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Corporate India Advisors LLP
Indirect Tax
Newsletter
31st March 2015
INSIDE THIS ISSUE
1 Service Tax 2 CENVAT Credit 3 Central Excise 4 Customs and FTP 5 VAT/CST Contents
Notifications/Circulars
Customs …………………………………………………………………………………………………1
Foreign Trade Policy………………………………………………………………………………2
Judgments
Service Tax…………………………………………………………………………………………….3
CENVAT Credit……………………………………………………………………………………….5
Central Excise…………………………………………………………………………………………5
Customs & FTP……………………………………………………………………………………….7
VAT/CST…………………………………………………………………………………………………8
News & Comments……………………………………………………………………………..9
Notifications / Circulars
Customs
Notification Safeguard Duty levied on import of saturated fatty alcohols The Central Government imposed Safeguarding Duty on Saturated Fatty
Alcohols excluding the Saturated Fatty Alcohols with carbon chain length of
pure C8 falling under Tariff item 2905 17 00 or subheading 3823 70 of the
Customs Tariff Act. The Safeguarding Duty shall be imposed at the following
rate: a) 20% ad valorem , when imported between the period 28th August
2014 to 27th August 2015 b) 18% ad valorem, when imported between the period 28th August
2015 to 27th August 2017;and c) 12% ad valorem, when imported between the period 28th August
2017 to 27th February 2018 This imposition shall come in effect from date of imposition of provisional
Safeguard duty, i.e. from 28th August 2014 Notification No. 1/2015‐Customs (SG) Dated 13‐03‐2015 Indirect Tax Newsletter
Page 2
Notification Definitive Anti Dumping Duty imposed on Sheet Glass The Central Government imposed Definitive Anti Dumping Duty on the
“Sheet Glass” falling under Tariff item 7004 20 11 or 7004 20 19 of the first
Schedule to the Custom tariff Act. The rate of anti dumping duty is USD
63/MT based on the country of origin and country of export per MT. The duty
shall be effective for the period of 5 years from the date this notification is
published. Notification No. 07/2015‐Customs (ADD) Dated 13‐03‐2015 Circular Compliance to the orders mandatory for import of steel products On the representations received by the CBEC that the import of steel
products are being allowed without compliance of mandatory Indian
Standards, the board has advised that the import of such products should not
be allowed without complying the Steel and Steel Products (quality Control)
Order, 2012 and Steel Products (Quality Control) Second Order, 2012 as
amended. Circular No. 08/2015‐Customs Dated: March 24, 2015 Foreign Trade Policy
Notification Mandatory documents prescribed for Export and Imports of goods The Central Government has inserted Para 2.53 of FTP, 2009‐14, prescribing
the mandatory documents required for exports and import of goods
from/into India. The documents for export of goods from India are Bill of
lading/ Airway Bill, Commercial Invoice cum packing List and Shipping Bill/ Bill
of Export, For imports, the prescribed documents are Bill of lading/ Airway
Bill, Commercial Invoice cum packing List and Bill of entry. Further, for export
/ import of specific goods or the goods which are subject to restrictions or for
which No Objection Certificate is required, the regulatory authority may
electronically or in writing can seek for additional documents. The
Notification shall come into effect from 1st April 2015. Notification No. 114/(RE‐2013)/2009‐2014 dated 12‐03‐2015 Notification Amendment in Classification of Export of Military Stores The Central Government had amended Table A of Schedule 2 of ITC (HS)
Classification of Export and Import of Military Stores. Now, for exports of
military stores as specified in Export Licensing Note of Table A, No Objection
Certificate (NOC) shall be obtained from the Department of Defence
Production, the description of item in the Shipping Bill shall be prefixed the
Serial No. of the item indicated in Table A as MS 001 or as the case may be
and the Shipping Bill shall indicate the number and date of NOC of
department of Defence production. Notification No. 115(RE‐2013)/2009‐2014 dated 13‐03‐2015 Notification Addition of two new ports for import of new vehicles The Central Government has amended condition 2 to Chapter 87 of ITC(HS)
2012, Schedule 1 of the Import Policy to add two new Customs Port i.e.
