Customs and Service Tax notifications issued providing relief to export sector

Government has issued three notifications No.115/2007-Customs, No. 42/2007-Service Tax and No.43/2007-Service Tax, here today giving effect to the announcement made by the Finance Minister on 29.11.07 in the Lok Sabha. These three notifications provide relief by way of customs duty and service tax exemptions.

Notification No.115/2007-Customs reduces basic customs duty on following items relating to textile sector:

- Polyester filament yarns and polyester staple fibres from 7.5% to 5%;

- Other man made filament yarns namely, acrylic, viscose etc (excluding nylon filament yarns) from 10% to 5%;

- Other man made staples fibres namely, acrylic, viscose etc (excluding nylon staple fibres) from 10% to 5%;

- Spun yarns of man made staple fibres and filament yarns (excluding nylon fibres) from 10% to 5%;

- Polyester chips from 7.5% to 5%;

- Fibre intermediates viz. Dimethyl terephthalate (DMT), Pure terephthalic acid (PTA), and Mono ethylene glycol (MEG) from 7.5% to 5%; and

- Para-xylene from 2% to zero.

There is no change in basic customs duty on nylon filament yarn / fibres, nylon chips and caprolactum and continues to remain the same. There is also no change in basic customs duty on acrylonitrile and rayon grade wood pulp.

Notification No.43/2007-ST dated 29th November, 2007 provides relief by way of refund of service tax paid on business exhibition service [section 65(105)(zzo)] provided to manufacturer-exporters of textile goods such as carpets, textile floor coverings, articles of apparel and other made up textile articles, who are registered as exporter with any of the specified organizations. The benefit under this notification is available for the said textile manufacturers whether or not the business exhibition service is directly relatable to export goods. This notification is valid for a period up to 31.03.2009.

Service tax paid by exporters on input services used for export goods is neutralized under various existing schemes. These are taxable services which are directly relatable to export goods. The issue of providing refund of service tax paid on taxable services, which are not "input services" but could be attributable to export of goods was examined in consultation with stakeholders.

Government has already notified the following seven taxable services and the service tax paid on these seven taxable services, which are attributable to exports even if they are not used as input services, shall be refunded to exporters.

· Port Services provided for export. (Section 65[105][zn])

· Other port Services provide for export. (Section 65[105][zzl])

· Services of transport of goods by road from ICD to port of export provided by  Goods Transport Agency. (Section 65[105][zzp])

· Services of transport of export goods in containers by rail from ICD to port of export. (Section 65[105][zzzp])

· General Insurance Services provided to an exporter in relation to insurance of export goods. (Section 65[105][d])

Technical testing and Analysis Agency Services in relation to technical testing and analysis of export goods. (Section 65[105][zzh])

· Inspection and Certification Agency Services in relation to inspection and certification of export goods. (Section 65[105][zzi])

Refund of service tax paid by exporters on taxable services linked to exports has been further extended to following two more taxable services vide Notification No.42/2007- ST dated 29^th November, 2007:

·  Storage and warehousing service [section 65(105)(zza) of the Finance Act, 1994]

·  Cleaning activity service [section 65(105)(zzzd)]

 For details, relevant notifications may be referred to.

Notification No.115/2007-Customs, notifications No. 42/2007-Service Tax and 43/2007-Service Tax all dated 29^th November, 2007 are available on the CBEC website http://www.cbec.gov.in.