TaxTMI 
TaxTMI 
Minutes of Tariff Conference held on 28th & 29th October, 2015 at Chandigarh
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....3 to B41 6 Implementation and other related issues B42 to B52 7 Audit Manual B53 ANNEXURE-B B1- Hyderabad Zone- Assessment and Valuation-Non-adoption of Section 4A-Valuation of Goods-Clearances made to Depots by Cement Manufacturers:- Issue: Cement in packaged form has been notified under Section 4A of the Central Excise Act, 1944 with effect from 17.3.2012. The assessee affixes a label on the bags removed to its depots clearly stating. "meant for industrial/institutional consumer". An audit objection has been raised in this zone for non- adoption of retail sale price based valuation on the clearances made to depots by a cement manufacturer, subsequently sold to industrial/institutional consumers. However, the assessee is clearing such consignments of cement in bags to their depots on the basis of value arrived as per Section 4 of the Central Excise Act, 1944, on the ground that the depot is nothing but an extended arm of the factory and when goods are sold to the industrial/institutional buyer, provisions of Section 4A do not apply. Relevant legal provisions: Rule 3 of Legal Metrology (Packaged Commodities) Rules, 2011 states that the provisions of....
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....Zone - Assessment and valuation-Retention of Sales Tax Collected from Customers and Inclusion thereof in the Transaction Value: Issue: During the course of audit of certain units, it has been noticed that Government of Rajasthan has declared that the concerned manufacturer shall be eligible for Customized Package (a financial package) under Rajasthan Investment Promotion Policy-2010 (RIPS 2010) on fulfillment of conditions laid down therein. According to the scheme manufacturer shall be allowed subsidy (consisting of Investment Subsidy and Employment Generation Subsidy) for a period of 7 years. Under the scheme the maximum amount of subsidy shall be 55% of the total amount of tax i.e. VAT and CST which become due to be deposited into the government exchequer. 2. A doubt has arisen, whether such subsidy granted by the Industrial Department of Government of Rajasthan to the extent adjusted against sales tax liability is liable to be included in the transaction value under the provisions of Section 4 of the Central Excise Act, 1944. Concerned Zone also informed that the subsidy amount given by RIPS, 2010 is not paid in cash to the unit and is adjusted against the sales tax li....
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....by the State Govt. State VAT laws may considers VAT as fully paid in such situations but it is only a deeming fiction of full payment and not actual payment to the exchequer. Such deeming fiction would apply only for purposes of considering VAT fully paid under the State law and not for allowing abatement under Section 4 of the Central Excise Act, 1944.Definition of transaction value quite clearly states that transaction value does not include taxes actually paid. B3 - Vadodara Zone-Assessment and Valuation- Whether the Excisable Products like Dish Washing Liquid, Floor Cleaner, Toilet Cleaners Falling under Tariff Items 34022010 and 34022090, Liable for Excise Duty by Assessing Value under Section 4 or Section 4A (MRP based assessment) of Central Excise Act, 1944. Issue: The sponsoring zone explained that a doubt had arisen regarding the applicability of section 4A of Central Excise Act, 1944 in respect of excisable products like Dish washing liquid, liquid floor cleaner, liquid toilet cleaners falling under tariff items 34022010 and 34022090. The said goods at present are being cleared in retail packs of 250 ml/500 ml/ 1 litre in open market, under Section 4 of Central E....
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.... with the recommendations of the Joint Director (Cost) and opined that subject matter being contentious, should not be decided for the time being. The jurisdictional Commissioner elaborated the logic of applicability of Cost Audit Report Rules, 2011. The issue has been brought before the conference as to whether the said Cost Audit Report Rules may be adopted for fixing value addition though these rules are not specified in the notification on area based exemption. Discussions & Decision The conference discussed the issue and after discussions concluded that the formula prescribed in the notification is binding for arriving at the value addition by revenue. It was beyond the authority of law to impose conditions in a notification not explicitly prescribed in the notification concerned. The sponsoring zone may make a detailed reference to the Board, suggesting change in the notification, if they deem it necessary. However, till the amendments are made in the notification, the formula as prescribed in the notification is required to be followed to arrive at value addition. As the present applications would be governed by the notification as they exist, they should be decided on....
