bizsolindia july 2015 · pdf fileis wanted by the indian government for alleged money ......

Bizsol UPDATE July - 2015

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There is this occupational hazard for anyone tryingto capture the news and news makers of a month

in a single column. With so much happening bothnationally and internationally the task of identifyingthe topics of interest is harder than to write on thetopics themselves. Be that as it may, here goes mychoice for this month.

Even as breaking news are breaking televisionscreens globally on various topics of importance andurgency in India we seem to be preoccupied with onlyone topic - Modi (this time the other Modi) - theirrepressible and brash Lalit Modi, the scion of a familywhich lords over an industrial empire. Lalit Modi whois wanted by the Indian government for alleged moneylaundering and tax evasion 'lives life king size' as oneof his company's own tagline suggests for a brand ofcigarettes it produces. For the common man heepitomises all that the rich and the powerful have cometo represent in the county. He is obscenely rich andlives his life which could be the envy of the super richin any part of the developed world. He is powerfuland he is influential. As if that is not enough he hasthe gift of the gab that could give even a politician acomplex. He is an alleged fugitive. I am using the termalleged advisedly as he has threatened to sue themedia for calling him a fugitive. Many describe himas a firebrand celebrity. He is not firebrand; he is firepersonified. Anyone who has touched him has gotsinged. BJP is learning this the hard way. Within onemonth of the partydifferentiating itself from theprevious regime by claiming to berunning a clean andscam-free administration, the nemesis hasstruck andhow. Whether Sushma Swaraj and Vasundhara Rajewould go is a matter for the record; but what is real isthat their reputations have irredeemably gone. Themost hazardous job today is being a spokespersonfor the BJP on the subject of Lalit Modi. You cannotblame them if you find their performance far from

FROM THE DESK OF THE CHAIRMAN

satisfactory. You feel sorry for them for having todefend the indefensible. In order to find some kind ofa fig leaf to insulate the party from Lalit Modi they areworking overtime to creatively interpret legalprovisions and redefine the English language.Narendra Modi is faced with a Hobson's choice. Ifask the ministers to go he will incur the wrath of theparty and its parivar and if he doesn't, he loses hisown credibility. He, therefore, has decided to pressthe mute button and wait for the storm to blow over.The movers and shakers in the corridors of power inIndia is now living in dread.Lalit Modi is the proverbialloose cannon. No one is really sure whose cupboardit would be from where Lalit Modi would take out thenext skeleton!

Raghuram Rajan may soon acquire the sobriquet asa prophet of doom. He had predicted not long agothat the world economy was headed for a meltdownand it happened in 2008 just as he had predicted. Hewas in the news once again recently when in anaddress at the London Business School he saidsomething in similar vein. It is no secret that Rajan isnot all comfortable with the current economic worldorder. It is well known that he believes that for a stableeconomic environment those who are in positions toinfluence the global system should work with betterco-operation and co-ordination. In his recent addressin London he raised an important issue and almostprophesied that the world might get into the samestate of affairs as existed during the Great Depressionin the early 1930s if are not careful. When the mediareported the speech it read as if Rajan was predictinganother recession in the immediate future. TheReserve Bank of India was quick to issue aclarification that Rajan was not hinting about anyimpending recession. This clarificationnotwithstanding, the import of what Rajan said shouldnot be lost on the policy makers. In the background


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of the US reversing quantitative easing before the endof the year Rajan's observations do assumesignificance. Rajan restated the simple economictheory in the speech that you cannot get growth outof nowhere. He also said that it is not enough if youonly shift growth from someone else. Simply put, whathe said was that you have to create growth. Growthin money supply can come from nowhere if you startprinting money as is being done in the US in the nameof quantitative easing. You shift growth from onecountry to another when you resort to competitivedevaluation of one's currency against othercurrencies. Wealth and the resultant money supplyhave to come from genuine growth - it should beneither notional nor pirated. This can happen onlyand only if some credible and acceptable rules ofengagement are evolved among countries realisingthat an action by one will almost certainly have aneffect on the other in an increasingly networked worldeconomic environment. Rajan has been saying thisfor quite some time and today it has become anextremelyvalid concern. Take for instance what couldhappen in the Indian stock markets when the USincreases the interest rates. The RBIGuv will be calledupon to face the resultant musicfor what is being donein another continent far away from our shores.Despitebeing awell-timed and well intentioned concern itremains to be seen when one would see the worldplaying according to a new set of rational and not justnational rules of the game of money.

President Obama must be a reasonably happy mantoday. After having to fight many a bitter battle withthe Congress dominated by the Republicans he is oncourse to leave a lasting legacy when he demits officein less than two years. His signature initiative inrevolutionising the healthcare sector in the US finallygot the go-ahead from the county's Supreme Court.Earlier the constitutional validity of his AffordableHealthcare Act popularly known as Obamacare waschallenged in the U S Supreme Court. After winningthe legal battle about its constitutional validity the Actwas once again dragged to the apex Court on asensitive procedural issue inadvertently created bythose who drafted this legislation. As per the Act taxbenefits would accrue only to those who purchaseinsurance policies from insurance exchanges set upthe states. As many as 24 states, largely led by the

Republicans had refused to set up these exchangesresulting inpotential loss of tax incentives to those whobuy insurance from those exchanges set up by thefederal government. Without the tax incentives theso-called affordable healthcare would have becomeunaffordable. If the Supreme Court had gone by aplain reading of the text a large number of peoplewould have gone out of insurance cover. At stakebefore the Court was not a legal interpretation but asocial construct of the relevant provision and that isexactly what the Supreme Court did with a 6 to 3verdict in favour of the government. In the processthe Court went much beyond the written word in thestatute and went to the intent of the legislature muchto the chagrin of the Republicans. The latter arecommitted to repeal this Act once they put their ownman in the White House. In the absence of an alternateproposal to Obamacare the presidential aspirants fromthe party, however, must be a relieved lot not havingto go against this popular sentiment in favour of thehealthcare reform. The US has been grappling withthe issue of healthcare reforms for nearly a century.This is no mean achievement for Obama. Thisdecision of the Court was also not without its ironies.President Obama when he was a Senator had votedagainst the appointment of John Roberts, the ChiefJustice of the Supreme who in this case sided withthe majority opinion in upholding the statute. Anotherjustice who held that Obamacare was unconstitutionalin the earlier case cast his support in favour of theverdict on this procedural issue. An important fact isthat this case, now known as King vs Burwell is boundto be cited extensively even in courts outside the USwhenever thorny issues of interpretation of statutescrop up.

When reckless lenders and irresponsible spendersmeet what awaits you is a tragedy. The Greek hasearned a name for themselves for enacting tragic plotson theatre. Another tragedy is being played out inreal life now. The people of this country have nowbacked its government to stand up to other nations inEurope in an unprecedented referendum. They arefed up of the austerity measures and the attitude ofother nations in the euro zone. They face theproverbialchoice between a rock and the hard place. Normallyin a referendum people are asked to say yes or noon policy and those who govern chalk out the details.


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Here the people are burdened with the details andthe government would formulate the policy based onthe outcome of the referendum. Greek's currentsituation is not just about economics. It is about politicsas well. Granted that the Greeks had been profligatespenders. That is because they were allowed to doso by the lenders themselves who benefited from theplight of the Greek. When the European Union wasformed the punters made money on arbitrageopportunities then available in the country at the costof the country bringing this once prosperous countryto its knees. As always there are no easy solutionsand as always logical solutions are not easy toimplement. Germany, the leader of euro pack displaysa self-righteous attitude when they demand that theGreek tighten their belts and earn their right to live adecent life. Germans come from the space where theyhad done this before when integration of East andWest Germany had taken place. They put up with theattendant adverse economic consequences on thereunification of the country and in turn they expectthat similar sacrifices be made by the Greek as well.The Germans do not want to continue to subsidise awayward country and its reckless spending behaviour.Portugal, Spain and Italy share similar views as theywere forced to implement austerity measures imposedby the euro zone countries when they faced similarfinancial crises in the past. They have now a trackrecord to show that these measures do work. Wellknown economist and Nobel laureate Joseph Stieglitzlaunched a scathing attack on other Europeancountries for their unreasonable demands on Greece.According to him the steps taken by the creditors havealready damaged the Greek economy in the last fiveyears and there is a distinct danger of the countrybecoming a basket case if it accepts the kind ofunreasonable demands made now. What wouldhappen to Greece after the referendum is anybody'sguess. Once again it is getting proven that the basicdesign and architecture of the euro zonewas defectiveat best and disastrous at worst. The Greek issue hasonly helped to accentuate further the dysfunctional

nature ofan economic edifice independent of thesovereign structure.

You may like English and hate the English or viceversa. But one has to accept the fact that it is thepeople of England who first formallyenunciated theprinciples of a just society based on personalliberty.This has had an abiding impact across the worldand not just in England over a period of time. It is noexaggeration that the world we live inhas beeninfluenced in no small measure by the United Kingdomjust on account of this. The fundamental principle ofa just society is liberty. The Charter which enshrinesthis liberty was first codified when in June 1215 whenKing John signed the famous Magna Carta. It isthrough this Charter created exactly 800 years agothat even the King himself was subjected to the ruleof law! Today the principles found in the Magna Cartahas transcended time and boundaries. It so happensthat when this occasion is being remembered andcelebrated across the world we in India alsoremember the imposition of Emergency exactly 40years back when we, the subjects of our country,decided to surrender our fundamental rights to themight of the state. Our rising again as a democracy isa testimony to our in-built democratic values both inour society and in ourselves. Here is a toast to thatspirit.

