Refund of Service Tax under Notification No. 41/2007-ST when Duty Drawback claimed

PJ/Case Laws/2010-11/1089

Case: CCE, Jaipur-II v/s M/s Rajasthan Synthetics Ltd

Citation: 2011-TIOL-243-CESTAT-DEL

Issue:- The exemption under Notification 41/2007-ST is available even if the drawback is availed even for the period prior to exemption.

Brief Facts:- Respondent-assessee is an exporter who had filed refund claim of service tax paid on services utilized for export of their goods under the provisions of Notification No. 41/2007-ST dated 06.10.2007. The refund claim was rejected on the ground that the appellant had availed drawback of duty and as per Condition I(e) of the Notification refund under said Notification was not admissible if duty drawback was claimed.

Respondent-assessee filed revision application. Revisional Authority held that all the services specified under Notification No. 41/07-ST as amended on which refund has been allowed are availed after clearance of goods from the factory, therefore, these services cannot come under the purview of taxable services used as input services in the manufacturing or processing or for containing or packing of export goods. Thus, while fixing the rates of drawback the incidence of service tax paid on such specified service of Notification No. 41/07-ST used for export of goods is not taken into consideration. It was also noted that Condition I(e) of the Notification was withdrawn vide Notification No. 33/2008-ST dated 07.12.2008 to remove ambiguity. It was held that since the goods in question have been exported without availing drawback of service tax under the Customs, Central Excise Duties and Service Tax drawback Rules, 1995 therefore refund was admissible to the respondent.

Revenue has come in appeal against Revisional Order.

Appellant’s Contention:- Appellant finds fault with the Revisional Order on the ground that the Notification No.41/07-ST does not grant any benefit to the service tax prayers because no credit shall be available in respect of the movement of the goods till the export point.

Respondent’s Contention:- It is the preliminary submission of the respondent that the Tribunal in the case of Commissioner of Central Excise, Meerut vs. Anand Track & Field Equip. Pvt. Ltd [2010 (19) S.T.R. 379 (Tri.-Del.)] has already considered the issue and Revenue's appeal on the similar footing was dismissed.

Reasoning of the Judgment:- The Tribunal held that no doubt, at the first instance, the case of the respondent is covered by the Single Bench decision aforesaid cited by the respondent. But the reasoning given in the order passed by Revisional Authority almost concurring with the original authority also grants relief to the respondents. When the adjudication was reviewed, Revisional authority found that original order also the authorities also get sanction from the citation made by the ld. Counsel. Consequently, Revenues appeal is dismissed.

It was also stated that there is no information with Revenue to suggest whether the Single Member Bench decision cited as aforesaid is carried by Revenue in appeal to any higher Court and whether that order has been stayed by such Court. Accordingly, Revenue appears to have no grievance further against the Single Member decision for which appeal is also liable to be dismissed.

Decision:- Appeal dismissed.

Comments:- We are normally bringing you the decisions which are effecting the trade and industry. This is also example of the same. The number of cases were rejected by the department for handicraft industry on this issue that the manufacturer is availing the drawback. We have pleaded before them the Drawback Rules says that the Government fixes the rates of drawback after seeing the service tax incidence on “input services” under Cenvat credit Rules. The Government has introduced this new scheme for those services only on which Cenvat credit is not admissible. But the department did not agree. We further pleaded that the deletion from the definition clearly leads to conclusion that the Government did not intend to incorporate this condition. But the department said that the amendment notification clearly states that it is effective from the date of its publication. Even we wrote a series of article titles “Johnny and service tax refund” to bring about the problems of exporters. It does not have retrospective effect. But the contention of exporters has ultimately been accepted by the department. The truth ultimately prevail.

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PJ/Case Laws/2010-11/1089

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