Kattupalli port and APM Terminals , Pipavav Port to the existing list of 12
ports/ICDs through which import of new vehicles is permitted. Page 3
Indirect Tax Newsletter
With this amendment, new vehicle can now be imported through following
Customs ports: Seaports‐ (i) Nhava Sheva, (ii) Mumbai, (iii) Kolkata, (iv) Chennai, (v) Ennore,
(vi) Cochin, (vii) Kattupalli, (viii) APM Terminals Pipavav; Airports‐ (ix) Mumbai Air Cargo Complex, (x) Delhi Air Cargo, (xi) Chennai
Airport; and ICDs ‐ (xii) Telegaon Pune, (xiii) Tughlakabad & (xiv) Faridabad.” Notification No. 117(RE‐2013)/2009‐2014 Dated 13‐03‐2015 Judgments
Service Tax
Service tax not payable by the air travel agent on fuel surcharge In this case the appellant, an air travel agent, discharged service tax under
the Service Tax Rules on basic fare without including the fuel surcharge. The
authorities demanded service tax by alleging that the value is deflated to the
extent of fuel surcharge. The Tribunal negated the departmental contentions
by holding that the value relevant for service tax purpose is the basic fare,
which presently excludes the fuel surcharge. Kafila Hospitality & Travels Ltd. Vs. CST, Delhi [2015‐TIOL‐406‐CESTAT‐DEL] Appeal in relation to service consumed in SEZ whether exempt or taxable, will lie before Supreme Court In this case the question before the Hon’ble High Court was whether the
underlying input services will be treated as exempt. The High Court of
Bombay held that the relevant issue definitely relates to determination of
rate of duty and hence the issue will lie before the Supreme Court in terms of
Section 35‐ G( 1) of the Central Excise Act, 1944. CCE & ST, Pune Vs. Credit Suisse Services (I) Pvt. Ltd. [2015‐TIOL‐552‐HC‐
MUM‐ST] Exemption to performing artists in folk or classical art forms of music etc. under Notification No.25/2012 is valid The petitioner sought quashing of the exemption in respect of services
provided by a performing artists in folk or classical art forms of music etc.
from service tax as discriminatory and violative of Articles 14 and 19(1)(g) of
the Constitution of India in the absence of the same benefit being extended
to other performing artist namely film actors. The Hon’ble High Court denied
holding the entry as invalid since two categories are clearly different and
distinguishable and cannot be treated at parity. The mere fact that there was
an element of drama or acting both in case of theatre and in case of films did
not mean that the two activities are identical, taking into consideration the
circumstances in which films are made and theatre is performed. Siddharth Suryanarayan Vs. UOI [2015‐TIOL‐561‐HC‐MAD‐ST] Page 4
Fencing of Indian borders is not subject to service tax under Erection, Commissioning services Indirect Tax Newsletter
In this case the appellant was engaged in fencing the India Bangladesh
border. The dispute arose whether the activity is subject to service tax under
the taxable category of Erection, Commissioning or Installation agency
services. The Tribunal held that the activity will not be subject to service tax
since fencing could loosely be called as a structure, but the services rendered
by them are not in the nature of Erection, Commissioning or Installation, but
in the nature of civil construction. Mackintosh Burn Ltd Vs. CC, CE & ST, Shillong [2015‐TIOL‐457‐CESTAT‐KOL] Prior service tax registration not mandatory for refunds In this case the appellant were denied the refund of input services under Rule
5 of CENVAT Credit Rules, 2004 on the basis that the appellant did not hold
the service tax registration. The Tribunal held that holding registration is not
a prior consideration for availment of CENVAT credit and hence refund will
be allowed. KPIT Cummins Global Business Solutions Ltd. Vs. CCE, Pune‐I [2015‐TIOL‐400‐
CESTAT‐MUM] Refund under 41/2007 not allowed if assesse is not registered In this case the appellant filed a refund claim under Notification 41/2007 ST
dated 6.10.2007 without getting itself registered. The authorities rejected the
refund claim for non registration of the assesse. The Tribunal upheld such
rejection by holding that obtaining registration is not mere procedural part
but is substantial portion of the notification. Sirius Overseas Pvt. Ltd Vs. CCE, ST & C, Visakhapatnam‐II [2015‐TIOL‐434‐
CESTAT‐BANG] Filing of refund online will be date of refund filing In this case the appellant filed the online refund claim within time but the
hard copy was filed later on. The authorities denied the refund claim alleging
it time barred. The Tribunal regularised the refund claim by holding that since
the online refund was filed in time, claim is not time barred. Transcend Mt Services Pvt. Ltd Vs. CST, Delhi [2015‐TIOL‐448‐CESTAT‐DEL] Provisions as applicable on date of institution of proceeding will prevail till it attains finality In this case the High Court of Kerala dealt with the requirement of payment
of mandatory pre‐deposit of 7.5% for filing the appeals. The High Court held
that in the present case since the proceedings started before the enactment
of Finance Act, 2014, the petitioner cannot be compelled to deposit the said
amount for the purpose of appeal. Muthoot Finance Ltd. Vs. UOI [2015‐TIOL‐632‐HC‐KERALA‐ST] Extended period not invokable if short payment depicted in return In this case the appellant depicted the short payment of service tax in the
relevant return. The authorities demanded service tax by invoking the larger
period. The Tribunal disallowed invocation of larger period by holding that
since the correct calculation were already depicted in the return, the larger
period cannot be invoked. Central Warehousing Corporation Vs. CST, Ahmedabad [2015‐TIOL‐405‐
CESTAT‐AHM]
Page 5
Indirect Tax Newsletter
CENVAT Credit
Reversal under Rule 6 not required for sale to SEZ Security services are inextricably linked to manufacture In this case the appellant cleared the goods to DTA on payment of duty and
to SEZ unit without payment of duty after following the ARE‐1 procedure.