Before signing off I have a pleasant duty to perform.Mr. A. B. Nawal, our Managing Director has beenelected to the Central Council of the Institute of CostAccountants of India. Mr. Nawal created a record ofsorts by garnering maximum first preference votesfrom the members of the Regional Council. On behalfall of us at Bizsol I congratulate Mr. Nawal and wishhim all the very best for a successful tenure in theCouncil of the Institute. We are proud of you Mr.Nawal.

Thank you.

Venkat R. Venkitachalam


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CUSTOMSNotificationsTariff:• Exemption from customs duty on goods required

for the National AIDS Control Programme fundedby Global Fund to fight AIDS, TB and Malaria(GFATM), subject to condition specified in thenotification. [Notification No. 37/2015-Cusdated 10 June - 2015]

• List of export categories / sectors ineligible forduty credit scrip entitlement under 'MerchandiseExports from India Scheme' has been revisedby central government and accordingly, itemsrestricted for export under Schedule-2 of ExportPolicy in ITC(HS), sugar of all types and forms,export of milk and milk products, and meat andproducts thereof unless specifically notified inAppendix 3B, shall be ineligible.

Further, items prohibited for export underSchedule-2 of Export Policy also excluded fromScheme. [Notification No. 38/2015-Cus dated15 June - 2015]

• Import of base metals and articles of base metalfalling under chapter 72 can be made atconcessional BCD rate of 5% except for flat-rolledproducts of iron / non-alloy steel falling underchapter heading 7202 60 00, 7208, 7209, 7210,7211, 7212, 7225 3090, 7225 4019, 7225 50 or7225 9900.

Iron and non-alloy steel falling under chapterheading 7206, 7207, 7213, 7214, 7215, 7216,7217, 7219, 7220, 7221, 7222, 7223, 7225,7226, 7227 and 7228 can be imported withconcessional BCD rate of 7.5% except for grain-oriented silicon-electrical steel / residuary itemscovered in alloy steels falling under 7225 11 00,7225 3090, 7225 4019, 7225 50 or 7225 9900,

7226 11 00. [Notification No. 39/2015-Cusdated 16 June -2015]

Non-Tariff• Courier Imports and Exports (Clearance)

Regulations,1998 has been amended as follows:

(A) Regulations shall not apply to export ofgoods-

(i) Proposed to be exported under DutyExemption Schemes, Export PromotionCapital Goods Scheme or any other similarexport promotion schemes. this sub-clauseshall not apply to goods notified in Appendix3C of the Foreign Trade Policy (2015-2020),proposed to be exported from Chennai,Delhi and Mumbai airports under theMerchandise Exports from India Scheme(MEIS) in consignment of value upto rupeestwenty five thousand and involvingtransaction in foreign exchange

(ii) Other than the goods specified in Appendix3C of the Foreign Trade Policy (2015-2020),in respect of which the proper officer directsthe filing of shipping bill or bill of export inthe prescribed form

(B) in regulation 6 w.r.t Clearance of exportgoods through courier, after sub-regulation(3) and before the existing proviso followingpara has been added "Provided that for thegoods specified in Appendix 3C of theForeign Trade Policy (2015-2020), suchentry shall be made in the form prescribedin the Shipping Bill and Bill of Export (Form)Regulations, 1991"

( C) In the Form Courier Shipping Bill-II (CSB-II), in the Declaration, for clause (ii), thefollowing shall be substituted, namely:-

"(ii) I /We hereby declare that the goods for


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export as per this Shipping Bill include onlybonafide commercial samples andprototypes of goods of a value notexceeding Rs. 50,000/- per consignmentand bonafide gifts of articles for personaluse of a value not exceeding Rs. 25,000/-per consignment and which are for the timebeing not subject to any prohibition orrestriction on their export from India and onexport of which no transfer of foreignexchange is involved".

(D) In the Form Courier Bill of Export- II (CBEx-II), in the Declaration, for clause (ii), thefollowing shall be substituted, namely:-

"(ii) I /We hereby declare that the goods for

export as per this Shipping Bill include onlybonafide commercial samples andprototypes of goods of a value notexceeding Rs. 50,000/- per consignmentand bonafide gifts of articles for personaluse of a value not exceeding Rs. 25,000/-per consignment and which are for the timebeing not subject to any prohibition orrestriction on their export from India and onexport of which no transfer of foreignexchange is involved"

[Notification No.62/2015-Customs (N.T),Dated 17-June-2015]

• Tariff Value of Imported goods have been furtheramended as given below:

1 1511 10 00 Crude Palm Oil 6622 1511 90 10 RBD Palm Oil 6823 1511 90 90 Others - Palm Oil 6724 1511 10 00 Crude Palmolein 6835 1511 90 20 RBD Palmolein 6866 1511 90 90 Others - Palmolein 6857 1507 10 00 Crude Soyabean Oil 7638 7404 00 22 Brass Scrap (all grades) 35339 1207 91 00 Poppy seeds 260210 71 or 98 Gold, in any form, in respect of which the benefit of entries 382 per 10 grams

at serial number 321 and 323 of the Notification No. 12/2012 - (US $)Customs dated 17.03.2012 is availed

11 71 or 98 Silver, in any form, in respect of which the benefit of entries 516 per kilogramat serial number 322 and 324 of the Notification No. 12/2012- (US $)

Customs dated 17.03.2012 is availed12 080280 Areca nuts 2268

(US $ Per Metric Tons )

[Notification No.65/2015-Customs (N.T), Dated 30-June-2015].

Safeguards:• No New Notifications

Anti-Dumping Duty:• Anti-dumping duty has been imposed on "Hot

Rolled Flat Products of Stainless Steel of ASTMGrade 304 with all its variants", falling underchapter 7219 or 7220 originating in, or exportedfrom People's Republic of China, the Republicof Korea and Malaysia and imported into India

and shall be effective for a period of five years(unless revoked, superseded or amendedearlier). [Notification No. 28/2015-Customs(ADD) Dated 05-June-2015]

• Anti-dumping duty has been imposed on"Vitamin E", falling under tariff items 2936 28 00or 2309 90 10 originating in or exported fromthe People's Republic of China and imported intoIndia and shall be effective for a period of five

Sl.No

Chapter/heading/sub-heading/tariff item

Description of goods Tariff value US $(Per Metric Tonne)


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years (unless revoked, superseded or amendedearlier). [Notification No. 29/2015-Customs(ADD) Dated 10-June-2015]

• Anti-dumping duty has been imposed on "NylonTyre Cord Fabri", falling under Sub-heading 590210 originating in or exported from the People'sRepublic of China and imported into India andshall be effective for a period of five years (unlessrevoked, superseded or amended earlier).[Notification No. 30/2015-Customs (ADD)Dated 12-June-2015]

Circulars:• Guidelines have been issued by CBEC for

Principal Director General pursuant to delegationof power to appoint common AdjudicatingAuthority in all cases investigated by DRI.

Following cases will be adjudicated by AdditionalDirector General (Adjudication):

(a) Cases involving duty of Rs 5 Cr and above,

(b) Group of cases on identical issues involvingaggregate duty of Rs.5 crores or more

(c) seizure value of Rs 5 Cr or more,

(d) cases of overvaluation,

(e) existing cases with erstwhile Commissioner(Adjudication)

(f) Non-DRI cases pending with erstwhileCommissioner (Adjudication) would beassigned to Additional Director General(Adjudication), DRI

Cases other than mentioned above and having

more than one Customs Commissionerateshould be assigned to the jurisdictionalCommissioner of Customs on the basis ofmaximum duty evaded.

Cases other than at (a to f) above involving asingle Customs Commissionerate would beassigned to the jurisdictional Commissioner ofCustoms

However, cases made by Commissionerates orcases made by DRI wherein Adjudicating officeris ranked below Additional Director General(Adjudication), DRI, shall continue to be dealt byCBEC. [Circular No. 18/2015-Customs dated09 - June 2015]

• EOU / STP / EHTP / BTP unit having turnover ofRs 10 Cr or more in in preceding financial yearmay avail fast track clearance w.r.t pre-authenticated procurement certificate and self re-warehousing. [Circular No. 19/2015-Customsdated 09- June 2015]

Instructions:• No New Instructions

CENTRAL EXCISENotifications:• Excise Duty Exemption has been granted to

'Ethanol produced from molasses generatedfrom cane crushed in the sugar season 2015-16' as per amendment to Notification No.12/2012-CE dated 17th Mar 2015 as under:

Sl.No

Chapter orheading or sub-

heading ortariff item of theFirst Schedule

Description of excisable goods Rate ConditionNo.

40A 2207 20 00 NIL –Ethanol produced from molasses generated from canecrushed in the sugar season 2015-16 i.e. 1st October, 2015onwards, for supply to the public sector oil marketingcompanies, namely, Indian Oil Corporation Ltd., HindustanPetroleum Corporation Ltd. or Bharat PetroleumCorporation Ltd., for the purposes of blending with petrol.

