service tax on cif value on imports

[Ramakrishnan Seshadri]

Dear Sir,

We are the manufacturer of automobile parts suppliying to OEM. We are having regular imports of CKD parts and machineries. Now we heard from other companies that the Excise department during audit asking the assessees to pay service tax of 1.5%(including cess) on the CIF value of imports from April 23rd to June 2017.and also this applicable under gst regime also.

They are giving the details as File no.354/42/2016 TRU dt.13.04.2017 and the notification no.14/2017/ 15/2017/ 16/2017 dt.13.04.2017.

Kindly request the experts to guide us the same on this issue.

Thanks & REgards

S.Ramakrishnan

AI Summary

Automobile parts importer challenges service tax on CIF value; Rule 6(7CA) clarified, potential double taxation concerns raised. A manufacturer of automobile parts raised a query about the applicability of service tax on the CIF value of imported goods, as directed by the Excise Department for the period from April to June 2017. A respondent clarified that under Rule 6(7CA) of the Service Tax Rules, 2004, importers are liable to pay a service tax of 1.4% on the CIF value, effective from January 22, 2017. The discussion raised concerns about potential double taxation, as freight is already part of the assessable value for customs duties. Under the GST regime, similar issues arise with IGST on freight. The respondent confirmed that the Excise Department's demand from April 23, 2017, is incorrect, and service tax paid post-GST implementation is not eligible for input tax credit.