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....it has been explained that where no material of different composition is mixed, the exclusion clause of Note 1 of Chapter 25 does not apply. This view is reinforced by the observation of Hon'ble Supreme Court in the matter in the matter of M/S Deepak Agro Solutions Ltd. [2008-TlOL-98-SC-CUS]. Additionally, Rule 2(b) of the General Rules for Interpretation of Schedule provides that any reference to a given material or substance shall be taken to include a reference to goods wholly or partly of that substance. Accordingly, it was concluded that the impugned product, when not added with any external binder, shall be classified under Chapter heading 2506. 3.6 - Hyderabad Zone - Classification - Classification of Coconut Oil Packed in Packages up to Sizes of 200mI: Issue: This issue relates to classification of Coconut Oil. There are two contending classifications of Coconut Oil under the Central Excise Tariff. Chapter 15 covers various types of Vegetable Oils including Coconut Oil and Chapter 33 covers Cosmetics including Hair Oil. The dispute with regard to classification of the product i.e. Coconut Oil arose after the Board's clarification vide Circular no. 145/56/19....
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....it pulp or juice based drinks attract same rate of duty. Tariff heading no 22029090 on the other hand was a residuary heading and would apply only when the goods under consideration do not find coverage under other tariff heads. Conference further noted that in the absence of specific product under reference with details of constituents and manufacturing process, it would not be possible to come to any firm conclusion. Therefore, conference did not recommend any amendment in the tariff. B.8 - Lucknow Zone - Classification - Classification of Goods Known as TASLA Issue: An item by the name of 'TASLA' of Iron and Steel is being manufactured in this zone and the assessee is classifying the same under tariff item 82019000 as "other Hand Tools of a kind used in agriculture, horticulture or Forestry'. The process of manufacture adopted is procuring the iron and steel sheet, slitting and cutting circles out of it and pressing them in the deep drawing double action power press giving it a deep shape and folding corner edges for convenience and safety. The local Commissionerate is of the view that the said goods are better classified under tariff item 73239410 as "Ghame....
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....unal in case of M/S Mehta Steel Industries [2000(120)ELT 583(Tri)] wherein it was held that "The product in question shallow pans apparently falls under Heading No. 82.01 of the Tariff as this heading covers not only hand tools, but also other tools of kind used in the agriculture, horticulture or forestry. The shallow pans are used in the agriculture, horticulture as well as forestry. The Asstt. Collector has rightly classified the product under this heading, keeping in view the Explanatory Notes under HSN. Being an implement of a kind used in the agriculture, Heading No. 73.26 of the Tariff as contended by the SDR, is not at all attracted in this case, as the same relates only to the other articles of iron and steel, forged or stamped, but not further worked. Keeping in mind the use of the product in question, and taking into consideration the HSN Explanatory Notes, the view taken by the Asstt. Collector as well as by the Commissioner (Appeals) classifying the product (shallow pans) under Heading No. 82.01 of the Tariff cannot be said in any manner erroneous so as to call for any interference in the appeal before us. " The conference accordingly concluded that the ghamella/tas....
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....nes for processing milk dependent essentially on the principle of heat exchange (heading 84.19) are excluded from coverage under chapter heading 84.34. The heading also excludes refrigerating appliance (whether or not specially designed for cooling or keeping milk and milk cooling vats incorporating evaporator of a refrigerating unit (heading 84.18) from Chapter Heading 84.34. Thus any machinery which answers to a description under headings 8418 or 8419 cannot be classified under heading 8434. This principle was upheld by Hon'ble Supreme Court in case of HMT Limited [2007 (214) E.L.T. IO(S.C.)] where milk/cream chillers and chilling plants were under consideration amongst other equipments for classification and classification under 84.34 rejected. As far as classification under CETH 8418 is concerned, HSN notes for the heading provides that - "The refrigerators and refrigerating equipment of this heading are in the main machines or assemblies of apparatus for production, in a continuous cycle of operations, of low temperatures (in the region of O degree centigrade or less) at the active cooling element, by the absorption of the latent heat of evaporation of liquefied gases (....
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.... be covered by the judgment in case of Praj Industries (supra) and the equipment would be prima-facie classified under 8418. However, the sponsoring Zone may verify the facts of the case and scope of the headings explained in the foregoing paragraphs and decide the classification B10 - Ahmedabad Zone - Scope of Exemption to annealed Hot Rolled Patta Patti of Chapter 72 under sr. No. 203 of Notification No. 12/2012-CE dated 17.03.2012 : Issue: The sponsoring zone explained that an assessee in the zone is engaged in the manufacture of stainless steel hot rolled patties and pattas and stainless steel cold rolled patties and pattas falling under chapter 72. They have cleared the annealed hot rolled patta and patties by availing exemption from payment of Central Excise duty under Sr. No. 203 of notification no 12/2012-CE dated 17.03.2012. There are certain intermediate processes between hot rolling and cold rolling. Hot-rolled pattas/patties are subjected to process like pickling and annealing to make them suitable for cold-rolling process. The zone was of the view that the exemption was intended for processes that are performed on the hot rolled pattas/patties such as pickling....