[Notification No. 32/2015-CE dated 4th June 2015]


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• Exemption from whole of the Excise duty grantedto the product viz. ' Anti-Retroviral Drugs (ARVDrugs)' & 'Diagnostics and Equipments' havingspecified descriptions subject to the conditionthat ' the manufacturer produces at the time ofclearance of the said goods, before the AssistantCommissioner of Central Excise or DeputyCommissioner of Central Excise havingjurisdiction, a certificate from an officer not belowthe rank of Deputy Secretary to the Governmentof India in the Ministry of Health and FamilyWelfare to the effect that the said goods arerequired for the National AIDS ControlProgramme funded by Global Fund to fight AIDS,TB and Malaria(GFATM). This exemption will beavailable up to 31st Mar 2016 only. [NotificationNo. 33/2015-CE dated 10th June 2015]

Non-Tariff:• Every manufacturing unit engaged in the

manufacture of aluminum roofing panels fallingunder

Tariff Item 7610 90 10 is not required to registeras per provisions of Rule 9 of Central ExciseRules, 2002 subject to the conditions that suchroofing panels are consumed at the site ofmanufacture for execution of the project and themanufacturer of such goods has a centralizedbilling or accounting system in respect of suchgoods manufactured by different manufacturingunits and opts for registering only the premisesor office from where such centralized billing oraccounting is done. [Notification No. 17/2015-CE (NT) dated 8th June 2015]

• Now issue of invoices, preserving of records inelectronic form and authentication of records andinvoices by digital signatures are allowed subjectto following conditions, safeguards andprocedures:

Every assessee proposing to use digitalsignature shall use Class 2 or Class 3 DigitalSignature Certificate duly issued by the CertifyingAuthority in India.

Every assessee proposing to use digitalsignatures shall intimate the following details tothe jurisdictional Deputy Commissioner or

Assistant Commissioner of Central Excise, atleast fifteen days in advance:-

a) name, e-mail id, office address anddesignation of the person authorised to usethe digital signature certificate;

b) name of the Certifying Authority;

c) date of issue of digital certificate and validityof the digital signature with a copy of thecertificate issued by the Certifying Authorityalong with the complete address of the saidAuthority

Every assessee using DSC already are requiredto submit all above details within 15 days fromthe date of issue of this notification.

Every assessee who opts to maintain records inelectronic form and who has more than onefactory or service tax registration shall maintainseparate electronic records for each factory oreach service tax registration.

Ensure that appropriate backup of records inelectronic form is maintained and preserved fora period of 5 years immediately after the financialyear to which such records pertain.

[Notification No. 18/2015-CE (NT) dated 6thJuly 2015]

Circulars:• No new Circulars

Instructions:• Instructions regarding maintenance of Records

in Electronic Form and authentication of recordsby Digital Signature, manner of verification of saidelectronic data as well as procedure forverification of digitally signed invoices anddocuments has been issued. [Instruction F. No.224/44/2014-CX.6 dated 6th July 2015]

SERVICE TAXNotifications• No New Notifications

Circular• No New Circular


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FOREIGN TRADE POLICYNotifications:• Following amendments have been made in the

Foreign Trade Policy 2015-20. Theseamendments shall be deemed to have come intoforce with effect from 1st April 2015:

1. Lorry Receipt / Railway Receipt / PostalReceipt have been added in the list ofmandatory documents for export / importof goods from / into India in para 2.06 (a) &(b)of Foreign Trade Policy

2. Goods imported against payment in freelyconvertible currency would be permitted forexport only against payment in freelyconvertible currency, unless other notifiedby DGFT, shall not be eligible for any exportincentives as per amended para 2.46 { II(d) } for Foreign Trade Policy

3. Duty Credit scrip can be used for Paymentof Customs Duties for capital goods, as perDOR notification as per amended para 3.02of Foreign Trade Policy

4. Ineligible categories under MEIS as perpara 3.06 amended as follows-

(vii) Items, which are restricted for exportunder Schedule-2 of Export Policy in ITC(HS), unless specifically notified in Appendix3B

(xiv) Sugar of all types and all forms, unlessspecifically notified in Appendix 3B.

(xvi) Export of milk and milk products, unlessspecifically notified in Appendix 3B.

(xvii) Export of Meat and Meat Products,unless specifically notified in Appendix 3B.

5. 3.09 2 (e) Ineligible categories under SEIS- units operating under SEZ are now eligiblefor SEIS benefits.

6. 4.22 (iv) Export Obligation Export have beenamended and to be read as - exportobligation period for inputs, as specified inAppendix 4-J, shall be as mentioned in therelevant column of the said Appendix

7. Definition of "Service Provider" as per para

9.51 (ii) has been amended and to be readas - Supply of a 'service' from India toservice consumer(s) of any other countryin India; (Mode 2 - Consumption abroad).

[Notification No. 08 /2015-2020 dated 04/06/2015]

• Status Holders can export "freely exportableitems" on free of cost basis up to Rs.10 lacs or2% of average annual export realisation duringpreceding three licensing years, whichever isLower (previously it was higher of the two). Thiswill have adverse impact and every status holdercompany needs to revisit their FOC suppliesoutside India for Export Promotion. [NotificationNo. 09 /2015-2020 dated 04/06/2015]

• Minimum price for import of Areca Nuts underITC (HS) code 0802 80 10, 0802 80 20, 0802 8030 and 0802 80 90 of Chapter 8 of ITC (HS)2012 - Schedule -1 (Import Policy) has beenenhanced from existing Rs.110/- to Rs.162/- perKilogram. [Notification No. 10 /2015-2020dated 08/06/2015]

• Provision for Import, auction/sale and re-exportof rough diamonds in Special Notified Zone(SNZ) is notified. It has been mentioned thatdetailed procedure for the same would bespecified by CBEC. [Notification No. 11 /2015-2020 dated 15/06/2015]

• Prohibition on import of milk and milk products(including chocolates and chocolate products andcandies/ confectionary/ food preparations withmilk or milk solids as an ingredient) from Chinais extended for one more year, i.e., till 23.6.2016or until further orders, whichever is earlier.[Notification No. 12 /2015-2020 dated 24/06/2015]

• Export of all varieties of onions for the itemdescription at Serial Number 51 & 52 of Chapter7 of Schedule 2 of ITC (HS) Classification ofExport & Import will be subject to a MinimumExport Price (MEP) of US$ 425 F.O.B. per MT.[Notification No. 13 /2015-2020 dated 26/06/2015]

• Trade with Islamic State in Iraq and the Levant[ISIL], Al Nusrah Front [ANF] and other


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individuals, groups, undertakings and entitiesassociated, directly or indirectly, with Al Qaida inoil and oil products (hydrocarbons) and items ofcultural, scientific and religious importance isprohibited. [Notification No. 14 /2015-2020dated 30/06/2015]

Public Notices:• The last date for submitting the applications for

entitlement as Pre-shipment Inspection Agencies(PSIA) has been extended. Applicants can, forthe time being, submit applications initially withoutbank guarantee. However, they shall be requiredto submit bank guarantee or an equivalentfinancial instrument before they are notified asPSIA. [Public Notice No. 19/2015-20 dated the05/06/2015]

• In case of second extension of authorisation, thecomposition fee shall be charged @0.5% permonth of FOB value of exports made.Accordingly, corrections have been made inParagraphs 4.38 (viii) (b) & (c) to align the samewith paragraph 4.38(viii) (a). Typographical errorin paragraph 4.42(c) has been corrected.[Public Notice No. 20/2015-20 dated the09/06/2015]

• For recognition of Pre-Shipment InspectionAgency (PSIA), Bank Guarantee is to beexecuted with DGFT. Bank Guarantee Formatfor the same is notified. [Public Notice No.21/2015-20 dated the 23/06/2015]

• SION for (Golf Gloves made of Knitted/Crocheted/Woven/Non-Woven fabrics) in theTextile Product (Product Code: J) is beingnotified. Before this there was no SION for thisexport product. [Public Notice No. 22/2015-20dated the 23/06/2015]

• Import of processed metallic scrap which includesthe following categories of scrap: (i) Shredded,Cut Sheared, Rotor Sheared (ii) Briquetted,Baled, Bundles. (iii) Turnings, Borings, Granules,Nodules may be allowed at designated portshaving Scanner/Radiological DetectionEquipments (RDEs), subject to fulfillment ofspecified conditions.

Following Appendices are inserted in theAppendices and Aayat Niryat Forms of FTP2015-20;

(i) Appendix 2N-2, prescribing Format of Self-Declaration cum Legal Undertaking, isannexed as Annexure 1 to this Public Notice.

(ii) Appendix 2G-1, prescribing List of thedesignated Customs Ports having Scanners/Radiological Detection Equipments (RDEs),is annexed as Annexure 2 to this PublicNotice.

