DUTY on Pan Masala is payable as per the Annual Capacity determined under the Provisions of ¶The Pan Masala Packing Machines (Capacity Determination And Collection Of Duty) Rules, 2008¶, Notified under CE(NT) No 30/2008 dated 1.7.2008, read with Notification No 42/2008-Central Excise, dated 1.7.2008. The total duty payable computed as per the above Notifications is to be distributed according to the Formula given under Notification No 30/2008 CE(NT). At present, the duty ratio is as under:

The above ratio is determined as per the effective duty rate of Basic Excise duty at 14%, Additional duty of excise as 6% NCCD at 23%, Education Cess at 2% and Secondary Education Cess at 1% as detailed under:

Let the Assessable value be Rs 100

The duty on Pan Masala under Notification No 12/2012 CE dated 17.3.2012 is 12% (Entry No 35)

So, the above duty distribution ratio needs to be modified as under:

Similarly, in respect of Pan Masala containing tobacco, the present duty ratio in Notification No 30/2008 CE(NT) was computed by taking the duty rate at 50%. But, vide Finance Act, 2010, in tariff item 2403 99 90, duty rate has been enhanced to 60% and accordingly, the duty ratio needs to be revised as under:

Central Excise - CENVAT Credit – Duty Paid on Non Excisable Goods

GOVERNMENT has ordered that where an assessee has paid duty of excise on the process of cutting, slitting and printing of aluminium foils final product), falling under heading 7607 of the First Schedule to the Central Excise Tariff Act, the CENVAT credit taken or utilised, of the duty or tax or cess paid on inputs, capital goods and input services used in the making of the said final product, shall not be required to be reversed, notwithstanding that the process of cutting, slitting and printing of aluminium foils have been held as not amounting to manufacture by the Central Excise and Service Tax Appellate Tribunal by its order in  Appeal No. 3181 of 2010 in the case of M/s Printo India Graphics (P) Ltd. Vs CCE, Delhi and upheld by the Supreme Court in Civil Appeal No. 8533 of 2011,  subject to the following conditions:-

(a) the said non-reversal shall be allowed only for the CENVAT credit taken upto the 15 th of March, 2012.

(b) the said non-reversal shall be allowed only when excise duty has been paid on removal of the said final product.

(c) the said assessee shall not prefer a claim of refund of the excise duty paid by him on the said final product:

And the CENVAT credit, if any, taken by the buyer of the said final product, of the excise duty paid by the said assessee on the said final product made and cleared up to the 15th March, 2012 shall not be required to be reversed. 

Notification No. 24/2012-Central Excise (N.T.), Dated : April 19, 2012

FDRs to be submitted by Provisional Mega Power Projects - Practical Problems

WE received this mail from a Netizen:

As per Notification No 12/2012 CE dated 17.3.2012, Entry No 338 read with condition No 43, goods supplied to MPPs ( Mega Power Projects) in respect of which certificate of project status is issued provisionally, the CEO of the project is required to furnish a FDR equal to the duty of excise payable but for the exemption to the Deputy/Assistnat Commissioner of Central Excise, having jurisdiction and if the project developer fails to furnish the final mega power status certificate within a period of thirty six months from the date of clearance of excisable goods, the said security shall be appropriated towards duty of excise payable on such clearances but for this exemption; ( the earlier Notification No 6/2006 CE dated 1.3.2006 also had an identical condition)

After the word jurisdiction, it should have been mentioned in whose jurisdiction the FDR is required to be furnished. Should it be at the suppliers' jurisdiction or should it be at jurisdiction of the MPP.

Board, vide Circular No 963/06/2012-CX dated 29.3.2012 has clarified that it is the suppliers' jurisdiction only.

Here, it would be relevant to discuss the history of the aforesaid notification. Initially when the excise exemption to MPP was introduced vide  Notification No. 12/2010-CE dated 27-02-2010, the manufacturer was made liable to pay excise duty in the event the goods were not used for the mega power project. Accordingly, as the undertaking was required to be submitted by the manufacturer, to his jurisdictional ACCE/DCCE since he had the jurisdiction over the manufacturer's factory for issuance of Show Cause Notice in the event of non-fulfilment of the aforesaid condition.

However, the said condition was subsequently amended and the onus to ensure the end-use was shifted to the Project Developer. Accordingly, with the aforesaid amendment, in my view, the undertaking is now required to be submitted by the Project Developer to the jurisdictional ACCE/DCCE of the project (though in whose jurisdiction the undertaking is to be submitted is not very clearly mentioned in the condition of the Notification) so that in the event, the goods are not used for intended purposes, the jurisdictional ACCE/DCCE of the Project Developer can issue Show Cause Notice on the Project Developer for recovery of excise duty.

The above interpretation is also supported by the fact that the in the event of non-compliance, the excise authorities of the supplier cannot raise any show cause notice on the project authority (who has been made liable to pay excise duty) since the project authority does not fall under the jurisdiction of the supplier's excise authorities and accordingly, the very purpose of the said undertaking would be defeated.

It appears to be absurd that the undertaking has to be furnished at the project end and FDRs have to be furnished at the supplier's end when the usage of the material has to be ensured at the Project Developer end and further when the Project Developer is made liable to pay excise duty in case of failure to use the goods for the intended purposes. 

Additionally, for administrative reasons also, the undertaking or the FDR should be submitted at the Project Developer's jurisdictional excise authorities end since otherwise, the same will lead to multiple recoveries by multiple jurisdictional authorities in addition to the difficulty and extra effort of the supplier's excise authorities in keeping a proper track of the Project Developer.

It is suggested that Board should re-examine the Circular No 963/06/2012-CX dated 29.3.2012

Jurisprudentiol – Tuesday's cases

Central Excise

OIO not vitiated by absence of notice - same issue cannot be agitated again before Tribunal and Court: HC

RETROSPECTIVE withdrawal of exemption Notification - High Court holds that OIO not vitiated by absence of notice – same issue cannot be agitated again before Tribunal and Court

Income Tax

Whether even if assessee invests in tax-free bonds in two parts of Rs 50 lakhs each in two consecutive financial years, Sec 54EC exemption is available - YES, rules ITAT

ASSESSEE sold a house property on 22/10/2007 and made investment of Rs 50 Lacs, on 31/12/2007 in REC Bonds and Rs. 50 Lacs on 26/5/2008 in NHAI Bonds and claimed exemption of Rs. 100 lacs u/s 54EC. The investment in REC Bonds was within time limit of 6 months prescribed in Section 54EC while investment in NHAI had been made only on 26/5/2008 as the subscription of neither of the scheme opened during 1/4/2008 to 26/5/2008 and assessee made very same day the subscription of first scheme got opened.

Service Tax

Prima facie, no Service Tax payable on postage charges - Pre-dep[osit waived - CESTAT

THE applicants are share transfer agent and registry to issue. They are acting as an agent of the Company in processing application for shares and dispatch letters, refund orders certificate and other related documents in respect of the issue. As they are processing the share transfer and dispatch the transfer certificate to the transferee therefore, they are paying postage on those dispatch which they recovered from principal on actual basis.

See our columns Tomorrow for the judgements

Until Tomorrow with more  DDT

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