The revenue demanded an amount equivalent to 10%. The Tribunal negated
this demand and held that clearances to SEZ is akin to exports and hence the
demand under Rule 6 of CENVAT Credit Rules, 2004 will not sustain.
S P Fabricators Pvt. Ltd. Vs. CC, Chennai II [2015‐TIOL‐474‐CESTAT‐MAD] In this case the Tribunal held that the input security services have
inextricable link with the manufacturing process and hence the CENVAT
credit cannot be denied. Sar Ispat Pvt. Ltd. Vs. CCE, , Puducherry [2015‐TIOL‐488‐CESTAT‐MAD] Credit on inputs used for constructing passive infrastructure is available In this case the appellant procured the inputs etc. for constructing the
passive infrastructure to provide the business support services. The
authorities denied the credit citing the creation of immovable property. The
Tribunal allowed the credit by holding that goods when brought were not
immovable property and since there is inextricable link between provisions
of services, the credit will be allowed even if the result is immovable
property. The Tribunal also held that facts are closer to the Sai Sahmita
Storages Pvt. Ltd. Vs. CCE ‐ 2011‐TIOL‐863‐HC‐AP‐CX and distinguish from
Bharti Airtel Ltd. Vs. CCE, Pune‐III ‐ 2014‐TIOL‐1452‐HC‐MUM‐ST. Reliance Infratel Ltd. Vs. CST, MumbaI‐II [2015‐TIOL‐516‐CESTAT‐MUM] CENVAT Credit allowed on MS Rod Sheets, M.S.Chennel, Flats etc. used in the fabrication of fly ash hooper, fly ash bin In this case the High Court of Madras allowed the CENVAT credit on these
items by holding that these items will qualify as accessory etc. of the capital
goods and hence credit is allowed. India Cements Ltd. Vs. CCE NO 1, Foulks Compound Annai Medu, Salem‐
636001 [2015‐TIOL‐650‐HC‐MAD‐CX] Central Excise
Job work charges to include the value of scrap sold In this case a manufacturer appointed a job worker for manufacturing the
goods. The job worker retained the scrap and sold the scrap in the market.
The authorities demanded excise duty on the value of scrap so sold. The
Tribunal upheld such demand by holding that the consideration for job
worker will be job work charges plus the consideration obtained by selling
the scrap in the market.
CCE, Pune‐III Vs. Ankur Packaging Pvt. Ltd. [2015‐TIOL‐472‐CESTAT‐MUM] Page 6
Suo‐motto re‐credit is allowed in case of favourable order by appellate authority Indirect Tax Newsletter
In this case the respondent paid duty under protest by reversing the credit.
The Commissioner (Appeals) held non‐payment of duty and pursuant to this
order, the respondents suo‐motto recredited its accounts with the same
amount. The authorities objected to it and issued another notice proposing
recovery of the credit availed again. The Tribunal negated these contentions
and held that once the appellate authority have held in favour of respondent,
there is no bar for suo‐motto recredit. CCE, Ahmedabad Vs. Chiripal Industries Ltd. [2015‐TIOL‐471‐CESTAT‐AHM] Specific disclosure to authorities is not requirement for non invocation of larger period In this case the authorities invoked the larger period for the goods cleared
without payment of duty by a manufacturer on the basis that manufacturer
has not disclosed this aspect to the authorities. The Supreme Court held that
filing of Form CT‐3 indicates that matter is in knowledge of the authorities
and hence the larger period cannot be invoked. CCE, Mumbai Vs. Blue Star Ltd. [2015‐TIOL‐19‐SC‐CX] Value of Packing required to make the goods marketable is addible in transaction value In this case the finished products were packed in plastic containers and then
put in cartons for selling to the wholesale dealers for the purpose of
transportation. The Supreme Court held that the test is whether packing is
done in order to put the goods in marketable condition and whether the
goods are capable of reaching the market without the type of packaging
concerned. If yes, then the cost of packing is includible in the transaction
value. CCE, Chennai Vs. Addisons Paints & Chemicals Ltd. [2015‐TIOL‐18‐SC‐CX] Bonafides of assesse cannot be doubted if the authorities themselves have the doubts about the dutiability In this case the petitioner was cutting the larger steel plates into smaller one
and did not paid excise duty as it considered not amounting to manufacture.