(iii) Appendix 2-H-1, prescribing Format of Pre-Shipment Inspection Certificate to be issuedby Inspecting Agency/Scrap Yard, isannexed as Annexure-3 to this Public Notice

[Public Notice No. 23/2015-20 dated the 30/06/2015]

• Area / Region of Operation of Pre-ShipmentInspection Agencies (PSIAs) listed in Appendix-2G has been amended. All the Pre-ShipmentAgencies listed in Appendix 2G are allowed timeupto 31.07.2015 to submit Bank Guarantee asprescribed in Public Notice No.21 dated23.06.2015 read with Public Notice No.19 dated05.06.2015. [Public Notice No. 24/2015-20dated the 02/07/2015]

Trade Notices:• Beta version of online ANF 5A has now been

released and now it is possible not only to applyonline for grant of EPCG authorization but alsoto upload the required supporting documentsusing digital signatures of the applicant. W.e.f01.07.2015, the submission of physical copiesof the application and its supporting documentswould be totally dispensed with and only onlineapplications, along with digitally uploaded /submitted documents would be accepted atDGFT. [Trade Notice No. 3/2015 dated01/06/2015]

• For Status Holders shortened time lines are laiddown for issue of advance authorisation and itssubsequent amendments:


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• Beta version of online ANF 3A has now beenreleased and now it is possible not only to applyonline for claiming rewards under MEIS but alsoto upload the required supporting documentsusing digital signatures of the applicant.Submission of Proof of Landing would be inaccordance with the provision of para 3.03.ofHBP 2015-20. [Trade Notice No. 5/2015 dated16/06/2015]

• As part of trade facilitation, DGFT has nowdeveloped a mobile application which has beenreleased for the Android platform. Mobile apphas the following features:

1. Minister's Speech

2. Foreign Trade Policy

3. Foreign Trade Procedures

4. Foreign Trade Policy Statement

5. Appendices and ANF of FTP

6. Know ITC(HS) code for a product

7. Know MEIS rate for a product

8. Application status

9. Check latest tweets

10. Download forms, appendices etc

[Trade Notice No. 6/2015 dated 29/06/2015]

SPECIAL ECONOMIC ZONE:• No New Notifications

INCOME TAX:Notification:• Department has notified income tax returns viz

ITR-1 for Individual having Income from Salaryand Interest, ITR-2 for Individuals and HUFs nothaving income from Business or Profession, ITR-2A for Individuals and HUFs not having incomefrom Business or Profession and Capital Gainsand who do not hold foreign assets and ITR-4Sfor Individuals/HUFs having income frompresumptive business, for assessment year2015-16 along with instructions and conditions.[Notification 49/2015 dated 22nd June 2015]

• Government has defined exclusion from theword "Business relationship" for the purpose ofchartered accountant who is not entitled orrequired to attend before any income-taxauthority or the Appellate Tribunal in connectionwith any proceeding Income Tax Act. IN otherwords Chartered Accountants renderingfollowing services will also be entitled forrepresentation before any income-tax authorityor the Appellate Tribunal [Notification 50/2015dated 24th June 2015]

• Order has been notified so as to rectify / amendbelow provision of Black Money (UndisclosedForeign Income and Assets) and Imposition ofTax Act, 2015:

(a) The act will come into force w.e.f 01st July2015. Earlier it was mentioned 01st April2016, however due to this date it wasconstrued that the act will be applicable from

Sl.No

Category ofStatus Holders

Nature of Application(received through electronic mode)

Timeline fordisposal

(in working days)

1 5 Star and 4 StarStatus Holders

1. Advance Authorisation (where input norms are notified)

2. Revalidation of Advance Authorisation

3. Invalidation of Advance Authorisation

1 Day

2 3 Star, 2 Star and1 Star StatusHolders

1. Advance Authorisation (where input norms are notified)

2. Revalidation of Advance Authorisation

3. Invalidation of Advance Authorisation

2 Days

[Trade Notice No. 4/2015 dated 08/06/2015]


11

financial year starting from 01st April 2016,which was not the case, hence thiscorrection has been made.

(b) Further as this act received President Assenton 26th May 2015, it has been decided togive effect of this act w.e.f from 01st July2015.

[Notification 56/2015 dated 01st July 2015]

• As per Section 59 and section 63 of Black Money(Undisclosed Foreign Income and Assets) andImposition of Tax Act, 2015 (22 of 2015),Government has appointed

(a) the 30th day of September, 2015 as the dateon or before which a person may make adeclaration in respect of an undisclosedasset located outside India;

(b) the 31st day of December, 2015 as the dateon or before which a person shall pay thetax and penalty in respect of the undisclosedasset located outside India so declared.

[Notification 57/2015 dated 1st July 2015]

• Black Money (Undisclosed Foreign Income andAssets) and Imposition of Tax Rules, 2015 hasbeen notified. [Notification 58/2015 dated 2ndJuly 2015]

• Due date of filing of Income Tax return for non-audit cases has been extended from 31st July2015 to 31st August 2015. [Order dated 10thJune 2015]

Circular:• The Black Money (Undisclosed Foreign Income

and Assets) and Imposition of Tax Rules, 2015have been notified. Queries about the scope ofthe scheme and the procedure to be followedhave been clarified in the form of questions andanswers. Also circular explaining the substanceof the provisions of the compliance window hasbeen issued. [Circular 12/2015 dated 02nd July2015 and 13/2015 dated 06th July 2015]

MVAT:Notification:• Consulate Generals of Russian Federation has

been added in the list of organization who is

entitled for refund of tax collected by anyregistered dealer on his sales made to them.[Notification 1515/CR 11/ Taxation 1 dated29th May 2015]

Trade Circular:• All officers and authorities of department are

instructed to accept the correspondence andletters marked and addressed to them and anydeviation from the above will be dealt strictly.[Circular 8T 2015 dated 16th June 2015]

• Department has started the facility to acceptpayments under Maharashtra Tax on Entry ofGoods into Local Area Act, 2002 through theGRAS Portal from 01.07.2015. Payment ofaforesaid tax electronically is optional at present.It may be mandatory soon. Also department haslaid down procedure for submission of returnafter making payment through GRAS.

[Circular 9 T 2015 dated 1st July 2015]

COMPANY LAW:Notifications:• New reference Committee viz. Companies Law

Committee has been formed consisting 8members headed by Chairmanship of TheSecretary of Ministry of Corporate Affairs. Theterms of said committee are as under:

i) To make recommendations to theGovernment on the issues arising from theimplementation of the Companies Act, 2013and

ii) To examine the recommendations receivedfrom the Bankruptcy Law ReformsCommittee, the High Level Committee onCSR, the Law Commission and otheragencies, while undertaking (i) above.

[Order F. No.2/19/2011-CL-V dated 4th June2015]

• Certain provisions of the Companies Act, 2013as specified in below tables shall not apply orshall apply with such exceptions, modificationsor adaptations stated as under to the PrivateLimited Companies:


12

Sr.No

Chapter No./ Section No./Sub-section(s) in the Companies

Act, 2013

Exceptions / Modifications / Adaptations w.r.t.Private Limited Companies.

1 Chapter I, sub-clause (viii) of clause(76) of section 2.

Any advice, directions or instructions to a director / Managergiven in any professional capacity Shall not be considered forsection 188 w.r.t. related party transactions.

2 Chapter IV, section 43 and section 47. Provisions w.r.t. Kinds of Share Capital and Voting rights arenot applicable to Private Limited Co's if MOA and AOA of PrivateLimited Companies provide the same.

3 Chapter IV, sub-clause (i) of clause(a) of sub-section (1) and sub-section(2) of section 62

In case of further issue of shares in case of private limitedcompanies the proviso has been inserted stating that in case90% of the members have given their consent in writing or inelectronic mode, then the period of less than 15 days fromdate of opening an offer as well as notice to all shareholdersless than three days are allowed.

4 Chapter IV, clause (b) of sub-section(1) of section 62.

Further issue of share through 'employee stock option' isallowed by way of Ordinary Resolution instead of SpecialResolution.

5 Chapter IV, section 67 & Chapter XIISection 185

Restrictions w.r.t. 'Buy back of own shares' as well asrestrictions w.r.t. 'Loan to Directors' will not be applicable toprivate limited Co. in whose share capital no other bodycorporate has invested any money, if the borrowings of saidcompany from Banks or financial institutions or body corporateis less than twice of paid up share capital or fifty crorewhichever is lower and such company is not in default inrepayment of such borrowings.

6 Chapter V, clauses (a) to (e) of sub-section (2) of section 73

Prohibitions on acceptance of deposits from public will not beapplicable to private limited companies which accept from itsmembers monies not exceeding 100% of aggregate of paidup share capital and free reserves and such company shallfile the details of monies so accepted to the registrar.

7 Chapter VII, sections 101 to 107 andsection 109

Following sections will apply unless otherwise specified in saidsections or the articles of the companies so provide otherwise:

Section 101 : Notice of meeting.Section 102 : Statement to be annexed to Notice.Section 103 : Quorum for meetingsSection 104 : Chairman of meetings.Section 105 : Proxies.Section 106 : Restriction on voting rights.Section 107 : Voting by show of handsSection 109 : Demand for poll.


13

Sr.No

Chapter No./ Section No./Sub-section(s) in the Companies

Act, 2013

Exceptions / Modifications / Adaptations w.r.t.Private Limited Companies.

8 Chapter VIl, clause (g) of sub-section(3) of section 117.

Exemption from filing of resolutions to ROC for resolutionspassed as per provisions of Section 179(3) i.e. w.r.t. makecalls on shareholder, buy back of shares, issue securities anddebentures, borrow monies, invest funds of companies, grantloans, give guarantees, approve financial statements, diversifythe business, amalgamation, take over a company etc.

9 Chapter X, Clause (g) of sub-section(3) of section 141

For appointment of auditor clause applicable with modificationas if such persons or partner is at the date of such appointmentor reappointment holding appointment as auditor of more thantwenty companies other than OPC, dormant companies, smallcompanies and private companies having paid up share capitalless than 100 crore.

