Service Tax Refund - Exporters- Meaning of drawback on ST
This query is : Resolved
11 April 2009
We are exporters of agricultural commodities.
Our suppliers (service providers) are charging service tax on freight bills, Professional surveyors, commision by bank against realisation of export proceeds,etc.
As per notification no. 33/2008 dt 07.12.08 clause 'e' of notification 41/2007 has been omitted.
clause 'e' states service tax cannot be claimed if assessee is "availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995; "
CAN ANY 1 LET ME KNOW WHAT IS THE MEANING OF .............drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995........
HOW CAN DRAWBACK BE CLAIMED OF SERVICE TAX? drawback is claimed on goods exported & not on service tax.
my contact details are:
Cell - 9930361807 & nikhil@shlogamagro.com
Nikhil
Our suppliers (service providers) are charging service tax on freight bills, Professional surveyors, commision by bank against realisation of export proceeds,etc.
As per notification no. 33/2008 dt 07.12.08 clause 'e' of notification 41/2007 has been omitted.
clause 'e' states service tax cannot be claimed if assessee is "availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995; "
CAN ANY 1 LET ME KNOW WHAT IS THE MEANING OF .............drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995........
HOW CAN DRAWBACK BE CLAIMED OF SERVICE TAX? drawback is claimed on goods exported & not on service tax.
my contact details are:
Cell - 9930361807 & nikhil@shlogamagro.com
Nikhil
11 April 2009
Drawback refers to the refund given to exporters on taxes like excise, Customs and service tax (from this year) levied on inputs in the manufacture of export products.
“The drawback rate will be a single composite rate. It will incorporate the burden of service tax on inputs. There will be no separate break-up of the service tax,”
The refund would, however, be proportionate to the extent of exports in the total turnover of the firm.
For instance, if 30% of a company’s turnover is from exports, it would get drawback of 30% of the service tax paid.
But this does not apply to your instance case as you have neither paid any excise nor you have claimed , so you can claim the refund of service tax and give a declaration to the effect that no refund has been claimed under any other provisions and this is the only calim for service tax
“The drawback rate will be a single composite rate. It will incorporate the burden of service tax on inputs. There will be no separate break-up of the service tax,”
The refund would, however, be proportionate to the extent of exports in the total turnover of the firm.
For instance, if 30% of a company’s turnover is from exports, it would get drawback of 30% of the service tax paid.
But this does not apply to your instance case as you have neither paid any excise nor you have claimed , so you can claim the refund of service tax and give a declaration to the effect that no refund has been claimed under any other provisions and this is the only calim for service tax
19 April 2009
Sir, Thanks for your reply. We are 100% export company. We claim duty drawabck when agri goods are exported without using Packing Material. Can we still claim refund of service tax. We have filed refund claim & AO says you cannot take refund coz u hv claimed duty drawback. the commodity which v export is exempted from excise duty. our personal meeting (beneficial to both) in this matter shall help me resolve this matter. Can you send your contact details. My contact details - 9930361807 (mumbai no.)
25 July 2025
You're raising a genuine and longstanding point of confusion faced by many exporters — the interplay between **duty drawback** and **refund of service tax** under **Notification No. 41/2007-ST** and later **Notification No. 33/2008-ST**.
Let’s break this down clearly for you:
---
### 🔹 **What is "Drawback of Service Tax" under Drawback Rules, 1995?**
In the **Customs, Central Excise Duties and Service Tax Drawback Rules, 1995**, "drawback" refers to **rebate of duties/taxes** (like customs duty, excise duty, and service tax) **already paid** on inputs or input services used for **goods exported** out of India.
So, when the term says **“drawback of service tax paid on specified services”**, it means:
> **A notional or actual rebate of service tax paid on services like freight, bank commission, survey charges, etc., which are directly related to export of goods.**
If you are **already availing drawback** under these Rules (and that drawback **includes service tax component**), then **you cannot again claim refund** of the same service tax under **Notification 41/2007-ST**. This is to avoid **double benefit**.
---
### 🔹 **What Changed in Notification No. 33/2008-ST (dated 07.12.2008)?**
Originally, **clause (e)** of Notification 41/2007-ST **prohibited** exporters from claiming refund of service tax **if they had availed duty drawback** that **included service tax**.
However, after **Notification No. 33/2008-ST**, **clause (e) was omitted**, which means:
✅ Exporters can now **claim refund of service tax** **even if they have claimed drawback**, **as long as** the **drawback does not include the service tax portion**.
---
### 🔹 In Your Case (Agricultural Commodity Exporters):
1. You are exporting **exempted goods** (agri products are **non-excisable**), so:
* You are **not claiming excise drawback**.
