Satellite Operator:
a) Satellite operator desiring to launch a satellite approaches the International Telecommunication Union (ITU), which is a regulatory body that governs the orbital traffic for launch of a satellite. The Satellite Operator prepares and submits a proposal for launching of a satellite into a proposed orbital location targeting a particular footprint and specification with the ITU.
b) Thereafter, the ITU, in coordination with all members countries, approves the location of the satellite and grants permission to launch the satellite.
c) The space on satellite can be independently and simultaneously be used for any purpose for example Communication, VSAT, Navigation etc. from different geographically locations.
4) Cable Distributor (MSO and Local Cable Operator) :
A cable/ DTH operator obtains a copy of the downlink permission granted to a channel, which approaches it for carrying their channels, on their network for further re-distribution to the masses/ end users/ consumers/ subscribers.
17. To appreciate the contentions of the parties, it would also be appropriate to reproduce the relevant terms of the Agreement and the Service Order.
AGREEMENT
18. Clause 1 deals with ‗AGREEMENTS‘, while the ‗Provision of Services‘ is contained in clause 2 of the Agreement. They are reproduced below :
“1. AGREEMENTS
1.1 Agreements. By executing this MSA, Intelsat and Customer agree that, upon execution by both Parties of a service order pursuant to this MSA (each, a “Service Order”), Intelsat shall provide to Customer, and Customer shall purchase from Intelsat, the services described in such Service Order (the “Service(s)”), in accordance with, and subject to the conditions of, this MSA and such Service Order.xxxxxxxxxx
2. PROVISION OF SERVICES
2.1 General. Intelsat shall provide each Service in accordance with the “Service Specifications” defined in the relevant Service Order. All Services are offered on a non-exclusive basis.
2.2 Intelsat-Provided Facilities. Intelsat shall provide each Service using satellite and/or terrestrial facilities owned and/or operated by Intelsat and/or third parties under contract with Intelsat (the “Intelsat-Provided Facilities”). Any third party facilities used for any Service as part of the Intelsat-Provided Facilities shall be subject to the terms and conditions of Intelsat’s agreement with such third-party provider, as amended from time to time.
2.3 Space Segment Allocation. Intelsat reserves the right to assign and/or reassign Customer‘s space segment allocation within the satellite identified in the Service Order or to move the Service to a different satellite and/or a different orbital location (the satellite being used for the Service at any given time referred to herein as the Satellite”), or in any other way to alter the method by which it provides a Service, provided that any such change does not result in a failure of the Service to meet the Service Specifications. Except in emergency circumstances, Intelsat shall notify Customer of any changes to its allocation as soon as reasonably practicable prior to such change and shall use reasonable efforts to minimize disruption to Customer’s Service during any such change.‖
19. The ‘Customer Obligations and Use Restrictions‘ are contained in clause 3 of the Agreement and they are reproduced below:
“3. CUSTOMER OBLIGATIONS AND USE RESTRICTIONS
3.1 Customer‟s Use and Third Party Use. Each Service is provided for Customer’s own use and in no event shall Customer be permitted to resell a Service to any other person or entity unless Customer‘s provision of services to such person or entity includes substantially more communications facilities than the Service provided by Intelsat. For purposes of this Section, ―resell‖ shall include any means allowing another person or entity to utilize the Service, in whole or in part, including through sale, resale, license, lease, sublease, grant, assignment, or any other means of direct or indirect conveyance. Without limiting the foregoing, Customer shall be responsible to Intelsat for any and all use of the Service or transmissions via the Service by any third party user throughout the chain of use (each a ―User” and collectively the “Users‖) to the same extent as Customer would be for its own use or transmissions, and all references in the Agreement to Customer’s responsibilities to Intelsat regarding Customer’s use or transmissions shall be interpreted accordingly.
3.3 Operational Requirements and Non-interference. Customer shall use each Service, and shall require that its Users use such Service, if applicable, in compliance with the “Operational Requirements” contained in the Service Order, as such may be amended by Intelsat from time to time upon notice to Customer, and which can, for convenience, be located at http://www.intelsat.com/resources/earthstations/iess.asp or www.panamsat.com/customer support/legal agreements.asp. Customer shall configure, equip and operate its transmit facilities so that the interface of these facilities, in outerspace, with the Satellite shall conform to the characteristics and technical parameters of the Satellite. Customer shall follow Intelsat’s procedures for initiating or terminating any transmission to the Satellite. Customer shall operate all transmit facilities in a manner that allows for cessation of, and shall cease, transmission immediately upon receiving notice from Intelsat under Section 13.2 below. Customer shall furnish such information regarding the technical parameters of its transmissions as may be required by Intelsat prior to commencing, during, and upon the conclusion of, any transmission to the Satellite. Customer shall, upon Intelsat’s request, provide measured proof that any transmit facility meets any material requirement specified in the Operational Requirements. Customer shall follow established practices and procedures for frequency coordination and shall not use the Service, or any portion thereof, in any manner that would or could be expected, under standard engineering practice, to cause harm to any satellite or related infrastructure of Intelsat or a third party, or to cause interference with any satellite or related infrastructure of Intelsat or a third party.