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....leviable under the First Schedule to the Customs Tariff Act, 1975(51 of 1975) and the additional duty leviable under section 3 of the said Customs Tariff Act when imported into India". The customs exemption prescribes conditions which have to be adapted for granting exemption from Central Excise duty in view of condition 41. This leads to dispute regarding interpretation of the conditions as they are amenable for Customs exemption and not for Central Excise notification. In this connection, reference was invited by the zone to CESTAT Order in the case of AUDCO India Ltd.[2013 (297) ELT (Tri Chennai)]. Relevant portion of the order is reproduced below: " The present dispute has arising basically because of the fact that the Excise duty exemption has been provided with reference to exemption for Customs Duty and the condition that are appearing in the Customs notification has not been adopted to suit claiming excise duty exemption. There is necessity for making changes if the exemption from excise duty is to be meaningful. In the first place, there is no importer involved when goods are manufactured in India or supplied in India. Similarly, customs assessment and duty paymen....
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....tion shall apply mutatis mutandis for the purpose of said Central Excise notification. It was further clarified that the phrase U mutatis mutandis" in the said amendment would mean - "with such changes as are required" to make the exemption notification operational on Central Excise side also. B12 - Coimbatore Zone - of SSI Exemption- When there is a Deed of Assignment Of Brand Name Within the Hindu Undivided Family (HUF): Issue: The sponsoring zone explained that in a case noticed in the zone, a HUF owned a particular brand. Each of the members of the HUF was allotted different areas of operations by virtue of a deed of assignment. Each member was manufacturing and clearing excisable goods, using the same brand name, within his allotted area, with each of them separately availing the threshold SSI exemption. The Hon'ble Supreme Court has stated in this case i.e. where a Brand Name has been assigned to members of HUF that the trademark would remain vested with all the members and that all of them are separately eligible for SSI exemption. The sponsoring zone was of the view that the provision is prone to misuse and there was a need for amendment in the SSI notification....
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....he enactment of SEZ Act on 10.02.2006. Once the SEZ Act came into effect from 10.02.2006, all the units functioning as FTZ were declared as SEZ units. notification no.4/2003-CE dated 30.03.2003 was issued to convert various FTZs into SEZs. Further, as per the Notes explaining clauses of the Finance Bill, (clause 106), after enactment of SEZ Act, AZs have become redundant and hence it sought to amend sub- section (I) of Section 3 of the Central Excise Act. By virtue of the above amendment, the word FTZ was omitted and substituted with the word SEZ in section 3 of the Central Excise Act, 1944. Consequently, tribunal concluded that now the expression FTZ in the notification no. 67/95-C.E. needs to be read as SEZ and the benefit of exemption extended to the intermediate goods when final goods are supplied to SEZ. Conference accepted this view and concluded that benefit of exemption should be extended to the intermediate goods when final goods are supplied to SEZ. Conference also recommended to the Board that notification no 67/95-C.E. should be amended to avoid litigation on the issue. B14- Chennai Zone - Scope of exemption- under the Central Excise Notifications should be appended ....
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....ference discussed the language used in the exemption notification and the conditions prescribed therein and noted that the language of the exemption notification is quite clear. Duty rate applicable for manufacture of 'Mobile Handsets' in terms of sl. no. 263A to the notification no. 12/2012-CE dated 17.03.2012 is 1% subject to condition that no credit under Rule 3 or Rule 13 of the Cenvat Credit Rules, 2004 has been taken in respect of inputs or capital goods used in the manufacture. so long as the conditions in the notification are satisfied, the benefit of the concessional rate is available. An exemption notification is required to be implemented by the field formations without going into the policy intent behind it, if the language used in the notification is clear. For example, it is not relevant for the field formation to examine whether the effective duty rate of 1% is appropriate or whether any credit of input services is available to be taken or not. Once the condition of not availing credit in respect of inputs and capital goods as prescribed is fulfilled, the effective duty rate consequent upon exemption is only required to be paid giving full effect to the exemp....