The Supreme Court held that since the authorities themselves were not clear
about whether the process amount to manufacture or not, the bonafides of
the petitioner cannot be doubted and hence larger period cannot be invoked.
Sanjay Indl Corpn & Anr Vs. CCE, Mumbai [2015‐TIOL‐17‐SC‐CX] Ground not mentioned during the main hearing cannot be heard during rectification application
Tribunal cannot remand the case back on multiple occasions In this matter the Supreme Court dismissed the petition by holding that since
the issue raised in the rectification application was not argued at the time of
hearing of the main case, the ROM application cannot survive. CCE, Jaipur Vs. Hindustan Zinc Ltd. [2015‐TIOL‐16‐SC‐CX] In this case a matter was adjudicated thrice during last 12 years and was
remanded back by the Tribunal. On application of both the parties against
the remand back, the High Court of Bombay quashed the remand back order
and asked Tribunal to decide the matter on merits. RalliS India Ltd. Vs. CCE, [2015‐TIOL‐630‐HC‐MUM‐CX] Page 7
Amortized value of tools and dies given on FOC basis to job worker to be added in transaction value Indirect Tax Newsletter
In this case the appellant did not discharged excise duty on such amortised
value and declared on the invoice that the price is the sole consideration. The
Tribunal held that the amortized value is includible in transaction value and
larger period is also invokable since the appellant has misdeclared the facts
by putting on the invoice that price is the sole consideration. ITW India Ltd. Vs. CCE, Pune‐1 [2015‐TIOL‐504‐CESTAT‐MUM] Customs
SCN to be treated as served by affixing on notice board only after exhausting all the options
In this case the petitioner changed the premises under an intimation to the
authorities. The authorities dispatched the SCN to the old address and postal
authorities marked as ‘left’. The tribunal treated the appeal as time barred.
The High Court of Bombay regularised the appeal by treating that is within
time by holding that since the order was not sent to new address, resort to
putting the SCN on the notice board cannot be resorted. Balaji Marbles vs. UOI & ANR [2015‐TIOL‐642‐HC‐MUM‐CUS] Exemptions as available under excise will be available for CVD purposes In this case the Supreme Court held that for the purposes of levying CVD, one
should assume that the goods are manufactured in India and then calculate
the duty. Accordingly, it was held that all excise duty exemptions as are
available for manufacturing in India, will be also available on importing a the
corresponding product in India for CVD purposes. Aidek Tourism Services Pvt. Ltd. Vs. CC, New Delhi [2015‐TIOL‐23‐SC‐CUS] Reasonable cause to be shown for extension of warehousing period and subsequent re‐export
In this case the goods were lying at the warehouse of the appellant for last 15
years. The petitioner sought extension of warehousing on the basis of it
being declared sick company. The High Court disallowed the permission for
re‐export of goods citing that there was no conscious effort on the part of
petitioner to actual re‐export the goods. Mere filing of extension without
reasonable cause is not enough. Binny Ltd. Vs. CC (Imports) Customs House, No.60, Rajaji Salai Chennai –
600001 [2015‐TIOL‐602‐HC‐MAD‐CUS] General baggage exemption cannot be clubbed for for family members In this case the petitioner imported a television and argued for duty free
clearance under Baggage Rules by clubbing the exempt limits of all the family
members. The High Court of Calcutta denied these contentions and held that
the general free allowance will be considered for the importer only without
clubbing the limits applicable for other persons. Dinesh Kumar Goyal & ANR Vs. ACS & ORS [2015‐TIOL‐690‐HC‐KOL‐CUS] Indirect Tax Newsletter
Page 8
VAT
Process of perforation of papers, printing the lines and insertion of carbon paper amounts to manufacture In this case the petitioner were engaged in purchasing the paper, perforating
the paper on both side, printing the lines on paper and inserting the carbon
papers between the papers. Under the Bombay Sales Tax Act, 1959 the term
"manufacture" was defined to include producing, making, extracting,
altering, ornamenting, finishing or otherwise processing treating, or adapting
any goods, or using or applying any such process, as the State Government
may, having regard to the impact thereof on any goods or to the extent of
alteration in the nature, character or utility of any goods brought about by
such process, by notification in the Official Gazette, specify. In these
circumstances the Hon’ble High Court of Bombay held that since in the
normal trade practice the resultant paper is identified as specific item, the