10 Chapter XI, section 160. This section w.r.t. right of persons other than retiring directorsto stand for directorship is not applicable.

11 Chapter XI, section 162 This section w.r.t. Appointment of directors to be votedindividually not applicable.

12 Chapter XII, section 180 Restrictions on powers of Board w.r.t sale, lease theundertaking, invest, borrowings etc. will not be applicable toprivate limited companies.

13 Chapter XII, sub-section (2) of sectionI 84

The restriction w.r.t. non-participation in the meeting shall notapply to private limited company.

14 Chapter XII, second proviso to sub-section (1) of section 188.

The proviso stated below w.r.t. related party transactions shallnot apply - "Provided further that no member of the companyshall vote on such special resolution, to approve any contractor arrangement which may be entered into by the company, ifsuch member is a related party."

15 Chapter XIII, Sub-Section (4) & (5) ofSection 196

Appointment of Managing Director, whole time director ormanager with approval in general meeting as well as overallmaximum limit of managerial remunerations shall notapplicable in case of private limited companies.

The similar notifications for Government Companies, Nidhi Companies as well as Section 8 Companieshave been issued.

[Notification Nos. G.S.R. 463(E), 464(E), 465(E) & 466(E), dated 5th June 2015.]


14

• Revised substituted e-form CAR-2 for filing ofintimation of appointment of Cost Auditor by theCompany to Central Government as well as e-form CAR-4 for filing of Cost Audit Report toCentral Government has been issued.[Notification No. G.S. R. dated 12th June2015]

Circular:• Extension of time for filing of Notice of

appointment of the Cost Auditor for the F.Y, 2015-16 in Form CRA-2 has been allowed up to30thJune 2015 without any additional fees as wellas for filing of cost audit report to the CentralGovernment for the F.Y, 2014-15 in form CRA-4is also allowed to file up to 31st Aug 2015 withoutany additional fees. [General Circular No. 08/2015 dated 12th June 2015]

• It has been clarified that, if the companies are indefault for repayment of deposits, a depositor isfree to file an application under section 73(4) ofthe said Act, with the Company Law Board if thecompany fails to make repayment of depositsaccepted by it. Further the company may alsofile application under section 74(21 of the saidAct with the Company Law Board seekingextension of time in making the repayment ofdeposits accepted by it before thecommencement of the provisions of the said Act.

Further if the companies complied with therequirements laid down in Section 7a(1)(b) of theCompanies Act, 2013 Companies can repaydeposits accepted prior to 1"t April, 2O14 inaccordance with terms and conditions for whichthe deposits had been accepted.

It is also clarified that there is no bar on theRegistrar of Companies for filing of prosecutionagainst a company if such company fails to makerepayment of deposits accepted by it under theprovisions of the Companies Act, 1956 orCompanies Act, 2013, subject to the contentsas specified above. [General Circular No. 09/2015 dated 18th June 2015]

FEMA (Important Circular)• As per A.P. (DIR Series) Circular No. 113 dated

March 26, 2014, External Commercial

Borrowings (ECB) can be raised by airlinecompanies for working capital and for apermissible end-use under the approval routetill March 31, 2015.

It has now been decided by the RBI that theabove scheme of raising ECB for working capitalfor Civil Aviation Sector will continue till March31, 2016 with the same terms and conditions.

[RBI//2014-15/638 A.P. (DIR Series) CircularNo.109 June 11, 2015]

• As per A.P. (DIR Series) Circular No. 113 datedJune 24, 2013 External Commercial Borrowings(ECB) can be raised by eligible borrowers for lowcost affordable housing projects under theapproval route with a ceiling of USD 1 billion ineach of the two years, 2013-14 and 2014-15 andsubject to review thereafter.

It has now been decided that the scheme ofraising ECB for low cost affordable housingprojects will continue for the financial year 2015-16 with the same terms and conditions. [RBI/2014-15/637 A. P. (DIR Series) Circular No. 108June 11, 2015]

• As per Notification No. FEMA.344/2015 RBreferring Foreign Exchange Management(Transfer or Issue of Security by a PersonResident outside India), the RBI amended theregulations and added the following definitionsand amendments:

1. Employees' stock option is an option givento directors, officers or employees of acompany or of its holding company or jointventure or wholly owned overseassubsidiary/subsidiaries, if any which givesthem the benefit or right to purchase, or tosubscribe for shares of the company at afuture date at a pre-determined price.

2. Sweat equity shares are equity sharesissued by a company to its directors oremployees at a discount or for considerationother than cash, for providing know-how ormaking available rights in the nature ofintellectual property rights or valueadditions.


15

As per amended regulations, an Indiancompany may issue "employees' stockoption" and "sweat equity shares" to itsemployees/directors or of its holdingcompany or joint venture or wholly ownedoverseas subsidiary/subsidiaries who areresident outside India, provided that:

a) The company should follow SecuritiesExchange Board of India Act, 1992 or theCompanies (Share Capital and Debentures)Rules, 2014 notified by the CentralGovernment under the Companies Act2013.

b) The "employee's stock option"/sweat equityshares issued are in compliance with thesectorial cap applicable to the saidcompany.

c) Issue of "employee's stock option"/sweatequity shares in a company where foreigninvestment is under the approval route shallrequire prior approval of the ForeignInvestment Promotion Board (FIPB) ofGovernment of India.

d) Issue of "employee's stock option"/sweatequity shares under the applicable rules/regulations to an employee/director who isa citizen of Bangladesh/Pakistan shallrequire prior approval of the ForeignInvestment Promotion Board (FIPB) ofGovernment of India.

[Notification No FEMA.344/2015 RB DatedJune 11, 2015]

• As announced in the sixth Bi-Monthly MonetaryPolicy Statement, 2014-15, the RBI andGovernment of India has introduced cash settledInterest Rate Futures (IRF) for the term of 5-7year and 13-15 year of "Government of IndiaSecurities" and modified the residual maturity ofcash settled 10-year IRF to between 8 years and11 years with various options for maturity, whichare mentioned below.

Options for 10-Year cash settled InterestRate Futures contractsThere shall be two options for 10-Year cashsettled Interest Rate Futures contractsGovernment of India security i.e. single

Instrument or a basket of Government of IndiaSecurities. The face value for both options willbe Rs. 100 and both options will have residualmaturity of 8 and 11 years for expiry of futurescontract.

Options for 6-Year cash settled Interest RateFutures contracts

There shall be two options for 6-Year cash settledInterest Rate Futures contracts Government ofIndia security i.e. single Instrument or a basketof Government of India Securities. The face valuefor both options will be Rs. 100 and both optionswill have residual maturity of 4 and 8 years forexpiry of futures contract.

Options for 13-Year cash settled InterestRate Futures contracts

There shall be two options for 13-Year cashsettled Interest Rate Futures contractsGovernment of India security i.e. singleInstrument or a basket of Government of IndiaSecurities. The face value for both options willbe Rs. 100 and both options will have residualmaturity of 11 and 15 years for expiry of futurescontract.

Other conditions for cash settled 6-year, 10-year and 13-year Interest Rate Futurescontracts (Single Instrument).

1. The underlying security shall be decided bystock exchanges.

2. The contract shall be cash-settled in Indianrupees

3. The final settlement price shall be calculatedby the volume weighted average price ofthe underlying security based on pricesduring the last two hours of the trading on(NDS-OM) system. If less than 5 trades areexecuted in the underlying security duringthe last two hours of trading, then FIMMDAprice shall be used for final settlement.

Conditions for the option of Basket ofSecurities

a. The underlying security shall have couponwith semi-annual compounding.

b. Exchanges shall disclose criteria forincluding securities in the basket and


16

determining their weights such as tradingvolumes in cash market, minimumoutstanding etc.

c. The contract shall be cash-settled in Indianrupees.

d. The final settlement price shall be based onaverage settlement yield which shall bevolume weighted average of the yields ofsecurities in the underlying basket. For eachsecurity in the basket, yield shall becalculated by determining weighted averageyield of the security based on last two hoursof the trading in NDS-OM system. If lessthan 5 trades are executed in the securityduring the last two hours of trading, thenFIMMDA price shall be used for determiningthe yields of individual securities in thebasket. "

These amendments shall, come into force witheffect from June 12, 2015. And these instrumentswill be called as "Government of India security",following the words "with residual maturitybetween 4 and 8 Years, 8 and 11 years and 11and 15 years".

[RBI/2014-15/640 FMRD.DIRD.10/14.03.01/2014-15 June 12, 2015]

• As per FEMA regulations, banks are allowed toborrow funds from their Head Office, overseasbranches and correspondents and availoverdraft in the nostro accounts up to a limit ofhundred per cent of their unimpaired Tier I capitalor USD 10 million (or its equivalent), whicheveris higher. But as per A.P. (DIR Series) CircularNo. 61 dated October 10, 2013, the RBI permittedAD I banks to borrow from international /multilateral financial institutions for a limitedperiod up to November 30, 2013.

It has now been decided by the RBI to permit ADCategory - I banks to borrow from international /multilateral financial institutions without

approaching the RBI for a case by case approval.But such borrowings should be for the purposeof general banking business and not for capitalaugmentation and shall be subject to theapplicable prudential conditions stipulated in theA.P. (DIR Series) Circular no. 40, 2013 datedSeptember 10, 2013.