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....s clarified that, in respect of Nepal, even if the export proceeds are received under Indian rupees, the clearances are still eligible for rebate or refund as the case may be. In such a case, it is not known why the export clearances to Nepal are still being considered as home clearances with reference to the limit of exemption available to an SSI under the notification referred. The condition in the notification is restricting the benefit to the Small Scale Manufacturers to the extent of clearances made to Nepal. Clarification is needed in view of the change in the treatment given to Exports to Nepal w.e.f. 01.03.2012. Discussion & Decision The conference agreed that it was a valid suggestion and there was a need to amend notification no. 8/2003 - CE dated 01.03.2003 to bring parity in the exports to Nepal under various notifications. The conference recommended that Board may examine the same However, it was also agreed that till the necessary amendments in SSI exemption are made, the present dispensation of treating exports to Nepal as domestic consumption shall continue to apply. B.18 - Chennai Zone - Cenvat Credit - Amendment to Notification No. 67/95-CE dated 16.03.19....
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....at credit taken. While it is necessary to grant exemption to intermediate products used for manufacture of specified final product as mentioned under Sl.no. (i) to (v), there is no justification for extending the exemption by prescribing reversal of proportionate credit. This proviso not only results in revenue loss but also leads to disputes. It is, therefore, suggested that either of the following suggestion may be considered:- a) Sl.No.(vi) of the proviso to Notification No.67/95-CE can be omitted so that the manufacturer can pay duty on the intermediate product on comparable value, if available or on the value arrived at as per CAS-4 method or b) The words & figures "Rule 6 of Cenvat Credit Rule, 2001", may be substituted by Rule 6 (3)(i) of Cenvat Credit Rules, 2004 so as to prescribe payment of 6% of the value of exempted final products. Discussion & Decision The alternative mechanisms prescribed in Rule 6 of the Cenvat Credit Rules, 2004 was intended to offset the Cenvat credit taken in proportion to the exempted goods/services. Thus, payment of an amount equivalent to 6% of value of exempted goods/services was an alternative to Cenvat credit rever....
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....used for the manufacture of exempted goods or provision of exempted service's. It is clear from the above that Cenvat credit can be taken on input services covered under category "A" and Cenvat credit cannot be taken on input services used in category "B". Therefore, for arriving at the quantum of credit liable to be reversed, common input services referred in category "C" alone should be taken into account while applying the formula prescribed. However, it may be seen that the expression "P" in the formula specifically reads as 'total cenvat credit taken on input services during the financial veary. Hence, the same is interpreted by some field officers as total of - Cenvat credit on the input services used exclusively in manufacture of dutiable goods and for provision of output services [+] Cenvat credit taken in respect of inputs used exclusively in exempted category [+] Cenvat credit taken on common input services used in both dutiable and exempted categories". 3. In this context, reference is invited to the observations of the Hon'ble CESTAT, Mumbai while passing stay order in the case of Thyssenkrupp Industries Pvt Ltd Vs CCE, Pune reported as [ 2014 (310) E.L.T....
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....ual usage in the exempted goods. As this alternative comes in operation when separate accounts are not maintained, the formula can only be based on ratios of values which is how the formula in the rule is. Conference also noted that the rule is quite clear in terms of language used and has stabilized after a long period of time. Therefore, it was concluded that there was no need to amend or clarify Rule 6 as it exists and should be implemented in terms of clear provisions of the rule as it exists. B.20 - Chennai Zone - Cenvat Credit - Rule 9(I)(a) of Cenvat Credit Rules, 2004: Issue: The said Rule provides for taking credit on the basis of an invoice issued by a manufacturer for clearance Of inputs or capital goods as such. Apart from a manufacturer, service providers can also clear inputs and capital goods as such. However, there is no corresponding provision similar to Rule 9(I)(a)(i)(II) of CCR, 2004 for taking credit on the basis of invoice issued by the service provider for removal of inputs or capital goods as such. Even though Rule 3(6) of CCR, 2004 allows an assessee to take credit of duty paid by the manufacturer/ provider of output service in respect of removal o....
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.... withdraw the Education Cess and Secondary & Higher Education Cess. It is a policy decision to not allow utilization of accumulated credit of education cess and secondary and higher education cess after these Cesses have been phased out. As these Cesses have been phased out and no new liability to pay such Cess arises, no vested right can be said to exist in relation to the accumulated credit of the past. The rule and notifications as they exist need to be followed and do not need any amendment. B.22 - Coimbatore Zone - Cenvat Credit - Refund of Cenvat Credit under Rule 5 of CCR, 2004, in respect of raw material used in respect of goods supplied duty free against ICB to mega power/ultra mega power projects: Issue: It would be desirable to provide completely duty free procurement of raw materials (zero rating) for use in the manufacture of goods to be supplied against ICB to mega power/ultra mega power projects. While the main units/sub-contractors are entitled to exemption under notification no. 12/2012-CE dated 17.03.2012, the vendors who supply materials to such main units/sub-contractors do not get any exemption from payment duty. This leads to accumulation of credit wi....
