TIOL-DDT 2832
26 04 2016
Tuesday

YESTERDAY was the last day for filing Service Tax return for the period October 2015 to March 2016, but there was no ACES to file the return. ACES simply crashed and there was no way that returns could be filed. We got many frantic calls, messages and mails from frustrated assessees. We sent a sample message to ADG, Systems. Even the normally responsive ADG didn't reply. But yes, there was light at the end of the dark tunnel - the Board understood the problem and extended the last date till 29th April 2016 as Difficulties have been faced by assessees in accessing the ACES application on 25th April 2016. There was no difficulty; it was simply not accessible.

CBEC Order No.1/2016-Service Tax., Dated: April 25, 2016

What is wrong with ACES?

THIS is what CBEC proclaims about ACES.

Automation of Central Excise and Service Tax (ACES) is the e-governance initiative by Central Board of Excise and Customs (CBEC). It is one of the Mission Mode Projects (MMP) of the Govt. of India under National e-Governance Plan (NeGP). It is a software application which aims at improving tax-payer services, transparency, accountability and efficiency in the indirect tax administration in India. This application is a web-based & workflow-based system that has automated all major procedures in Central Excise and Service Tax.

In the post-independent era of Indirect Tax administration in India, ACES is the most significant IT-based initiative undertaken that has transformed the way about 18.20 lakh indirect taxpayers transact their business with the department of Central Excise and Service Tax. Being an innovative reform initiative in the indirect tax department, ACES had benefited members of trade, industry and commerce.

The ACES application has resulted in a major change in the way the Central Excise and Service Tax field formations conduct their regular business vis-a-vis the Trade & Industry. e-filing and e-processing of documents has started replacing manual filing and handling of paper documents.

The main purpose of the initiative was to re-engineer the business processes and transform the existing tax administration into a modern, efficient and transparent system. Its objective was to strike an optimal balance between trade facilitation and enforcement and to promote a culture of voluntary compliance. It aims at reducing physical interface of the business community with the departmental officers and to provide a transparent and paper-less business environment with improved taxpayer services delivered through an automated process.

In the department, most of the officers do not know how to use ACES and so they don't use it. The assessees have no choice; they have to use it, at least to file their returns. Assessees with unlimited patience have accepted government incompetence as a way of life and many have stopped even complaining, as they find that complaints don't solve the problems. The same hardware, the same software and the same officers for too long a time have rusted ACES. Perhaps ACES has to be reinvented and re-engineered. Till then instead of ease of doing business, it is going to be one hell of doing business.

Make all officers to file returns

RETURN filing is such a torture that many an assessee would rather close business than go through the punishment of filing returns. In fact, many of the officers of the Department will not be able to file the returns. Is it not grossly unfair to ask the assessees to file a return which you yourself cannot do? No assessee should be made to file a return that an officer cannot file.

Every officer of the Department from Inspector to Chairman should be mandatorily made to file at least one return a month on behalf of an assessee. Maybe even the Minister should file a couple of returns in a year.

Yesterday, delivering the YB Chavan Memorial lecture, RBI Governor Raghuram Rajan said that every senior official in the government should live one day like a common man without any assistants, and try to get one routine task done, so that they get a better sense of the scale of changes which are required in the country.

He said,

Most officials realise how complex the system is only after retirement, and an exercise like this will give them a much better sense of the changes required.

A lot of officials, including myself, learn the difficulties of working in India as an 'aamaadmi' only once we leave office, lose the assistant, the assistant to the assistant, and the assistant to the assistant's assistant. Post retirement, and I have seen this with all the people I know, they realise the system is much harder to deal with.

Rajan's suggestions are most appropriate for the tax officials.

Excisability of Bagasse - CBEC Clarifies - Beware there is Rule 6(3)

THIS is a long and complicated story. Excisability of bagasse and similar waste products arising during the course of manufacture has been under dispute for a long period of time.

In 2008, the definition of "excisable goods” in clause (d) of Section 2 of the Central Excise Act, 1944 was amended by adding an explanation that for the purposes of this clause, "goods” include any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.

Based on this, by Circular No. 904/24/2009-CX dated 28.10.2009, CBEC clarified that with this amendment in Section 2 (d), the bagasse, aluminium/zinc dross and other such products termed as waste, residue or refuse which arise during the course of manufacture and are capable of being sold for consideration would be excisable goods and chargeable to payment of excise duty.

What about the period prior to 2008. Board said, "wait for the decision in Balrampur Chinni Mills Ltd case in Supreme Court.

