TIOL-DDT 2191
17.09.2013
Tuesday

RULE 8(3A) of the Central Excise Rules, 2002 reads as:

(3A) If the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall, pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date the assessee pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow.

This Rule has been the cause of mighty litigation in the recent past.

Trade has represented that the provisions of Rule 8(3A) needs to be reviewed as the rule does not make a distinction between cases of bona fide mistake which can lead to default in payment of duty and cases of willful default.

Board notes that the CESTAT in the following cases has allowed credit to be used even during the period of default.

1. Meenakshi Associates [para 15 and 16 in 2012-TIOL-587-CESTAT,

2. Baba ViswakarmaEngg Co [para 11, 12 and 13 in 2011-TIOL-2010-CESTAT-DEL and

3. Bactolac Formulations [para 5 of 2012-TIOL-970-CESTAT]

For amending the Rule, CBEC has sought inputs from the field on the following issues:

1. Whether non-compliance of Rule 8(1) has become lesser by introduction of Rule 8(3A)?

2. Whether the rule is being enforced in all cases of default?

3. In view of the judicial pronouncements listed above, is the rule continuing to serve its purpose of timely and complete payment of duty?

4. Whether a rule of imposing automatic and mandatory penalty at the rate of 1% per month on the defaulted amount would better serve the purpose as it would reduce the grace period of 30 days given in the present rule, would do away with adjudication proceedings needed to impose penalty at present.

Let us hope the Board acts soon on this and puts an end to unwanted litigation.

Incidentally the Board letter does not bear a date and there is no time limit prescribed for the field to submit their reports.

Please also see

1. Monthly payment of Excise Duty - Boon or Bane? - Draconian Law! DDT 1542 - 03.02.2011

2. Is inadvertent short payment of duty more sinful than intentional evasion? DDT 2050 -21.02.2013

CBEC letter F. No.201/08/2013-CX-6 addressed to all Chief Commissioners, Dated: No date

All Industry Rates of Duty Drawback effective 21.09.2013 - Board Issues Circular

ALL Industry Rates (AIR) of Duty Drawback were revised effective from 21.09.2013 by Notification No. 98/2013- Customs (N.T.), dated 14.09.2013.

Board expects the Commissioners to ensure that the due diligence is exercised to prevent any misuse. They should see that exporters do not avail of the refund of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods through any other mechanism while claiming AIR. Moreover, there is need for continued scrutiny for preventing any excess drawback arising from mismatch of declarations made in the Item Details and the Drawback Details in a shipping bill. For example, when quantities declared in Item details and Drawback details are same, but units of their measurement are different, or unit of measurement is same but quantities declared do not match or the 4-digit RITC in the Item Details and Drawback Tariff Item No. in Drawback Details are different.

Further Board wants the Commissioners to bring to its notice any error/suggestions.

In the case of export of articles of silver (silversmiths' wares), which are high value items, there should be close monitoring and a monthly report indicating quantum of export and drawback availed may be sent to the Board for the next 12 months by the Commissioners having jurisdiction over the relevant Custom Houses.

CBEC Circular No. 37/2013, Dated: September 14, 2013

Customs - Concessional Rate of Duty for Sugar beet seeds

GOVERNMENT has notified a concessional rate of 5% Customs duty for import of ‘Sugar beet seeds'.

Notification No. 43/2013-Cus, Dated: September 13, 2013

Customs Exchange rates changed

GOVERNMENT has notified new exchange rates for Imported goods and export goods for certain currencies effective from today. The rates for US Dollar have been reduced to 63.15 for import and 62.15 for export.

Notification No. 99/2013 - Cus.,(N.T.), Dated: September 16, 2013

CESTAT - Out of Turn Hearing for Covered Cases

CESTAT has requested Advocates/Consultants to submit the list of their cases, which are covered by the decisions of the Supreme Court, various High Courts or of a Larger Bench. They are requested to file Miscellaneous Applications with applicable fee so that such matters can be listed on out of turn basis for expeditious disposal.

This is a wonderful step by CESTAT in trying to clear a part of the mountain of pending cases.

CESTAT Circular in F. No.01(32)R/Jud./CESTAT/12 , Dated: September 13 2013

FEMA - Location of Forex Counters at International Airports in India

NON-residents are allowed to carry Indian currency upto a maximum of Rs. 10,000/- beyond Immigration/Customs desk to the Duty Free Area/Security Hold Area (SHA) in the departure hall in international airports in India for meeting miscellaneous expenditures subject to the condition that non-residents will not be allowed to carry any Indian Rupee beyond SHA and that they should dispose of Indian currency before boarding the plane.

RBI directs that in order to provide money-changing facility to non-residents to convert unspent Indian Rupees with them, Foreign Exchange Counters in the departure halls in international airports in India may be established in the Duty Free Area/SHA beyond the Immigration/ Customs desk. Such Foreign Exchange Counters will however, only buy Indian Rupees from non-residents and sell foreign currency to them subject to usual terms and conditions. Putting up suitable display at these counters, reminding the passengers that the area is the last point for non-residents to possess Indian Rupees (INR) will be the responsibility of the Airport Authorities.

