Unavailed Cenvat under Rule 5 and Refund of Service Tax on Outward Services

[Ashok Chopra]

Respected Forum,

I am 100% EOU and availing Refund of Unavailed Cenvat under Rule 5 and also filing refund of Service Tax paid on outward services for the export of final product.

Now, i am being asked by excise authorities that as per recent amendment in Rule 5(2) i am not entitled for Unavailed Cenvat, if i am getting refund of Service Tax paid on outward services for the export of final product.  I am eligible for only one refund either Unavailed Cenvat under Rule 5 or refund of Service tax paid on outward services for the export of final product.

Pls let me know, whether department is correct or not?

Pls provide me notification or clarification to show my superior

As per new amendment in Rule 5(2), person who claims rebate of service tax under the (Service Tax Rules, 1994) in respect of such tax.

what is the difference in rebate and refund and exemption?

i shall be thankful, if you will clarify my above queries.

thanks and regards

AI Summary

Unavailed Cenvat refund entitlement may conflict with service tax rebate claims; Rule 5(2) interpretation and clarification required.
The issue is whether Rule 5 permits refund of accumulated unavailed Cenvat credit where the exporter also claims a rebate of output-stage service tax on exported services. Authorities have treated the amended provision as disallowing both recoveries concurrently; commentators argue the refunds are distinct-input-stage Cenvat refund under Rule 5 and output-stage service tax rebate are separate claims-and that Rule 5(2) should only prevent duplication of recovery of the same input duty/tax, necessitating CBEC clarification.