TIOL-DDT 2239
27.11.2013
Wednesday

RULES 8, 9 and 10 of the Central Excise Valuation Rules, 2000 dealing with determination of assessable value in case of captive consumption and sale to related person have been amended vide notification no. 14/2013 - Central Excise (N.T.) dated 22.11.2013 to clearly state that these rules apply irrespective of whether the whole or a part of the clearances of manufactured goods are covered by the circumstances given in these rules. Each clearance is required to be assessed according to section 4(1)(a) or the relevant rule dealing with the circumstances of clearance of the goods, as the case may be.

Board gives an example:

If an assessee clears his goods in such a way that

first removal of goods is to independent buyers,
some goods are captively consumed,
second removal is to such a related person who is covered under rule 9 and
third removal is to a person who is covered under rule 10,

then

the first removal should assessed under section 4(1)(a),
captively consumed goods should be assessed under rule 8
second removal should be assessed under rule 9 and
third removal should be assessed under rule 10 of these rules.

Board informs that Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 are not required to be followed sequentially. Each of these rules provide for arriving at the assessable value of goods under different contingencies as noted by the Supreme Court at paragraph 70 in case of Commissioner of Central Excise, Mumbai vs M/s FIAT India Pvt Ltd - 2012-TIOL-58-SC-CX ].

Sub-standard drafting of laws and confusing clarifications later only advance the cause of growth in litigation.

The Board has made a passing reference to the FIAT case (above) - everybody knows that FIAT judgement is not what even the most optimistic department ever wanted, but just because it is in favour of the Government, they are keeping quiet.

Fiat as a car doesn't seem to be running well in India, but the Fiat case has run into the very basic foundation of the Central Excise Valuation Law, shaking it from the roots and the Government has just put a silencer as Fiat runs amuck.

CBEC Circular No. 975/09/2013-CX, Dated: November 25, 2013

FTP - new Pre Shipment Inspection Agency (PSIA) notified

DGFT has amended the Appendix 5 of the Handbook of Procedures (Vol.I). 'Global Consortium for Inter Border Trade Inspection and Certification Ltd.' has been added as a new Pre Shipment Inspection Agency (PSIA).

DGFT Public Notice No.39/(RE:2013)/2009-2014 Dated: November 26, 2013  

CBI Charge sheet against Central Excise Commissioner quashed by Delhi High Court

REMEMBER the case of Dr.Anup KumarSrivastava, Commissioner of Central Excise in New Delhi who was arrested by the CBI on corruption charges?

CBI has filed a charge sheet against Dr.Anup Kumar Srivastava, then Commissioner, Central Excise, Delhi-I; LallanOjha, Superintendent, Central Excise; Hemant Gandhi, a middleman; DilipAggarwal, a private person and AnandAggarwal, a private person. The Charge is that the Commissioner & Superintendent, along with the middleman (Private person) hatched a conspiracy among themselves to get an illegal raid conducted on the premises at Rama Road in Karol Bagh, New Delhi of a mobile phone importer, with a view to extract illegal gratification. As a result, the Superintendent led the said raid and settled for a bribe of Rs. 60 lakhs. The mobile operator & his partner allegedly paid Rs. 40 Lakhs to the Superintendent of Central Excise, which was collected by the middleman including a cheque of Rs. 20 lakhs for the balance amount.

Last week, the Delhi High Court quashed the charge sheet against Commissioner Srivastava. The charge sheet against the Superintendent and other accused will continue.

Srivastava should now get his job and all the perks back.

Click here: - 2013-TIOL-942-HC-DEL-SERVICE

Service Tax - Transportation of answer sheets collected from District collection centres and delivering the same to Nagpur University - since appellant is being paid on KM basis he cannot be called as a Rent-a-cab scheme operator

THE appellant is owner of motor vehicles. Under a work order placed by the Nagpur University, the appellant undertook the job of transporting answer sheets from various district collection centres and delivering the same to the University.

