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EXCISE
• • • ISSUE - IX VOLUME - VI AUGUST - 2011
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www.bizsolindia.com
CUSTOMS
SERVICE TAX
We believe in C-2
This Month 4 U C-2
Editorial 1
What's New 2
By Ashok Nawal
Beyond the obvious 14
Did you miss this 19
Bizsol Services 20
Seminar Photo C-3
Ion Cloud Service C-4
Cost Accounting Records 10
and Cost Audit -
IN THIS ISSUE
• For important due dates please turn over
August - 2011
UPDATE
THISMONTH
4U
Payments Due Dates
Provident Fund- July 2011 15/08/2011
Central Sales Tax –August 2011 Return-cum-Challan 21/08/2011
VAT – August 2011 Return 21/08/2011
ESI Contribution 21/08/2011
Profession Tax 31/08/2011
Excise Duties-August 2011 05/09/2011
Excise Duties- August 2011 By E-Payment 06/09/2011
Service Tax – August 2011 05/09/2011
Service Tax -August 2011–By E Payment 06/09/2011
TDS/TCS- August 2010 07/09/2011
Returns
ER-1 and ER-2 Monthly return for August 2011 10/09/2011
ER-6- August 2011 10/09/2011
W E B E L I E V E I N
E D I T O R I A LTaking credit for the “green initiative” the Ministry of Corporate Affairs is patting itself on the back and the corporate sector is also smiling. It has the making of a master stroke – the Department is getting credit for being environment friendly without having to make any effort or committing any resource. The expenditure on printing and posting of annual reports though may be a small percentage for a company, in absolute terms it could be quite substantial for a large company with a large share-holder base. How many shareholders are going to take the trouble of asking for printed reports and how many of them would go on line and check, read and analyse the Balance Sheet of a company in which he or she holds shares? The ones who would ask for printed annual reports is going to be a miniscule percentage. But is it such a great thing? Joint stock companies are hailed as models of democracy. The members of the Board are elected by the shareholders, the auditor is appointed by them and above all there is a slew of issues for which the shareholders exercise their final authority in the general meetings. But in practice what is happening? Except for the promoters and a few large shareholders there is total apathy when it comes to exercising one's franchise in a company meeting and thereby influence the policies of the company. The only umbilical cord that a shareholder has apart from the dividend cheques, if any, is the notice of meetings and the annual accounts. Narcissistic tendencies on the part of the promoters and management over the years added more and more glossy pages apart from the regulatory requirements of reports like that on corporate governance. All these added weight to the Reports literally and destroying the forests in the process. The act of denying the shareholder a simple notice and the consolidated financial performance by the ministry is like throwing the baby also with the bathwater! Continue sending the basic minimum information like Notice, Directors Report and the Balance Sheet and Profit and Loss Account to the shareholders. Serious investors could always ask for the detailed reports or can access them on the net. The green initiative is bound to increase the shareholder apathy which would not augur well for good corporate governance. Now comes the report that the Ministry of Corporate Affairs have decided to ban distribution of gifts and refreshments to the shareholders at the AGMs. However laudable the measure may be, the corporates are bound to find it difficult get even the necessary quorum at the AGMs! For the uninitiated there is democracy and there is corporate democracy.
Karunanidhi, the Tamil Nadu Chief Minister has a unique distinction. He is perhaps the only CM who even after his tenure as CM continues in his chair. He had the same wheel chair which he used when he was the CM! With his ambitious and impatient sons asking for his post in the party openly and at war against each other, daughter languishing in jail, his HUF business empire falling apart all around him what a sad sunset for the old man. The nemesis is catching up with him in his old age.
Suddenly there appears to be some hope for GST. With the appointment Sushil Modi, the Deputy Chief Minister of Bihar as the Chairman of the Empowered Committee for GST who is from BJP, the Government has perhaps ensured a smoother passage of the new economic reform initiative. Though the idea of GST originated at the time when BJP was in power at the Centre, the Congress was of late cornering all the credit for ushering in the new tax regime. With a BJP man heading the Committee the BJP ruled states could be expected to join the bandwagon soon. That is good news. Now one can be more or less certain that the new taxation statute will be in place by next fiscal.
As we go to press Yeddyurappa has managed to anoint one of his cronies as the new Chief Minister of Karnataka. That is not good news for the Congress which always had a stick to beat the BJP with as long as Yeddyurappa was the CM. Again, unfortunately for the Congress he also did not bargain hard enough with the BJP central leadership to appoint his son as the new CM as was widely expected. If that had happened, it would have denied BJP the moral right to criticise Congress of dynastic rule.
Years back when the first serial bombs rocked Mumbai, posters sprang up all over the city popularising the slogan “Salaam Bombay”. The posters praised the Mumbaikars for their resilience in the face of adversities. I remember to have written deriding the slogan on the ground that the city betrayed an element of insensitivity even after the death of so many people. For the people who survived the serial blasts it was business as usual more out of commercial and economic compulsions and it would be wrong to read noble meanings into that. After the recent terror attack, thankfully there are no self-congratulatory messages in Mumbai. Things are getting more serious and people are becoming more cynical. When Bal Thackeray says the influx people to the metropolis should be regulated, it is dismissed as chauvinistic proclamation. When Prithviraj Chavan talks of decongestion of Mumbai he is reminded by his party that it is against vote bank politics. Just imagine how difficult it is to bring bombs and detonate them in the city of Mumbai? Can the police detect and stop them? Anyone can do it at will in the congested city that Mumbai has become. It is time something is done seriously to address this issue without getting politics in the way. If the present CM also fails to so, it will not be long before we see a repeat of 13/7.
Noida is in the news again; again for the wrong reasons. The recent judgment of the High Court of Lucknow should be a wakeup call for all those in the guise of industrial development indulge in land grabbing. The builder – politician nexus which has become so notorious that it is time they are brought to account. Unfortunately, the unwary customer is the first one who is going to take the hit initially. One only hopes that the entire episode gets sorted out with minimum damage to those who have booked their dream homes.
A raging debate is on in God's own country about God's own wealth. In a fairly enlightened society that the state of Kerala is, the outcome of the debate about what one should do with the wealth found in the Temple in the state capital should be quite interesting for more reasons than one. Thankfully the royal family is not staking any claim for it except for saying that it belongs to their family deity. The debate will surely touch upon issues like title to the property, government's right to it, committing it for welfare of the society and also religious belief. It will be quite some time before one hears the last word on the issue. But when it is done, it will surely reflect the ethos of the society in a modern age.
The US has managed to avert a major debt crisis. Though the drama that was associated with it in itself is big news, what is important is the lesson it beholds for us. A country like ours prone to fiscal profligacy by successive governments both at the Centre and the States, the need for adherence to the requirements of the Fiscal Responsibility Act cannot be overemphasised.
Both Kalmadi and Raja have asked for permission from the Speaker to attend the Parliament session even as they cool their heels in jail. This request is a bit premature. As things stand with the number of politicians getting indicted on various charges of corruption by various agencies, it may be prudent and cost effective to shift the Parliament to Tihar instead.
It is indeed a pleasure and previlage for all of us at Bizsol to congratulate our colleague Mr. Vijay Joshi who has been elected as the Chairman of WIRC of Institute of Cost & Works Accountants of India. All of us at Bizsol wish him all the best for a successful tenure.
Thank you.
Venkat R Venkitachalam
August - 2011
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What's New…!!Custom
Anti-dumping duty
l Anti dumping duty is imposed on Metronidazole (29332920) originating in, or exported from, the China PR has been continued upto 14th June, 2012. [CUS NTF NO. 48/2011 DATE 15/06/2011].
l Anti dumping duty is imposed on import of sewing machine needles falling under ITCHS 8452.30 originating in, or exported from, the China PR. [CUS NTF NO. 50/2011 DATE 22/06/2011]
l Anti-dumping duty on imports of Hydrofluoric Acid originating in, or exported from, China PR has been withdrawn w.e.f. 07/07/2011. [CUS NTF NO. 57/2011 DATE 07/07/2011]
l Definitive anti dumping duty has been imposed on Sodium Tripoly Phosphate (STPP) (2835 31 00) originating in, or exported from, People’s Republic of China. [CUS NTF NO. 58/2011 DATE 08/07/2011]
l Anti dumping duty has been imposed on 1, 1, 1, 2-Tetrafluoroethane or R-134a (2903 3919) originating in, or exported from, People’s Republic of China and Japan. [CUS NTF NO. 61/2011 DATE 15/07/2011]
l Anti dumping duty on Saccharin (29251100) originating in, or exported from, the China PR has been continued upto 5th June, 2012. [CUS NTF NO. 62/2011 DATE 19/07/2011]
l Anti dumping duty on Poly Vinyl Chloride Paste Resin (3904 22 10) originating in, or exported from, originating in, or exported from, People’s Republic of China, Japan, Republic of Korea, Malaysia, Russia, Taiwan and Thailand has
thbeen imposed till 26 July 2015 [CUS NTF NO. 66/2011 DATE 26/07/2011].
l Anti dumping duty on Rubber Chemicals, namely,MOR,PX13 and TDQ, falling under Chapters 29 and 38 originating in, or exported from, European Union, People’s Republic of China, Chinese Taipei and the United States of
America has been continued till 20/10/2015 [NTF NO. 67/2011 DATE 28/07/2011].