[RBI/2014-15/649 A.P. (DIR Series) Circular No.112 June 25, 2015]

• As per Government of India Circular No. 17/2015- Customs, dated May 26, 2015 (ANNEX)regarding guidelines on manner of operation ofthe Special Notified Zone (SNZ), the RBIpermitted trading of rough diamonds in India bydiamond mining companies with termsmentioned in A.P.(DIR Series) Circular No. 116of April 01, 2014. But as per FEMA regulations,every exporter of goods/ software, to any placeoutside India, other than Nepal and Bhutan, isrequired to submit declaration in EDF /SOFTEX;

But in order to facilitate re-export of unsold roughdiamonds imported on free-of-cost basis at SNZ,the RBI clarified that the unsold rough diamonds,when re-exported from the SNZ without enteringthe Domestic Tariff Area (DTA), do not requireany EDF formality. But entry of consignmentcontaining different lots of rough diamonds intothe SNZ should be accompanied by a declarationof notional value by way of an invoice and apacking list indicating the free cost nature of theconsignment.

For the lots cleared at the Precious CargoCustoms Clearance Centre, Mumbai, Bill of Entryshall be filed by the buyer while purchasing roughdiamonds. AD bank may permit such importpayments after being satisfied with the bona-fidesof the transaction.

[RBI/2015-16/110 A.P. (DIR Series) CircularNo.1 July 02, 2015]


17

CBEC Notified Exchange Rate for Conversion of Foreign Currency w. e. f. 03rdJuly 2015 [Notification No.66/2015-Customs (N.T) Dated 02nd July-2015]

SCHEDULE - I

S.No. Foreign Currency

Rate of exchange of one unit of foreign currencyequivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1. Australian Dollar 49.45 48.05

2. Bahrain Dinar 173.85 164.35

3. Canadian Dollar 51.20 50.05

4. Danish Kroner 9.60 9.30

5. EURO 71.45 69.70

6. Hong Kong Dollar 8.30 8.15

7. Kuwait Dinar 216.80 204.55

8. New Zealand Dollar 43.35 42.20

9. Norwegian Kroner 8.15 7.95

10. Pound Sterling 100.70 98.45

11. Singapore Dollar 47.65 46.65

12. South African Rand 5.35 5.05

13. Saudi Arabian Riyal 17.50 16.50

14. Swedish Kroner 7.70 7.50

15. Swiss Franc 68.15 66.55

16. UAE Dirham 17.85 16.85

17. US Dollar 64.25 63.20

S.No. Foreign Currency

Rate of exchange of 100 units of foreign currencyequivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1. Japanese Yen 52.25 51.05

2. Kenya Shilling 66.00 62.35

SCHEDULE-II


18

EASE OF DOING BUSINESS - POLICIES &REALITIES

By CMA Ashok B. NawalContact: +91 9890165001 • Email: [email protected]

Prime Minister Modi envisions transforming our nationand creating opportunities for all citizens byharnessing digital technologies. His vision is toempower every citizen with access to digital services,knowledge and information. The objective of the DigitalIndia Group is to come out with innovative ideas andpractical solutions to realize Hon'ble Prime MinisterNarendra Modi's vision of a digital India.

Hon'ble Prime Minister has announced variousschemes with slogan such as

• Make in India

• Ease of Doing Business

• Swacch Bharat

• Digital India

• Sabka Saath Sabka Vikas & many more…

However, NDA Government under his leadership havetaken specific measures to implement the slogans intothe reality. He had visited number of countries andthere is a substantial increase in inflow in FDA.Further, in the budget 2015-16, Swaccha Bharat Cessis introduced @2% on specified services form thenotified date (which is yet to be notified). He hadinaugurated Digital India fortnight in the last week.

In the month of June 2015, Department of IndustrialPolicy & Promotion of Ministry of Industry hadpublished "Assessment Framework for State levelreforms enabling ease of doing business. It covers:

1. Need of reform

2. State Level Assessment

3. Objectives

4. Assessment framework

a. Capture

b. Assess

c. Collate

d. Share

5. Assigning importance to factors enabling easeof doing business

6. Detailed questionnaire for :a. Setting up a business - General(9

Questions)b. Setting up a business - Single window

system(19 Questions)c. Allotment of land and obtaining construction

permit - General& NOCs/ licences/registrations (37 Questions)

d. Complying with environment procedures -General&NOCs/ licenses/ registrations (32Questions)

e. Complying with labour regulations -General&Application for NOCs/ licences/registrations (50 Questions)

f. Obtaining infrastructure related utilities -General & NOCs/ licences/ registrations (21Questions)

g. Tax procedures - General &NOCs/ licences/registrations (43 Questions)

h. Carrying out inspections - General &Procedures (61 Questions)

i. Enforcing contracts (8 Questions)

The questionnaires set up for the above subjectsincludes around 285 questions and focusing on SingleWindow System & combination of permissions andtime required including publishing of checklist &requirement of documents on the website ofrespective department of the Government. Each StateGovernment needs to self-assessed and decides theaction plan for upgrading itself for reduction of timewithout compromising on the object. Thequestionnaire set up, perhaps covers all the pointswhere industries are facing the problems withGovernment Authorities which increases thecorruption across.

Perhaps, Hon. Prime Minister have appreciated thefacts that Make in India Mission cannot be successfulwithout ensuring ease of doing business.

This publication reveals very vital facts where Indiaranks as compared to various factors such as:


19

Economy Ease of DoingBusiness Bank (2015)

Singapore 1New Zealand 2Hong Kong, SAR, China 2South Africa 43Russia 62China 90Sri Lanka 99Brazil 120Pakistan 128India 142Uganda 150

Topic IndiaRanking

Starting a business 158

Dealing with construction permits 184

Getting Electricity 137

Registering property 121

Getting credit 36

Protecting minority investors 7

Paying Taxes 156

Trading across borders 126

Enforcing contracts 186

Resolving insolvency 137

Government of Maharashtra has claimed to reduce75 permissions to 25 permissions for setting up thebusiness in Maharashtra. Similarly MIDC have alsoreduced the requirements.The required permissions would be for land allotmentand lease, mortgage, building plan approval, final fireNOC and building completion certificate. All other nineNOC permissions have been done away with.The labour department has notified new rules to

enable renewal of factory licence in three days, orthe application will be deemed renewed.

Similarly under the Bombay Shop and EstablishmentsAct, new permission will be granted in three days orthe application will be automatically considered asdeemed approved.

Let us go through the policies already implementedby Central Government.

Department Policy Reality Suggestion

CENTRALEXCISE

Good governance meeting & tax Payer'sDay with all Commissioners on TaxPayer's Day - Each Wednesday 9:30 amto 1:00 pm

Needs to be seen, since this hasbeen implemented in this month.

Officers should consider thegrievances and find out theissues rather than consideringthe issues as personalcomplaints otherwise Assesseewill have their own fear.

REFUND & REBATESNeeds to be sanctioned within 3 monthsfrom the date of receipt otherwisemandatory interest is required to be paidin line with income tax

Refund & rebates are neversanctioned within time andwithout liasoning. Interest isnever given even though it ismandatory and if it claimed,pressure from departmentalofficers is made on thecompany's official to withdraw theinterest.

Tax Payer Day or any other dayshould be earmarked alongwithindustry's representatives andanalyse the MIS for delay inprocessing application & timetaken for refund.All the applications should bemade online and like income tax,bank account number should beasked and directly to be creditedto the bank accounts alongwithinterest, if applicable.

PERMISSIONS AS APPLICABLE TOEOU & SEZ UNITSSuch permissions should be given inspecified date and in accordance withBoard Circular and provisions of foreigntrade policy

Permissions are not given in thetimeline frame either by CBEC orForeign Trade Policy. There is noreview mechanism and thereforepermissions are granted basedon the efficiency of liasoning.

Each permission should beonline and should be grantedwithin stipulated days and MISshould be reviewed andresponsibility on the officers to beput and reasons and writingshould be asked for with copy toassessee.


20


CUSTOMS SELF-ASSESSMENTThough self-assessment era has beenstarted and even customs act has beenamended from Nov 2011 and Onsightaudit of import & export consignment isreduced so as to enable importer to clearthe consignment within 24 hrs and makehurdle free exports.

As such self-assessment isintroduced only for 5%-10%instead of 100%. Normalclearance of importedconsignment is not less than 72hrs and that too with effectiveliasoning. ACP status not beenrenewed for number of exporters& importerson flimsy ground ofissue of SCN. Excise departmentissues number of notices whichare subsequently do not stand inthe court of law but in a effectpolicy remains on some papers.

Negative list of importers andexports to be made on specificcriteria and self-assessment is tobe introduced for each and everyimport & export consignment ofsuch persons other thanappearing in the negative list.Custom manual needs to beupdated. Custom officer needsproper training of Act &procedures and they should bemade answerable for unduehardship to the importer &exporters.

INCOMETAX

Simplified returns and scrutinyassessment on selective basis and grantrefund within 6 months and alongwithinterest as applicable.

In the department of RevenueCBDT has only implemented thepolicy in real sense andharassment has beensubstantially reduced initialproblems of the systems of TDSreturns has been also betterstreamlined.

There should be a periodicallymechanism to refund the taxwhich has been short paid onaccount of TDS Returns andrevision thereof.

