SERVICE TAX REFUND WITH OUT BRC

[RAVEENDRANADH N]

Dear Sir,

Ours is Software exports company, we have registered with Service Tax under VCS scheme and paid all dues, now it streamlined we are up to date like filing of ST3 and refund application etc.

Problem is we have paid service for Import of services (paid under reverse charge) - which I can get refund from the department, our refund claim is under process with Assist Commissioner, now they are telling us to submit the BRC.

actually we have submitted all FIRC copies against export invoices everything is matching, in fact invoice numbers also mentioned in the FIRC for a strong proof.

My question is : BRC is mandatory to get the ST refunds? one of my friend tells me recently Department is issuing refund based on the FIRC.

Can you please help me on this.

Regards,

Ravi

[YAGAY andSUN]

Dear Ravi,

Just get FIRC endorsed from your authorized signatory and submit it with your Authorised Dealer ( your Banker). On the basis of record available with the Bank, it will be converted in BRC provided you had submitted export documents through your AD.

BRC is mandatory document to get the refund from the Deparment.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

[Mahir S]

Yes sir, BRC is mandatory for allowing refunds. However, refunds may be allowed subject to submission of BRC within 160 days from the date of export of goods

[YAGAY andSUN]

According to Section 11B of C.E. as made applicable to Service Tax, the time limit is filing of refund is within One Year from the Date of Export.

[KASTURI SETHI]

I agree with M/s.YAGAY AND SUN regarding time limit of one year under Section 11 B of the Central Excise Act as made applicable to Service Tax law. But I fail to understand what was the basis of 160 days as mentioned by Sh. Mahir S. Can you throw light pl. ?

[Mahir S]

Sir,

In this regard, Kindly refer following Board Circular :-

Circular No. 354/70/1997 CX dated 13.11.1997 issued vide F.No. 209/54/97 - CX - 6.

[YAGAY andSUN]

Dear Ravi,

After the advent E BRC this 160 day's provision has no value and legal sanctity. Further, In case of Status Holder, foreign remittances against export of goods as well as services can be received within one year or if ETX form under FEMA has been submitted then such extended period for getting the BRC would be valid period. Such extension granted by RBI must be informed to Customs Department, Central Excise Department and VAT Department otherwise DRI can initiate the investigation. If no foreign remittance is received then all benefits under C.E. Act, Customs, FTP, VAT and Income Tax so sanctioned/availed/granted must be deposited with the exchequer along with Interest.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[KASTURI SETHI]

Sir, I agree with you (M/s.YAGAY and SUN) in toto. Board's circular dated 13.11.97 is a matter of by-gone era. Though circular has not been withdrawn, yet so many changes have taken place.

Thanks for sharing knowledge.

KASTURI LAL SETHI

[Mahir S]

Sir,

The question here is reg. application made rebate claim, so if any assessee desires to get rebate claim for export under claim for rebate, then the JAC/JDC can surely ask for BRC or for submission withhin 160 days time limit from the date of issuance of OIO.

FIRC is issued against any receipt of amount from foreign countries by a bank to their customers. It can be an advance payment against export proceeds, ocean or airfreight, or remuneration or wages under consultancy charges or for any other reasons.

BRC means Bank Realization Certificate issued by bank to their customers against any specific documents. Normally BRC is issued by a bank to their customers who have been in to export business on each shipment of export proceeds. Various export promotion agencies provide incentives, import duty exemptions and other financial assistance to the exporters. These agencies require to submit export proof by the exporters to claim such benefits. One of the proof of exports other than export promotion copy of shipping bill (EP copy of shipping bill), Mate Receipt issued by the carrier and/or customs authorized ARE-1 (for goods under central excise only) is Bank Realization Certificate BRC issued by the respective bank who received foreign amount for exporters.

At present, there is no FIRC or BRC required for government export promotion agencies like DGFT or Customs department where in EDI facility available, as the said foreign receipt is directly linked electronically with customs and DGFT through the authorized dealer bank of exporters.

So once after receiving the amount under each shipment, the exporter approaches their bank and submits the proof of exports and FIRC details (Foreign Inward Remittance Certificate) to obtain a BRC under each shipment. This Bank Realization Certificate BRC is submitted with the various authorities as proof of shipment or proof of exports along with customs legal document of EP copy of shipping Bill, Mate receipt issued by carrier of goods and central excise document of ARE – 1 where ever applicable.

Here you need to observe that an FIRC can be obtained whenever you receives amount from foreign country. It can be an advance amount against exports or services.

Before introducing EDI system (Electronic Data Interchange), a GR form has to be filed by exporters along with shipping bill to customs for completion of export procedures and formalities. The copy of shipping bill is impressed on GR form. GR form is a document of export to be submitted with RBI to regulate foreign inward remittance. In order to get BRC, exporter has to submit a copy of GR form to prove the account under which they had received the foreign amount.

Specifically, for claiming rebate claim for export of goods from the excise department, BRC is a must, either at the time of submission of claim or at time of passing of OIO or within 160 days of passing of OIO. It is at the discretion of adjudicating authority to allow rebate based on FIRC, if he is satisfied, but not compulsory.

Further, the above said circular dated 13.11.1997 is still in existence and not yet withdrawn, and therefore department is bound to follow it.

However, the moot question here is why the assessee is not being able to provide copy of BRC. ???

In view of above clarifications, I stand by my views.

AI Summary

Bank Realization Certificate requirement: refunds for export-related service tax need BRC unless FIRC accepted by authority within statutory time limits. Refunds for export-related service tax generally require a Bank Realization Certificate (BRC) as primary proof of foreign remittance; banks can convert an endorsed Foreign Inward Remittance Certificate into a BRC when export documents were submitted through the authorised dealer. Departments normally insist on BRCs for refund or rebate claims, though adjudicating authorities may accept a FIRC if satisfied. Statutory and administrative time limits apply, with a one year statutory window noted alongside an older shorter administrative timeframe whose practical relevance has diminished due to EDI and other changes.