Tariff
l Total exemption of Customs duty has been granted when specified products imported from Bangladesh, Bhutan, Nepal, Maldives under SAFTA Agreement [CUS NTF NO. 49/2011 DATE 21/06/2011]
l Most popular scheme for the exporter got another lease of life….! DEPB Scheme got another extension. Now it will be operational
thupto 30 September 2011.This will be applicable to all exports which has been granted LET
thexport order “upto 30 September 2011” Accordingly corresponding notification in Customs has been amended. [CUS NTF NO. 51/2011 DATE 22/06/2011]
l Basic Customs Duty on various Petroleum Products has been slashed to control the steep increase in petroleum products
Name ITCHS New Oldof the BCD BCDProduct Rate Rate
Crude 2709 00 00 0% 5%
Petrol 2710 11 2.5% 7.5%
HSD 2710 19 30 2.5% 7.5%
Various 2710, 2711, 2712, 5% 10% Petroleum 2713, 2714 or 2715 Products
[CUS NTF NO. 52/2011 DATE 25/06/2011]
l Tariff concession has been provided to specified goods originating and imported from Malaysia under Preferential Trade Agreement. [CUS NTF NO. 53/2011 DATE 01/07/2011]
l Exemption has been provided for Basic Custom duty on import of Naphtha by M/s Haldia Petrochemicals Limited (HPL), for use in the manufacture of specified polymers. [CUS NTF NO. 54/2011 DATE 01/07/2011]
l Exemption is provided on Basic custom duty on
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instruments, components, spares, jigs, fixtures, dies, tools, accessories, computer software, raw materials and consumables required for the Long Range Surface to Air Missile (LR-SAM) Programme of Ministry of Defence which will be valid up to November 2011 [CUS NTF NO. 64/2011 DATE 19/07/2011]
l In case of imports for a project for which the provisional certificate regarding Mega Power Project status issued, the importer is required to furnishes a security in the form of a Fixed Deposit Receipt from any Scheduled Bank for a term of thirty six months or more in the name of the President of India for an amount equal to the duty of customs payable on such import to the Deputy Commissioner of Customs or Assistant Commissioner of Customs at the time of importation and if the importer fails to furnish the final Mega Power Status certificate within a period of thirty six months from the date of importation, the said security shall be appropriated towards duty of customs payable on such imports. [CUS NTF NO. 65/2011 DATE 21/07/2011]
l Cambodia has been added in the list of countries for getting concessional rate of duty under preferential agreement for the goods specified in the notification no 46/2011 dtd 1st June 2011. [CUS NTF NO. 68/2011-Customs dtd 29th July 2011]
Now imports from Japan will be cheaper w.e.f 1st August 2011, since concessional rate of customs duty will be applicable to the specified goods. [CUS NTF NO. 69/2011-Customs dtd 29th July 2011]
Non Tariff
l Philippines has been added as member state under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN).In other words, concessional rate of duty will be applicable for the goods imported f r o m P h i l i p p i n e s u n d e r t h e s a i d agreement.[CUS NTF NO. 40/2011 (NT) DATE 24/06/2011]
l Customs Tariff (Determination of Origin of Goods Under the Preferential Trade Agreement Between the Governments of the Republic of India and Malaysia) Rules, 2011 has been notified. Accordingly import of goods from Malaysia will be liable for concessional rate of customs duties. [CUS NTF NO. 43/2011 (NT) DATE 01/07/2011]
Import of following raw sugar subject to specified conditions,
1701 Raw Sugar
1701 91 00 or 1701 99 90 Refined or white sugar
1701 Raw sugar if imported by a bulk consumer
[CUS NTF NO. 55/2011 DATE 05/07/2011]
l Supply of free of cost under a bilateral agreement between the Government of India and a Foreign Government will be exempted from payment of import duties. [CUS NTF NO. 56/2011 DATE 07/07/2011]
l Quota on import has been fixed to 40000 tons for the year 2011-12 for import of Smoke Sheets (4001 21), Technically specified Natural Rubber (TSNR) (4001 22) and Other categories of rubber falling under 4001 29 and Basic Custom Duty on the same will be 7.5%.[CUS NTF NO. 59/2011 DATE 13/07/2011]
l Import of following goods for sale in Kalaichar and Balat border haats at Indo-Bangladesh border has been exempted from payment of customs duties subject to estimated total value of goods do not exceed US$ 50 by a person during a day,
No. Description of goods
1. Locally produced vegetables, food items, fruits, spices
2. Minor local forest produce, for example bamboo, bamboo grass and broom stick but excluding timber
3. Products of local cottage industry like gamcha, lungi
4. Small locally produced agriculture household implements, for example dao, plough, axe, spade, chisel
5. Locally produced garments, melamine products, processed food items, fruit juice
[CUS NTF NO. 60/2011 DATE 14/07/2011]
l Alkyl esters of long chain fatty acids obtained from vegetable oils, commonly known as bio-diesels will attract 10% of Basic Customs duties. Earlier it was chargeable to 2.5% of Basic Custom duty. [CUS NTF NO. 63/2011 DATE 19/07/2011]
l Exemption from payment of whole customs duty and additional customs duty has been extended to the machinery, equipment,
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l Time limit for using re-credited DEPB scrips/ Reward Scheme scrips in case of 4% CVD (SAD) has been extended upto upto 15.09.2011. [CUS CIR NO. 30/2011 DATE 19/07/2011]
l “Crude Palm Stearin” shall be assessed under CTH 3823 11 11 of Customs Tariff Act, 1975 based on the decision of Honorable Supreme Cour t in case o f C.C.E.C. & S.T. , Visakhapatnam Vs. JOCIL Circular No.31/ 2011-Customs
l Exports of Lac/shellac were subject to Cess under ‘The Produce Cess Act, 1966’. However, vide Produce Cess Laws (Abolition) Act, 2006, the said Produce Cess Act, 1966 has been
threpealed w.e.f 25 September, 2006. Thus, a Cess under this Act is no longer required to be paid on exports of Lac/shellac Circular No. 32 /2011-Customs
l E-Payment of Customs Duty is mandatory involving the amount of Rs 1 lacs. The Customs Duty involved in lower amount can be made through banking channel. Procedure of making E-Payment has been notified and effective date of implementation will be notified separately. Circular No. 33/2011-Customs
Central Excise
Tariff
l Excise duties on HSD intended to be sold without brand name has been reduced to Nil from Rs. 2.60 per liter. However the benefit of the same has not been passed on the consumers. The government is more interested in recovering the losses of the petroleum companies. [NTF. NO. 32/2011-CE, DT. 25/06/2011]
l Exemption has been provided on Color positive unexposed cinematographic film in rolls of any size and length. [NTF. NO. 33/2011-CE, DT. 25/06/2011]
l Mach inery, equ ipment , i ns t ruments , components, spares, jigs, fixtures, dies, tools, accessories, computer software, raw materials and consumables required for the Long Range Surface to Air Missile supplied to the Program LR-SAM under the Ministry of Defence, are exempted from payment of Excise duty up to 25.11.2011. [NTF. NO. 34/2011-CE, DT. 19/07/2011]
l Dhamra in Orissa has been notified as port for import/export of coking coal, thermal coal and limestone. [CUS NTF NO. 45/2011 (NT) DATE 07/07/2011]
l Tariff Value of Brass Scrap (all grades) falling under 7404 00 22 and Poppy seeds falling under 1207 91 00 has been revised to USD 4294 / MT and USD 2350 / MT respectively. [CUS NTF NO. 47/2011 (NT) DATE 15/07/2011]
Custom
Circulars
l Considering the extension of DEPB Scheme, it is clarified that all the exports having ‘Let Export Order’ upto 30.09.2011 are eligible for issue of DEPB scrip by the DGFT. [CUS CIR NO. 26/2011 DATE 01/07/2011]
l Import of following goods would require would require the permission of that Ministry of Environment and Forests as per Hazardous Waste (Management , Handl ing and Transboundary) Rules, 2008
waste electrical and electronic assemblies or scrap containing components such as accumulators and other batteries electrical and electronic assemblies (including printed circuit board electronic components and wires) destined for direct re-use and not for recycling or final disposal. second hand computers [CUS CIR NO. 27/2011 DATE 04/07/2011]
l Definitive/final anti-dumping duty can be collected only for a period of five years from the date of its imposition and a definitive/final anti-dumping duty can be collected beyond the stipulated period only when a notification extending the levy has been issued before the expiry of the parent notification. Unless extended, the collection of final anti-dumping duty should cease on the completion of five years. [CUS CIR NO. 28/2011 DATE 08/07/2011]
l Custodians already exempted from payment of cost recovery charges under Circular No.27/2004-Customs dated 6.4.2004 and Para 5.3 of Board’s Circular No.13/2009-Customs dated 23.3.2009 would continue to avail the exemption even after issue of Board Circular No.4/2011-Customs dated 10.1.2011 under Handling of Cargo in Customs Areas Regulations, 2009 [CUS CIR NO. 29/2011 DATE 18/07/2011]
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Circulars / Instructions
l The Board to constitute three member Committees of Chief Commissioners and Commissioners, which will examine the proposals for write-off of irrecoverable arrears and recommend deserving cases to the authority competent to order such write-off.
