JUDGMENT

K.S. Jhaveri, J. - In both these appeals since identical questions of law and facts are involved, they are decided by this common judgment.

2. By way of these appeals, the appellant has challenged the judgment and order of the Tribunal [2016 (42) S.T.R. 537 (Tribunal)] whereby the Tribunal has allowed the appeal of the assessee.

3. This court while admitting the appeals framed the following question of law :-

D.B. Central Excise Appeal No. 22/ 2016 and 47/2016

"1. Whether a service not being delivered outside India and not used outside India can be termed as export in violation of provisions of Export of Service Rules, 2005 and whose effective use and enjoyment was in India, in terms of the Board Circular No. 141/10/2011-ITU, dated 13-5-2011."

4. The facts of the case are that proceeding is initiated in view of Show Cause Notice issued under C. No. V(H)ST/Adj-I/49/2007/1483-15, dated 21-5-2007 to M/s. National Engineering Industries Ltd., Khatipura Road, Jaipur (hereinafter also referred to as "the assessee") who are holding Service Tax Registration No. 101/ST/AMC/JPR-II/03, and were engaged in providing services of Commission Agent falling under the category of Business Auxiliary Services under Chapter V of the Finance Act, 1994. They appeared to have not paid Service Tax amounting to Rs. 49,99,770/- during the period from January, 2006 to December, 2006 in contravention of provision of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994 as per facts detailed below. The assessee were not paying service tax on the commission received in Foreign Currency for the services rendered in India, the details of commission were called for from the assessee, who vide their letter dated 22-1-2007 submitted that they had received commission (amounting to Rs. 4,41,43,881/-) in Foreign Currency for the service rendered in India for the period from January, 2006 from M/s. NTN Corporation, Singapore, NTN Corporation, Japan and NTN Corporation, USA.

5. Counsel for appellant Mr. Ranka has taken us to the order of the original authority wherein it has been observed as under :

11. The assessee is appointed as distributor by the foreign company to promote sales of their product in India. They get commission on the imports into India when orders are placed through them. The assessee thus finds buyers in India for the product of foreign seller and procure orders from the Indian buyers for supply of product by the foreign seller to Indian buyer. Indian buyer makes payment to the foreign seller and in turn the foreign seller pays commission to assessee. One more option is available in the Distributorship Agreement where the buyer can opt for payment of commission directly to assessee which is separately indicated in the sale invoice. In such a case the amount of commission is not passed on to the seller by the buyer. Where the buyer pays price inclusive of commission to the foreign seller the portion of the commission from the price is paid by the seller to NEI. Thus, when the amount paid by the Indian buyer in foreign currency to the foreign seller which is inclusive of assessee commission the foreign seller pays the commission portion out of the price to assessee in foreign currency. Where the Indian buyer pays that portion out of the price to assessee in foreign currency. Where the Indian buyer pays that portion of price which represents commission, directly to assessee in that case NEI do not get commission from seller in foreign currency but gets from the Indian buyer either directly or through the route of foreign seller. The commission received by NEI in foreign currency from the foreign seller is from foreign currency remitted by the Indian buyer. The order for import are procured in India and goods against such orders are imported into India and the portion of commission in foreign currency gets remitted from India which is received back in India. Thus, the cycle of service starts from India and finishe