Cenvat credit of service tax on export sale

[Asked by Guest]

A LTD Manufacturing co. exported some products and paid freight ( air / sea ) and also paid other charges alongwith service tax. Can the co is eligible for CENVAT credit of service tax on export sale activity ? is answer will chage if the same is for import activity ? Manoj

Rule 5 of Cenvat Credit rules, 2004 allows cenvat credit even if goods are exported without payment of duty. However, in case of import of goods, if case these goods are used for manufacturing activity, you are eligible for cenvat credit as usual on input services.

Service Tax paid on freight will be allowed upto the palace of removal as input service. However service tax paid beyond the place removal have some controversy because of input service definition is not clear u/s. (2) (l) of Cenvat credit Rules. However courts already have held that beneficial provisions should be constructed in liberal manner to give the benefits. So i am on the view that Service Tax paid beyond place of removal will be allowed.

[Madhukar N Hiregange]

In my view the st paid on such services would be that relatingto clearacne of the product. As long as the prodcut is excisabel the credit would be available. If it were paying for incoming servcies from outsdie India that also would be eligible as input credit.

AI Summary

Cenvat credit entitlement for service tax on export-related services may extend to freight and input services used in manufacture.
Rule 5 permits Cenvat credit even where goods are exported without payment of excise duty; service tax on export-related services is claimable where such services qualify as input services for manufacture or clearance. Freight service tax is typically allowed up to the place of removal, while service tax charged beyond that point is contested due to ambiguity in the definition of input service, though some view a liberal construction or nexus to clearance as supporting credit.