Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench at Ahmedabad REGIONAL BENCH-COURT NO. 3 Service Tax Appeal No. 11773 of 2017 – DB (Arising out of OIA-CCESA-VAD-APP-II-VK-82-2017-18 dated 19.06.2017 passed by the Commissioner (Appeals) Central Excise and Service Tax-VADODARA-II)

Akshita Exports ……..Appellant Prop M/s Shree Ram Synthetics Pvt Ltd

701, 7th Floor Metro Tower Near Kinnery Cinema Ring Road SURAT,GUJARAT VERSUS Commissioner of C.E. & S.T.-Surat-i ……Respondent NEW BUILDING...OPP. GANDHI BAUG, CHOWK BAZAR, SURAT,GUJARAT-395001 APPEARANCE:

Shri Shri S Suriyanarayanan, Advocate for the appellant Shri M P Solanki, Assistant Commissioner (AR) for the department CORAM:

HON'BLE MEMBER (JUDICIAL), MR. SOMESH ARORA HON'BLE MEMBER (TECHNICAL), MR. SATENDRA VIKRAM SINGH Final Order No. 10459/2025 DATE OF HEARING: 17.04.2025 DATE OF DECISION: 09.06.2025 SATENDRA VIKRAM SINGH

1.1 M/s. Akshita Exports (the appellant) were engaged in export of goods. It has been alleged by the department that the appellant was paying commission to foreign agents during the period from 2008-2009 to 2011-2012 and also claiming export incentives on such commission amount under Duty Entitlement Passbook Scheme (DEPB) and Duty Drawback Scheme. The department intended to tax the said commission amount on reverse charge basis under “Business Auxiliary Service” as defined under Section 65(105)(zzb) of the Finance Act, 1994. On the other hand, the appellant contended that the said commission amount is not liable to service tax.

1.2 It is on record that the invoices issued by the appellant to their foreign buyers indicated the commission amount separately which was deducted from the gross value of the export goods to arrive at the net invoice value. Likewise, in the shipping bills also, FOB value is inclusive of the commission amount.

The appellant received foreign remittances in respect of exports done by reducing the amount to the extent of commission indicated in the invoices. Scanned copy of Export Invoice No. AE/M/10/09-10 dt.20.05.2009, Shipping Bill No. 7352130 dt. 21.05.2009 & Bank Certificate of export and realisation is appended below:-

The commission amount is calculated as a percentage of export value, but it is generally less than 12.5%. The department also recorded statements of Shri Rajesh Nigania, Director of the appellant on 07.05.2014 who admitted to have paid the commission amount to their foreign buyers who in turn paid the same to their commission agent. In reply to question no.8, he admitted that they have not appointed any foreign commission agent; that for export business, it was a normal trade practice to extend commission; that in his case, the foreign commission agents have never provided any service in relation to export of goods and those were the agents of their buyers; that the price of goods is inclusive of commission to be paid to foreign buyer’s agents; that by paying them, he was able to secure export orders. He also revealed that there was no written contract/ agreement between him and the buyer or the foreign buyer’s agent and it was only verbal agreement.

1.3 A show cause notice dated 15.05.2014 was issued to the appellant demanding service tax of Rs.32,73,031/- under proviso to Section 73 (1) of the Finance Act, 1994 by invoking the extended period of limitation along with interest under Section 75 and penalty under Sections 76, 77 (1) (a), 77 (1)

(b), 77(2), 70 and 78 of the Finance Act, 1994.

1.4 The said show cause notice was decided by order-in-original dated 30.10.2015 wherein, proposals made in the show cause notice were confirmed except the penalty proposed under Section 76 which was dropped. Aggrieved with the said order, the appellant filed appeal before the Commissioner (Appeal) who vide impugned order dated 19.06.2017 upheld the order of the lower authority and rejected the appeal. Hence, the present appeal.

2.1 The appellant filed appeal on 13.10.2017 wherein, they contended the following:-

• Shri Raje