B.S.V. Murthy, Technical Member - Appellant is a 100% EOU which is engaged in providing 'Technical Testing and Analysis' Service. The appellant receives Reference Standards Materials (RSM) and conducts lab tests to verify whether the product is in accordance with US standard Operating Procedure and submits reports to their parent-company in USA. The appellant treated the service as a taxable service and was discharging the service tax liability regularly. Taking a view that appellant is not eligible for duty-free import of chemicals and duty-free sourcing of Indian material on the ground that the activity undertaken by them in respect of services cannot be considered as one of export of service, proceedings were initiated. The impugned order confirms this view and has confirmed central excise duty demand of Rs. 10,35,983/- denying exemption Notification No. 52/2003-Cus., dated 31-3-2003 and confirming the duty demand amounting to Rs. 2,06,89,615/- denying exemption under Notification No. 22/2003-C.E., dated 31-3-2003. The demand relates to the period December 2005 to June 2010. Penalty equal to the duty demanded has also been imposed and interest on the duty has also been demanded.

2. The issue involved is a short one which is whether the 'Technical Testing and Analysis' Service undertaken by the appellant and resultant report sent abroad can be considered as export of service or not. The learned counsel for the appellant submitted that the Development Commissioner has stated it so; the appellant has achieved positive net foreign exchange throughout; the adjudicating authority had not addressed the Development Commissioner before initiating proceedings; the appellant had chosen to pay service tax voluntarily since option was available to them either to claim rebate or to export without payment of service tax; according to the Export of Service Rules, if a service is performed partly in India and partly abroad, such activity is considered as export of service. He has relied upon the decision of the Tribunal in the case of B.A. Research India Ltd. v. CST [2010] 26 STT 60 (Ahd.) The learned AR on the other hand submits that the entire activity of Technical Testing and Analysis is done in India only and only report is sent to the parent-company. Therefore it has to be held that all the activities were undertaken in India only and therefore the activity undertaken by them cannot be considered as export of service. He also submits that the fact that appellant voluntarily paid service tax goes to show that they were liable to pay service tax and entire activity was undertaken in India only.

3. We have considered the submissions made by both the sides. There is no dispute that the activity undertaken by the appellant is covered by one Export of Service Rules, 2005. According to this Rule, if a service is performed partly outside India, it is treated as performed outside India. Another condition required to be fulfilled is that the consideration for the service should be received in foreign convertible currency. There is no dispute that the appellants have received the consideration in foreign convertible currency. The only issue is whether the activity can be considered to have been partly performed in India and partly performed outside. In this connection we find that the reliance of the learned counsel on the decision of this Tribunal in the case of B.A. Research India Ltd. (supra) is appropriate. In that case also the Tribunal was considered a situation where the testing and analysis was done in India and report was sent abroad and the Tribunal took the view that unless the test report is sent, the performance of service cannot be considered as complete and therefore the service can be treated as partly performed in India and partly performed outside. In this case also, the appellants receive chemicals and materials from their parent company, conduct testing and analysis on the same and send the report electronically to the pare