Revenue-neutrality plea not sustainable with reference to terminal excise duty'
July, 15th 2014
We supplied goods to projects financed by World Bank under contracts awarded under the International Competitive Bidding (ICB) route. We paid terminal excise duty (TED) and cleared the goods. Our claim for TED refund has been rejected on the basis of DGFT Policy Circular no. 16 dated March 15, 2013. Please guide us how we can claim refund of such TED.
Since September 1, 2004, the wordings in the Para 8.3(c) of the FTP have remained unchanged, stating "exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given." The Policy Circular no. 16 dated March 15, 2013 only reiterates that position. So, the denial of your claim of refund of TED is fully in accordance with the FTP. The Tribunal vide its majority decision in the case of Reliance Industries Limited [2009-TIOL-530-CESTAT-AHM] has held that plea of revenue neutrality is not sustainable with reference to terminal excise duty. Now, all you can do is to approach the Policy Relaxation Committee for relaxation of the Policy, and if your plea is not accepted even in a review petition, approach the DGFT with your grievance and seek a personal hearing in accordance with Para 2.49 of the FTP and DGFT Trade Notice no. 5/2013 dated 19.07.2013.
We are exporters of wool yarn, with the majority of our production being exported. We do not take Cenvat Credit and claim drawback at the All Industry Rate of drawback of five per cent for our item 'when Cenvat Credit not availed'. We have not been claiming refund of service tax on input services. How to do this in future and for past exports also?
As per CBEC Circular no. 37/2013-Cus dated September 14, 2013, the incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods is already factored into the drawback rates. For claim of refund of service tax paid on services used for export of goods, you may follow the procedures and fulfil the conditions prescribed in the notification no. 41/2012-ST dated June 29, 2012. You cannot claim the refund for the past years, as this notification requires you to make certain declarations on shipping bill, which apparently, you have not done. For exemption from payment of service tax on foreign agent's commission and goods transport agency, you may refer to notification no. 42/2012-ST dated June 29, 2012 and 31/2012-ST dated June 20, 2012 respectively.
We refer to your Q&A column dated May 5, 2014, wherein you have mentioned that there is no bar on using SHIS scrips to pay duty on imported second hand capital goods. Our CHA says that the Customs are not permitting this. Can you please inform how we can proceed?
I suggest that whenever your CHA says something that does not make sense, you may directly meet the Customs officers and ascertain what the problem is. If you don't get proper response, you may resort to grievance redressal processes mentioned in Chapter 32 of the Customs Manual 2014 available in the website cbec.gov.in.