The constitution of the Committees and the powers to write off, delegated to the competent authorities are as under:-
[CIR NO. 946/07/2011-, DT. 01/06/2011]
l Logo or Name of the School, Institution or the Company, Security Agency, Hotels, Airlines either printed, embroidered or etched on them on uniforms or made-up articles like quilt, blankets, towels, linen will not be considered as Branded made up article and no excise duty will be levied. [Circular No. 947/8/2011- CX dated 21.06.2011]
l Export warehousing facility has been extended to Tijara Tehsil of Alwar District in the state of Rajasthan by amending the Circular No. 581/18/2001-CX dated 29th June, 2001 [Circular No. 949/10/2011-CX dated 19.07.2011]
l Conditions for claiming exemption for Mega Power Project and Ultra Mega Power Project applicable under sr no 91 A of notification no 6/2006 as amended has been modified to the extent of provision of FDR etc. [NTF. NO. 35/2011-CE, DT. 21/07/2011].
l Exemption under Notification No. 03/2006-CE extended to the food preparations including food preparations containing meat, falling under chapters 16 or 19 (except chapter heading 1905) which are prepared or served in a hotel, restaurant or retail outlet whether or not such food is consumed in such hotel, restaurant or retail outlet [NTF. NO. 37/2011-CE, DT. 25/07/2011].
l Exemption under Notification No. 06/2006 CE has been extended to All goods in respect of which a general licence under section 406 of the Merchant Shipping Act, 1958(44of 1958) has been granted by the Director General Shipping.[NTF. NO. 38/2011-CE, DT. 29/07/2011].
Non Tariff
l New simplified form for quarterly returns in form no ER – 8 for the units clearing excisable goods @ 1% duty has been notified. However if the units is manufacturing and paying normal rate of duty for certain products and clearing the goods @1% also on some products, will have to file ER-1 return only. [NTF. NO. 15/2011-CE (NT), DT. 30/06/2011]
l New Formats of ER-1 & ER-3 returns has been stnotified and made effective 1 October 2011. In
other words return for the month of September will be in the new format. [NTF. NO. 16/2011-CE (NT), DT. 18/07/2011]
l Powers of Chief Commissioner LTU has been delegated to Assistant / Deputy Commissioner of Central Excise, LTU for obtaining new registration under Large Taxpayer’s Unit [NTF. NO. 17/2011-CE (NT), DT. 18/07/2011]
l New substituted clause of section 11AC of Central Excise Act 1944 has been made
steffective from 1 August 2011. [NTF. NO. 18/2011-CE (NT), DT. 28/07/2011]
l Manufacturer of made up textile articles is required to pay duty on the finished goods cleared from the premises of Job Worker. [NTF. NO. 19/2011-CE (NT), DT. 28/07/2011]
Chief Commissioner of Customs & Central Excise/ Central Excise/ Customs
Commissioner of Customs & Central Excise / Commissioner of Customs / Commissioner of Central Excise
Committee of two Chief Commissioners of Customs & Central Excise/ Central Excise/ Customs and the Chief Commissioner (TAR)
Committee of two Commissioners of Customs & Central Excise/ Central Excise/ Customs and one Commissioner (TAR) nominated by CC(TAR))
(a) Full powers for a b a n d o n m e n t o f irrecoverable amounts of f ines and penalt ies imposed under Customs Act, 1962, and Central Excise Act, 1944.(b) To write off irrecoverable a m o u n t s o f Customs/Central Excise duties upto Rs. 15 lakh subject to a report to the Board.
(a) Full powers for a b a n d o n m e n t o f irrecoverable amounts of f ines and penalt ies imposed under Customs Act, 1962, and Central Excise Act, 1944.(b) To write off irrecoverable amounts of Customs/ Central Excise duties upto Rs. 10 lakh subject to a report to the Chief Commissioner.
Competent Authority
Powers delegated
1.
2.
Sl.No.
Constitution of the Committee
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not apply to export of cotton waste including yarn waste and garneted stock (Tariff code 5202). NOTIFICATION NO. 58/2010, DT. 01/07/2011
l The Central Government makes the amendment in Notification No 56(RE – 2010)/2009-2014 dated 08.06.2011 read with Notification No 24(RE – 2010)/2009-2014 dated 18.02.2011. Minimum Export Price (MEP) of onions other than Bangalore Rose Onions and Krishnapuram onions will be US$ 230 per Metric Ton F.O.B. It was US$ 200 per Metric Ton as notified on 08.06.2011. There shall be no change in the MEP of Bangalore Rose Onion and Krishnapuram onion which continues to be USD 350 per Metric Ton F.O.B. Notification No. 59/2010 DT: 15/07/2011
l Export of 10 lakh MT of Non Basmati rice has been permitted on private account subject to conditions under para 2.1.15 and modalities for registration of contracts as per Annexure 1 to this notification Notification No. 60 (RE-2010)/2009-2014 19th July,2011
l Notification No. 116 (RE-2008)/2004-09 dated 03.07.2009 has permitted export of 6,50,000 tones of wheat products upto 31.3.2010, which was earlier extended upto 31.3.2011 by Notification No. 41/2009-14 dated 18.05.2010. Now this validity has been extended upto 31.03.2012. Notification No. 61 (RE-2010)/2009-2014 DT. 20th July, 2011
DGFT Public Notices
l DEPB Scheme will continue to be operative till th30 September, 2011. Accordingly, the words
“till 30th June, 2011” would get replaced with the worlds “till 30th September, 2011 PUBLIC NOTICE NO. 54 (RE-2010) /2009-2014 dtd. 17th June, 2011.
l Conditions and modalities for registration of contracts for additional quantity of 10 lakh bales(1,70,000 MTs ) of cotton with DGFT. the cap on export of cotton in the current cotton year has been increased to 65 lakh bales from 55 lakh bales. For allocation of this additional quantity of 10 lakh bales.PUBLIC NOTICE NO. 55/2010, DT. 17/06/2011.