Revenue held the view that such a service is covered under "Rent-a-Cab scheme operator" and the appellant is required to discharge Service Tax.

Demand notices were issued, also invoking extended period, and confirmed by the adjudicating authority. The Commissioner (Appeals) upheld the demand of service tax and restricted the penalty amount to 25% of the service tax imposed u/s 78 and also reduced the penalty imposed u/s 77 of the FA, 1994 to Rs.1,000/-.

Appellant is before the CESTAT against the confirmation of the ST demand and the Revenue is not happy with the reduction in penalty.

The appellant submitted that they had provided vehicles to the Nagpur University for transportation of written answer sheets. As per the work order placed by the University, the appellant was to receive an amount of Rs.4.70 per K.M. As per the terms and conditions of the contract, the appellant has to collect the written answer sheets from six District Collection Centres and deliver those to Nagpur University. Inasmuch as since the payment was to be made by the University on Kilometre basis for the week/month, it could not be said that the appellant had provided "Rent a Cab scheme operator" services.

The Bench observed -

"7. In the present case, the appellant was engaged in the activity of transportation of written answer sheets collected from various District Collection centres and deliver the same to the Nagpur University and the payment is on the Kilometre basis as per the work order. There is no evidence on record to show that the cab was hired on monthly, weekly or daily basis. In view of the terms and conditions of the work order, we find merit in the contention of the appellant, that the appellant has not provided taxable service of "Rent-a-Cab Operator" services. In view of this, the demand and consequential penalty is set aside. As the demand is set aside, therefore, there is no question of imposition of any penalty. Hence the appeal filed by the Revenue is dismissed ."

See 2013-TIOL-1765-CESTAT-MUM

 Jurisprudentiol - Thursday's cases

Central Excise

Service Tax - CENVAT Credit - Capital Goods cleared as such - assessee would be entitled to reverse whatever Cenvat credit availed on the value to be assessed on the date of such subsequent sale as capital goods: CESTAT LB

THE use of capital goods is to spread over many years. A decision to the effect that assessees can bring in capital goods, use it for a few days and then remove it without reversal of any CENVAT credit taken is not consistent with the overall scheme of CENVAT credit and can lead to abuse of the scheme. On a conjoint reading of Rule 3(4) with the provision added to Rule 3(5) with effect from 13.11.2007, the Board's Circular dated 01.07.2002 along with Board's letter dated 26.05.1993, it is quite clear that the inputs or capital goods when disposed of after putting it into some use over a period of time, then the assessee would be entitled to reverse whatever Cenvat credit availed on the value to be assessed on the date of such subsequent sale as capital goods.

Income Tax

Whether when assessee purchases shares at a price lower than quoted market price, there is any provision in I-T Act to tax the deemed difference between the two - NO: Delhi High Court

THE assessees are HCL Employees and Investment Company Limited (HEICL) & Associated Techno Plastics Private Limited (ATPPL). ATPPL had purchased 77929 shares of HCL Limited, which were sold by HEICL. These shares were purportedly purchased at the price of Rs.6.02 per share though the market price on the date of sale, i.e., 16th December, 1988 was Rs.41/- per share, being the quoted price on the recognised stock exchange. The issue before the Bench is - Whether when the assessee purchases shares at a price lower than the quoted market price, there is any provision in the I-T Act to tax the deemed difference between the two. And the ruling partly goes against Revenue.

Customs

Matter in appeal before High Court; not appropriate for Larger Bench of Tribunal to decide the issue: CESTAT LB

MATTER referred to Larger Bench due to two conflicting decisions of the Tribunal. The later order of the Tribunal is in appeal before High Court. Larger Bench does not consider it appropriate to answer this reference. The pronouncement of the High Court on due consideration of the ratios of Colombowala and KI International, would provide a wider jurisdictional guidance than in an order of reference. The appellant is at liberty to pursue the appeal on merits before the Member having the roster without awaiting the result of the appeal in High Court.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a Nice Day

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