processes undertaken and of the above nature results in a product emerging
and for specified purpose and utility, that is sought and known in the
commercial world as a distinct product having a different identity. Sakhi Industries Ltd. Vs. The State of Maharashtra [2015‐TIOL‐520‐HC‐MUM‐
CT] Assessee need not file an indemnity bond if C forms misplaced by the authorities In this case the petitioner submitted the original C forms to the authorities
and obtained the acknowledgment. The forms were misplaced by the
authorities. The authorities demanded the indemnity bond from the
petitioner. The Hon’ble High Court of Madras denied submission of
indemnity bond and held that since the forms are misplaced by the
authorities, the petitioner will be allowed to submit the duplicate copies of
the C form with the authorities. Sree Kumar Engineering Works Vs. Assistant Commissioner (CT) [2015‐TIOL‐
579‐HC‐MAD‐VAT] Transfer of goods by branch office to head office purchased pursuant to auction is stock transfer In this case an assesse had a branch office in the State of Andhra Pradesh and
head office in the State of Maharashtra. The branch office purchased the
beeri leaves from State Government pursuant to auction and transferred the
goods to HO. The authorities treated the sale as sales within the State and
imposed sales tax. The Supreme Court held that there was no nexus between
the auctioner and the HO and sales concluded when the branch office paid
the auctioner for the beeri leaves. The transfer of goods by branch office to
HO will be treated as stock transfer not subject to sales tax. CCT Hyderabad Vs. Desai Beedi Company Andhra Pradesh [2015‐TIOL‐21‐SC
CTLB] Page 9
Contract for printed material for a particular customer is a works contract Indirect Tax Newsletter
In this case the petitioner printed the material for its client. The printed
material could not have been sold to another person. In this fact pattern, the
Hon’ble High Court of Madras held that sine the work executed by the
assessee related to printing of materials and such printed materials were
meant for particular customers, who placed orders and it cannot be sold in
the open market like any other goods, the contract is works contract even if
some material is incidentally transferred to the contractee. Heritage Printers Vs. The Joint Commisioner (SMR) Of Commissioner Taxes
Office Of The Special Commissioner & Commissioner Of Commercial Taxes
Chepauk, Chennai ‐ 600 005 [2015‐TIOL‐608‐HC‐MAD‐CT] News and Comments
FTP to be released by 01‐04‐2015 The rate of service tax to be changed from 12.36% to 14% from notified date after passing of the Finance Act The Government of India will be releasing new Foreign Trade policy on 1st
April, 2015. The proposed 14% Service Tax rate will be implemented from a date to be
notified after enactment of the Finance Bill, 2015. The exact date of which
will be known after the Finance Bill gets assent of the Hon’ble President of
India and the ministry notifies the date for the change. Moreover, the
“Education Cess” and “Secondary and Higher Secondary Education Cess” shall
be subsumed in the revised rate of Service Tax i.e. 14% (No Cess on Service
Tax). Hence, one should not charge or pay 14% until a date has been notified after
the President’s assent (Expected after end of April in early May). Page 10
Indirect Tax Newsletter
Corporate India Advisors LLP
MUMBAI
DELHI
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RohiniAggarawal
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PUNE
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Phone: 020-26438202
About CIA CIA is an indirect tax specialist firm. CIA is run by eminent professionals having a niche experience in all realms of indirect taxes in leading multinational consulting firms. The services comprises of Service tax, Central Excise, Foreign Trade Policy, Customs, Value Added Tax, Central Sales Tax, Anti‐dumping / Subsidy Measures and Goods and Services Tax. CIA has Wide spectrum of network on PAN India basis and provides best value for money proposition. CIA leverages upon its strong knowledge base, research and professionals with distinguished background For Private Circulation Only CIA does not assume any responsibility for the information given under the document. While every effort has made to avoid errors or omissions in this publication, it is suggested that to avoid any doubt the reader should cross‐check all the facts, law and contents of the publication with original Government publication or notification or judgment. CIA neither accepts nor assumes any responsibility or liability for any act undertaken by any reader of this publication in whatsoever manner.