TIOL-DDT 1945
19.09.2012
Wednesday

CONSEQUENT to the amendment to Rule 5 of the CENVAT Credit Rules, 2004 vide Notification No. 4/2006 CE(NT) dated 14.3.2006, exporters of output services have also become eligible for claiming refund of CENVAT Credit under Rule 5 of the CCR 2004. After the amendment, many service exporters have started claiming refund under the new provisions. In case of 2010-TIOL-1486-CESTAT-BANG, among other grounds, the refund claim of the assessee was rejected on the ground that the assessee was not registered with the department and the benefits of CENVAT Credit scheme is available only to an assessee registered with the department. This view of the revenue was upheld by the Tribunal in the above order.

The assessee took the matter in appeal before the High Court of Karnataka. In its order 2011-TIOL-928-HC-KAR-ST, the High Court has made some interesting observations on the issue of whether it is mandatory for an assessee to obtain Central Excise Registration to avail the benefit of CENVAT Credit. The Court held:

++ Insofar as requirement of registration with the department as a condition precedent for claiming CENVAT credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the CENVAT credit rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside.

Maize Bran Exempted from Customs Duty

GOVERNMENT has amended Notification 12/2012 Cus dated 17.03.2012 to insert an entry 99A to unconditionally exempt Maize Bran from customs duty. The entry reads:

The last available Notification No is 52/2012 Cus dated 13.09.2012 and this Notification No is 54/2012 Cus dated 17.09.2012. It appears that somewhere Notification No 53/2012 Cus is stuck in the files of CBEC and the goods exempted under this missing Notification can be known only when it surfaces.

Notification No. 54/2012 -Cus , Dated: September 17, 2012

Common Adjudicating Authority Appointed

BOARD has assigned the Show Cause Notice DRI F.No. 50D/15/2011-CI dated 30th March, 2012 issued by Additional Director General, Directorate of Revenue Intelligence, New Delhi in the case of M/s Asian Hotels Ltd., Hyatt Regency, Bhikaji Cama Place, New Delhi, to the Commissioner of Central Excise (Adjudication), New Custom House, New Delhi for the purpose of adjudication .

CBEC Order dated September 17, 2012.

Delay in receipt of replies from AG - CBDT calls for information

DURING the Chief Commissioners Conference (of Income Tax) some of the Chief Commissioners mentioned that due to non-receipt of replies from the AG regarding acceptance of replies of the Department on the audit objections or otherwise, remedial action is being taken and subsequently when the communication accepting the position of the Department is received such remedial action is to be dropped and in some cases infructuous demands were created on completion of assessments reopened on account of pendency of audit objections.

So, the field officers are requested to furnish the details, including number of cases in which remedial action had to be initiated due to non-receipt of reply from AG and subsequently the proceedings had to be dropped on receipt of reply from AG accepting the Department's reply and of cases wherein assessment proceedings were completed in such cases resulting in infructuous demand, for taking up the matter with the AG.

In Central Excise and Customs, there are instructions to issue Show Cause Notice even if the AG objections are contested by the department. This lead to issuing some funny notices to the assessees asking them to show cause as to why an abatement extended under Section 4A by the Government should not be denied to them, because AG felt that the abatement given by the Government was on higher side! And by invoking extended period of limitation for suppression!

CBDT F.No. 246/94/2012 dated September 12, 2012.

The Scheme of 1% Interest Subvention on Housing Loans extended up to 31.3.2013

IN tune with the Government of India's decision to extend the 1% Interest Subvention Scheme, RBI has made some changes in the Scheme towards more liberalization. The changes are:

++ The interest subvention scheme has been liberalized with effect from FY 2011-12 by extending it to housing loans up to Rs.15 lakh where the cost of the house does not exceed Rs.25 lakh (Previously it was for housing loans uptoRs.10 lakh, provided the cost of unit does not exceed Rs.20 lakh).  The Scheme has since been extended by Government of India and will remain in force up to March 31, 2013.

++ A Budgetary provision of Rs. 400.00 crore has been made under the Scheme for the year 2012-13 by Government of India.

++ The National Housing Bank is the sole Nodal Agency for implementation of the Scheme for Scheduled Commercial Banks, Regional Rural Banks and Housing Finance Companies.

RBI Circular Dated: September 18, 2012

Vodafone makes provision for Indian Tax Liability

IN an interview, Chief Financial Officer of Vodafone Andy Halford reportedly mentioned that the company may make a provision to cover the legal risks of 2.2 billion USD liability due to the Indian Government. The situation has changed and we are looking at it,” Halford said from Vodafone's headquarters in Newbury, England. The company's test over whether to take a provision “is now being applied differently against a recently introduced, albeit retrospective, legislation”.

Jurisprudentiol – Thursday's cases

Service Tax

Taxability of reimbursable expenses on travel local accommodation, etc. incurred by a Consulting Engineer has been under dispute from early stage from which said service was made taxable - action of appellant in not including same in gross value is bona fide - impression of appellants was backed by instructions from CBEC - suppression cannot be alleged for invoking extended period - Appeal allowed: CESTAT

FOR the purpose of deciding this appeal, it is sufficient to examine whether extended period of five years could have been invoked for issuing such demands. In view of the clarification issued by CBEC and the decisions relied by the appellants, the action of the appellant was bona fide and suppression cannot be alleged for invoking extended period of time for demanding such service tax. The appeal is allowed on this ground.

Income Tax

Whether interest u/s 234D is chargeable on excess refund granted for an assessment year prior to June 1, 2003 but assessment proceedings go beyond cut-off date - YES: HC

THE issues before the High Court are - Whether insertion of Explanation 2 to Sec 234D is declaratory and thus, would apply with retrospective effect - Whether a declaratory amendment makes no change in law but merely clarifies what the law always was - Whether the interest u/s 234D is chargeable on excess refund granted for an assessment year prior to 1/6/2003 but the proceedings go beyond the cut-off date - Whether the provisions of Sec 234D would have any retrospective operation qua refunds granted prior to 1/6/2003. And the answers go in favour of Revenue.

Central Excise

Evidences unearthed by department in investigation are several and overwhelming and each piece of evidence corroborated other - once department by way of evidence has shown that transactions are not genuine, onus of proving that transactions are genuine lay on appellants which they had failed to do miserably - Credit rightly denied by adjudicating authority: CESTAT by Majority.

WHILE the dealers' invoices show the price of iron and steel scrap varying from Rs. 6750/- to Rs. 7,500/- PMT, the original manufacturer's invoices show the price varying from Rs. 8,000/- to Rs. 10,500/- PMT, and hence, this proves that the assessees did not receive the same duty-paid goods purportedly sent by the ship-breakers at Alang. The Counsels for the appellants contended that this ground is not taken in the show-cause notice. The concerned invoices are part of the relied upon documents. As an adjudicating authority, the Commissioner is required to examine the relevant records. In that process, if the Commissioner has found that dealer's invoice price is less than that of manufacturer, no fault can be found with the Commissioner's findings. The Commissioner's findings on this count cannot be said to have gone beyond the show-cause notice.

Happy Ganesh Chaturthi

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a Nice Day.

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