Cenvat on Export

[Sanjeev Sharma]

A domestic IT Services Company M/s ABC Ltd provides IT support Services both in the Domestic market and Export Services (remotely) to Customers abroad. 

The quantum of export revenue to total Revenue is around 40%.   

ABC Ltd was in the past able to utilize the total CENVAT credit in respect of input services towards payment of service tax on Output services.  

In view of the recently amended Rule 5 of the Cenvat Credit Rule, 2004 and the Notification No 27/2012 – Central Excise (NT)  dt 18.06.2012,

Can ABC  Ltd continue to avail CENVAT credit on Service tax paid on Input services  to offset against liability of Service tax on domestic output Services. ?

Or

 will the Company, as per revised Rule-5, be mandatorily required to apply for refund for the pro-rata quantum of CENVAT connected with Export  turnover ?.  

[YAGAY andSUN]

You may opt either option depending on your utilization of CENVAT credit against the output service or finished goods liability.

AI Summary

Cenvat credit on export: option to utilize credit against domestic service tax or seek refund based on utilization. An IT services exporter may either continue to utilize available Cenvat credit to discharge service tax on domestic output services or apply for refund of the portion attributable to exports; the appropriate choice depends on actual utilization of Cenvat credit against output service or finished goods tax liability following amendments to Rule 5 and Notification No. 27/2012.