Service tax Credit on railway frieght

[Guest]

Dear Sir,

Can we taken Service tax credit on railways freight against export

Prabhakar Singh

[Rajagopalan Ranganathan]

Sir,

Before replying your query I want more details. Please explain how railway freight and export is connected?

[Guest]

Sir,

railways freight from icd to port

[YAGAY andSUN]

It can be treated as services beyond the place of removal. You may seek rebate under Notification 41/2012-ST.

[Rajagopalan Ranganathan]

Sir,

As per para 6 of Circular No. 999/6/2015- CX dated 28.02.2015 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.

In view of the above clarification of CBEC you are eligible to take credit of service tax paid on railway freight since the service of railway was used in taking the export goods to the port of export (place of removal).

AI Summary

Service tax credit on transportation: railway freight to port qualifies as input service enabling export-related CENVAT credit. Service tax paid on railway freight used to carry export goods to the port/ICD/CFS (the place of removal) qualifies as an input service; where the manufacturer exporter files the shipping bill and goods are handed to the shipping line, transfer of property is at that port and the freight service is eligible for CENVAT credit and any applicable rebate.