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We are dealers in iron and steel scrap. While importing, we pay additional duty of customs of four per cent. While this material is re-sold to local VAT customers, we charge this four per cent. Please clarify whether input tax credit can be claimed in these cases, and under what clause or notification.
If you are a dealer/importer registered with central excise, you can pass on the four per cent additional duty of customs (levied under Section 3(5) of the Customs Tariff Act, 1975) to your customer and issue an invoice as prescribed under Rule 11 of Central Excise Rules, 2002. In that case, your customer can take Cenvat Credit of the four per cent additional duty of customs on the basis of that invoice, as per Rule 9 of the Cenvat Credit Rules, 2004. But, this credit of four per cent is not available to service providers. You must note that if you pass on this four per cent credit to your customers, you cannot claim refund of the same from Customs. Regarding the credit of VAT that you charge your customers, they can take credit on the basis of the tax invoice you issue under the relevant state VAT laws.
We are not registered with the Service Tax Department, as the aggregate service we provide is less than Rs 10 lakh. Now, against our export of services, can we claim refund of accumulated Cenvat Credit under rule 5 of Cenvat Credit Rules, 2004 or claim rebate through Form ASTR2?
I wonder how you got accumulated Cenvat Credit because, for taking Cenvat Credit, you must be paying service tax. As a service provider availing exemption under notification no. 33/2012-ST dated June 20, 2012, you must take note of the conditions that do not allow you to take Cenvat Credit of service tax paid on any input services, or capital goods during the period you avail the exemption. You can start availing credit on capital goods and input services received from the time you start paying service tax.
Also, when you start availing the exemption, you should pay an amount equal to the Cenvat Credit on inputs lying in stock and the balance of credit shall lapse. So, there is no question of accumulating credit. But, you can claim rebate of duty paid on inputs and service tax and cess paid on input services through ASTR-2 form. You need not have a registration from the department for that claim, but you must file the necessary declaration prescribed under the relevant notification no. 39/2012-ST dated June 20, 2012.
Under the e-BRC system, the banks show only the actual amount realised after deduction of foreign bank charges. When we submit the e-BRC to Customs, they ask us to surrender proportionate drawback for the shortfall. In every invoice some bank charges get deducted and so for every shipping bill, some drawback has to be surrendered. This is a lot of paperwork. How can we avoid it?
I suggest you submit a negative statement to Customs as per CBEC Circular no. 5/2009-Cus dated February 2, 2009, instead of submitting e-BRC.
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