FOREIGNTRADEPOLICY

Paras 9.10 & Para 6.41 of Handbook ofprocedures prescribed time limit whichis given below

Reality is completely different.The period of processing &disposal is directly in proportionefficiency of liasoning.Redemption of advanceauthorization takes lot of time&needs lot of documentations.Similarly,procedure ofdebonding itself is complex andabsolutely followed differently indifferent Commissionerate

There should be a reviewmechanism and responsibility tobe fixed on erring officers andexplanation to be sought fromthem with copy to the importers&exporters.

Category of Application TimeLimit ForDisposal

IEC Number 2

Advance Authorisationwhere Input-Output normsare notified or under para-graph 4.07 of HBP, AdvanceAuthorisation for AnnualRequirement and DFIA. 3

ADJUDICATIONPeriod of deciding the adjudication isdecided as 6 months and each officerwho has been assigned theresponsibility of adjudication should actas Quasi-judicial authority and decidethe matter on merit.

More than 98% matters aredecided much after 6 months andin the exceptional cases ordersare passed on merits andsubsequently those cases aredropped by CESTAT.However there are someexceptions which can be countedand the list will not be more than100 in All India basis.

Assesses are unnecessarily heldup in litigations, time & cost andmental harassment therefrom.Further they have to deposit 7.5%or 10% of duty demandeddepending on the filing firstappeal or second appeal.Review has to be made by CBECon order in Original issued byauthorities, which has beenwithout following decisions ofHigher Judicial Authoritiesotherwise action should be takenon such officers for doing grossjudicial indiscipline.This is line with decision of HonSupreme Court.


21


Fixation of input outputnorms 120Issuance of EPCGAuthorisations 3All Authorisations underGem &Jewellery scheme 3Revalidation of Authori-sation and extension ofexport obligation periodby R.A 3Acceptance of BG/LUT 15Redemption/EODC ofAdvance Authorisation/DFIA 15Redemption of EPCGAuthorisations andrelease of BG /LUT. 30Issuance/renewal of statuscertificate 3Amendment of anycategory of Authorisation 3Miscellaneous 10Refund of DBK/ TEDunder deemed export 30Fixation of Brand Ratefor duty drawback 30Issue of LoP / LoI 15Conversion of LoP / LoI 15Acceptance of LUT 3Renewal of LUT 3Permission for broadanding / diversification 3Permission for change inlocations 7Permission for AdvanceDTA sale 2Permission for mergerof units 7Permission for enhance-ment of production capacity 3Cancellation of LoP 3Permission for debonding/exit 7Permission for DTA sale 2Eligibility certificate foremployment visa for lowerlevel technicians 2Issue of Green Card 2Renewal of Green Card Same dayPermission to lease CG 1

Permission for disposal ofscrap / waste 2

Permission for change inname 2


22


Inter Unit Transfer 2Wastage Norms, ad-hoc 2Permission for re-import Same dayPermission for re-export Same dayPermission for replace-ment / repair of goods Same dayAllotment of I.E. Code 1Authorization of softexform 1Reimbursement of CSTclaims 7Issue of GSP Certificate Same dayPermission for conversionof EOU to STPI, EPCG 5Permission of final exit ofEOU 5Permission of extension ofEOU 2Permission to allowincrease in value of CG 2Permission for exportthrough exhibition / tour 2Reimbursement of DutyDrawback / TED 7

DEPARTMENTOF

INDUSTRIALPOLICY &

PROMOTION

Government has introduced E-BizServices maintained by Infosys whichpresently covers approvals andregistrations of the following :1. Industrial Licence2. Industrial Entrepreneur

Memorandum3. Employer Registration with ESIC4. MCA Name Availability5. MCA Director Identification Number6. Certificate of Incorporation7. Certificate for Commencement of

Business8. Reporting of Advance Foreign

Remittance9. Reporting of FC-GPR10. Issue of Permanent Account

Number-NSDL11. Issue of Permanent Account

Number-UTIITSL12. Issue of Tax Deduction &

Collection Account Number13. Employer Registration with EPFO14. Issue of Importer Exporter Code15. License for Possession and Sale or

Possession and Use of Explosives

Undoubtedly policy has beenimplemented by Ministry ofIndustry.

More & more sectors also to beincluded and DIPP should act asa nodal agency between variousdepartments & followingapprovals can be coordinated bythe nodal agencies.16. Approval of Foreign Direct

Investments under Auto-maticRoute as well as ApprovalRoute.

17. Application for obtainingPollution Control Boardpermission to set up factoryand thereafter application forobtaining Pollution ControlConsent.

18. Obtaining No ObjectionsCertificates from variousMinistries / Departments forProjects.

MINISTRYOF

CORPORATEAFFAIRS

E-Governance is introduced and all theROC formalities has been on e-governance.

Ministry of Corporate Affairs hasimplemented policy for ease ofdoing business.


23

There is a need for Integrations of Existing OnlineWebsites of various Departments such as DGFT,Central Excise, RBI, Banks, Customs, VAT / CST andso on ….. so that every time, investors and industriesneed to run to various Departments for getting eitherNOC or authenticated documents and informationcertified by other Departments. For example, 1) forClaiming Merchandize Incentive Scheme benefits, theShipping Bills have to be imported or uploaded byCustoms Department into DGFT Online Website,however, it is never done and every time people haveto chase Customs for doing it, which increasestransaction cost and time. 2) For fixing Brand Rate ofDrawback, again the exporter needs to chase theCustoms for submission and processing of DBKclaims, which can be done automatically betweenCentral Excise & Customs Department themselves.3) For setting up EOU Unit, the entrepreneur has toapply to Development Commissioner Authorities andfor various verifications and permissions, he is beingmade a spring board between Central Excise &Development Commissioner, which is very timeconsuming and in such cases, it lasts more than 4-5months and same case is when exit from EOU(debonding), which may last more than 12 monthstoo. For every export cleared under self-clearance,intimation of each and every export is to be given toCentral Excise within 24 hours, which is acumbersome job and it should be made online itself.

Further, system should be online for:

1. Giving Intimations, making On-line Applicationsfor obtaining Approvals / Permissions /Registrations / Licences, Verification Report,NOCs, Authentication & submission of PeriodicReturns under various the following Actsdistinguished under Tax Laws, Business Laws&Labour Laws, it should be done online:

TAX LAWSi. Central Excise Act, 1944

ii. Customs Act 1962

iii. Central Sales Tax Act, 1956 (even if not nowsince it is governed by State, however, it shouldbe possible after GST is implemented)

iv. Finance Act, 1994 (Service Tax)

v. Income Tax Act, 1961

vi. Foreign Exchange Management Act, 1999

vii. Maharashtra Value Added Tax Act, 2002 (evenif not now since it is governed by State, however,it should be possible after GST is implemented)

viii. Prevention of Money Laundering Act, 2002

ix. SEBI (Disclosure & Investor Protection)Guidelines, 2000

x. Securities & Exchange Board of India Act, 1992.

xi. The Medicinal & Toilet Preparations (ExciseDuties)

Act, 1955

xii. The Research and Development Cess Act, 1986

BUSINESS LAWS

i. Foreign Trade (Development & Regulation) Act,1992

ii. Special Economic Zone Act, 2005

iii. Bureau Of Indian Standards Act, 1986

iv. Competition Act, 2002

v. Contract Act, 1972

vi. E-Waste (Management & Handling) Rules, 2011

vii. Explosives Act, 1884

viii. ISO Certification (Food Safety and Standards Act,2006)

ix. Legal Metrology Act, 2009

x. Micro Small & Medium Enterprises DevelopmentAct, 2006

xi. Motor Vehicle Act, 1988

xii. Negotiable Instruments Act, 1881

xiii. Public Liability Insurance Act, 1991

xiv. The Companies Act, 2013

xv. The Consumer Protection Act, 1986

xvi. The Copyright Act, 1957

xvii. The Electricity Act, 2003

xviii. The Environment (Protection) Act, 1986

xix. The Hazardous Wastes (Management &Handling) Rules, 1989

xx. The Indian Boilers Act, 1923

xxi. The Information and Technologies Act, 2000


24

xxii. The Maharashtra Tax on Entry of Motor Vehiclesinto Local Areas Act, 1987

xxiii. The Patents Act, 1970

xxiv. The Petroleum Act, 1934

xxv. The Trade Marks Act, 1999

INDUSTRIAL & LABOUR LAWSi. The Factories Act, 1948

ii. The Industrial Employment (Standing Order)Act, 1946

iii. The Minimum Wages Act, 1948

iv. The Payment of Wages Act, 1936

v. Workmen Compensation Act, 1923

vi. Payment of Bonus Act, 1965

vii. The Payment of Gratuity Act, 1972

viii. The Bombay Shops & Establishment Act, 1948

ix. The Sales Promotion Employees (Condition ofService) Act 1976

x. Contract Labour (Regulation and Abolition) act1970

xi. Industrial Disputes Act, 1947

xii. Maharashtra Sales Tax on Professions, Trades,Callings & Employments Act 1975

xiii. MRTU & PULP Act (Maharashtra)

xiv. The (National & Festival Holidays) Act, 1963

xv. The Apprentice Act, 1961

xvi. The Bombay Industrial Relation Act, 1946

xvii. The Bombay Labour Welfare Fund Act, 1953 ORMaharashtra Labour Welfare Fund Act, 1953

