We have availed of the ‘storage and warehousing’ service outside India for storing our export goods in warehouses abroad. We have remitted the charges to the warehouse keeper for that. Now, the audit team has asked us to pay service tax as this is a service provided from outside India and received by us in India and therefore, amounts to import of services. Are we required to pay up?
‘Storage and warehousing service’ is a taxable service covered under Section 65 (105) (zza) of Finance Act, 1994. This service is covered under Rule 3 (ii) of Taxation of Services (Provided from outside India and Received in India) Rules, 2006. According to this provision, taxable services provided from outside India and received in India shall, in relation to this service, be such services as are performed in India. The first proviso to the said Rule 3(ii) says that where such taxable service is partly performed in India, it shall be treated as performed in India. This means that this service is taxable only if the service is partly or wholly performed in India. In your case, the service is wholly performed outside India. Therefore, there is no need to pay service tax on the same.
Can we use the Status Holder Incentive Scrip (SHIS) for payment of duty to regularise default under the advance licence scheme, as per Para 3.17.11 of the Foreign Trade Policy (FTP), which says that duty credit scrips can also be used / debited towards payment of Customs Duties in case of EO defaults under authorisations issued under Chapters 4 and 5 of the Policy?
Para 3.17 of the FTP gives the ‘Common Provisions of Duty Credit Scrips’, except where specifically provided for. Para 3.17.11 of the FTP, which you have referred to, is a sub-para of Para 3.17. Now, it is specifically provided in Para 3.16.3 of the FTP that the SHIS shall be with Actual User Condition and shall be used for imports of capital goods (as defined in the FTP) relating to the sectors specified in Para 3.16.4 of the FTP. The specific provision in Para 3.16.3 of the FTP is an exception to the common provision in Para 3.17.11 of the FTP. Therefore, you cannot use the SHIS scrip in accordance with Para 3.17.11 of the FTP.
The Customs have raised a query that our import price is less than the London Metal Exchange (LME) price. Can they reject our import price based on LME prices?
Based on LME prices, the Customs may raise a query regarding why your price cannot be rejected and you have to explain the matter to the Customs. Usually, rejection of the transaction value i.e., the price paid or payable for imported goods, by the Customs cannot be sustained, except on the basis of contemporaneous imports or on the grounds that the conditions given in Rule 3(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 are not met.