l SION for “Lug Cap” [C-773 of the Product Group “Engineering Products”(Product Code: 61)] is amended. The revised SION will be as under,
Service Tax
Notification
l The exemption from payment of service tax to the service of transport of goods by rail has been extended upto January 2012. [Notification No. 38/2011-ST 14.06.2011]
l Exemption to the taxable service provided to any person in relation to transport of goods specified in Notification N 08/2010 ST 27.02.2010 by rail has been extended up to January 2012. [Notification No. 39/2011-ST 14.06.2011]
l Since absolute exemption is available to the goods transported by road is extended through above notif ication, hence conditional exemption ie partial exemption provided under Notification No. 1/2006 ST 01.03.2006 shall come into force from January 2012. [Notification No. 40/2011-ST 14.06.2011]
l Services provided by club or association of dyeing units in relation to the project meant for common facility set-up for treatment and recycling of effluents and solid waste discharged by dyeing units, with financial assistance from the central or state government, are exempted from the whole of service tax. [Notification No. 41/2011-ST 25.07.2011]
Circulars
l The term ‘Completion of Service’ as referred in Point of Taxation Rules, 2011, is clarified as the test for the determination whether a service has been completed would be the completion of all the related activities that place the service provider in a situation to be able to issue an invoice. [CIR. NO. 144/13/2011- ST, DT. 18/07/2011]
Foreign Trade Policy
DGFT Notification
l Exemption for export of cotton waste including yarn waste and garneted stock [ITC (HS) Code 5202] from the quantity restriction on export of cotton during Cotton Season, 2010-11. Cap of additional 10 lakh bales, on export of cotton during the cotton season 2010-11 (upto 30.09.2011), will apply only to Tariff codes 5201 and 5203. This cap shall not apply to export of cotton waste including yarn waste and garneted stock(Tariff code 5202). This cap shall
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l Exporters of pharmaceutical products will adopt a trace and track system and incorporate its features for exported medicines using barcode technology as per GS 1 global standards
l The trace and track technology will come into effect as follows:
(a) Primary Level packaging - With effect from 1st July, 2012
(b) Secondary Level packaging - With effect from 1st January, 2012
(c) Tertiary Level packaging - With effect from 1st October, 2011
Earlier the requirement of affixing barcodes was to come into effect from 01.07.2011. Now more time is being allowed. PUBLIC NOTICE NO. 59/2010, DT. 30/06/2011
l Director General of Foreign Trade, notifies with immediate effect, procedures/guidelines to strengthen the enforcement mechanism available under the Drugs and Cosmetics Act, 1940 to ensure that counterfeit drugs do not get exported out of the country. PUBLIC NOTICE NO. 60/2010, DT. 30/06/2011
l I t operat ional izes the provis ions of Memorandum of Understanding dated 23.10.2010 between India and Bangladesh and facilitates trade in Border Haats at Baliamari – Kalaichar and Lauwaghar –Balat across the borders at Meghalaya. PUBLIC NOTICE NO. 61/2010, DT. 01/07/2011
l Under SION C-1058, till now, only Tubular Bags (Gaunlet) were permitted as an input at Sl No. 3 of the SION. Now, this is modified to permit an alternate item i.e. relevant sewn Gaunlet cloth. There is no other change. PUBLIC NOTICE NO. 62/2010, DT. 07/07/2011
l Earlier, in SION, J-373, there were four items, which were allowed for imports. Now, fifth import item i.e “Pesticides (Biocides/ Fungicides/ Herbicides/ Insecticides)” is added in SION, J-373. PUBLIC NOTICE NO. 63/2010, DT. 07/07/2011
l Description of the export product under SIONs A-2913 and A-263 have been modified. There is no other change. The number of inputs, their description & quantity permitted remains the same. The only change is in the name of export product in respect of both SIONs. PUBLIC NOTICE NO. 64/2010, DT. 13/07/2011
l Extension of period for document submission, scrutiny and issue of registration certificate for
Note: In case the Lug Cap is printed, an additional input will be allowed as under:-
Description Quantity
7.Printing inks CIF value of import item No.7 is restricted upto 1 % of FOB value of exports.
This will facilitate import of raw materials for plain as well as printed Lug Caps. PUBLIC NOTICE NO. 56/2010, DT. 20/06/2011
l SION for Export product C-390 and C-1538 of the Product Group “Engineering Products has been amended. Earlier export item was “without handle” only. Now, those with handles (either of fibre glass or wood) are also permitted. Accordingly the inputs required for the handles are added. In these two SIONs ( C-390 and C-1538), the description of the export product has been widened and additional import items are permitted. However, there is no change in the description or quantity of other import items. [PUBLIC NOTICE NO. 57/2010, DT. 20/06/2011]
l EIC(Export Inspection Council) would also be the authorised agency to issue Certificate of Origin under India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA), with effect from 1st July 2011. PUBLIC NOTICE NO. 58/2010, DT. 30/06/2011
Export Item Import Items
Description Quantity Description Quantity
Lug Cap whether printed or plain(a) with Internal Coating Lined with PVC compound and(b) External Coating.
1 kg 1.30 Kg /Kg content in the Export Product
1.05 kg/kg content in the Export Product
CIF value of import items from SI No.3 to 6 is restricted upto 5 % of FOB value of exports.
1. Prime Quality Electrolytic Tin Plate (ETP)
2. PVC Lining Compoundc
3. Primer Lacquer for internal base coat
4. Adhesive Lacquer for internal coat
5. External base coat- white or Gold
6. Varnish
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l Individuals and HUF, to whom audit as per section 44AB is applicable will have to submit the Income Tax Return electronically under Digital signature from Assessment Year 2011-12 (F Y 2010-11). (Notification No. 37/2011 dated 01/07/2011)
l Exemption from filing return of Income Tax return has been provided to Individuals who’s total income does not exceed Rs 5 Lacs and having Income from Salaries & Interest Income not exceeding Rs 10,000 from saving bank account subject to certain condition for the assessment year 2011-12.( Notification No. 36/2011 dated 23/06/2011)
l The Cost Inflation Index for the Financial year 2011-12 has been specified as 785 for the purpose of calculation of long term capital gain.(Noti f ication No. 35/2011 dated 23/06/2011)
l Exemption from inclusion in total income to M/s Rolls Royce defense services Inc. of any income arising as royalty or fees for technical services from Ministry of Defence vide Contract No. Air HQ/8836/RR/Eng B signed on 12th December 2005 to an extent of 35.43 Cr has been provided. (Notofication No. 34 dated 16/06/2011)
l Fund u/s 10(23AAA) can apply its income or accumulation is extended to include “to meet the costs of annual medical tests or medical checkup sof the member, his spouse and dependent children”. (Vide Notification No. 33 dated 03/06/2011)
l Inclusion of Interest on Post Office Savings Bank Account to the extent of Rs. 3500 in case of Individuals and Rs. 7000 in case of joint account fo r exempt ion u /s 10(15) .(Notification No. 32/2011 dated 03/06/2011)
l Agreement for avoidance of double taxation and prevention of fiscal evasion between The Government of the Republic of India and The Government of the Republic of Mozambique shall be given effect to in the Union of India with effect from 1st day of April, 2012. (Notification No. 30/2011 dated 31/05/2011)
Circulars
l TDS Certificate in form 16A can be now downloaded from the website and can be authenticated using digital signature. (Circular No. 03/2011 dated 13/05/2011.
l In order to safeguard the revenue interest, prior permission under section 281 of the Income Tax Act, 1961will be required from the
export of cotton [ITC (HS) Code 5201 or 5203. It is extended in view of strike/holidays in Bangladesh and disruption of work in Mumbai. Hence, close date is 22.07.2011. There is no other change in Public Notice No. 55(RE-2010)/2009-14 of 17.06.2011. The last date of export remains 15.09.2011. Public Notice No. 65 (RE-2010)/2009-2014 New Delhi, Dated the 15 July, 2011
DGFT Circulars
l Clarification regarding import of Fuel under Advance Authorisation / DFIA Scheme. Fuel has been incorporated in view of provisions at para 4.1.3 of FTP. the import entitlement will be either as per SION, if it exists or in non-SION cases, an applicant can seek the inputs in terms of para 4.7 of the HBP v1 and the final adjustment will be made as per adhoc / SION fixed by Norms Committee. POLICY CIR NO. 33/2010, DT. 01/07/2011
l Export of cotton waste including yarn waste and garneted stock [ITC(HS) Code 5202] is “Free” subject to registration of export contracts with DGFT. Documents required for making an applications for grant of registration certificate with format of Declaration/Undertaking is being given in Annexure-I of this Policy Circular POLICY CIR NO. 34/2010, DT. 01/07/2011.
Income tax
INCOME TAX NOTIFICATIONS
l Exemption to EADS Deutschland Gmbh Worthstrable 85, 89077 Ulm Germany from income arising as fees in pursuance of its agreement with GOI for providing consultancy services for Airborne Early Warning and Control Systems, connected with security of India. [Notification No. 40/2011 dated 29/07/2011]
l Commissioner of Income Tax of Ghaziabad, will be in charge of assessments of individuals deriving income from other sources and income from business & profession who’s principle place of business is within Gaziabad & Bulandshahr and Companies having registered office located within Gaziabad & Bulandshahr. Similarly, Commissioner of Income Tax, NOIDA will be in-charge of Gautam Buddha Nagar and Commissioner of Income Tax Meerut will be in-charge of Meerut & Baghpat for the assessees mentioned earlier. (Notification No. 38/2011 dated 12/07/2011)
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profits for payment of remunerations exceeding Rs. 4 lakh*p.m. If the managerial person has no interest in the capital of the company and having a graduate level qualification with expert and specialized knowledge in his profession.
