TIOL-DDT 2745
15 12 2015
Tuesday

SOME more decisions from the recent Central Excise Tariff Conference.

The Coconut Oil Controversy:

DDT had covered the archaic coconut oil controversy several times. 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. 145/56/1995-CX dated 12.10.1995, wherein the Board clarified that the Coconut Oil being marketed in small containers could not be a basis for classifying the product as Hair Oil. For classification under Chapter Heading 3305, product should be suitable for use on hair and the product should be put up in a packing of a kind sold in retail for such use. Further, the Board vide Circular no. 890/10/2009-CX, dated 3/6/2009 issued under Sec. 37 B clarified that the Coconut Oil packed in small containers up to 200 ml shall be classified under Chapter Heading No. 3305 by treating it as Hair Oil.

The conference noted that the issue has been resolved by the Board by issue of Circular no. 1007/14/2015-CX dated 12.10.2015. (DDT 2703). The circular takes note of the judgments in case of Raj Oil Mills Ltd. vs. Commissioner, Central Excise - 2013-TIOL-1609-CESTAT-MUM, where Tribunal held that edible Coconut Oil in retail packing of 200 ml or less is classifiable under Chapter 15 covering Animal or Vegetable Fats and Oils and not under Chapter 33 covering Cosmetics and Toilet Preparation. Similar view was taken by Tribunal in case of Capital Technologies Ltd. & Ors Vs CCE, Tirupati reported in 2011-TIOL-775-CESTAT-BANG.

The Conference decided that the issue of classification can now be decided by the field taking into consideration the facts of the case read with the judicial pronouncements.

What did that mean? - Effect of a Notification :

There is often litigation on what the notifications issued by the Government really mean. The DGFT at the end of its notifications give an explanation, 'Effect of this notification'. In the Tariff Conference, Chennai zone raised a point that to avoid disputes owing to interpretations, all amendment notifications should be appended with a clarification in the notification itself or a circular should be subsequently issued to explain the effect of the amendment.

The Conclusion was that while clarification may be issued where necessary but not in all cases particularly where the language of the notification or amendment in the rule is quite clear.

Para B-6 and B-14 of CBEC Instruction in F.No.96/85/2015-CX.I., Dated: December 07, 2015

Anti Dumping Duty on Albendazole

GOVERNMENT has imposed anti dumping duty on Albendazole falling under tariff item 2933 29 50 of the First Schedule to the Customs Tariff Act, originating in, or exported from the People's Republic of China and imported into India.

Notification No. 62/2015-Cus ADD., Dated: December 14, 2015

Withdrawal of inter-unit transfer of CENVAT credit facility available to Large Tax Payer Units (‘LTU')

PRIOR to Budget 2014-15 LTUs with multiple service tax registrations could freely transfer CENVAT credit available with one of its service registered premise to another service registered premise. However, vide Budget 2014-15 an amendment to Rule 12A(4) of the CENVAT Rules was made to withdraw this administrative facility effective July 11, 2014.

In a recent RAC meeting of Bangalore Zone, it was represented, "As a result of the amendment carried out vide the Budget 2014-15, one of the key benefits available to a LTU assessee has been taken away with which has impacted all the LTU assessees very dearly. As a result, the present LTU scheme does not offer any substantial benefit to the service providers and the existing LTU assessees are exploring the option to exit the scheme. The Credit transfer facility provided to LTU assessee under the earlier Rule 12A of the CENVAT Rules may kindly be re-instated as this was one of the key benefits promised to LTUs at the stage of their registration under the LTU scheme."

The Department replied, "it is a policy matter. Recommendations would be communicated to the Board.”

Please also see Bid Adieu to LTU in DDT 2394 - 11.07.2014

Perils of Self-assessment - No Refund - Yet?

THE Story so far from DDT 2709:

WHAT do you do when you forget to claim an exemption notification in a Bill of Entry filed by you and self assessed, duty paid and goods cleared? How can you rectify this situation? The Department may not agree to a re-assessment and you cannot go in appeal against your own assessment.

In a recent meeting of the Trade Facilitation Committee in JN Customs, a Customs Broker raised an issue that after introduction of Self Assessment, the Appellate Commissioner holds that Appeal can be entertained only if Re-assessment or order of assessment is issued by the Department whereas the Appraising Group takes a view that assessment done, whether self or not, is an assessment order as was done prior to the introduction of Self Assessment. As of now, in most cases of this nature Commissioner (Appeal) is remanding the matter.

He informed Commissioner that re-assessment/amendment u/s149 of the Customs Act is not allowed in cases where importer by mistake forgot to claim notification benefit for which he was entitled.

Commissioner informed the members that JNCH has already taken up this issue with Board.