By Circular No. 941/02/2011-CX dated 14.02.2011, Board informed, "The Civil Appeal filed by the department in the case of M/s Balrampur Chinni Mills Ltd. has been dismissed by the Hon'ble Supreme Court on 21.7.2010. Accordingly the cases pending for the period prior to budgetary changes of 2008 in respect of excisability of Bagasse may be taken out from the Call Book and decided in the light of the law decided by the Apex Court.”

In Instruction F.No.17/02/2009-CX (Pt.) dated 12.11.2014, Board wanted the field to follow the decision of the CESTAT Larger Bench - 2014-TIOL-1762-CESTAT-Mum-LB which held, "Aluminium dross and skimmings and similar non-ferrous metal dross and skimmings which arise as a by-product in the process of manufacture of aluminium / non-ferrous metal products are manufactured goods and hence excisable w.e.f. 10.05.2008 in view of the explanation added to Section 2(d) of the Central Excise Act, 1944."

in the case of   M/s Union of India and Ors vs M/s DSCL Sugar Ltd - 2015-TIOL-240-SC-CX   dated 15.07.2015, the Supreme Court examined the issue and reaffirmed that bagasse is not a manufactured product. The Judgement applies to both periods, before and after the insertion of explanation in Section 2(d) of the Central Excise Act, 1944 by the Finance Act, 2008.  

In view of the Supreme Court judgement, all the above Board Circulars have become non est and the Board has fairly rescinded them now.

The Board, therefore, advises that cases kept in Call Book on the above issue may be taken out and adjudicated.

Wait, wait - it's not all good news. Board reminds that rule 6 of the CENVAT Credit Rules (CCR), 2004 was amended with effect from 01.03.2015 by inserting explanation 1 and explanation 2 in sub-rule (1) of rule 6. These explanations continue in the present rule 6 also :-

"Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2  shall include non-excisable goods cleared for a consideration from the factory.

Consequently, Bagasse, Dross and Skimmings of non-ferrous metals or any such byproduct or waste, which are non-excisable goods and are cleared for a consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services, in terms of rule 6 of the CENVAT Credit Rules, 2004.

So, when you clear Bagasse or such waste, you are caught in the web of Rule 6.

It would have been easier to pay duty on bagasse than to comply with Rule 6.

CBEC Circular No.1027/15/2016-CX, Dated : April 25, 2016.,

FTP -No Import of Dogs for Breeding

GOVERNMENT has introduced policy conditions on import of dogs under Chapter 01 of ITC (HS), 2012 - Schedule - 1 (Import Policy):

Import of dogs is allowed only for the following specific purposes:-

i. Pet dog with valid pet book and relevant records/documents in the name of importer.

ii. Dogs imported by the R&D Organisations for conducting research with the recommendation of CPCSEA.

iii. For the internal security by the Defence and Police Force.

Import of commercial dogs for breeding or any other commercial activities other than the purposes mentioned above is not permitted .

DGFT Notification No.3/2015-2020., Dated: April 25 2016

Ratifying the WTO's Trade Facilitation Agreement will help India further boost economic growth

INDIA has ratified the new Trade Facilitation Agreement (TFA). India's WTO ambassador Anjali Prasad handed over her country's instrument of acceptance to Director-General Roberto Azevêdo on 22 April.

"I'm very pleased to receive India's instrument of ratification from Ambassador Prasad,” DG Azevêdo said. "India is one of the most dynamic economies in the world today and has become a top recipient of foreign investment. Ratifying the WTO's Trade Facilitation Agreement will help India further boost economic growth by reducing trade costs and supporting its integration into the global economy.”

Concluded at the WTO's 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.

Service Tax - Supreme Court upholds quashing of Show Cause Notice

CAN a Show Cause Notice be quashed when there is a statutory adjudication and appellate procedure?

An assessee who supplied manpower was stuck with a Show Cause Notice to pay tax under the category of cargo handling service. The assessee challenged the Show Cause Notice in the High Court and the High Court quashed the Show Cause Notice. The Department took the matter to the Supreme Court pleading that it was not appropriate for the High Court to deal with the writ petition, bypassing the adjudicatory machinery provided under the Act, more so when the statutory appeals against the adjudication orders are also provided.  

The Supreme Court found that the High Court has simply gone by the contract in question and taking into consideration all the averments, which were made in the show cause notice, on the basis of admitted facts, it has come to a conclusion that even when the allegations in the show cause notice are accepted, the said contract does not amount to providing any 'Cargo Handling Service' as defined under Entry 23 of Section 65 of the Act.

Therefore, Supreme Court was of the opinion that the High Court did not commit any mistake or illegality in entertaining the writ petition when no disputed questions of fact were involved and the legal issue was to be decided on the basis of the facts, as admitted by the parties, which were so specifically recorded by the High Court itself.

For more details on this case, please see Breaking News

Until Tomorrow with more DDT

Have a nice day.

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