3.4 Customer-Provided Facilities. Unless otherwise specified in the Service Order, Customer shall be responsible for the provision, installation, operation, maintenance of, and for securing all necessary licenses and/or authorizations for, all earth station facilities and equipment (“Customer-Provided Facilities”) for transmitting signals to, or receiving signals from, the Satellite in accordance with the requirements set forth in the Service Order. In addition, all Customer earth stations must be registered by Intelsat prior to operation, in accordance with the Service Order. By executing a Service Order, Customer represents and warrants that the information it will provide to Intelsat in connection with earth station registration will be complete and accurate in all material respects. Customer may contract with parties other than Intelsat to transmit its signals to, or receive its signals from, the Satellite, provided that Customer shall require that its contractors comply with all of the requirements of this MSA and the Service Order. If Customer retains third parties as permitted by the previous sentence, those third parties’ facilities and personnel shall be deemed to be Customer-Provided Facilities and the acts and omissions of those third parties shall be deemed to be the acts or omissions of Customer. Intelsat shall have the right, but not the obligation, to inspect any Customer-Provided Facilities together with associated facilities and equipment used by Customer, or by a third party under the authority of Customer, to transmit to the Satellite. Intelsat shall use all reasonable efforts to schedule inspections to minimize the disruption of the operation of the facilities, and Customer shall make the facilities available for inspection at all reasonable times. Any such inspection shall not be deemed approval of the facilities by Intelsat or a waiver of any of Intelsat’s rights hereunder.
3.5 Transmission Plan. No later than ten (10) business days prior to the Service Start Date, Customer shall provide Intelsat with a transmission plan (the “Transmission Plan”) which complies with the Operational Requirements. Customer must have Intelsat’s written approval of the Transmission Plan, which approval shall not be unreasonably withheld or delayed, prior to, and as a condition to, Customer‘s commencement of the Service. Customer shall also be permitted, subject to Intelsat‘s prior written approval, to modify the Transmission Plan from time to time, subject to the terms of the applicable Service Order. Intelsat’s approval of a Transmission Plan shall not constitute, nor does Intelsat make any representation, warranty, or covenant regarding the efficacy of the use of any number of carriers or other alternative uses of the Services. In addition, Intelsat does not make any representation, warranty or covenant regarding the efficacy of any Transmission Plan or use of the Service in relation to potential sources of terrestrial interference, and the absence of terrestrial interference is not a Service Specification.‖
20. The “Service Outage‘ is contained in clause 5 of the Agreement and the relevant clause 5.1 is reproduced below :
“5. SERVICE OUTAGE
5.1 Confirmed Outage. A “Confirmed Outage” shall have occurred when the Service fails to meet the Service Specifications for a period of time specified in the Service Order, and such failure is confirmed by Intelsat. If a Confirmed Outage has occurred, it shall be deemed to commence when Customer notifies Intelsat of the occurrence of the Confirmed Outage (subject to Intelsat’s confirmation), and to end when Intelsat notifies Customer or Customer has actual knowledge that the Service has been restored. Any period during which Customer uses the applicable Service shall not count towards the duration of the Confirmed Outage.‖
5.3 Outage Credits. If a Confirmed Outage occurs, Intelsat shall give Customer a credit (an „Outage Credit‟) against future Charges for that Service. Unless otherwise specified in a Service Order, Outage Credits shall equal pro rata Service Fees due for that period of time during which a Confirmed Outage of the Service, or any portion thereof, has occurred.‖
21. Clause 6 of the Agreement deals with ‗Interruption of Service‘ and the relevant clause 6.1 is reproduced below :
“6. INTERRUPTION OF SERVICE
6.1 Interruption Rights. Customer recognizes that it may be necessary, if the Satellite or any component thereof loses power, or in other unusual or abnormal technical situations, or other unforeseen conditions, for Intelsat to deliberately interrupt Customer’s use of the Service. Intelsat shall make decisions to interrupt Services for such purposes in good faith. To the extent technically feasible, Intelsat shall give Customer at least 24 hours notice of such interruption and shall use all reasonable efforts to schedule and conduct its activities during periods of such interruption so as to minimize the disruption to users of the Satellite. Customer acknowledges, however, that Intelsat may interrupt Service without notice in any situation that in the opinion of Intelsat has caused or is likely to cause harm to any satellite or related infrastructure of Intelsat or a third party or interference with any satellite or related infrastructure of Intelsat or a third party. Customer shall immediately cease transmissions to the affected Satellite when required to do so by Intelsat under this Section.‖
22. The “Suspension of Service‘ is contained in Clause 8 of the Agreement and relevant clauses 8.1 and 8.3 are reproduced below :
“8. SUSPENSION OF SERVICE
8.1 Suspension for Cause. Intelsat may suspend a Service in any circumstance in which Intelsat would have the right to terminate the related Service Order or this MSA for cause under Section 7.1 above, provided that any notice that would be required for termination for cause is also given for such suspension. In no event shall Intelsat’s election to suspend a Service be construed as a waiver of Intelsat’s right to terminate the Service Order or this MSA.
8.3 Effect of Suspension. Customer shall immediately cease transmissions to the Satellite (if applicable) upon notice of suspension by Intelsat in accordance with this Article 8. Intelsat may continue to suspend the Service until any breach of the related Service Order by Customer is cured and, in the case of any suspension of Service pursuant to Section 8.2 above, until any action or threat of action is resolved in Intelsat’s favor or removed and, in each case, until assurances are given to Intelsat’s reasonable satisfaction that the matter(s) giving rise to a suspension of Service will not reoccur. Intelsat’s suspension of a Service in accordance with this Article 8 shall not result in any Outage Credit to Customer, and all Charges for the Service shall continue to be due and payable.”
SERVICE ORDER
23. It would also be useful to reproduce the relevant portion of the Full Time Agreement – Service Order dated August 27, 2002 executed between PanAmSat and CMM Broadcasting Network Limited and the same is as follows :
“FULL-TIME AGREEMENT-SERVICE ORDER#7261
