Query on refund of service tax

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This query is : Resolved

Naitik (Querist)

01 June 2009
1. We are exporting goods. We have not made any domestic sales during the year. In manufacturing goods to be exported, we have availed various services such as telephone, internet, repairs & maintenance, auditor’s service, GTA service etc.

2. Now when we refer Notification no. 41/2007 dated 6-10-2007 as amended from time to time it is mentioned that service tax may be refunded only on those specified services mentioned in this notification which have been utilized in manufacturing of export of goods. Further department vide circular no. 112/06/2009-S.T. dated 12-3-2009 in the S.No. V it has mentioned that “Being prospective in nature refund is not admissible on such services received prior to the date they are notified in the said notification, even if the goods, in relation to which these services are used, are exported after the date when such services are notified under notification no. 41/2007 –ST.”

3. On the other hand, under Rule 5 of CENVAT Credit Rules, 2004 it has been prescribed that any input or input service which is used in the manufacture of final product which has been exported, CENVAT Credit in respect of the input or input service shall be allowed to be utilized by the manufacturer or provider of output service towards payment of any duty on goods cleared for home consumption or service tax on output service. And if such adjustment is not possible, manufacturer shall be allowed refund subject to such safeguards, conditions as may be specified by Central Government by notification.

4. According to my knowledge department has issued Notification No. 5/2006 – Central Excise (N.T.) date 14-3-2006 in pursuance to Rule 5 of CENVAT Credit Rules, 2004.

5. The following is my queries.

• Do I entitle to claim the refund on all input services which has been availed for exporting the goods if there is no domestic sales?

• Assuming we have made domestic sales during the year. What would be the position if I have made export sales as well as domestic sales?

• What would be the impact of Notification no. 41/2007 –ST dated 6-10-2007?