Refund of Service Tax to exporters

[Guest]

Notification 40 & 41 - Refund of Service Tax to exporters. There is provision for refund of Service tax on testinf Charges covered under section 65(105) (zzh), in notification term testing of such goods is used now my query is if I export Garments then only service tax on Garment testing will qualify or testing of Fabric used for making such garment will also qualify assuming other conditions are met. Regards

[Madhukar N Hiregange]

AS I have understood only the post removal services are envisaged here. For other inputs the drawback rate is considered to have included the same. If you are not claiming under duty drawback then maybe you wouldbe eligible to avil credit and then refund under Rule 5 of CCR 04.

AI Summary

Refund of service tax on testing charges depends on post-removal service classification and drawback or credit options. Refund eligibility for Service Tax on testing services hinges on whether the testing is a post-removal service related to exported goods; testing of inputs used in manufacture is generally considered included in duty drawback. If duty drawback is not claimed, the exporter may instead avail input credit and seek refund under Rule 5 of CCR 04, subject to the conditions for credit and refund.