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....it of this amount is available to the buyer of the goods. The transaction is essentially a commercial one between the buyer and seller and no amount is recovered by seller representing or showing it as Central Excise duty. Therefore, department cannot be said to be aggrieved by the transaction. No amendment in section IID of the Central Excise Act, 1944, to recover such amount is warranted, even if this additional amount is charged from the customer and not deposited with the department. 8.24 - Hyderabad Zone - CENVAT Credit - Whether the benefit of Rule 5 of Cenvat Credit Rules, 2004, can be extended to clearances made to 100% EOUs (deemed exports):- Issue: Rule 5 of the Cenvat Credit Rules, 2004, allows refund of accumulated Cenvat credit on export of goods and services in terms of the formula, procedure, conditions etc. specified therein. 2. The term "export service" has been defined under the provisions of the said rule to mean a service which is provided as per Rule 6A of the Service Tax Rules, 1994, whereas, there was no explanation under central excise as to what are "export goods" till 01.03.2015. In the absence of such definition of Export Goods till 01.03.2015....
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....clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of Cenvat credit as determined by the specified formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board. The specified formula may give undue/unintended benefit by allowing refund of the entire CENVAT credit in proportion to the export turnover, irrespective of its actual usage in manufacture of exported goods. It is felt that CENVAT credit eligible as cash refund should pertain to the input / input services which were actually used in the manufacture of goods or provision of output services, which are exported. Hence, it may be recommended by the conference to the Board to insert a rider under the provisions of Rule 5 of Cenvat Credit Rules, 2004 so that refund of unutilized credit is restricted to the extent which is relatable to the exported goods/services to prevent premature cash refund of tax on inputs/input services where such inputs/input services are at a much later stage. Dis....
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....thin the factory and become a cost to the business. Demand for reversal of the input services credit, when such input services cannot be reused, unlike inputs and capital goods which are available for reuse would not be fair to the trade. Therefore, the conference concluded that the present rule represents the correct provision in accordance with the principles of input tax credit. Rule 3(5) of the Cenvat Credit Rules, 2004, does not need any amendment. Audit para may be replied accordingly. B.27 - Meerut Zone - Cenvat Credit - Interest on Reversal of Cenvat Credit Taken on Inputs Sent for Job Work and not Received Within Stipulated Period. Issue: Rule 4(5)(a)(i) and Rule 4(5)(a)(ii) of the CENVAT Credit Rules, 2004 provides that CENVAT credit on inputs shall be allowed even if inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, reconditioning or for the manufacture of intermediate goods necessary for the manufacture of final products. Such inputs and capital goods are required to be received back in the factory within one hundred and eighty days of their being sent to a job worker. If the inp....
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....se of Hindustan Zinc Ltd. [2008 (228) ELT 517 (Raj.)] on the other hand has allowed Cenvat Credit of duty paid on Welding Electrodes used for repairing of Capital goods. In view Of the contrary judgments the Board may like to issue regarding admissibility of Cenvat Credit on Welding Electrodes used for repairing and maintenance, so that a uniform practice is followed all over the country. Discussion & Decision The conference noted that there are contrary judgments on the issue by Hon'ble Allahabad High court in the case of M/S Upper Ganges Sugar & Industries Limited and by Hon'ble Rajasthan High Court in case of M/S Hindustan Zinc Limited. Further Hon'ble Supreme Court has referred the matter to a larger bench in case of RamaIaShahkariChini Mills Ltd [2010 (260) ELT 321]. As the issue is pending before the Hon'ble Supreme Court, for the present the cases may continue to be in the Call Book. Further the conference recommended that Board should examine the issue and if needed amend the rules to bring certainty to the issue of availability Of credit on welding electrodes used under different situations. B.29 - Meerut Zone - Cenvat Credit - Dutiability of Bagga....
