TIOL-DDT 2779
04 02 2016
Thursday

THREE days back, the Central Government issued a back-dated relief notification 1/2016-CE (NT) dt. 01.02.2016 and an all encompassing Board Circular 1014/2/2016-CX.

In the words of the Board "This beneficial amendment of deleting proviso to rule 3(i)(vii) of CENVAT Credit Rules, 2004 has been done retrospectively with effect from 01.03.2015, that is the date from which reversal of Cenvat Credit for non-excisable goods was provided in rule 6 of Cenvat Credit Rules, 2004."

The ship-breaking industry were all smiles.

Now, it's time for many others, almost everyone, to celebrate.

Swachh Bharat Cess Component allowed as Rebate/Refund + services used beyond factory for export also refundable

ON 2^nd February, the Central Government came out with a bunch of notifications(released only yesterday) and which have the following effect -

As the adage goes, better late than never!

But what about the accumulated credit of Education Cess lying in the CENVAT account of the assessees?

Notwithstanding the Tariff Conference and Para B-21 of CBEC Instruction in F.No.96/85/2015-CX.I., Dated: December 07, 2015 it would have been welcome if the Board had come out with an amendment in the CCR, 2004 to allow payment of Central Excise duty / Service Tax by utilising the Education cess lying in balance.

Notifications 1/2016-ST, 2/2016-ST & 3/2016-ST, all dated 2nd February 2016.

Cenvat credit on sales commission

ON the subject matter, it seems the Board had realized that its Circular No. 943/04/2011-CX dated 29.04.2011 which was intended to give relief to assessees all over India was losing its Midas touch in the State of Gujarat owing to the Gujarat High Court decision in Cadila Healthcare Ltd. - 2013-TIOL-12-HC-AHM-ST.

This is what the Circular clarified -

The High Court had in paragraph 5.2 of its order held -

"…The term input service as defined in the rules means any service used by a provider of taxable service for providing an output service or used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal and includes services used in relation to various activities of the description provided therein including advertisement or sales promotion. Thus, the portion of the definition of input service insofar as the same is relevant for the present purpose refers to any service used by the manufacturer directly or indirectly in relation to the manufacture of final products and clearance of final products from the place of removal. Obviously, commission paid to the various agents would not be covered in this expression since it cannot be stated to be a service used directly or indirectly in or in relation to the manufacture of final products or clearance of final products from the place of removal… Under the circumstances, the adjudicating authority was justified in holding that the commission agent is directly concerned with the sales rather than sales promotion and as such the services provided by such commission agent would not fall within the purview of the main or inclusive part of the definition of input service as laid down in rule 2(l) of the Rules."

So, the ground reality is that after pronouncement of the judgement of Gujarat High Court in Cadila Healthcare, the position is that Cenvat credit on sales commission agent's service is being denied in Gujarat; whereas in other parts of country it is being allowed based on the P&H High Court's Judgement in Ambica Overseas 2011-TIOL-951-HC-P&H-ST and Board's Circular dated 29.04.2011.

To alleviate the sufferings of the assessees who were wrongly given the short shrift, the Board has used its magic wand and extended its largesse to assessees all over India by amending the CCR, 2004 itself.

Notification 2/2016-CE(NT) released yesterday does the following -

In the CENVAT Credit Rules, 2004, in rule 2, in clause (l), after sub-clause (C), the following Explanation   is inserted:-

Explanation.- For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis."

As the amendment introduces an Explanation, assessees, in particular those in Gujarat, may have every right to say that the same is clarificatory and hence retrospective in operation.

Please also see Cenvat credit on sales commission - Assessees in Gujarat given the short shrift.

After all, 'tis the season of good times!

Nonetheless, there is another amendment in rule 3 of CCR, 2004 by way of a proviso &which makes it amply clear that the CENVAT credit of any duty shall not be used for payment of the Swachh Bharat Cess. Perhaps this was a safety valve which was missing and now backs the FAQ, Question no. 14 which reads -

Q.14 Whether Cenvat Credit of the SBC is available?

Ans. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax

Notification 02/2016-CE(NT) dated 3rd February 2016.

Kholongchhu Hydro Electric Project included

IN exercise of the powers conferred by sub-rule (3) of rule 19 of the CER, the CBEC vide notification 45/2001-CE(NT) has specified the conditions, safeguards and procedures for export under bond of all excisable goods without payment of excise duty from the factory of production or manufacture, warehouse etc. to Kurichu Hydro Electric Project, Tala Hydro Electric Project, Punatsangechhu-I Hydro Electric Project, Punatsangchhu-II Hydro-Electric Project and Mangdechhu Hydro-Electric Project in Bhutan.

Now, to this list is added  Kholongchhu Hydro Electric Project.

Notification 3/2016-CE(NT) dated February 03, 2016.

Refund of CE duty on purchase of cars by physically handicapped persons - Board ameliorates situation

IN the context of Sl. No 280 of Notification No. 12/2012-CE dated 17.03.2012 vide which concessional rate of duty has been provided for purchase of Cars by physically handicapped persons, Board has received references from intended beneficiaries that their refund applications filed beyond one year from purchase of vehicle have been rejected as they were hit by limitation under Section 11B of the Central Excise Act, 1944.

The beneficiaries have indicated that the reason for such delay in filing the claim is due to the delay in procuring certificate from the line Ministry as warranted by the notification.

To ameliorate such situations the Board has come out with a procedure which goes thus -

"When a handicapped person approaches the Central Excise office for refund of duty paid on the vehicle, he should be advised that refund application should be filed within one year of payment of duty, irrespective of availability of certificate from the Line Ministry so that such claims are not time barred. The Officer processing the refund in turn should issue a deficiency memo, if the said certificate is not available. On submission of the Certificate, refund can be processed and sanctioned. Interest would be payable only for period beyond three months from submission of the complete application with the certificate from the Line Ministry."

So, the point is file refund claim first - certificate from Line Ministry can follow.

A good suggestion by the Board but the field formations are never known to take such instructions kindly but are eager to dispose of the refund applications, one way or the other!

Circular 1015/3/2016-CX, Dated: February 03, 2016

Customs Single Window extended to other locations

THE Central Board of Excise and Customs has taken-up the task of implementing 'Indian Customs Single Window Project' to facilitate trade. This project envisages that the importers and exporters would electronically lodge their Customs clearance documents at a single point only with the Customs. The required permission, if any, from other regulatory agencies (such as Animal Quarantine, Plant Quarantine, Drug Controller, Textile Committee etc.) would be obtained online without the importer/exporter having to separately approach these agencies. This would be possible through a common, seamlessly integrated IT systems utilized by all regulatory agencies and the importers/exporters. The Single Window would thus provide the importers/exporters a single point interface for Customs clearance of import and export goods thereby reducing interface with Governmental agencies, dwell time and cost of doing business.

Detailed instructions in this regard have now been issued.

Circular 03/2016-Customs, Dated: February 03, 2016

CBEC is spending Rs.0.83 for collecting Revenue of Rs.100

THE GST roll-out will not only increase the tax collection, but also reduce the high cost of revenue collection being incurred by the department. As of now, CBEC (which comes under Revenue Dept) is spending Rs 0.83 for collection of Rs 100. This will come down once GST is implemented. - Member, CBEC informed while speaking on the sidelines of a CII-organised event last year.

Following are the details provided by the CBEC on its portal.

Comparative figures of various countries for the year 2011

Until Tomorrow with more DDT

Have a nice day.

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