claiming of service tax refund against C&F Bills (export of goods)

[jagadesh kumar bhojanapalli Kumar]

We are claiming service tax refund under Notification No.41/2012-ST dtd.29.6.2012 service tax paid on specified services used for export of Goods. The department is issuing SCNs is based on Circular no.999/06/2015-CX dtd.28.02.2015 (988/12/2014-CX dtd.20.10.2014 which is irrelevant .

The above contention of department is wrong .

Pl provide us inputs to defense our refund claims .

thanks

[Rajagopalan Ranganathan]

Sir,

According to para 4 of the Circular No.999/06/2015- CX dtd.28.02.2015 it would appear that handing over of the goods to the carrier/transporter for further delivery of the goods to the buyer, with the seller not reserving the right of disposal of the goods, would lead to passing on of the property in goods from the seller to the buyer and it is the factory gate or the warehouse or the depot of the manufacturer which would be the place of removal since it is here that the goods are handed over to the transporter for the purpose of transmission to the buyer. It is in this backdrop that the eligibility to Cenvat Credit on related input services has to determined.

According to para 6 of the above circular In the case of clearance of goods for export by manufacturer exporter, shipping bill is filed by the manufacturer exporter and goods are handed over to the shipping line. After Let Export Order is issued, it is the responsibility of the shipping line to ship the goods to the foreign buyer with the exporter having no control over the goods. In such a situation, transfer of property can be said to have taken place at the port where the shipping bill is filed by the manufacturer exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined accordingly.

According to para 7 of the above circular In the case of export through merchant exporters, however, two transactions are involved. First is the transaction between the manufacturer and the merchant exporter. The second transaction is that between the merchant exporter and the foreign buyer. As far as Central Excise provisions are concerned, the place of removal shall be the place where the property in the goods passes from the manufacturer to the merchant exporter. As explained in paragraph 4 supra, in most of the cases, this place would be the factory gate since it is here that the goods are unconditionally appropriated to the contract in cases where the goods are sealed in the factory, either by the Central Excise officer or by way of self-sealing with the manufacturer of export goods taking the responsibility of sealing and certification, in terms of notification no. 19/2004-Central Excise (N.T.) dated 6.9.2004, etc.

If you are a merchant exporter then credit of service tax is available to you only in respect of services availed by you for transporting the export goods from you premises to the port of export/ICD etc. If you are a manufacturer exporter then you can avail the same for transporting the export goods from your factory premise to port of export/ICD etc..

AI Summary

Cenvat Credit eligibility for export depends on place of removal and where property in goods passes to the buyer or intermediary. Eligibility to CENVAT credit for service tax paid on services used for export depends on the place of removal and point of transfer of property: for manufacturer-exporters transfer may occur at the port/ICD where the shipping bill is filed after Let Export Order, so credit is determined accordingly; for merchant-exporters the place of removal is where property passes from manufacturer to merchant-often the factory gate-and credit is limited to transport from the merchant's premises to port/ICD.