TIOL-DDT 2878
29 06 2016
Wednesday

BY  Notifications No. 8/2014-CENT and 9/2014-CENT both dated 28.2.2014, the CE Rules and CENVAT Credit Rules were amended to stipulate that an importer who issues an invoice on which CENVAT Credit can be taken, is required to get registered and file a quarterly return.

Now by Notification No.  30/2016-C.E. (NT)  dated 28th June, 2016, it is stipulated that an assessee who is registered as a First Stage Dealer shall not be required to take registration as an importer and vice-versa.

An assessee who conducts business both as an importer and a First Stage Dealer may take only one registration as he has been exempted from the requirement of taking a second registration. Board says that the facility is optional and any assessee needing separate registration for his own business purposes, may so register.

Such assessee who conducts business both as a First Stage Dealer and an Importer, henceforth shall also have the option of filing a single quarterly return giving details of transactions as a first stage dealer and an importer, one after the other in the same table of the return, viz., all transactions as first stage dealer during the return period shall be followed by all transactions as an importer during the same return period.

Please also see DDT 2852 24 05 2016

CBEC Circular No. 1032/20/2016-CX, Dated: June 28, 2016

Not a very Rewarding Proposal

THIS is the story of a perseverant informer of the Central Excise Department, whose petition was decided by the Gujarat High Court last fortnight.

Amount recovered by the Department: Rs. 1,73,346/-

Advance Reward Paid: Rs. 1 Lakh

Balance Reward Claimed: Rs.22,12,023

The petitioner claims to be an informer, on whose information a raid was carried out and incident of excise duty evasion came to light sometime in 1999.

The petitioner gave a secret information to the officer of Director General,Central Excise Intelligence (DGCEI) regarding illegal act of excise evasion by one VFL, which was manufacturing excisable goods, viz. Polyester staple fiber (PSF) and was removing the said product clandestinely without paying any duty. On the basis of such information, the officers of DGCEI carried out raid at the factory premises of VFL and their raid revealed that indeed it was a case of excise duty evasion on big scale.

On completion of the investigation, show cause notice was issued by the excise authorities, whereby demand of Rs.9,92,31,857/- was raised and upon adjudication, was confirmed by the adjudicating authority. The confirmation of duty was challenged by VFL before the CESTAT. However, the appeal came to be dismissed and hence, demand of duty adjudicated has attained finality.

The petitioner-informer has received an amount of Rs.1,00,000/- as advance reward for the information. He wants the balance of reward due to him which he claims to be more than Rs. 22 lakhs after deducting the one lakh already received.

The case of the petitioner for receiving the final reward on the basis of the adjudication by the adjudicating authority was considered by the Rewards Committee. The decision of the Rewards Committee was communicated under communication dated 19.12.2011. From this communication, it appears that the Rewards Committee has held:-

"The committee finally observed since no additional recovery except Rs.1,73,346/- paid by the party through PLA has been made in this case andRs.1,00,000/- has already been granted and paid to the informer as advance rewarded and recovery proceedings from remaining dues amount to Rs.15,86,60,312/- are pending with the DRT, Mumbai the case is not ripe for grant of final reward at this stage; final reward proposal can be considered only after completion of recovery proceedings in the DRT, Mumbai when additional recovery to the Government take place."

The Department submitted that the instance of giving final reward would only come into existence on the basis of actual recovery made by the Department pursuant to the information given by the informer. It is submitted that in the instant case,what is actually recovered by the Department is an amount of Rs.1,73,000/- and as against this, the petitioner has already received an amount ofRs.1,00,000/- towards the interim reward. He submitted that in view of the fact that the amount is actually not recovered and the recovery to be made by the Department is still subject to the pending proceedings with DRT,Mumbai, where number of claimants appear to have staked their claims against M/s.VFL and therefore, unless those litigations come to an end, thereafter only recovery of the actual amount from M/s.VFL will be possible and depending upon extent of recovery made in the instant case, final reward can be passed.

