REBATE OF SERVICE TAX TO EXPORTERS

[Dr. Sanjiv Agarwal]

In supersession of Notification No. 52/2011-ST dated 30.12.2011, Notification No. 41/2012-ST dated 29.6.2012 shall govern the grant of rebate of Service Tax on the taxable service which are received by an exporter of goods and used for exports of goods w.e.f. 1.7.2012. This rebate shall be granted by way of refund of Service Tax paid on the specified services subject to extent and manner as prescribed in Notification No. 41/2012-ST.

While the rates for rebate have been specified in the schedule to the notification and procedure prescribed in para 2 and 3 of the said notification, it is important to note the following points –

1) Specified services would mean -

(i) in the case of excisable goods, taxable services that have been used beyond the place of removal, for the export of said goods;

(ii) in the case of goods other than (i) above, taxable services used for the export of said goods;

but shall not include the following input services, viz,  - construction ; works contracts ; renting of motor vehicles ; general insurance; servicing, repair & maintenance ; outdoor catering, health, life insurance etc. meant for employees etc. [sub-clause A, B, BA, and C of Rule 2 (l) of Cenvat Credit Rules, 2004].

2) Rebate can be claimed on the basis of rates as mentioned in schedule or as per procedure (Para 2) or based on documents (Para 3).

3) Cenvat Credit of Service Tax paid on specified services used for export of goods should not be taken.

4) No rebate can be claimed under this notification by developer of SEZ or unit in SEZ.

5) If export proceeds are not received within time allowed or within extended time, such rebate shall be deemed to have never been allowed and shall be recovered back in terms of recovery provisions. taxmanagementindia.com

Procedure for rebate in terms of Para 2

(a) manufacturer-exporter, who is registered as an assessee under the Central Excise Act, 1944 or the rules made thereunder shall register his central excise registration number and bank account number with the customs.

(b) exporter who is not so registered under the provisions referred to in clause (a), shall register his service tax code number and bank account number with the customs.

(c) service tax code number referred to in clause (b) above, shall be obtained by filing a declaration in Form A-2 to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the registered office or the head office, as the case may be, of such exporter.

(d) the exporter shall make a declaration in the electronic shipping bill or bill of export, as the case may be, while presenting the same to the proper officer of customs, to the effect that--

(i) the rebate of service tax paid on the specified services is claimed as a percentage of the declared Free On Board(FOB) value of the said goods, on the basis of rate specified in the Schedule.

(ii) no further rebate shall be claimed in respect of the specified services, under procedure specified in paragraph 3 or in any other manner, including on the ground that the rebate obtained is less than the service tax paid on the specified services.

(iii) conditions of the notification have been fulfilled.

(e) service tax paid on the specified services eligible for rebate under this notification, shall be calculated by applying the rate prescribed for goods of a class or description, in the Schedule, as a percentage of the FOB value of the said goods.

(f) amount so calculated as rebate shall be deposited in the bank account of the exporter.

(g) shipping bill or bill of export on which rebate has been claimed on the basis of rate specified in the Schedule, by way of procedure specified in this paragraph, shall not be used for rebate claim on the basis of documents, specified in paragraph 3.

(h) where the rebate involved in a shipping bill or bill of export is less than rupees fifty, the same shall not be allowed.

Procedure for rebate based on documents (Para 3)

(a) rebate may be claimed on the service tax actually paid on any specified service on the basis of duly certified documents.

(b) the person liable to pay service tax under section 68 of the said Act on the taxable service provided to the exporter for export of goods shall not be eligible to claim rebate under this notification.

(c) the manufacturer-exporter, who is registered as an assessee under the Central Excise Act, 1944 or the rules made thereunder, shall file a claim for rebate of service tax paid on the taxable service used for export of goods to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of manufacture in Form A-1.

(d) the exporter who is not so registered under the provisions referred to in clause (c) above, shall before filing a claim for rebate of service tax, file a declaration in Form A-2, seeking allotment of service tax code, to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the registered office or the head office, as the case may be, of such exporter.

(e) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code number to the exporter referred to in clause (d) above, within seven days from the date of receipt of the said Form A-2.

(f) on obtaining the service tax code, exporter referred to in clause (d) above, shall file the claim for rebate of service tax to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the registered office or the head office, as the case may be, in  Form A-1.

(g) the claim for rebate of service tax paid on the specified services used for export of goods shall be filed within one year from the date of export of the said goods.

The date of export shall be the date on which the proper officer of Customs makes an order permitting clearance and loading of the said goods for exportation under section 51 of the Customs Act, 1962.

(h) where the total amount of rebate sought under a claim is upto 0.50% of the total FOB value of export goods and the exporter is registered with the Export Promotion Council sponsored by Ministry of Commerce or Ministry of Textiles, Form A-1. shall be submitted along with relevant invoice, bill or challan, or any other document for each specified service, in original, issued in the name of the exporter, evidencing payment for the specified service used for export of the said goods and the service tax paid thereon, certified in the manner specified in sub-clauses (A) and (B) below -

(A) if the exporter is a proprietorship concern or partnership firm, the documents enclosed with the claim shall be self-certified by the exporter and if the exporter is a limited company, the documents enclosed with the claim shall be certified by the person authorised by the Board of Directors.

(B) the documents enclosed with the claim shall also contain a certificate from the exporter or the person authorised by the Board of Directors, to the effect that specified service to which the document pertains has been received, the service tax payable thereon has been paid and the specified service has been used for export of the said goods under the shipping bill number.

(i) where the total amount of rebate sought under a claim is more than 0.50% of the total FOB value of the goods exported, the procedure specified in clause (h) above shall stand modified to the extent that the certification prescribed thereon, in sub-clauses (A) and (B) above, shall be made by the Chartered Accountant who audits the annual accounts of the exporter for the purposes of the Companies Act, 1956 or the Income Tax Act, 1961 as the case may be.

(j) where the rebate involved in a claim is less than rupees five hundred, the same shall not be allowed.

(k) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after satisfying himself,-

(i) that the service tax rebate claim filed in Form A-1 is complete in every respect.

(ii) that duly certified documents have been submitted evidencing the payment of service tax on the specified services.

(iii) that rebate has not been already received on the shipping bills or bills of export on the basis of procedure prescribed in paragraph 2; and

(iv) that the rebate claimed is arithmetically accurate,  refund the service tax paid on the specified service within a period of one month from the receipt of said claim.

Where the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, has reason to believe that the claim, or the enclosed documents are not in order or that there is a reason to deny such rebate, he may, after recording the reasons in writing, take action, in accordance with the provisions of the said Act and the rules made thereunder.

Forms used –

Form A1 - Application for claiming rebate of Service Tax on specified services used for export of goods.

Form A2 – Declaration by exporter for obtaining Service Tax code.

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