Service Tax Refund

[Guest]

Dear Sir,

Vide Notification No. 92/2012 Cus (NT) dated 04.10.2012, new drawback rates have been notified. The Drawback schedule has two rates, one when CENVAT facility has not been availed and the other when CENVAT facility has been availed. While explaining the provisions of this Notification, vide Circular No 27/2012 –Cus Dated 05.10.2012, the Board has clarified that:

As in previous years, the drawback rates have been determined on the basis of certain broad parameters including, inter alia , the prevailing prices of inputs, Standard Input Output Norms (SION), share of imports in the total consumption of inputs, FOB value of export goods the applied rates of Central Excise & Customs duties, the factoring of incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods, factoring incidence of duty on HSD/Furnace Oil.

As can be seen from the highlighted portion above, the incidence of service tax paid on taxable services used as input services in the manufacturing or processing of export goods, has also been factored in the drawback rates.

There is a separate Notification (notification no. 52/2011-ST dated 30.12.2011) which allows refund of service tax on certain services used in respect of goods exported.

Now, my question is whether the exporter can avail drawback and also simultaneously avail the refund of service tax under notification no. 52/2011-ST. Since Notification 92/2012 Cus(NT) does not prohibit the availment of refund under notification no. 52/2011-ST, the same should be allowed. Also there is no restriction in notification no. 52/2011-ST. with regard to availment of drawback. Hence both drawback and refund should be admissible or not.

Please clarify me.

Thanks,

VARSHA MEHTA

[JAMES PG]

 

As per the conditions of Not 52/11 ( amended by Not 41/12 dt 29.06.12)

" the exemption shall be claimed either on the basis of rates specified in the Schedule of rates annexed to this notification(hereinafter referred to as the Schedule), as per the procedure specified  in paragraph 2 or on the basis of documents, as per the procedure specified in paragraph 3"

The procedure specified in para 3 is nothing but claiming ST refund.

Hence it is clear that simultaneous claiming  of drawback and ST refund is not possible

[YAGAY andSUN]

Either refund or drawback will be available.   Both can't be availed simultenously. 

AI Summary

Service tax refund exclusivity: exporters cannot claim both drawback and service-tax refund under notification rules. Drawback schedules factor service tax incidence on input services, while the service-tax notification permits exemption either by Schedule rates under paragraph 2 or by documentary refund under paragraph 3. The notification's either/or claim mechanism means the documentary refund route cannot be combined with drawback; an exporter must elect either drawback or service-tax refund.