Cenvat on Export, Service Tax

[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 ?.  

Posts / Replies

[Pradeep Khatri]

You may opt either option depending on your utilization of CENVAT credit against the output service or finished goods liability.