Cenvat credit availability on Currency exchanged

[kamal chordia]

Dear Sir

We are manufacturer exporter, as per notification no 26/2011 Service Tax dt 31.03.2011 our bank charged service tax on currency exchanged (export reliasation)

Please inform that service tax charged in the bank advice is cenvatable or not.

Thanks & regards

Kamal

[kamal chordia]

Please notification no as 26/2010 service tax dt 31.03.2011

[Rajagopalan Ranganathan]

Sir,

In my opinion service tax paid on currency exchanged (export reliasation) is an post export activity. Hence the same cannot be availed as credit. In respect of export only service tax paid on input services utilized for export of finished goods can be availed as credit. In your case the service tax paid on a service which is not an input service but post export service. Hence you are eligible to avail the credit.

[KASTURI SETHI]

Sh.Kamal Chordia Ji,

Cenvat credit is admissible. Since you are manufacturer-cum-exporter of dutiable final product. Thus ST paid can be taken as input service for utilization in relation to manufacture and clearance of dutiable finished goods. Needless to say exported goods are treated as duty-paid goods.

[KASTURI SETHI]

No such restriction in Service Tax has been imposed like in Central Excise vide Notification No.1/2011-CE dated 1.3.2011 as amended.

[SURESH ASTEKAR]

There are several decisions holding that service tax paid on bank commission charges etc., are eligible for availing as Cenvat credit. One of these is as under:

2013 (287) E.L.T. 234 (Tri. - Ahmd.) = 2012 (11) TMI 871 - CESTAT AHMEDABAD COMMISSIONER OF CENTRAL EXCISE, SURAT-II Versus VISHAL MALLEABLES LTD.

Cenvat - Input service - Bank commission charges for collection of sale proceeds of export goods - They are charges in relation to business of manufacture and sale of assessee - They are input service on which credit could be taken by assessee - Department’s plea that service was rendered beyond place of removal, rejected - Rule 2(l) of Cenvat Credit Rules, 2004. [paras 6, 7]

[kamal chordia]

Thanks a lot of Sh Rajagopalan ji, Sh Kasturiji and Sh Sureshji for your valuable comments.

Kamal Chordia

AI Summary

Cenvat credit on bank currency-exchange charges may be available if treated as an input service related to manufacture and clearance.
Whether service tax on bank currency-exchange charges for export realisation is eligible for Cenvat credit hinges on characterisation: if treated as an input service in relation to manufacture and clearance of dutiable goods (with exported goods treated as duty-paid), credit is claimable, supported by tribunal decisions on bank commission and collection charges; conversely, if regarded as a post-export service not connected to manufacture/clearance, it is not eligible. Absence of a specific service-tax restriction like an excise notification is noted.