Refund V/s Rebate on Input services

[Vartik Choksi]

We are manufacturer of excisable goods.99 % of the goods are exported out of India. We take CENVAT Credit in RG 23A Part II for the inputs and input services. We have filed rebate claim with the excise deparment for the inputs and input services used in the manufacturing of the excisable goods by debiting the CENVAT Credit in RG 23A Part II.  We have also received the refund from the department.

 

However we do not take the CENVAT of Input services on the following :

 

1. Terminal Handling Charges

2. Banking & Financial Services (Bank takes service tax on the remittance received from abroad)

3. Outward GTA (Service tax on GTA paid from the factory gate to container freight station)

4. Outward Freight Charges

 

As per Rule 2 (l) of CENVAT Credit Rules, 2004 the CENVAT Credit for the manufacturer means any service used by manufacturer up to the place of removal.  Therefore till date we have not taken CENVAT Credit on the above mentioned services.

 

The refund mechanism precsribed in Notification No. 41/2012 -ST dated 29-6-2012 is a complex. 

 

Now my questions are as under:

 

1.  Can I take the CENVAT on input services mentioned above in RG 23A Part II and file a rebate claim with the excise authority? 

 

2.  If answer to above question is negative, is there any other refund mechanism other than mentioned in Notification No. 41/2012 -ST dated 29-6-2012 through which refund may be claimed?

[YAGAY and SUN]

In Notification No. 41/2012-ST dated 29-06-2012, the standard rates of refund have been prescribed, you have to mention in the shipping bill that you will avail the refund of service tax under this notification and by default after export the refund will be credit in your bank account.

[JAMES PG]

You can also claim Service Tax Refund under Not No 41/12 by filing refund claim with the jurisdictional Dy /Asst Commisioner if the claim is not made on the basis of rates  specified in the Schedule of rates. As per proviso1 (b)  of the Notn,

"(b) the rebate 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"

Another alternative is that you can claim Cenvat credit of Service Tax as the place of removal for FOB export is held to be Port in a series of judgements and also Master Circular No 97/8/2007 dated 23.08.07 clarified the same.

[Vartik Choksi]

Dear Sir,

Thanks for the reply.

Can u please provide the list of decisions in which FOB has been held as the place of removal?

And what about the CENVAT CREDIT ON Banking & Financial Services?  Can I claim the same in RG 23A Part II or need to file a seperate claim under Notification No. 41/2012 ?

 

[JAMES PG]

 Given below few among the many judgements:

JK TYRE & INDUSTRIES LTD Vs CCE, Mysore - 2010 (1) TMI 424 - CESTAT, BANGALORE

JSW STEEL LTD.Vs CCE, Thane - 2012 (12) TMI 141 - CESTAT, MUMBAI

2012-TIOL-1514-CESTAT-AHM M/s DYNAMIC INDUSTRIES Vs CCE, DAMAN

M/s Modern Petrofils Vs CCE, Vadodara - 2010 (2) TMI 328 - CESTAT, AHMEDABAD

CCE, Ahmedabad Vs M/s ADF FOODS LTD - 2009 (6) TMI 866 - CESTAT AHMEDABAD

CCE Vs .M/s GMR INDUSTRIES LTD 2012 (8) TMI 24 - CESTAT, BANGAORE

RAWMIN MINING AND INDUSTRIES LTD Vs CCE, Bhavnagar 2008 (10) TMI 79 - CESTAT, AHMEDABAD

M/s Leela Scottish Lace Pvt Ltd Vs CC, Bangalore 2010 (3) TMI 905 - CESTAT BANGALORE

For Banking services also, the option is either refund claim or Cenvat credit

AI Summary

Cenvat credit entitlement for export related input services may be pursued as rebate or document based refund under notified procedures.
Exporter who debited CENVAT in RG 23A Part II obtained rebate for inputs but did not take CENVAT on certain services (terminal handling, banking and financial services on remittances, outward GTA, outward freight) citing Rule 2(l) CENVAT; Notification No. 41/2012 ST allows refund on schedule rates or on documents (with procedure via jurisdictional officer), and an alternative is claiming CENVAT credit where FOB place of removal is treated as port as supported by tribunal decisions; banking services may be reclaimed either by refund under the notification or by CENVAT credit claim.