Service tax on ocean freight

In the 2016 budget, following changes made with respect to Ocean Freight (Service tax)

1. Ocean export Freight : Which are earlier considered as exempt &/or export service (depending upon the condition) since place of provision of service will be place of destination of goods. In the budget, such export ocean freight become zero rated service (by making changes in the definition of exempted service in CENVAT Credit Rule) by virtue of which input credit against the same will be avaiilable as credit.

2. Ocean Import Freight : Which was earlier considered as exempt service as per negative list. In 2016 budget it become taxable after taking abatement of 70% and input credit against the same will be available as credit.

Dear Sir

The abatement of 70% flows from Notfn 26/2012-ST  where the stipulated condition is No Cenvat to avail.  

Dear Sir

Furthermore,  Explanation at the end of Rule 3 of Cenvat Credit Rules is explicit whereby such other provisions/conditions of notification prevails over the Cenvat Credit Rules, and accordingly, condition stipulated in Notfn 26/2012-ST comes into foray. 

Dear Sir

You are right. The Notification 08/2016-ST dt. 1.3.16 excluded input services from the purview of "condition" for the services of Srl. No. 10 of Notfn 26/2012.  Thanks Sir

Dear Sir,

Here the main issue which industry is facing is on the double tax. Firstly on import consignment therei  will be a customs duty on Landing cost which includes freight, plus there will be a service tax. Indutries who are in the trading are facing a bigger issue.