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 ?.  

AI Summary

IT Services Firm ABC Ltd Can Choose Between Continuing CENVAT Credit Use or Applying for Export Refund Under Rule 5 Amendment. A domestic IT services company, M/s ABC Ltd, which generates 40% of its revenue from exports, previously used CENVAT credit from input services to offset service tax on output services. With the amendment to Rule 5 of the Cenvat Credit Rule, 2004, and Notification No. 27/2012, the company seeks clarification on whether it can continue this practice or must apply for a refund for the CENVAT credit related to export turnover. The response indicates that ABC Ltd can choose either option based on its utilization of CENVAT credit against output service or finished goods liability.