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No rebate to Exporters of Services to Nepal . . . But why !!!

JUNE 21, 2012

By R Subramanya, Advocate

A plethora of Notifications have been issued to the exporters who were exporting the goods to Nepal, and there was a paradigm shift from the Erstwhile DRP scheme to normal export scheme on all exports to Nepal. In other words, the exports to Nepal were made at par with all other countries against convertible currency. The following notifications were issued to make it happen.

1.

Rebate of duty on excisable goods used in goods exported to any country except Bhutan - Amendment to Notification No. 21/2004-C.E. (N.T.) - 2/2012-C.E. (N.T.) dated 22-02-12

2. 

Export under bond - Removal of intermediate goods without payment of duty, for manufacture & export by holder of DEEC & Advance licence to any country except Bhutan w.e.f. 1-3-2012 - Amendment to Notification No. 44/2001-C.E. (N.T.) - 28/2011-C.E. (N.T.) dated 05-12-11

3.

Export under bond - Procurement of excisable goods for use in manufacture of export goods - Change of conditions for Nepal w.e.f. 1-3-2012 - Amendment to Notification No. 43/2001-C.E. (N.T.) - 27/2011-C.E. (N.T.) dated 05-12-11

4.

Export under bond to all countries except Bhutan w.e.f. 1-3-2012 - Amendment to Notification No. 42/2001-C.E. (N.T.) - 26/2011-C.E. (N.T.) dated 05-12-11

5.

Rebate of duty on export of goods to all countries other than Bhutan w.e.f. 1-3-2012 - Amendment to Notification No. 19/2004-C.E. (N.T.) - 24/2011-C.E. (N.T.) dated 05-12-11

All the benefits of rebate of duties paid were extended to the exporters were made available to the exporters to Nepal. The efforts were made to alienate Nepal from Bhutan, and more specifically the ‘Nepal and Bhutan' were replaced with only ‘Bhutan'.

But, CBEC came out with a Notification No. 39/2012-ST dated 20-6-2012, wherein the rebate of central excise duties paid on inputs and service tax paid on the input services, is being granted to the exporters of services, except ‘Nepal and Bhutan'.

The erstwhile ‘export of Service', in the new language means, provision of service from taxable territory to a non-taxable territory, under the provisions of place of supply rules, 2012 notified vide Notification 28/2012-ST dated 20-6-2012.

In the new Notification 39/2012-ST even though the export rebate of inupt excise duty and input service tax is being granted, unless the mention of place of provision of service rules are mentioned, how can the rebate of such input excise duty and service tax can be claimed.

Also, when the ‘jodi' of Nepal and Bhutan has been broken for the sake of central excise duty rebate, then why is it that for rebate of such input stage duties and service tax is being denied to the ‘exporter of services' to Nepal.

Is it a copy-paste mistake, committed un-intentionally, or is it an error on the run to raisina hill . . .

However, we would naturally expect some amendment / clarification on the same, as we always do.


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