CBEC formulates a scheme for speedy disbursal of pending refund claims of exporters of service under Rule 5 of the CENVAT Credit Rules, 2004

 

This Tax Alert summarizes Circular no. 187/6/2015-Service Tax dated 10 November 2015 issued by the Central Board of Excise and Customs (CBEC).

 

Vide this Circular the CBEC has formulated a scheme for speedy disbursal of pending refund claims of exporters of services under Rule 5 of the CENVAT Credit Rules, 2004. Key features of the scheme are as follows: 

 

• This scheme will be applicable to all refund claims which are pending as on 31 March 2015 and have not been disposed of by way of sanction order.
• The scheme does not cover the claims which are remanded back to the original sanctioning authority.
• Under this scheme, on submission of a certificate and an undertaking in a prescribed format by the claimant, a provisional payment of 80% of the claimed amount shall be made within 5 working days.
• The payment made is purely provisional which will be subject to verification and issuance of show cause notice.

Speedy grant of refund of accumulated and unutilised CENVAT credit shall be beneficial to exporters as it would relieve the burden of working capital. However, it is important to ensure that the scheme is well executed and administered.

 

The shift of assessment from ‘First Adjudication then Refund’ to ’First Refund then Adjudication’ would make the process faster and transparent, which is indeed a welcome step for taxpayers.