2017 (12) TMI 169 - AT - Service Tax

Refund in respect of clearing and forwarding agent and custom house agent service - N/N. 41/12-ST dt.29.6.2012 - refund denied as drawback was availed - Held that - as per Rule 12 (1) (ii) of the Drawback Rules, a declaration is required to be made in respect of input services used in the manufacture of export goods on which drawback has been claimed. As the services in question, namely, clearing and forwarding agent service and custom house agent service are used at the port of export and after the goods have been manufactured, the provisions of Drawback Rule 12 (1) (a) (ii) are clearly not applicable to these services. As for the contention that the notification is not admissible when the appellant have claimed drawback under Part-A of the drawback schedule, Ld. AR agrees that the said clause does not exist in the present Notification No.41/2012-ST. The Central Government has amended N/N. 41/2012-ST by way of Notification No.1/2016-ST dated 3.2.2016 in which the clause relating to place of removal has been deleted and input credit on these services beyond the factory of production has been allowed the facility of refund under this notification. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund claim under Notification NO.41/12-ST dt.29.6.2012.
2. Interpretation of Rule 12 of the Drawback Rules, 1995.
3. Applicability of drawback claim under Part-A of the drawback schedule.
4. Use of clearing and forwarding agent service and custom house agent service in export goods manufacture.
5. Comparison of conditions in Notification NO.41/12-ST and Drawback Rules, 1995.

Issue 1: Refund claim under Notification NO.41/12-ST dt.29.6.2012

The appeal concerns the refund of &8377; 5,26,456/- for clearing and forwarding agent and custom house agent services under Notification NO.41/12-ST. The Commissioner (Appeals) allowed the refund, stating that the notification does not restrict refund claims when drawback under Part-A of the drawback schedule is availed. The Revenue challenged this decision.

Issue 2: Interpretation of Rule 12 of the Drawback Rules, 1995

The Revenue argued that Rule 12 (a) (ii) of the Drawback Rules requires a declaration on the shipping bill regarding customs duty and service tax paid on input services for which drawback is claimed. They contended that since drawback of these services was claimed, no refund could be filed. However, the absence of a specific clause in Notification NO.41/12-ST regarding drawback claim under Part-A was noted.

Issue 3: Applicability of drawback claim under Part-A of the drawback schedule

The respondent argued that the services in question were not used in the manufacture of exported goods, citing a Tribunal judgment. They highlighted government circulars indicating a simplified refund scheme for service tax to exporters, akin to duty drawback. The absence of a provision in the notification disallowing drawback claim under Part-A was emphasized.

Issue 4: Use of clearing and forwarding agent service and custom house agent service in export goods manufacture

The Tribunal noted that these services were used at the port of export after goods were manufactured, making Drawback Rule 12 (1) (a) (ii) inapplicable. The absence of a restriction in Notification NO.41/12-ST on claiming drawback under Part-A supported the Commissioner's decision to allow the refund claim.

Issue 5: Comparison of conditions in Notification NO.41/12-ST and Drawback Rules, 1995

The Tribunal concurred with the Commissioner's analysis that the conditions in the notification did not preclude refund claims when drawback under Part-A was availed. The Tribunal referenced specific clauses in the notification and rules to support the conclusion that the appellant was entitled to the refund claim. The amendment to Notification No.41/2012-ST further validated this interpretation.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision to allow the refund claim under Notification NO.41/12-ST. The analysis focused on the specific conditions in the notification and Drawback Rules, emphasizing the absence of restrictions on claiming drawback under Part-A and the use of services beyond the factory of production for refund eligibility.