* (before 14.07.2011 for payment of more than Rs.4 lakh Central Govt permission was required)
[General Circular No. 46/2011 dt. 14/07/2011 MCA]
l In order to give ease to the corporate world to carry business in India the Ministry of Corporate Affairs has decided to modify the incorporation procedure to enable promoters to get their companies incorporated online within 24 hours. Simplified process of online incorporation of companies is likely to be implemented with effect from 11th August, 2011. [General Circular No. 49 /2011 dt. 23/07/2011 MCA]
l Ministry of Corporate Affairs has decided to simplify Procedure relating to shifting of Registered office from one state to another state. Thereby the work relating to confirmation of shifting of registered office from one state to another state and consequent alteration to Memorandum of Association of the company under section 17 of the Companies Act, 1956 shall be shifted from the jurisdiction of Company Law Board to the Registrar of Companies. This simplified process is likely to be implemented with effect from 24th September, 2011. [General Circular No. 50 / 2011 dt. 25/07/2011]
Assessing Officer for creation a charge on the assets of the business. The permission needs to be obtained atleast before 30 days of date of Transaction. (Circular no. 4/2011 dated 19/07/2011).
Company Law:
l Filing of Balance Sheet and Profit & Loss A/c in eXtensible Business Language (XBRL) mode.
The following class of Companies (Phase I) have to file the Financial Statements in XBRL Form only:
i) All companies listed in India and their Indian Subsidies.
ii) All companies having a paid up capital of Rs. 5 Crore and above.
iii) All companies having a turnover of Rs. 100 crore and above.
All the above mentioned companies are permitted to file their financial statements without any additional fee up to 30.11.2011 or within 60 days of their due date, whichever is later. However Banking companies, insurance companies, power companies and NBFCs are exempted for XBRL filing, till further orders. [General Circular 37/2011 dt. 07/06/2011 & Circular No. 57/2011 dt. 28/07/2011 MCA]
l No approval of Central Government will be required by the listed companies and their subsidiary companies, which are not having
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Cost Accounting Recordsand Cost Audit
Maintenance of Cost Accounting Records in accordance with sec 209 (1) (d) of the Companies Act 1956 and there is also the provision of Cost Audit under sec 233B of the Companies Act 1956.
rdPrior to 3 June 2011, there were 44 Industries which were notified and Maintenance of Cost Accounting Records in prescribed form was mandatory and therefore there were separate rules for each type of specified industry. Ministry of Corporate Affairs was issuing specific Cost Audit Order which was applicable to the specified unit of the company and not applicable to others.
Expert group was formed by Ministry of Corporate Affairs under the Chairmanship of Mr B B Goyal, Advisor (Cost) with the objective to evaluate necessity of such provisions and applicability across and otherwise. Expert group has issued a no of questionaries’ and also conducted the meetings with all stakeholders and thereafter submitted detailed recommendations and after lot of deliberations Ministry of Corporate Affairs have accepted the recommendations of the Expert Group.
Ministry of Corporate Affairs have rescinded no of Cost Accounting Record Rules and only following Record Rules have been made applicable to the specified industries.
(a) Cost Accounting Records (Bulk Drugs) Rules, 1974
(b) Cost Accounting Records (Formulations) Rules, 1988
(c) Cost Accounting Records (Fertilizers) Rules, 1993
(d) Cost Accounting Records (Sugar) Rules, 1997
(e) Cost Accounting Records (Industrial Alcohol) Rules, 1997
(f) Cost Accounting Records (Electricity Industry) Rules, 2001
(g) Cost Accounting Records (Petroleum Industry) Rules, 2002
(h) Cost Accounting Records (Telecommuni-cations) Rules, 2002
However Cost Accounting Record Rules 2011 has been notified and it has been made applicable to all companies who are engaged in production, manufacturing, processing and mining and having met one of the following criteria’s
a) The aggregate value of net worth as on the last date of the immediately preceding financial year exceeds five crores of rupees;
b) or wherein the aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds twenty crores of rupees;
c) or wherein the company’s equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India.
Production, Manufacturing, Processing and Mining has been defined in the Cost Accounting (Record) Rules 2011 which is reproduced below
“Manufacturing Activity” includes any act, process or method employed in relation to –
(i) transformation of raw materials, components, sub-assemblies, or parts into semi-finished or finished products; or
(ii) making, altering, repairing, fabricating, generating, composing, ornamenting, furnishing, finishing, packing, re-packing, oiling, washing, cleaning, breaking-up, demolishing, or otherwise treating or adapting any product with a view to its use, sale, transport, delivery or disposal; or
(iii) Constructing, reconstructing, reconditioning, servicing, refitting, repairing, finishing or breaking up of any products.
“Production Activity” includes any act, process, or method employed in relation to –
(i) transformation of tangible inputs (raw materials, semi-finished goods, or sub-
— By CMA A. B. Nawal
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some transformation and/or computation on the data in the computer’s memory.
Product is also defined as follows.
“Product” means any tangible or intangible good, material, substance, article, idea, know-how, method, information, object, service, etc. that is the result of human, mechanical, industrial, chemical, or natural act, process, procedure, function, operation, technique, or treatment and is intended for use, consumption, sale, transport, store, delivery or disposal.
In other words almost all the companies including software, construction and even the service industries are also covered under the ambit of Cost Accounting (Record) Rules 2011. The important feature of the said rules are given below
(1) Every company to which these rules apply, including all units and branches thereof shall, in respect of each of its financial year commencing on or after the 1st day of April, 2011, keep cost records.
(2) The cost records referred to in sub-rule (1) shall be kept on regular basis in such manner so as to make it possible to calculate per unit cost of production or cost of operations, cost of sales and margin for each of its products and activities for every financial year on monthly/quarterly/half-yearly/annual basis.
(3) The cost records shall be maintained in accordance with the generally accepted cost accounting principles and cost accounting standards issued by the Institute; to the extent these are found to be relevant and applicable. The variations, if any, shall be clearly indicated and explained.
(4) The cost records shall be maintained in such manner so as to enable the company to exercise, as far as possible, control over the various operations and costs with a view to achieve optimum economies in utilization of resources. These records shall also provide necessary data which is required to be furnished under these rules.
(5) All such cost records and cost statements, maintained under these rules shall be reconciled with the audited financial statements for the financial year specifically indicating expenses or incomes not considered in the cost records or statements so as to ensure accuracy and to reconcile the profit of all product groups with the overall profit of the company. The variations, if any, shall be clearly indicated and explained.
assemblies) and intangible inputs (ideas, information, know how) into goods or services; or
(ii) manufacturing or processing or mining or growing a product for use, consumption, sale, transport, delivery or disposal; or
(iii) creation of value or wealth by producing goods or services.
“Mining Activity” includes any act, process or method employed in relation to the extraction of ores, minerals, oils, gases or other geological materials from the earth’s crust, including sea bed or river bed.
“Processing Activity” includes any act, process, procedure, function, operation, technique, treatment or method employed in relation to
(i) altering the condition or properties of inputs for their use, consumption, sale, transport, delivery or disposal; or
(ii) accessioning, arranging, describing, or storing products; or - 3 –
(iii) developing, fixing, and washing exposed photographic or cinematographic film or paper to produce either a negative image or a positive image; or
(iv) printing, publishing, finishing, perforation, trimming, cutting, or packaging; or
(v) pumping oil, gas, water, sewage or any other product; or
(vi) transforming or transmitting, distributing power or electricity; or
(vii) harboring, berthing, docking, elevating, lading, stripping, stuffing, towing, handling, or warehousing products; or
(viii) preserving or storing any product in cold storage; or
(ix) constructing, reconstructing, reconditioning, repairing, servicing, refitting, finishing or demolishing of buildings or structures; or
(x) farming, feeding, rearing, treating, nursing, caring, and stocking of living organisms; or
(xi) telecasting, broadcasting, telecommunicating voice, text, picture, information, data or knowledge through any mode or medium; or
(xii) obtaining, compiling, recording, maintaining, transmitting, holding or using the information or data or knowledge; or
(xiii) Executing instructions in memory to perform
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(a) Cost Accounting Records (Bulk Drugs) Rules, 1974
(b) Cost Accounting Records (Formulations) Rules, 1988
(c) Cost Accounting Records (Fertilizers) Rules, 1993
(d) Cost Accounting Records (Sugar) Rules, 1997
(e) Cost Accounting Records (Industrial Alcohol) Rules, 1997
(f) Cost Accounting Records (Electricity Industry) Rules, 2001
(g) Cost Accounting Records (Petroleum Industry) Rules, 2002
(h) Cost Accounting Records (Telecommuni-cations) Rules, 2002
As per 3rd May and 30th June 2011 notification these rules shall apply to every company, including a foreign company as defined under section 591 of the Act, which are engaged in the production, processing,manufacturing,or mining of the following products/activities,including intermediate products and articles or allied products thereof and wherein,
a) The aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds hundred crores of rupees;
b) or wherein the company’s equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India
Sr. Name of Industry Relevant Chapter No. heading of the Central
Excise Tariff Act ,1985
1 Cement Chapter 25,38 and 68
2 Tyres and Tubes Chapter 40
3 Steel Plant Chapter 72 and 73
4 Paper Chapter 47 and 48
5 Insecticides* Chapter 38
6 Glass Chapter 70
7 Paints and Varnishes Chapter 32
8 Aluminium Chapter 76
9 Steel Tubes and Pipes
Note: Intermediate Products and Articles or Allies Products of above Industries if included under any other Chapter of Central Excise Traiff Act 1985 not
(6) All such cost records, cost statements and reconciliation statements, maintained under these rules, relating to a period of not less than eight financial years immediately preceding a financial year or where the company had been in existence for a period less than eight years, in respect of all the preceding years shall be kept in good order.
