Perils of Self-assessment - No Refund?
11 09 2015
Friday
From DDT 2610 - 02 06 2015
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?
Service Tax - Free Home Delivery of Food - NRAI seeks clarification from Revenue Secretary
THE Deputy Commissioner of Central Excise, Chandigarh, with the approval of his Additional Commissioner had clarified that in case of the transaction involving Pick-up or the Home Deliveries of the food sold by the Restaurant, the dominant nature of the transaction is that of sale and not service as the food is not served at the Restaurant and further no other element of service which is offered at the Restaurants, be it ambience, live entertainment, if any, air conditioning, or personalized hospitality is offered. The Service Tax can be levied if there's an element of 'Service' involved which would typically the case where food is served in restaurant.
While reporting this in DDT 2672 27 08 2015 , we asked, "Does the CBEC agree with this?"
Now, the National Restaurant Association of India (NRAI) is asking the same question.
The Association has written to the Revenue Secretary that the letter of the Deputy Commissioner has got wide publicity in the media, and has once again created problems for the industry and therefore, the Association has sought a "notification/clarification" on the matter so that the existing confusion can be allayed, and “correct procedures” can be followed by the industry.
In the Scheme of Ease of Doing Business, will the Revenue Secretary/CBEC give a clarification at the earliest?
CENVAT Credit on Cellular Phone Towers- Twist in Tower
IN its letter in CBEC F.No.137/315/2007-CX.4 Dated February 26, 2008, the CBEC wrote to all Chief Commissioners, DGST, DGCEI and all Service Tax Commissioners that it has been brought to the notice of the Board that telecom operators are availing CENVAT Credit on goods like angles, channels, beams, which are used for building transmission towers. Similarly, CENVAT Credit is also being availed on pre-fabricated building, shelters, PUF panels, etc., used for housing/storage of generating sets and other equipments. It appears that the telecom operators claim these items to be ‘inputs' for providing telecom services.
And Board opined: -
The items mentioned above are used for erecting towers, and making housing/storage units. Thus, these goods are used in making products that cannot be called as excisable goods, being attached to earth, and are not chargeable to excise duty. The items such as angles, channels, beams, etc., are this inputs for civil structures and as such, are not used for providing taxable service. Therefore, it is the considered view of the Board that credit of duty paid on such items is not available to the telecom service providers.
Show Cause Notices obviously flew in all directions, but six years later the Board found strong support in the Bombay High Court.
In Bharti Airtel Ltd Vs Commissioner - 2014-TIOL-1452-HC-MUM-ST, the Bombay High Court held that the towers and parts thereof and the prefabricated building, printers and office chairs are not capital goods under the Credit Rules, 2004 and also that the said goods are not inputs falling under Rule 2(k) of the Credit Rules. The High Court found no infirmity or illegality in the findings as recorded by the tribunal in holding that the subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the Credit Rules and hence CENVAT credit of the duty paid thereon was not admissible to the appellants.
An elated Board brought this judgement to notice of all concerned for compliance in CBEC Instruction in F. No. 267/60/2014-CX.8, Dated: November 11, 2014.
Against the Bombay High Court judgement, the party has filed an appeal in the Supreme Court, which is pending and tagged with another important appeal against the AP High Court order in Sai Samhita Storages case (2011-TIOL-863-HC-AP-CX), in which the High Court held that unless excluded, all goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit.
The tower issue is obviously before several adjudicating and appellate authorities. Recently the CESTAT referred the issue to a Larger Bench in Tower Vision India case - 2015-TIOL-1895-CESTAT-DEL. Earlier a Division Bench of the Tribunal had referred the matter to a Third Member.
So, the issue is pending in the Tribunal, the High Courts and the Supreme Court. Maybe the Board should ask for a transfer of all the cases to the Supreme Court.
While it stood thus, the issue reached the Bombay High Court again. Yesterday the High Court held that the Bharti Airtel decision does not require a relook and in any case the Court was bound by the decision of another Bench of the same court. We carried the decision yesterday itself - 2015-TIOL-2098-HC-MUM-ST .
The Towering Twist: Now the telecom towers are not maintained by the cellular operators but by ‘stand alone' tower managers who provided service under business support service. The CESTAT in Reliance Infratel - 2015-TIOL-516-CESTAT-MUM distinguished the Bharti Airtel judgement and allowed credit in such cases.
Until Monday with more DDT
Have a nice weekend.
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