'No Provision For Refunding Unutilised Credit On Account Of Deemed Exports'

27-May-2013

In the new Foreign Trade Policy (FTP), an important change has been made - notably, that the Served From India Scheme (SFIS) benefit will be allowed on Net Foreign Exchange (NFE) earned. How will NFE be calculated?

The provision referred by you was introduced on 18.04.2013 and will be applicable for services exported during the current year. For exports made in the previous years, you can claim SFIS on the basis of foreign exchange earned. At present, Para 3.6 of the Handbook of Procedures, Vol. 1 as well as the form ANF 3B deal with only the claims on the basis of foreign exchange earned. I believe that after the change in FTP on 18.4.2013, the consequential amendments in procedures and relevant application form for making SFIS claims on the basis of NFE will soon be notified.



We have a lot of unutilised Cenvat Credit because of deemed exports made without duty payment for supplies to export-oriented units, mega power projects, etc. Can we get any refund of that? If not, how can we stop further accumulation of Credit, as we have more and more deemed exports?

At present, Rule 5 of Cenvat Credit rules, 2004 grants refund of unutilised Credit on account of exports under bond/UT-1 to manufacturers and to service providers. There is no provision to refund unutilised Credit on account of deemed exports. You can curb further accumulation of Credit by obtaining advance authorisation and procuring all your inputs, whether imported or indigenous, without duty payment. Similarly, you may try to procure your capital goods also under Export Promotion Capital Goods scheme.



For service providers, the biggest liability is service tax. Given that the FTP now restricts SFIS on NFE basis, is there any good reason why payment of service tax has been allowed only through duty credit scrips issued under Focus Product Scheme, etc., but not SFIS? Why doesn't the government allow even free transferability of SFIS? With lot of useless unutilised SFIS scrips lying with me, what should I do?

I have no idea why the government thought fit to restrict SFIS on NFE basis, or why SFIS is not being allowed for payment of service tax, or why transferability is not being allowed for SFIS. It appears that the lobby of the service providers and the export promotion council for services are not strong enough or persuasive enough to convince the concerned authorities to grant you benefits beyond what you have got. You may also note that Chapter 3 benefits are rewards and the government has all the discretion to decide what to grant and what not to.



As a SSI unit filing quarterly returns, can we avail ourselves of Cenvat credit of May 2013 and June 2013 for payment of duty of April 2013?

For the quarter April-June, you can pay the duty by July 5 by utilising the Credit available as on June 30, as per second proviso to Rule 3(4) of Cenvat Credit Rules, 2004.

Source:-www.business-standard.com