(7) It shall be the duty of every person, referred to in sub-section (6) and (7) of section 209 of the Companies Act, 1956 (1 of 1956), to take all reasonable steps to secure compliance by the company with the provisions of these rules in the same manner as he is liable to maintain accounts required under sub-section (1) of section 209 of the said Act.
Each Company will have to obtain Compliance Certificate from Practicing Cost Accountant or Permanent Employee who is a member of ICWAI.
Compliance Certificate provides quantitative information with respect to production and sales as well as reconciliation with financial records and cost records. The cost records and Compliance Report along with all annexures need to be authenticated by Board of Directors and such Compliance Report should be submitted to the government online within 180 days of the end of company’s financial year.
There are the penal provisions for non-submission as well as statutory auditors report may be qualified failure to obtain Compliance Report.
Moreover Ministry of Corporate Affairs have issued 2 notifications issuing the Cost Audit Orders for following industries.
As per 2nd May 2011 Notification issued ,these rules shall apply to every company, including a foreign company as defined under section 591 of the Act, which are engaged in the production, processing, manufacturing, or mining activities, and
a) The aggregate value of net worth as on the last date of the immediately preceding financial year exceeds five crores of rupees;
b) or wherein the aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds twenty crores of rupees;
c) or wherein the company’s equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India.
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7) Profit Reconciliation (for the company as a whole)
8) Value addition and distribution of earnings (for the company as a whole)
9) Financial position and ratio analysis (for the company as a whole)
10) Related party transactions (for the company as a whole)
11) Reconciliation of indirect taxes (for the company as a whole)
Cost Auditor not only gives to statistics of above information but also record his findings and comments on the deviations if any.
Most important and useful part of the Audit Report is FORM OF THE PERFORMANCE APPRAISAL REPORT covering the following aspects.
1. Capacity Utilization Analysis
2. Productivity/Efficiency Analysis
3. Utilities/Energy Efficiency Analysis
4. Key-Costs & Contribution Analysis
5. Product/Service Profitability Analysis
6. Market/Customer Profitability Analysis
7. Working Capital & Inventory Management Analysis
8. Manpower Analysis
9. Impact of IFRS on the Cost Structure, Cash-Flows and Profitability
10. Application of Management Accounting Tools
The said Cost Audit Report needs to be submitted to Board of Directors and it has to be approved by the Board of Directors and it should be submitted by the company within 180 days of the end of the financial year of the company.
There are radical but positive changes made by the Ministry of Corporate Affairs and every industry should comply with the provisions of Cost Accounting (Record) Rules 2011 and Cost Audit (Report) Rules 2011.
mentioned above shall also be covered under these orders.
Ministry of Corporate Affairs has also simplified the procedure of Appointment of Cost Auditor. Cost Auditor will be appointed by Board of Directors and Form 23C to be submitted online for Appointment of the Cost Auditor by the company and Form 23D to be submitted online by Cost Auditor for acceptance of the Cost Audit.
Content of the Cost Audit Report has been changed and the usefulness of the same has been increased manifold. It will have the following contents.
1) General Information about the Company.
2) Cost Accounting Policy covering Identification of cost centers/cost objects and cost drivers, Accounting for material cost including packing materials, stores and spares etc., employee cost, utilities and other relevant cost components, Accounting, allocation and absorption of overheads, Accounting for Depreciation/Amortization, Accounting for by-products/joint-products, scarps, wastage etc, Basis for Inventory Valuation, Methodology for valuation of Inter-Unit/Inter Company and Related Party transactions, Treatment of abnormal and non-recurring costs including classification of other non-cost items, In case the Company has adopted IFRS, variations (if any) in treatment of cost accounting arising out of adoption of IFRS in Financial Accounting, Other relevant cost accounting policy adopted by the Company
3) Product Group Details (for the company as a whole) covering manufacturing and trading activity of all the products whether under reference or otherwise.
4) Quantitative Information (for each product group separately) covering all the products manufactured by company either with their own capacities or hired capacities or production on loan and license basis and also details of each capacities and details of stocks and sales.
5) Abridged Cost Statement (for each product group separately) giving element wise cost.
6) Operating Ratio Analysis (for each product group separately) covering operating ratios with respect to cost of sales.
Central Excise
Ø HC Ruling-the respondent ought to have been
given an opportunity to the petitioner to show cause why the entry should not be reversed regarding the Cenvat Credit already availed by them and without giving an opportunity, the respondent has passed the impugned order and therefore, there is violation of principle of natural justice and the order is liable to be set aside. There is no question of pre-determination of issue by the respondent and the respondent without affording opportunity passed the order, which has adverse effect of civil consequence on the petitioner there is violation of principles of natural justice and on that ground, the impugned order is liable to be set aside and it is set aside - AIT-2011-250-HC
Ø It is the avowedly policy of the government to
promote exports by relieving the burden of taxes on the product exported and also on the products consumed in the manufacture of the goods exported - rules, whether they be CENVAT Credit Rules or Central Excise Rules have to be read harmoniously to give effect to this objective - Appellant entitled to take credit on bought out items cleared for export along with machinery. [2011-TIOL-781-CESTAT-MUM]
Ø Subsequent change in prices effected by the
appellant at the depot does not affect the assessable value already determined and on which duty liability has been discharged - If that is allowed, the very object and purpose of Rule 7 of the Central Excise Valuation Rules will be totally defeated. rejection of refund claim filed due to reduction of prices is upheld.[2011-TIOL-736-CESTAT-MUM]
Ø Appeal dismissed on account of non-
appearance of appellant on numerous count, Gujarat High Court in case of Viral Laminates Pvt. Ltd [1998 (100)ELT 335 (Guj.)] held that Tribunal has no power to dismiss appeal in
default and appeal be decided on merits even in case of non-appearance. [2011-TIOL-491(Guj)]
Ø While availing benefit of notification No. 2/95-
CE reading with Rule 3(6)(a) of Cenvat Credit Rules 2001, by 100% EOU the only relevant aspect would be as to what is the amount of additional duty leviable on like goods under the Customs Tarrif Act, 1975 paid on such inputs or capital goods. The unit would be entitled to CENVAT credit in respect of the whole of the amount of additional duty leviable and paid on such input or capital goods. It has nothing to do with amount of exemption availed by the manufacturer of inputs in respect of Excise duty payable by it. [2011 (268) E.L.T. 43 (Guj.)]
Ø Rebate shall not be rejected on the ground of
procedural lapse of not getting ARE-1 triplicate copy endorsed or submitted. Rebate sanctioning authority to confirm about export of duty paid goods has to compare original copy of ARE-1 with duplicate copy duly endorsed by Customs officer at Port of export and triplicate copy of ARE-1 received from concerned range Superintendent. Certificate in respect of each ARE-1, issued by Superintendent certifying duty payment details along with correlating goods exported with those cleared from factory is sufficient to confirmed the duty paid nature. Procedural infraction of notifications, circulars can be condoned, if export really taken place.
Rebate of duty paid under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 shall not be denied relying upon Rule 14 ibid as prohibiting rebate under Rule 18 of Central Excise Rules,2002 because Notification No. 42/2008-C.E. Issued under Rule 18 ibid under which rebate on export of Pan Masala is allowed subject to condition.
