Service Tax liability on ocean freight

[Yatin Bhopi]

We are manufacturer. We regularly import our raw material from various countries. Normally terms are FOB at loading port.

We pay the freight to shipping line company (in $ USD) and insurance to Insurance company from loading port to Indian port .

Are we liable to pay service tax on reverse charge basis on freight paid to shipping line company?

AI Summary

Ocean freight non-taxable: imports to first customs station fall outside service tax under negative-list transportation rule.
Ocean freight for carriage from outside India to the customs station of clearance in India is treated as not subject to service tax, based on the negative-list exclusion for transportation of goods by vessel and the Place of Provision of Service rules locating the service outside India; the question of reverse charge applicability was raised but the contributors uniformly view inbound sea freight to the first customs station as outside the service tax net.