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....there are conflicting judgments of Hon'ble High Courts in this regard. Hon'ble High Court of Gujarat in case of Cadila Health care [2013(030) STR 0003] has disallowed the said Cenvat credit whereas Hon'ble Tribunal in case of Birla Corporation Ltd - [2014(35) STR977] followed the judgment of Hon'ble High Court of Bombay and allowed the credit. Board may be requested by the conference to issue necessary clarification on the subject to avoid further litigation and to achieve uniformity in the practice of assessment. Discussion & Decision The conference discussed the issue in detail and the facts of both the cases where apparently conflicting judgments have been delivered. It was noted that the judgment of Hon'ble High Court of Gujarat was in a very specific set of circumstances where the sales commission agent seemed to be only trading in the goods i.e. buying and selling the goods without undertaking any sales promotion or advertising. In the said judgment, Hon'ble Court noted that "there is nothing to indicate that such commission agents were actually involved in any sales promotion activities as envisaged under the said expression. Obviously, commissi....
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....ular clarified that the credit should be taken within the time-limit prescribed on the basis of eligible documents specified in rule 9 for the first time. The limitation does not apply for retaking of the credit. It was noted that the documents for credit are generally issued by a seller and used for taking credit by a buyer say a manufacturer or a provider of the output service. Rule 16 of Central Excise Rules, 2002 on the contrary does not deal with the receipt of inputs from a seller but deals with receipt for goods produced in the same factory brought back for being re-made, reconditioned etc. To make the credit eligible on such receipt, the rule creates a deeming fiction as if these goods have been received are inputs and allows credit after entering the particulars of such receipt in the records. Credit is thus taken by making appropriate entry in records and not on the basis of documents issued by a seller. Further, there is no bar of time in the rule 16 itself for receipt of the goods back in the factory. The conference was of the view that when rule 16 does not provide for any time limit, the same cannot be read into the rules indirectly through amendment in rule 4(7). Tak....
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....ersal on the basis of transaction value only when the selling price is higher and not when it is lower is not likely to stand judicial scrutiny. Further, Central Excise duty is a duty on manufacture of goods. In case of clearance of inputs or capital goods as such there is no manufacture involved. The maximum reversal of credit which the department can demand is the credit which was taken on receipt of inputs/capital goods. Any demand higher than the amount of credit taken would not stand judicial scrutiny as it would amount to demanding Central Excise duty on an activity which is not manufacture. The audit objection is accordingly not acceptable and reply to the same may be given suitably. B.33 - Nagpur Zone - Central Excise Rules & Procedures - Proper Officer to Issue Show Cause Notice for Recovery of Duty under the Concessional Duty Rules: Issue: (i) Manufacturers and manufacturer importers are permitted to procure excisable goods at concessional rate of duty by following the procedure prescribed under Central Excise (Removal Of Goods At Concessional Rate Of Duty For Manufacture Of Excisable Goods) Rules, 2001 [CE Concessional Duty Rules] and Customs (Import Of Go....
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....r/Manufacturer Importer who is required to exercise the powers of recovery, rather than the DCCE/ACCE having jurisdiction over the supplier of goods or the DCC/ACC of the Port of Import, as the case may be. (iv). However, divergent views have been expressed by the Appellate authorities in this respect in so far as the Cus. Concessional Duty Rules are concerned. In the case of Molex (l) Ltd. -2012 (275) E.L.T. 607 (Tri.- Bang.), it was held by the Tribunal that the Show cause notice issued under Rule 8 by the DCCE/ACCE having jurisdiction over the recipient manufacturer importer was without jurisdiction whereas in the cases of Samtel Colour Ltd. - 2000 (126) E.L.T. 1256 (Tribunal) and Cosmo Ferrites Ltd. - 2014 (308) E.L.T. 633 (Tri. - Del.), it has been held by the Tribunal that it is only the DCCE/ACCE, having jurisdiction over the recipient manufacturer importer, who can issue Show cause notice for recovery of differential duty under Rule 8. Discussion & Decision The conference noted that there are three judgments cited by the sponsoring zone on the subject. In case of Samtel Colours Ltd it was held by the tribunal that Assistant Commissioner having jurisdiction ov....
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....hat provisions of Rule 16(1) of CER 2002 the phrase i.e. "for any other reason" has to be read in context with earlier words i.e. "re-made, refined, reconditioning". Therefore it can be interpreted that Rule 16(1) ibid does not confer any blanket permission for availment of CENVAT credit on any goods even if the said goods are not undergoing any process which amount to manufacture. Such indiscriminate availment of CENVAT credit would be against the cardinal principles of the CENVAT scheme. For e.g. cutting and slitting of steel sheet in coil is considered as not amounting to manufacture. However, as per the present provisions of Rule 16(1) ibid, the processor can avail theCENVAT credit (which in such cases is normally of a considerable amount running into crores) and pass on the same to their customers. Secondly, the duty paid goods can also be brought in the factory and subsequently cleared as a Trading activity under the provisions of said Rule 16(1) ibid. In order to eliminate the possibility of misuse of the provisions of Rule 16(1) ibid for availing the CENVAT credit, it is suggested that the words for "any other reason" may be substituted by the words "for any other simila....