Rebate and Drawback schemes are export oriented schemes and it should not restricted by technical interpretation of procedure, which
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follow Apex Court decision in sub- Inspector Rooplal [(2000) 1 SCC 644]. [2011 (269) E.L.T. 289 (S.C.)]
Ø Transfer of Cenvat Credit availed on inputs
and capital goods available in EOU account to their DTA unit is allowed on de-bonding of EOU. It is undisputed that the 100% EOU is a unit of the very same and there is no separate entity. IN this case Board circular No. 799/32/2004-CX dated 23.09.2004 would be applicable. If the Cenvat credit is not transferred to the DTA unit, Revenue would have to refund the amount in case to the 100% EOU, if in accordance with law. [2011(269) E.L.T. 401 (Tri- Bang)]
Ø Cenvat credit cannot be denied on the basis of
mere technical violation. If original copies are not available and police compliant lodged by the assessee, then cenvat credit can be available on xerox copy of bill of Entry. [2011 (269) E.L.T. 407 (Tri- Mumbai)]
Ø Mere electricity consumption cannot be the
only basis for determining duty liability that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/ fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations if any, taking in to account the consumption of various inputs, requirements of labour, material, powers supply and the conditions for running the plant together with the attendant facts and circumstances. Electricity consumption varies from one unit to another , one date to another and even from one heat to another within same date and excise duty liability is based on assumed production and there is no other supporting record, evidence or document to justify its allegation. [2011 (269) E.L.T. 337 (All.)]
Customs
Ø Description of goods correctly mentioned, but
classification wrongly mentioned - It has been the consistent view of the various Benches of the Tribunal that the determination of the tariff heading and the applicable rate of duty is the ultimate job of the customs authorities and if an
will defeat very purpose of such schemes. [2011(268) E.L.T. 125 (G.O.I.)]
Ø It shall be the duty of Departmental
Representatives to assist Court/Tribunal and not merely support an order which is not in accordance with law, if on facts found that the impugned order was not a speaking order i.e issue was not res integra, then DR should be fair enough to accept that this is not a speaking order. Merely supporting impugned order by departmental representative will not give any benefit to Revenue. [2011 (268) E.L.T. 102(Tri-Mum.)]
Ø Clearances by 100% EOU to another EOU/
clearances to 100% EOU shall be treated as Physical exports for entitling refund of unutilised Cenvat Credit. Apex court in number of decision uphold Tribunal’s view that Revenue not to dispute that for fixing DTA sales limits only physical exports but deemed export should be considered. Appeal against Tribunal in Amitex Silk Mills Pvt. Ltd. [2006 (194) E.L.T. 344](Tribunal) which also held same and tribunal order was upheld by Apex Court- Rule 5 of Cenvat Credit Rules 2004. [2011 (269)E.L.T. 17 (Guj.)]
Ø Testing / Re-packaging of export material shall
amounted to processing of materials for export and after export of such material, exporter shall be entitled to rebate of duty paid on them. As per Notification No. 21/2004 -C.E. (N.T.), for entitlement to rebate, it is not necessary that such goods may be inputs for export goods or their processing should amount to manufacture in terms of Section 2(f) of Central Excise Act, 1944 and testing and re-packaging held to amount to processing. [2011 (269) E.L.T. 122 (G.O.I)]
Ø Tribunal Benches in specified cases even after
noticing decision in another case, proceeded to take totally contrary view taken in earlier judgement, and if judicial uncertainty created with regard to declaration of law involving identical issue in respect of same exemption notification, then propriety demand that matter be placed before president of Tribunal so that case is referred to Larger Bench. Institutional integrity can be destructed if one Tribunal Bench is permitted to conclude contrary to another Bench. All courts & Tribunal should
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alone is empowered to allow conversion of shipping Bills from one Export promotional scheme to another promotional scheme (DFIA Scheme to DEPB Scheme). Neither authorised officer nor Commissioner (Appeals) is authorised to deal with case of conversion from one export promotion scheme to another. [2011 (269) E.L.T. 378 (Tri-Chennai)]
Service Tax
Ø Non-payment of service tax on GTA service
availed as recipient resulting in imposition of penalties under sections 76 and 78 - Neither of the lower authorities indicated option available to the assessee to pay 25% of penalty under proviso to section 78 (1) within 30 days of the receipt of their respective orders - Penalties could be imposed for same offence under both sections 76 and 78 of the Act if the ingredients required for imposing such penalties existed, penalty imposed under sec. 76 upheld in view of Appellate Commissioner’s findings - Since assessee discharged tax liability with interest before passing of O-I-O and also paid 25% penalty no further penal liability under sec. 78 exists [2011-TIOL-777-CESTAT-BANG]
Ø 20% restriction under Rule 6(3) of the CENVAT
Credit Rules 2004 is not applicable to the credit availed on capital goods - The Commissioner wrongly found that the restriction contained in Rule 6(3) of CCR applied to credit of capital goods also - Entire case remanded to the Commissioner for fresh decision. [2011-TIOL-727-CESTAT-BANG]
Ø Section 66A inserted in the Finance Act, 1994
with effect from 18.4.2006 laying down that recipient of services in India from outside India shall be liable to pay tax cannot be made applicable retrospectively. [2011-TIOL-749-CESTAT-AHM]
Ø Levy of service tax on activities involving
design, manufacture, supply, installation, testing and commissioning of electrical, hydraulic & fire systems for DMRC Project through indivisible contracts - Deduction of Works Contract Tax by way of TDS under DVAT Act by DMRCL on running account bills provided by assessee indicates that impugned
assessee tentatively indicates a wrong classification according to his understanding, then no motive can be attributed to him and neither the goods can be confiscated nor penalty can be imposed -Impugned order in so far as it relates to the confiscation of the impugned goods, imposition of redemption fine and imposition of penalty set aside. It is up to the department to bring suitable changes in the legislation, if the intention is to cast some responsibility on the assessees to indicate correct classification and rate of duty for quick clearance. [2011-TIOL-722-CESTAT-MAD ]
Ø Drawback fraud being plunder of Govt. treasury
is more serious than duty evasion. [2011(269) ELT 497(Tri-Del.)]
Ø It needs to be emphasised that every litigant,
who approaches the court for relief is entitled to know the reason for acceptance or rejection of his prayer, particularly when either of the parties to the lis has a right of further appeal. Unless the litigant is made aware of the reasons which weighted with the court in denying him the relief prayed for, the remedy of appeal will not be meaningful. [2011(269) ELT 433 (Tri-Del.)]
Ø Consignment if detained, it should be
presumed that goods have been seized in terms of section 110 of Customs Act, 1962 even if no formal order issued by Customs authority. Time for issuing show cause notice under section 124(a) of Customs Act,1962 runs from actual date of detention. [2011(268) E.L.T.17(Cal.)]
Ø Customs authorities can issue notice or take
penal action under Customs Act, 1962 against unit situated in Special Economic Zone. Custom authority is not having power to authorize SEZ developer to undertake operation or approve proposal for setting up SEZ unit after repealing of Section 76G of Customs Act, 1962, but power of Customs authorities under Customs Act, 1962 including power to confiscate and impose penalty on SEZ units not taken away. [2011 (268)E.L.T. 21(Guj.)]
Ø As per Board Circular No.4/2004-Cus dated
16.01.2004, Jurisdictional Commissioner
August - 2011
16
on the consolidated declaration obtained from GTA. C.B.E.& C Circular cannot prescribe condition not present in the Notification. [2011 (22) S.T.R. 624 (Tri. Bang.)] [2011 (22) S.T.R. 631 (Tri.-Bang.)]
Ø Refund claim of cenvat credit of service tax paid
for Courier service, banking service and GTA service used for export need not to attach copy of shipping bill, ARE-1, invoice etc. in respect of each and every invoice relating to services utilised, if invoices produced by the assessee are possible to link export goods and services availed. What is required is whether the export invoice contains all the relevant details. However subject to the above guidelines the original adjudicating authority is directed to verify the claim once again in this matter. [2011 (22) S.T.R. 641 (Tri- Ahmd.)]
Ø Circulars issued in context of legal provision
which existed at material time not valid after law is changed, Circular only clarifies position of law and is not the law itself.[2011 (22) S.T.R. 629 (Tri- Chennai.)]
Ø New tax entry not presupposes non liability
under pre-existing entries. [2011 (23) S.T.R. 49(Tri- Bang.)]
Ø No separate account is required for credit of
duty taken on inputs and input services, credit taken of excise duty could be used for payment of service tax on the services provided by the assessee. [2011 (23) S.T.R. 33(Tri- Chennai.)]
