CESTAT Orders ₹11.07 Lakh Refund to Steel Strips Wheels, Recognises Foreign Port Services as Specified Services Under Amended Notification [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, has delivered a crucial judgment in favour of Steel Strips Wheels Ltd., allowing the company a refund of ₹11,07,308/- in service tax.

The dispute revolved around whether services availed at foreign destinations, such as handling charges, destination charges, container handling, and warehouse fees, qualify for ra ebate under Notification No. 41/2012-ST dated 29 June 2012.

The original adjudicating authority had rejected the rebate claim, holding that only services used up to the Indian port of export were eligible. It reasoned that once goods were cleared for export under Section 51 of the Customs Act, 1962, services rendered abroad could not be considered “specified services.”

This view was upheld by the Commissioner (Appeals), prompting Steel Strips Wheels Ltd. to approach the Tribunal.

Appearing for the appellant, counsel argued that the issue had already been settled in their favour in earlier proceedings. In Steel Strips Wheels Ltd. v. CCE [2019], the Tribunal had categorically held that taxable services used beyond the factory for export of goods are “specified services” and eligible for rebate.

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The appellant also relied on precedents such as Polyplex Corporation Ltd. v. CCE, Meerut [2015] and Jain Irrigation Systems Ltd. v. CCE, Mumbai [2015], where a rebate was allowed on services used abroad in connection with exports.

The Revenue, represented by its Authorised Representative, reiterated that the CBEC Circular No. 999/6/2015-CX dated 28 February 2015 restricted the “place of removal” to the port of export within India. It argued that services rendered at foreign ports were post-export activities and could not be treated as input services for rebate.

The Tribunal, however, rejected this contention. It noted that the 2016 amendment to Notification No. 41/2012-ST, introduced through Notification No. 1/2016-ST dated 3 February 2016 and reinforced by Section 160 of the Finance Act, 2016, had retrospectively broadened the definition of “specified services.” The amended provision clarified that taxable services used “beyond the factory or any other place of production or manufacture” for export are eligible for a rebate. This amendment, the Tribunal held, directly covered the services in dispute.

The Tribunal emphasised that judicial discipline requires consistency with its earlier rulings and those of other benches. It was also observed that the rebate scheme was intended to ensure exports remain tax-neutral, free from the burden of domestic duties and levies. Denying a rebate on services integrally tied to export delivery, even if performed abroad, would defeat this purpose.

Accordingly, the bench of Vasa Seshagiri Rao (Technical Member) set aside the Commissioner (Appeals)’ order and directed that Steel Strips Wheels Ltd. be granted the refund of ₹11,07,308/- along with consequential reliefs.

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