Without recording its view on the rival submissions, the High Court deemed it fit to dispose of the petition with a direction to the Rewards Committee to give a decision afresh. While doing so, the Rewards Committee will give full opportunity to both the sides to raise all the contentions.

It will be open to all concerned to raise all contentions including the contention that recovery as contemplated in "The Reward Scheme" does not cover the payment of duty by utilizing the cenvat credit.

Can reward be paid for duty recovered by debit entry in the Cenvat account? Board should amend the Scheme to specify whether reward can be given when recovery is made through Cenvat Credit account.

Payment of Tax Under Wrong Head/Code - Doomed?

SOME times assessee pays duty/service tax under a wrong code or he pays 12.5% under excise code and does not pay cess separately. In such cases, what should an assessee do to rectify such mistake? Should he file a revised return or does it amount to short payment of cess etc? Please clarify .

This was an issue raised in a meeting of the Regional Advisory Committee (RAC) of the Hyderabad Central Excise Zone recently.

The Department clarified:

The assessee has to necessarily pay the duty/cess, be it of Central Excise or Service Tax, under the correct Accounting Code, as there is no specific provision in the Central Excise Act/Finance Act/Rules for such adjustment. However, if any error is discovered after payment, the Principal Chief Controller of Accounts, CBEC, New Delhi vide their Office Memorandum d.t. 27.05.2009 regarding misclassification of accounting codes, has prescribed the course of action to be taken before the accounts of any financial year are closed, for correction of accounts classification, after getting approval from the Commissioner, if the amount involved is less than Rs. 50 lakhs, and Headquarters approval (Zonal CC) if the amount involved is above Rs. 50 lakhs in each case, provided the total amount of the challan is not changed due to the rectification of accounts codes .

The same issue was raised in the RAC meeting of Mysore Zone in April 2016.

The issue: The Assessee has paid service tax amount to Government, but while paying the same the assessee has mentioned wrong account Code. Now, Excise (Audit) Superintendent is saying that, assessee has mentioned wrong account code & assessee has not paid service tax under proper code & assessee should pay tax along with interest & penalty and apply for refund of amount paid under wrong account code.

But in this case assessee has correctly calculated service tax & paid to government within due date & not evaded the tax, but only mentioned wrong account code while depositing the tax. Under these circumstances is it correct on the part of the Audit Department to insist on taking refund of tax paid under wrong account code and paying the tax at correct code with interest and penalty holding that there is default in payment of tax.

The department has clarified earlier that if the assessee uses wrong account code for payment assessee need not be asked to pay service tax and the matter should be sorted out with PAO.

I request you to clarify the issue once again with necessary instruction to not to insist on taking refund and treating non payment of tax & payment of tax with interest and penalty.

The Department there replied:

It was clarified that for every service, an accounting head has been provided. The service tax has to be paid under appropriate accounting code for which the said tax pertains.

However in case of payment of service Tax under incorrect accounting code, the concerned assessee is required to make an application to the PAO, Service Tax , Mumbai for change of accounting code after scrutiny from JRO/JAC, with the approval of the jurisdictional Commissioner, after submitting required documents and challans through proper channel. The principal CCA CBEC OM NO: Coord/1(5)/R-II/09-10/23 dated 27.05.2009 regarding the procedures to be followed for correction of accounting classification may please be perused .

Ease of doing business?

Recently, the Gujarat High Court decided a similar issue. The High Court held, "Whatever be the internal instructions of the department, the amount not due under a head cannot be appropriated leaving the actual dues unpaid. The department cannot appropriate sum towards the head where there was no liability for the petitioner to pay the tax. If the petitioner is now made to pay said sum of Rs.5,04,700/-, that would be double recovery by the Government, which would be wholly unauthorized". 2016-TIOL-1205-HC-AHM-CX

Citizens are not thieves

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Until Tomorrow with more DDT

Have a nice Day.

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