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....bad have represented that some of their member units are manufacturing products which are exempted from Central Excise duty vide notification no. 12/2012 CE dated 17.03.2012 and as a consequence they are not availing CENVAT credit of central excise duty paid on input raw-materials. To claim the rebate of Central excise Duties paid on input raw materials on export of these exempted products, they were advised to avail facility under notification no. 21/2004 CE (NT) dated 06.09.2004 and to export the goods in Form ARE2 specified under the said notification; to which they have been intimated that by filing ARE2 which contained a declaration as at (d) that they shall not claim any drawback on export of the consignment covered under this application, they could not claim drawback of the Customs portion of the notified rate. Further as per the drawback schedule, the rate indicated in column no. 4 i.e Drawback when Cenvat facility has not been availed and column no. 6 i.e Drawback when Cenvat facility has been availed are same which shall mean that the rate pertains to only customs component in terms of condition no. 6 of the said notification. Therefore the trade was apprehensive that cl....
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....(a) Penalty is to be charged and collected by taking part of a month as one full month. (b) No of asessees are not in agreement with aforesaid view and are paying penalty @ 1% on actual no of days of failure to pay the duty calculated on prorate basis as this r view is supported by the judicial decisions of the CESTAT and High Courts on the interpretation of the phrase "part of the month". It is suggested that the phrase "for every month or part thereof " be read down as " for every month or part thereof considered on a pro rata basis." Discussion & Decision The issue was discussed and it was noted that there was variance in the practice of calculation of penalty under rule 8(3A). There are court cases wherein it is provided that calculation for part of the month for levy of interest should be done only for the number of days of delay and not for the full month. Case of BPL Mobile Cellular Ltd [2005(183) ELT 324] may be referred in this regard. However, such judgments relate to payment of interest and not to payment of penalty. The character of tax, interest and penalty has been explained by Hon'ble Supreme Court in case of Pratibha Processors [1996 (86) ELT 8....
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....f filing the next return." Discussion & Decision Service tax return is filed on half yearly basis whereas excise return is filed on monthly or quarterly basis. The nature of the assessee in Service tax and Central Excise is also different as a manufacturer often has better qualified compliance team. Therefore the need for revision of return is not as pressing in Central Excise. Further, the nature of revision would also be a relevant issue for consideration. Whether revision should be allowed for all elements of the return including turnover and tax liability or should it be allowed only for bona-fide and clerical mistakes needs to be examined. The conference concluded that a blanket provision for revision of all the prescribed returns may not be desirable and may complicate the compliance regime in Central Excise. The issue would also involve changes in ACES and would need consultation with DG, Systems. The conference concluded that a more nuanced view needs to be taken on the subject after collecting inputs from various stake holders. Conference suggested that policy wing in the Board may take further action as deemed fit. B.39 - Coimbatore Zone - Central Excise Rules & ....
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....payment of duty duly reflected in a Return is a case of admitted liability. Provisions of section 11A(16) introduced in the budget of 2015 are relevant in this regard wherein it has been provided that provisions of section IIA do not apply for duty which has been self assessed, reflected as payable in the Return but has not been paid. The implication of this sub-section is that for admitted liabilities no show cause notice and adjudication proceedings need to be undertaken. For such liability, provisions of rule 8(4) of the CER, 2002 apply. This rule provides that provisions of section 11 of the Act shall be applicable for recovery of duty, interest and penalty in case of default. The conference concluded that recovery of admitted liability thus can be initiated forthwith once the return has been filed and duty shown payable has not been paid. As the legal empowerment is available, necessary recovery can be made forthwith. B.41 - Vishakhapatnam Zone - Central Excise Rules & Procedures - No penalty for non-filing of NIL return: Issue: Rule 12(6) of Central Excise Rules envisages imposition of penalty for non-filing of returns irrespective of either NIL or otherwise. Under t....
