Relevance of relevant date for refund under Rule 5 for export of services
In terms of Rule 5 of the CENVAT Credit Rules, 2004 if any input or input service is used in the manufacture of final product and cleared for export or used in providing output service which is exported, the manufacturer/service provider shall utilize the CENVAT credit in r/o the inputs or input services so used for payment of excise duty on any final products cleared for home consumption or for export or service tax on output service as the case may be.
In case if such utilization (adjustment as per the Rule) is not possible the manufacturer or service provider shall be allowed refund of such unutilized CENVAT credit if any lying in the books subject to the conditions/safeguards prescribed in terms of Notification No. 5/2006 CE (NT) dated March 14, 2006 as amended. One of the essential conditions prescribed is the applicability of time limit as per s. 11B of the Central Excise Act, 1944 for filing of such refund claims. The relevant date for the purpose of reckoning the time limit of one year is defined in terms of clause B to Explanation under s. 11B of the Act.
According to this clause the ‘Relevant date' means
(a) In the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods,—
(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or
(ii) if the goods are exported by land, the date on which such goods pass the frontier, or
(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India …………
This definition of ‘Relevant date' under s. 11B does not mention anything with regard to export of services. So, in the absence of a specific definition what could be regarded as the ‘relevant date'?
Is it the date of rendering the service or the date of invoice or the date of realization of export proceeds or the date of receipt of advance (which is also deemed as taxable – but exempted by virtue of it being export) that could be regarded as the ‘relevant date'?
As it is, the refund claims under Rule 5 are hard to come by for the service providers in spite of the repeated clarifications and directions issued by the CBEC for speedy sanction/disposal of refund claims. But in the absence of any clarity in the provisions with regard to relevant date for export of services the assessees are hard put to satisfy the authorities on this aspect.
It is learnt that nearly six hundred Crores of rupees of refund under Rule 5 on export services is pending and the responsive Board has asked daily reports from the field on refund status. Instead of merely asking for the reports, the Board could try process a sample claim to learn the complexities involved and iron out the creases and come up with a specific clarification in this regard to dispel any doubts in the minds of the refund sanctioning authorities, in the interim and bring in suitable amendments to s. 11B at the appropriate time (next budget).