Ø Penalty not imposable in case of bona fide
belief of non-liability. [2011 (23) S.T.R. 3 (P&H)]
Ø Refund of Cenvat Credit on CA service,
Manpower Recruitment and Supply, Outdoor Catering, Insurance, Security and Technical Inspection & Certification services to assessee engaged in export of BSA & BSS. [2011 (23) S.T.R. 25 (Tri- Bang.)]
SEZ
Ø While the SEZ Act and the rules framed
thereunder provide for tax exemption to all serv ices prov ided to a Deve loper / Entrepreneur operating in a Special Economic Zone but vide the impugned circular the
contracts are works contracts, liable to service tax only with effect from 01.06.2007 - Judgment of Karnataka High Court in Turbotech Engineering = 2010-TIOL-498-HC-KAR-ST relied upon and Larger Bench decision in BSBK Ltd = 2010-TIOL-646-CESTAT-DEL-LB distinguished - Impugned order demanding service tax with interest and levy of penalties set aside. [2011-TIOL-748-CESTAT-BANG ]
Ø Collection of electricity bills and telephone bills
on behalf of electricity boards and telecom companies is not taxable under Business Auxiliary Service. [2011-TIOL-747-CESTAT-BANG]
Ø SIM Card has no intrinsic sale value and it is
supplied to the customers for providing mobile service to them, hence sale of SIM cards is part of value for taxable service and no sale tax is leviable - Supreme Cout. [2011-TIOL-71-SC-ST ]
Ø Service tax imposed on lawyers practicing in
Indian Courts, is stayed by Delhi High Court, till 06.09.2011, on petition No. 3437/2011 filed by the Supreme Court Bar Association. [2011 (268) E.L.T. A-27].
Ø If capital goods procured by Madurai Office,
BSNL (higher formation) and transferred to Kumbakonam Office, BSNL (subordinate formation) and if there is no dispute about duty paid nature of the capital goods and receipt and use of the capital goods for the authorised purpose, then there is no justification for denail of cenvat credit on the capital goods. Transaction between 2 offices cannot be treated as between two dealers hence Cenvat Credit is admissible. [2011 (22) S.T.R. 628 (Tri- Chennai)]
Ø Exemption under Notification No. 32/2004 – ST
dt. 03.12.2004 was denied to recipient of GTA service from Sept 2005, after issuance of circular by C.B.E & C on the ground that, assessee to have declaration of service provider endorsed on each consignment note. In this matter and in various similar decisions Hon’ble CESTAT held that recipient of GTA service was not required to furnish evidence of not availing the canvat scheme to quantify for the disputed benefit. Notification benefit should be allowed after issue of circular based
August - 2011
17
a reason for rectification under Section 154. Further, in order to invoke Section 154 for rectification of the mistake, the mistake sought to be rectified should be a mistake apparent on the record and must be an obvious and patent mistake and not something which could be established by long drawn process of reasoning on the point in issue on which there may be conceivably two opinions. A decision on a debatable point of law cannot be regarded as a mistake apparent on the face of the record amenable for rectification under Section 154 of the Income-tax Act. AIT-2011-252-HC
Ø For the purpose of computing capital gains
under Portfolio Management Service, the fee paid to the Asset Management Company at certain percentage of the NAV of the portfolio for purchase and sale of the securities is an allowable deduction. [2011-TIOL-346-ITAT-PUNE]
Ø When assessee transfers brands, trademark
and interests in a health periodical, held as intangible assets, the profit arising out of such transaction is to be treated as capital gains or business income. [2011-TIOL-371-HC-DEL-IT]
Government has sought to prescribe an additional condition that the parent statute, which in the present case is the SEZ Act, 2005, does not prescribe. The impugned circular curtails the tax exemption granted to a service provider providing services to a Developer or a Unit/Entrepreneur operating in a Special Economic Zone to only those services that have been rendered within the Special Economic Zone, which in clear terms, is inconsistent with Section 26(1)(e) of the SEZ Act. The impugned circular dated 03.04.2008 seeks to impose a condition that was not the intention of the legislature as expressed in the SEZ Act or in the SEZ Rules framed thereunder and thus, is liable to be set aside. [AIT-2011-284-HC]
Income Tax
Ø HC Ruling-any erroneous assessment cannot
be the subject matter for rectification under Section 154 of the Income-tax Act. The erroneous order of assessment can be rectified only under procedure known to law by carrying the matter before the appropriate authority by way of appeal to rectify the erroneous order or revise it as per law. A debatable point cannot be
August - 2011
18
l Commerce Secretary Rahul Khullar released the report on review and revamp
of EOU Scheme;
l DGCEI sleuths raid copper units in Delhi; seize Rs 2.2 Cr cash
l 2.9 Cr farmers avail debt waiver: FM declars in Rajya Sabha.
l CBDT has no data on black money converted into white and brought back into
country
l CESTAT Bar Association hosts Farewell on 5th August for Outgoing President
RMS Khandeparkar
l MC Joshi takes over as CBDT Chairman
l Praveen Mahajan joins as new Member of CBEC
l Ranjan Mathai takes over as Foreign Secretary
l MC Joshi set to be Chairman of CBDT on 1st August in place of Prakash
Chandra retiring on 31st July
l Praveen Mahajan appointed as Member of CBEC in place of Lalita John who
retires
l Sudha Sharma & SC Jaini to be Members of CBDT
l CBEC Member YG Parande appointed as Member of Authority for Advance
Ruling(Customs Excise & Service Tax)
l Sheela Sangwan to be Member of CBEC when Parande joins Advance Ruling
August - 2011
19
UPDATE
August - 2011
Bizsolindia Services Pvt. Ltd. Consultancy & Audit in the area of l Direct & Indirect Taxation,
l FEMA,
l Foreign Trade Policy,
l EOU,
l SEZ,l Project Consultancy SEZ, EOU, STPI,
Industrial Parks, Clusters etc.l Internal Audit,l Strategic Management Consultancy.
Bizsolindia Outsourcing Pvt. Ltd. Knowledge Process Outsourcing in the area of
l Indirect Taxation,
l Accounts, l Inventory management, l Fixed Assets Management.
Bizsolindia IT Services Pvt. Ltd. Specialised IT Consulting and Solutions / modules along with ERP Integration and following ares,
l Specialized Software for EOUs and SEZs
l Expert in Application programming using Java and ERP Connectivity / Data Migration
l Offers bucket of Add On Products for EXIM related solutions for the complete industry needs
l ERP Consulting / Implementation
Bizsol HR services Pvt. Ltd. Strategic Consultancy in the area of HR & Soft skills
Training.
Bhagwati Shipping Pvt. Ltd Custom House Agent (11/548)Custom Clearance of
Export and Import consignments.
A B Nawal & Associates, Cost Practicing Cost Accountant, Cost Audit, Central Excise,
Accountants Adjudication matters upto CESTAT, VAT Audit.
Behede Joshi & Associates, Practicing Chartered Accountants, Statutory Audit & Tax
Chartered Accountants Audit, VAT Audit, Transfer Pricing.
R Venkitachalam, Company Practicing Company Secretary. Secretary.
Bizsolindia provides consultancy in the following areas through associate companies and professional firms of the director,
O U R S E R V I C E S
UPDATE
August - 2011
Mr. A B Nawal along with Mr. V S Date, Mr. Amit Apte & Mr. R K Deodhar at seminar on “New Cost Accounting Records Rules, Cost Audit and Cost Accounting Standards” organised by Nasik Chapter of WIRC of ICWAI.
Mr. A B Nawal delivering lecture on New Cost Accounting Records Rules at seminar organised by Nasik Chapter of WIRC of ICWAI on 30th July 2011.
Mr. A B Nawal delivering lecture on AUDITING WITH A DIFFERENCE – FOREIGN TRADE POLICY & INDIRECT TAX at semiar arranged by Pune City CPE Study Circle of WIRC of ICAI on 09th July 2011.
Resident Director of Bizsolindia being elected as Chairman
of WIRC of ICWAI.
Congratulations
CMA Vijay Joshi
August - 2011UPDATE
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Reproduction of contents in any form needs prior written approval from Bizsol.
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Nashik: +91 253 2340586, Mumbai: +91 22 30284141,
Indore: +91 731 2539736, Daman: +91 9909025831,
ash Commercial Mall, Near Pan Card Club, Baner Road, Board of Directors Advisory Board Editorial Board
Venkat R. Venkitachalam Monica Joshi Manoj Malpani
Ashok Nawal Arun Sawant
Manoj Behede Pravin Arote
Hemant Sonar
Ganesh Borge
Kiran Sawale
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