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....lesser number of slabs as it would not address the issue of miss-declaration of speed. The slabs were fixed only in the last one year after detailed study and certainty in taxation required that frequent changes should not be made in the duty structure. It was decided that besides measuring the speed, assessees may be asked to furnish manufacturer's certificate or chartered engineer's certificate to verify the speed. B43 - Chennai Zone- Implementation & Other Related Issues - Mismatch in UQC with regards to Matches: Issue: There is a mismatch in the Unit Quantity Code (UQC) as per the Central Excise Tariff and the UQC adopted in trade parlance, with regard to matches. The UQC is "Kg" in Tariff, whereas in practice it is in boxes of 50 sticks. The trade sells products in units pack only. Therefore, it is felt that the Unit Quantity Code prescribed in the Central Excise Tariff be changed from Kg to boxes as this would be in tune with the practice adopted by the Trade. It was suggested that Unit Quantity Code in the Central Excise Tariff may be amended to "Boxes of 50 sticks." Discussions & Decision After discussion the conference concluded that there was not en....
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....milarly, Chapter 7 stipulates annual filing of Letter of Undertaking [LUT] for effecting exports, filing of ARE-I in respect of exports made under self-sealing to the Range Officer within 24 hours, etc. Such conditions have lost relevance with the advent of self-assessment and they also expend considerable compliance time and paperwork. Therefore, the Supplementary Instructions should be revamped with an objective to dispense with redundant procedures and in place prescribe online filing of intimation, LUT, bonds, etc to reduce transaction cost. Supplementary instruction also needed to be revised to make it consistent with subsequent legal changes. Discussion & Decision It was decided in the tariff conference that that after taking inputs from the field Supplementary Instructions would be examined for revision with the objective of providing solutions to the problems faced by the field. Chapter wise instructions would be circulated by the policy wing among the field formations for examining and proposing changes in the instructions. The policy wing would compile the proposals. B.46 - Chennai Zone-implementation & Other Related Issues-Monetary limit for filing appeal before....
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....iso to Sec 35F. Further, the appeal in the CESTAT comes up for first hearing after a gap of couple of years and therefore it would be reasonable to allow the assessee to pay pre-deposit till such time. Discussion & Decision The conference noted that after the amendment the new provisions, trade and department have just settled with the new provisions. Since the amendment in the law was made only last year, at present no further change in law was recommended in the conference. B.48 - Hyderabad Zone-Implementation & Other Related Issues - Section 11 AC of the Central Excise Act 1944 - Penalty in Cases Concerning Erroneous Refund: Issue: It is requested to consider omitting the words "or erroneously refunded" appearing in clause (a) sub-section (I) of the Section IIAC of the CEA, 1944 which deals with cases Of normal period. Erroneous refunds would not be for reasons other than suppression/fraud etc on the part of the claimant and therefore provisions for normal period of time were of not applicable. On the other hand if the erroneous refund was on account of the error of the refund sanctioning authority, the claimant should not be liable for penalty under Section IIAC ....
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.... way for unscrupulous manufacturers for misuse of duty free procurement of inputs. In case of Customs, an importer has an obligation to export the goods within certain time limit of import or raw materials obtained duty free under certain schemes like DEEC etc. It is suggested that a time limit for completion of manufacture/processing and export of finished goods from the date/period of procurement of duty free goods (inputs) may be incorporated in the aforesaid notification. In order to make the provisions of notification no. 43/2001 supra in harmonization with section IIA time limit of 1 year for export of goods may be introduced. Similarly, an amendment in Rule 6 of the said Rules may also be made to specify the time limit of one year for the intended purpose by the manufacturer from the date of receipt of such goods. Discussion & Decision Use of the goods within a specified time limit is not the intention of the Central Excise (Removal of Goods at Concessional rate of duty for manufacture of Excisable goods) Rules 2001 as no such provision has been made in the said Rules. Erstwhile chapter X procedure under central excise also had no such stipulation and no time limit ....
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....rd, delegated to the Chief Commissioner vide notification no. 11/2007-C.E(N.T) dated 1.3.2007, Chief Commissioner may assign cases from one Commissioner to another for expeditious adjudication, when pendency is large and such reassignment is necessary. Similarly, the Chief Commissioner may reassign cases for levels below the Commissioner from one Commissionerate to another within his zone. Appropriate orders would be required to be issued for such reassignment of cases. Chief Commissioner can also issue orders appointing common adjudicating authority within his zone . (iii) Powers to assign cases amongst officers within a Commissionerate would fall within the administrative competence of the Commissioner. Appropriate order would be required to be issued in this regard. B.51 - Implementation & Other Related Issues -Change in the practice of assessment : Issue: There are instances where individual Commissionerates or offices say a Division, change a long standing assessment practice. After changing the assessment practice such assessee may also be issued a show cause notice which is unfair situation for the business of the assessee. The Conference was requested to d....