A well-thought out move by the RBI under the stewardship of the new Governor.

RBI/2013-14/259 - A.P. (DIR Series) Circular No. 45 , Dated: September 16, 2013

FTP - Use of IEC Number by importers/exporters DGFT Cautions

IT is reported that some importers/exporters are effecting imports/exports by using IECs issued to others, which is a complete violation of provisions of Foreign Trade Policy.

As per the Section 7 of The Foreign Trade (Development and Regulation) Act, 1992, as amended in 2010 read along with Rule 12 of Foreign Trade (Regulation) Rules, 1993 every person should make import or export only with Importer-exporter Code Number allotted to him. Therefore, the IEC Number cannot be used by anyone other the IEC holder himself/herself.

Use of IEC by the person other than IEC holder himself is a violation of the above provisions and would attract action under Section 8 and 11 of The Foreign Trade (Development and Regulation) Act, 1992, as amended in 2010, except in case importers or exporters are exempted from obtaining IEC and who use permanent (common) IEC Numbers under Para 2.8 of Handbook of Procedure, Vol.1, 2009-14.

Therefore, DGFT cautions importers/exporters as well as all other stake holders to comply with the provisions of FT(DR) Act and Rules made thereunder while using their IEC Number. Non-compliance/ violation of these provisions would attract action in the form of suspension/cancellation of IEC or imposition of penalty, as appropriate, under the relevant provisions of FT(DR) Act and Rules.

DGFT Policy Circular No. 6 (RE-2013)/2009-2014 , Dated: September 16 2013

SEZ Rules Amendment - Explained

THE SEZ Rules were amended on 12th August 2013. (DDT 2168-13.08.2013). Now the Department of Commerce has issued clarifications explaining the changed rules.

The Department clarifies that the intent and purpose behind the said amendments is to address the challenges being faced by SEZ Developers and Units on the one hand, while creating a more investor friendly environment on the other. The amendments are a part of the SEZ reforms which aim to better achieve the objectives of the SEZ Policy viz. growth of economic activity, attracting investment, boosting exports and generating additional employment.

In order to facilitate better understanding of the amended Rules, the clarifications are issued:

The letter is addressed to the Chief Secretaries of the States and copies sent to all Development Commissioners, DG, Export Promotion and DG, EPC. Does it mean that they don't understand the Rules and the ordinary businessman needs no understanding?

Department of Commerce (SEZ Division) Letter No.D.12/45/2009-SEZ, Dated: September 13, 2013

Jurisprudentiol – Wednesday's cases

Central Excise

By not taking CENVAT Credit, Revenue realisation is more than Rs. 10 lakh extra No Suppression: CESTAT

BY not taking CENVAT Credit, Revenue realisation is more than Rs. 10 lakh extra No Suppression - There was no need for the appellant to suppress or mis-declare of any facts as the appellant could have taken CENVAT credit which was more than the duty payable as worked out by the department. In these circumstances, it cannot be said that the appellant has committed suppression or mis-declaration, fraud, collusion, etc. to evade payment of duty. By not availing the CENVAT credit, the revenue realisation is nearly more than Rs. 10 lakhs extra. In these circumstances, the entire demand is time-barred.

Income Tax

Whether power to waive interest u/s 215 is judicial discretion vested in tax authorities and cannot be challenged in writ - YES: Delhi HC

THE issues before the Bench are - Whether the power to waive interest u/s 215 is a judicial discretion vested in the tax authorities and cannot be challenged in a writ petition; Whether the duration of lapse of one year given in Rule 40(1) of Income Tax Rules needs to be computed from the date of the filing of the revised return or from the date of filing of the original return; Whether the assessee would enjoy any undue benefit, if the starting point of computation of such period is taken from the date of filing of the original return; Whether when the AO is not diligent enough and does not complete the assessment within the said period of one year, any interest liability for the period beyond that one year cannot be foisted on the assessee, unless the delay in not completing the assessment within the period of one year is clearly attributable to the assessee and Whether the delay as per Rule 40(1) can be attributable to the assessee, when the assessee has filed second revised return and sought adjournments during the assessment proceedings. And the assessee's writ is partly allowed.

Service Tax

Supply of cylinders is part of sale of gas and it is not separate activity in itself - rental charges form part of value of the goods sold - prima facie case in favour - Pre-deposit waived and stay granted: CESTAT

THE appellant imported helium gas which is supplied in reusable and returnable containers and have to be returned to the supplier. However, during the period the containers remained in the possession of the importer, they are charged rentals for the use of the containers. The department was of the view that the renting of containers falls within the taxable service category of "Supply of goods for tangible use" and the recipient of the service in India has to discharge service tax liability on the rent which he paid to the foreign supplier.

See our Columns Tomorrow for the judgements

UntilTomorrow with more DDT

Have a nice day.

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