* Your duty drawback is likely **only for Customs** (maybe under All Industry Rate – AIR).
2. If the drawback you are claiming **does not include service tax**, then:
✅ **You are eligible** to claim **refund of service tax** on input services used for export (freight, bank commission, surveyor fees, etc.)
3. You must give a **declaration/undertaking** that:
* The drawback claimed **does not include** service tax component.
* You are not claiming refund/drawback under any other provision for the same service tax.
---
### 🔹 Dealing with Your AO (Assessing Officer):
It’s common for some AOs to **misunderstand or misapply** the rules. You may want to submit:
* A **copy of Notification No. 33/2008-ST** (dated 07.12.2008)
* A **clarification letter** stating:
* You are only claiming Customs duty drawback,
* The exported goods are exempt from Excise duty,
* Hence, **no double benefit** is being taken.
If still rejected, you can:
* File a written objection,
* Escalate to the **Commissioner (Appeals)** under Section 85 of Finance Act, 1994.
---
### 📄 Suggested Declaration Format (for Refund Application):
```text
DECLARATION
We hereby declare that:
1. We are not availing any drawback of Service Tax under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995.
2. The drawback claimed by us is limited to Customs duties only, and does not include Service Tax component.
3. The services for which refund is claimed have been used exclusively for export of goods.
4. The exported goods are agricultural commodities and are exempted from Central Excise Duty.
We undertake that no double benefit is being claimed, and this claim for refund of Service Tax is the only such claim made.
(Signature & Seal)
(Name & Designation)
Date:
```
---
If you still need assistance preparing documents or replying to the department, I can help you draft a detailed letter or representation.
Would you like me to help you prepare that now?
Let’s break this down clearly for you:
---
### 🔹 **What is "Drawback of Service Tax" under Drawback Rules, 1995?**
In the **Customs, Central Excise Duties and Service Tax Drawback Rules, 1995**, "drawback" refers to **rebate of duties/taxes** (like customs duty, excise duty, and service tax) **already paid** on inputs or input services used for **goods exported** out of India.
So, when the term says **“drawback of service tax paid on specified services”**, it means:
> **A notional or actual rebate of service tax paid on services like freight, bank commission, survey charges, etc., which are directly related to export of goods.**
If you are **already availing drawback** under these Rules (and that drawback **includes service tax component**), then **you cannot again claim refund** of the same service tax under **Notification 41/2007-ST**. This is to avoid **double benefit**.
---
### 🔹 **What Changed in Notification No. 33/2008-ST (dated 07.12.2008)?**
Originally, **clause (e)** of Notification 41/2007-ST **prohibited** exporters from claiming refund of service tax **if they had availed duty drawback** that **included service tax**.
However, after **Notification No. 33/2008-ST**, **clause (e) was omitted**, which means:
✅ Exporters can now **claim refund of service tax** **even if they have claimed drawback**, **as long as** the **drawback does not include the service tax portion**.
---
### 🔹 In Your Case (Agricultural Commodity Exporters):
1. You are exporting **exempted goods** (agri products are **non-excisable**), so:
* You are **not claiming excise drawback**.
* Your duty drawback is likely **only for Customs** (maybe under All Industry Rate – AIR).
2. If the drawback you are claiming **does not include service tax**, then:
✅ **You are eligible** to claim **refund of service tax** on input services used for export (freight, bank commission, surveyor fees, etc.)
3. You must give a **declaration/undertaking** that:
* The drawback claimed **does not include** service tax component.
* You are not claiming refund/drawback under any other provision for the same service tax.
---
### 🔹 Dealing with Your AO (Assessing Officer):
It’s common for some AOs to **misunderstand or misapply** the rules. You may want to submit:
* A **copy of Notification No. 33/2008-ST** (dated 07.12.2008)
* A **clarification letter** stating:
* You are only claiming Customs duty drawback,
* The exported goods are exempt from Excise duty,
* Hence, **no double benefit** is being taken.
If still rejected, you can:
* File a written objection,
* Escalate to the **Commissioner (Appeals)** under Section 85 of Finance Act, 1994.
---
### 📄 Suggested Declaration Format (for Refund Application):
```text
DECLARATION
We hereby declare that:
1. We are not availing any drawback of Service Tax under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995.
2. The drawback claimed by us is limited to Customs duties only, and does not include Service Tax component.
3. The services for which refund is claimed have been used exclusively for export of goods.
4. The exported goods are agricultural commodities and are exempted from Central Excise Duty.
We undertake that no double benefit is being claimed, and this claim for refund of Service Tax is the only such claim made.
(Signature & Seal)
(Name & Designation)
Date:
```
---
If you still need assistance preparing documents or replying to the department, I can help you draft a detailed letter or representation.
Would you like me to help you prepare that now?
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