ISSUE

SUGGESTION

Refund of Service tax - Place of removal

The place of removal is defined in the Finance Act. There are input services related to export of goods after removal of goods from factory premises for which refund can be claimed as per Notification No. 41/2012. As per SC decision in case of Ispat Industries Ltd. 2015-TIOL-238-SC-CX the place of removal can be the premises which is in control of seller.

The field level officers are rejecting the refund considering the place of removal as port and when cenvat credit is avail of such services, the same is also denied considering the place of removal as factory.

This divergent view taken by department increase the cost of exportable goods as well as increase in litigation.

The assessee should give option either to claim refund or to take credit with proper declaration as it is immaterial whether credit is allowed for such services or refund as per Notification 41/2012.

Project Export in Excise and Customs:

The project export has been defined in PEM guidelines issued by RBI. In Project Export the supply of goods are associated with services to be provided outside India and realization of such goods and services are based on deferred payment viz. Advance payments, Progressive payments and Retention released after completion of project/defect liability period. The project exports are duly approved by the Authorised Dealer Banks as notified by the RBI. In project exports the realization of export is approved immediately when approval of project exports are given subject to further changes in terms and condition, if required as per fulfillment of required clauses of the contract entered by project exporter.

However there is no project export defined in Custom, Excise and Exim Policy and therefore the same is treated as routine export for the purposes of export benefit, realization and releasing the duty drawback. The strict requirement to realize the value of export goods within one year is being followed failing which either show cause notice for recovery of duty drawback is issued or duty drawback is put on hold. Further red alert is put in the system whereby the project exporter cannot import even its raw material required for export purposes or import of capital goods/consumables.

One shipping bill can generate only one BRC and in case part payment is received then the same is considered as final payment received and for issue of online BRC such shipping bill cannot be considered in the system and thereby export benefit is denied to that extent due to system failure.

The relaxation should be granted to release the duty drawback as well as export benefit as per approval given under PEM issued by RBI.

In online BRC, once shipping bill is considered realized for part payment, the facility to enter the subsequent payment should be provided.

Further export benefit should be allowed for such part payment realized which is not considered in online BRC for each shipping bills.

The Government has facilitated to refund the SAD provided the VAT has paid on sale of goods to state authority as per VAT/CST law. There are number of cases where the SAD claim is rejected even after producing the documentary evidence of tax payment on the basis of frivolous issues and accordingly there is inadvertent delay in allowing the refund subject to result of appeal. Further, the different format and certifications have been adopted by different ports.

The guidelines applicable to all ports should be issued and SAD should be refunded once there is a proof of payment of VAT/CST.

Use of duty credit scripts issued by DGFT

The scripts can be used for payment of duty on input material, capital goods and services tax on input services.

The facility should be extended to discharge the duty on finished goods, taxable output services

Release of duty drawback

The duty drawback put on hold for more than a year or so for query viz. produce ARE-1, contract copy etc.

This query should be resolved while issuing of shipping bills instead of holding the duty drawback.