Entity Recognized as Exporter in Customs Documents Alone Eligible to Claim Service Tax Refund Under Notification: CESTAT [Read Order]

NMDC Limited, a public sector undertaking engaged in the mining and sale of iron ore, filed several refund claims under Notification No. 41/2012-ST seeking a rebate of service tax paid on input services used in the export of iron ore. The refund claims were made for services such as railway freight, terminal handling, and sampling charges connected with the export of iron ore through MMTC Limited.

The Department rejected the refund claims on the ground that NMDC was not the exporter of the goods. It observed that under the Foreign Trade Policy, the export of iron ore with more than 64% iron content was allowed only through MMTC Limited, a State Trading Enterprise.

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The Commissioner (Appeals) upheld the rejection, holding that NMDC was not entitled to claim the refund since the shipping bills, export invoices, and Bills of Lading named MMTC as the exporter, and the export proceeds were realized by MMTC. NMDC appealed to the CESTAT.

The appellant’s counsel argued that NMDC was the real exporter since it owned the goods and only routed the export through MMTC due to restrictions under the EXIM Policy. It was submitted that as per Section 2(20) of the Customs Act, the term “exporter” includes an owner or any person holding himself out to be the exporter.

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The appellant’s counsel argued that ownership of the iron ore remained with it until MMTC received the sale proceeds from the foreign buyer and that the refund could not be denied on technical grounds when the export and payment of service tax were not in dispute.

The revenue counsel explained that the notification grants refund only to the exporter who actually exports the goods and that NMDC’s role ended with the sale of ore to MMTC at the port.

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The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the export of iron ore above 64% iron content was restricted and permitted only through MMTC as per the Foreign Trade Policy.

It explained that NMDC delivered the goods to MMTC at the port, and MMTC, being the authorized State Trading Enterprise, exported them under its name. The tribunal pointed out that the ownership and risk passed to MMTC before shipment and that all export documentation, including the shipping bills and realization of proceeds, were in MMTC’s name.

The tribunal held that NMDC was not the exporter under Notification No. 41/2012-ST and could not claim a refund of service tax paid on input services. The tribunal stated that the right to claim rebate or refund vests only with the entity recognized as the exporter in customs documents. Since MMTC was the exporter, NMDC’s appeals were dismissed.

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