In the meantime, the Mumbai Bench of the CESTAT in a case of an importer from Nagpur, held that if the Customs duty was paid in excess under a self assessment of bill of entry and borne by the appellant, for claiming of refund of excess paid duty, the appellant was not required to challenge the assessment of bill of entry. The matter was remanded to ascertain unjust enrichment. (Suryalaxmi Cotton Mills vs Commissioner of Central Excise, Nagpur - 2014-TIOL-3015-CESTAT-MUM) In this case, the importer did not claim CVD exemption to the tune of Rs. 1.34 crores and the department rejected the refund claim on the ground that the assessment order was not challenged. It was self assessment - how do you challenge self-assessment? Though the Department has no answer, it has no qualms about rejecting the refund claim. Mumbai Customs Commissioner says, he has referred the matter to the Board. Obviously, Board does not clarify things that easily.

The issue cropped up again last week in the Trade Facilitation Meeting of JN Customs, Mumbai. The above CESTAT order was brought to the Commissioner's notice.

The Commissioner replied,

No decision has been taken by the concerned Commissionerate on the issue as to whether department would file an appeal against the said Tribunal Order. The matter will be examined after any communication is received from the concerned Commissionerate. If the said Order is accepted by the department, a reference will be made to the Board before issuance of suitable instruction to Refund Section.

The issue came before the meeting of the Trade Facilitation Committee in JN Customs at its meeting on 27.8.2015.

The Commissioner informed the members that no information has been received from the Nagpur Commissionerate that whether they are appealing against the CESTAT order. The department is still awaiting response from them. The Commissioner urged the members of the trade that in case of any refund arising on account of reassessment of Bills of entry, the refund claim may be filed.

The issue is pending for more than eight months and the Mumbai Customs Commissioner is not able to get the information from his Nagpur counterpart as to whether the latter is contemplating an appeal against the CESTAT Order. Even if he had sent a pigeon, it would have come back with the information. And remember even if the CESTAT order is accepted by the Department, the JN Customs Commissioner is not going to grant refunds. In that case he would make a reference to the Board. In the meanwhile, the poor importers who have claimed refunds are doomed.

Another version of Ease of doing business?

The Story Continued:

In a meeting held on 24.09.2015, the Trade again raised the issue and requested that in view of non-filing of appeal by Nagpur-I Central Excise Commissionerate against CESTAT order, the CESTAT order may be followed.

The Chairperson informed the members that it has been informed by Nagpur-I Central Excise Commissionerate that the matter is under process of review and the appeal may be filed against this order. Hence, taking a different stand at JNCH would not be feasible. Once the outcome of the review is communicated by Nagpur-I Central Excise Commissionerate, the matter may be decided accordingly. However, considering the difficulties of the trade that some claims may become time barred till then, it was directed by the Chairperson that the trade may file the refund claims arising on account of reassessment of Bills of entry, which may be processed as per outcome of the review process.

The Story Continues:

In a recent meeting of the PTFC, this issue came up again. The Principal Commissioner informed that no reply has been received from Nagpur-I Commissionerate. He further informed that the matter being a national issue, we may wait till issuance of directions from Board. He also requested the members of trade to take up the issue with Board, with a request for looking into the matter as early as possible.

The CBEC should intervene: It's time the CBEC intervened. They should issue a clarification immediately. There is no point in keeping all these claims pending.

Service Tax on Works Contract - CAG Suggestions

RECENTLY, the CAG conducted a Performance Audit on assessees providing Works Contract Services, to seek an assurance that the indirect tax administration is adequately placed to safeguard the interests of revenue.

CAG has recommended:

1. Inter departmental co - ordination should be made obligatory mainly with Commercial Tax Department for identification of unregistered service providers and broadening of tax base in particular with VAT records through the Regional Economic Intelligence Committee meetings.

2. CBEC may consider to design a tool to co-relate service tax payments from the ST - 3 return filed either by service provider or service recipient involving service tax liability under reverse charge mechanism.

3. Monitoring mechanism to watch non/late filers should be strengthened keeping in view of determination of service tax payments through self assessment.

4. CBEC may review the requirement of submission of records and to ensure that the rule may be adhered to strictly or else the provision may be revised accordingly.

Central Excise - Process of cold-rolling on hot-rolled stainless steel patta/pattis amounts to 'manufacture': SC

YESTERDAY the Supreme Court held that the process of cold-rolling undertaken by the assessee on the hot-rolled stainless steel patta/pattis amount to 'manufacture' within the meaning of Section 2(f)(i) of the Central Excise Act, 1944.

The assessee lost the case on limitation also.

We bring you the judgement today. Please see Breaking News

Model CESTAT Bench at Hyderabad

YESTERDAY CESTAT President Justice Raghuram inaugurated what could be described as the best CESTAT Bench in the country at Hyderabad. The CESTAT is housed in a neat spacious building with about 12000 sq.ft space, with nice comfortable courtrooms. Justice Raghuram said the court should inspire awe and respect. The ambience at Hyderabad CESTAT certainly does. Hyderabad Bench should be the model for every Bench of the CESTAT.

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in