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Service Tax Notifications No. 41, 42 and 43 of 2012


No.CLE/Pol/Circular/2012 
July 3, 2012 

All Members of the Council. 

Dear Members, 

Sub :  Service Tax Notifications 

In continuation of our earlier circular No.CLE/ED/circular/2012, dt.June 29, 2012, the Central Board of Excise and Customs, Ministry of Finance has further issued the following Service Tax Notifications.

1.Service Tax Notification  No. 41/2012 Dated 29th June, 2012 notifying the Schedule of Rates for service tax refund and prescribing conditions for refund

Earlier, the Service Tax paid by exporters on notified post manufacturing services were reimbursed as per provisions of Service Tax Notification No.17/2009 dated 7th July 2009.  Considering the procedural hurdles faced by the exporters in availing the refund and also the lengthy documentation involved, the Hon’ble Union Minister of Finance had announced in the Union Budget 2011-12 that a scheme for refund of Service Tax on the lines of Duty Drawback will be introduced. 

Accordingly, the Central Board of Excise and Customs (CBEC) issued a Service Tax Circular No.149/18/2011-ST dated 16th December 2011  outlining the details of the simplified scheme of refund of Service Tax.  As per this scheme, the exporter has two options. The first option is to get the refund on the lines of Duty Drawback according to the Schedule of Service Tax. In this case, exporters who are already availing Drawback can get the refund through their existing bank account itself through ICES mode but should mention the first two digit/four digit chapter/sub-heading number of service tax schedule in the shipping bill and should also register their Central Excise/Service Tax Code Number with the Customs ICES through submission of an application in the prescribed format.  The second option is to get reimbursement through submission of documents to the Central Excise/Service Tax field formations by declaring Service Tax chapter/sub-heading number as 9801 in the electronic shipping bill. The Central Board of Excise and Customs has now issued a new notification No. 41/2012 dated June 29, 2012 wherein the new Service Tax refund schedule has been notified. The new rates will be applicable with effect from 1st July 2012. The details of the old rates, new rates and workings made by CLE which were submitted to the Service Tax Directorate are given below. 

The schedule of Service Tax refund rates concerning leather sector falling under Chapter 41, 42, 43 and 64 is given below

Sl.No. Chapter 
or 
sub-Heading No.
Description of goods
Old 
Rate
New Rate Workings made by CLE
49 41 Raw Hides And Skins (Other Than Fur skins) And Leather 0.03 0.04 0.05
50 4201 Saddlery and harness for any animal (including traces, leads, knee pads, muzzles, saddle cloths, saddle bags, dog coats and the like), of any material 0.05 0.12 0.19
51 4202 
  
    
Trunks, suit-cases, vanity-cases, executive-cases, brief-cases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; travelling-bags, insulated food or beverages bags, toilet bags, rucksacks,handbags, shopping-bags, wallets, purses, map-cases, cigarette-cases, tobacco- pouches, tool bags, sports bags, bottle- cases, jewellery boxes, powder-boxes,  cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paper-board, or wholly or mainly covered with such materials or with paper.
0.10 0.12 0.19
52 4203 Articles of apparel and clothing accessories, of leather or of composition leather 0.10 0.12 0.155
53 4204 Omitted - - --
54 4205 Other articles of leather or of composition leather 0.10 0.12  
55 4206 Articles of gut (other than silk-worm gut), of goldbeater’s skin, of bladders or of tendons 0.10 0.12 --
56 4301 Raw fur skins (including heads, tails, paws and other pieces or cuttings, suitable for furriers’ use), other than raw hides and skins of headings 4101, 4102 or 4103 Nil Nil --
57 4302 Tanned or dressed fur skins (including heads,  tails, paws and other pieces or cuttings), unassembled, or assembled (without the addition of other materials) other than those of heading 4303 0.10 0.12 --
58 4303 Articles of apparel, clothing accessories and other articles of fur skin 0.10 0.12 --
59 4304 Artificial fur and articles thereof 0.10 0.12 --
155 64 Footwear, gaiters and the like; parts of such articles 0.10 012 0.15

From the above, it may be noted that there is an overall increase in the Service Tax refund rates. 

2.Service Tax Notification No.42/2012 :  Service Tax Notification No. 18/2009 dated 7th July 2009 provided total exemption on service tax paid to foreign agents, to the extent of 1% of FOB value of export goods for which the said service was used. Further, the Service Tax circular no. 118 dated 23rd Nov. 2009 clarified that the current rate of service tax being ten per cent and the maximum allowable limit of foreign agency commission being ten percent of FOB, one percent of the FOB value of export goods is the maximum exemption of service tax. 

As per Service Tax Notification No.42/2012 dated June 29, 2012 the Service tax exemption on foreign agents commission has been continued with effect from July 1, 2012.  The conditions prescribed for availing the said exemption are as follows : 
(1) The exporter shall declare the amount of commission paid or payable to the commission agent in the shipping bill or bill of export, as the case may be. 

(2) The exemption shall be limited to the service tax calculated on a value of ten per cent of the free on board value of export goods for which the said service has been used. 

(3) The exemption shall not be available on the export of canalised item, project export, or export financed under lines of credit extended by the Government of India or EXIM Bank, or export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary. 

(4) The exporter shall submit with the half-yearly return after certification of the same as specified in clause (g) of the proviso 
( i ) the original documents showing actual payment of commission to the commission agent; and 
( ii ) a copy of the agreement or contract entered into between the commission agent located outside India and the exporter in relation to sale of export goods outside India: 
However, the following requests made earlier by CLE have not been considered and hence needs to be taken-up. 

  • Procedure of filing EXP-1 is dispensed with or a provision made that EXP-1 be filed before filing the first half yearly return  under the notification, and also power to condone delay be given to the authority.
  •  
  • To overcome the procedural difficulties it is requested that the time limit for filing EXP 2 may  be extended to 6 months from the present 15 days, by issuing a retrospective amendment to the said notification from 7.7.2009. This will provide due relief to our member exporters. 
3.Service Tax Notification No. 43/2012 : This Notification exempts services provided by railways by way of transportation of goods from the levy of service tax. This Notification is effective from the date of publication of this notification in the Official Gazette, upto and including 30th  day of September, 2012. 

Copies of the Service Tax Notifications dt.41 and 42 dt.June 29, 2012 and ST Notification No.43 dt.July 02, 2012 are enclosed herewith for reference. 

Members may kindly take note of the above. 

With regards 

D Saalai Maraan 
Executive Director

ST Notification No. 41 (29.06.2012) | ST Notification No. 42 (29.06.2012) | ST Notification No. 43 (2.7.2012)

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