xviii. The Bonded Labour System (Abolition) Act, 1976

xix. The Child Labour (Prohibition & Regulation) Act,1886

xx. The Children (Pledging of Labour) Act 1933

xxi. The Employees Provident Fund & Misc.Provisions Act 1952

xxii. Employees State Insurance Act, 1948

xxiii. The Employment Exchanges (CompulsoryNotification of Vacancies) Act,1959

xxiv. The Equal Remuneration Act, 1976

xxv. The Inter-State Migrant Workmen (Regulationof Employment & Conditions of Service) Act ,1979

xxvi. The Maternity Benefits Act, 1961

xxvii. The Fatal Accidents Act, 1955

xxviii. The Personal Injuries (CompensationInsurance) Act 1963

xxix. The Private Security Agencies Regulation Act2005

xxx. The Sexual Harassment of Women at Workplace(Prevention, Prohibition and Redressal) Act, 2013

xxxi. The Weekly Holidays Act, 1992

For example, many of the Industries does not knowthat there is intimations and returns to be submittedto the Collector under the Sexual Harassment ofWomen at Workplace (Prevention, Prohibition andRedressal) Act, 2013 and the Weekly Holidays Act,1992 and if such compliances is not done there ispenalty as well as punishment too. If everything ismade online including list of intimations and returnsalong with instructions to be submitted for specificindustries with do's and dont's online itself it will helpthem do compliances.

The list of Laws and Acts given are of generic natureand are applicable to almost every industry. However,we have not covered the industry specific Acts &Regulations in the above list - for example, TheInsecticide Act 1968, The FDA Act, The Atomic EnergyAct, 1962 etc. etc. and we also not covered the StateActs and Laws, which is a State subject.

Though policy has been laid down and roadmap hasbeen made by the government for meeting theobjective of "Ease of doing the Business in India", lotofreview mechanism and vigilance is required toensure the policy & practices are the same, otherwiseit will be only slogan and it will be really challenging tocompete with International Competitive market.However, if we can succeed then "Make in India"mission will not only be successful but India willemerging most powerful country in the world.

It is not only work of government but each of us needsto change the mind-set, work with ethical values andfollow the ethical practices then only we can really bepart of building the nation.


25

Depreciation means allocation of the cost of the assetover a period of its useful life. Under the CompaniesAct, 1956, depreciation had to be provided in thebooks of accounts as per rates prescribed in ScheduleXIV annexed to Companies Act, 1956 as amendedby following Straight Line Method / Written Down ValueMethod / Unit of Production method. UnderCompanies Act, 2013, salient features of depreciationare as under:

1. As per the provisions of Section 123 of theCompanies Act, 2013, depreciation shall beprovided in accordance with the provisions ofSchedule II annexed to Companies Act, 2013and amendments thereof.

2. Depreciation is the systematic allocation of thedepreciable amount of the asset over its usefullife.

3. Depreciable amount of an asset is the cost of anasset or other amount substituted for cost, lessits residual value

4. Useful life of an asset is the period over which

Guidelines for Computation of DepreciationUnder Companies Act, 2013

CA. Preeti Kulkarni

an asset is expected to be available for use byan entity, or the number of production or similarunits expected to be obtained from the asset bythe entity.

5. Some of the Key Factors to be considered fordetermining the useful life of the asset are:

• Technology / Technical, Technological,Commercial Or Other Types OfObsolescence

• Wear and Tear

• Repairs & Maintenance / Overhauling /Reconditioning

• Environmental Conditions

• Market / Customer Demand for products

• Expected actions by competitors or potentialcompetitors / industry in general

• Contractual Terms - Eg: Financial Lease

• Dependency on other assets - Eg: Life ofmoulds will also be dependent upon themain machine

It is interesting to understand the key differences in method of Depreciation under The Companies Act, 1956and The Companies Act, 2013.

S.No. Particulars Companies Act, 1956 Companies Act, 2013

Governing Section There was a separate Section 350 dealingwith Ascertainment of Depreciation whichprescribed that depreciation needs to becalculated in accordance with ScheduleXIV.

Section 123 deals with declaration andpayment of dividend and the method ofarriving at distributable profit. Depreciationas prescribed under Schedule II needsto be considered. Further other sectionsgive reference to computation ofdepreciation as per Section 123

1

Method of Depreciation Straight Line Method (SLM), Written DownValue Method (WDV) & Unit of ProductionMethod (UPM)

Straight Line Method (SLM), Written DownValue Method (WDV)

2

Depreciation base forTangible Assets

Rates are Prescribed Useful life is prescribed3


26

S.No.

Particulars Companies Act, 1956 Companies Act, 2013

Depreciation base forIntangible Assets

No specific mention for intangible assets.Amortisation as per Accounting Standard26 being followed

Amortisation required to be done inaccordance with Accounting Standard26. Method adopted needs to bedisclosed. Exception is provided foramortisation w.r.t. Toll Roads under Build,Operate and Transfer.

4

Schedule as per Act Schedule XIV Schedule II5

Residual Value of Asset There was no concept of residual valueit was governed as per AS - 6

Residual Value of maximum 5% isdefined. Companies have option to choosehigher residual value subject to followingconditions :(a) Disclosure of the said fact &(b) Justification for selection of differentuseful life

7

Mandate w.r.t. RatesPrescribed by Schedule

Companies have to follow the minimumrates prescribed under the schedule.Higher Rates may be adopted subject toappropriate disclosures including usefullives of the assets

Companies following the AccountingStandards as mentioned under Section133 of The Companies Act, 2013 areallowed to follow Lower useful life of assetthan prescribed subject to followingconditions :(a) Disclosure of the said fact &(b) Justification for selection of differentuseful lifeFor other companies, useful life shall notbe longer than that prescribed underSchedule II

6

Depreciation forSignificant Part of anAsset

There was no requirement ofidentification of significant part

Identification of Significant Part of Capitalgoods is required and if the useful life ofthe significant partis different from theuseful life of remaining asset, then usefullife of significant part has to bedetermined separately.

8

Impact of Shifts Calculations of the extra depreciation fordouble shift working & for triple shiftworking shall be made separately in theproportion which the number of days forwhich the concern worked double shift ortriple shift, as the case may be, bears tothe normal number of working days duringthe year. Further rates were alsoprescribed for few industries. Exceptionsare provided where benefit of extra shiftswill not be provided

If the asset is used for extra shift anytime during the year, value of depreciationshall be increased by 50% for no. of daysworking in double shift and by 100% forno. of days working in Triple shift.Exceptions are provided where benefit ofextra shifts will not be provided

9


27

S.No.

Particulars Companies Act, 1956 Companies Act, 2013

Depreciation of lowvalue asset

100% Depreciation need to be providedin the first year itself for asset havingvalue less than 5000/-. Further if theaggregate actual cost of individual itemsof plant & machinery costing Rs. 5,000or less constitutes more than 10 per centof the total actual cost of plant &machinery, rates of depreciationapplicable to such items shall be the ratesas specified in the Schedule

No such restriction is mentioned and thecompanies may determine the useful lifeof such assets with appropriatedisclosures

10

Depreciation under SLM/ Depreciation underWDV

As per the rates specified SLM - Percentage determined as (Costof Asset-Residual Value)/Useful Life ofAssetWDV - Percentage determined as {1-(Scrap Value of Asset/WDV of Asset)^(1/No.of years)}

11

In a nutshell, the depreciation accounting under theCompanies Act, 1956 has been brought in line withthe international accounting practices. Applicability ofIndian Accounting Standard IndAS -16 Property, Plantand Equipment which also deals in accounting ofdepreciation has been made applicable to allcompanies in a phasedmanner from 1.4.2015.

CHALLENGES FOR THE INDUSTRY1. Determining Useful Life of Asset for each of the

Assets in the Gross Block as on 1st April, 2014taking into consideration the important factorsaffecting the life. Identifying assets with NILremaining life and considering the impact onretained earnings

2. Determining Useful Life of Asset for each of theAssets procured during the Financial Year 2014-15 and thereafter

3. Determining Residual value for each of theAssets including Land, Buildings

4. Comparison of the Life so Determined vis-à-visthe other Reporting Standards adopted by thecompany such as US GAAP / IFRS

5. Revised Estimates incase there is any changeaffecting the base adopted for determining theuseful life of the asset

6. Determining Impact on Deferred Tax Asset /Deferred Tax Liability / Reserves and Surplus /Current Profit & Loss Account

7. Justification for adopting Life other thanprescribed under Schedule II

8. Determining useful life of significant part of anasset if it is different from the useful life of theremaining asset.

To overcome these challenges, company should lookforward for the following:

1. Obtain Installation Certificate for all capital goodsand Installation Certificate should specify usefullife which can be certified by Installation Agency/ CEO. This procedure can be adopted for thenew capital goods.

2. For existing capital goods, following activitiesneeds to be undertaken:

• Review the useful life of assets and validatethe same from Independent CharteredEngineer.

• Component approach for significant part ofthe asset has been prescribed and hencedetermine the significant part for each ofassets. Get it validated from IndependentChartered Engineer (CE). While doing so, itis important to cross check the amortization


28

considered for either working out assessablevalue for items of captive consumption ordetermining assessable value for productmanufactured out of free tooling or capitalgoods received.

• The CE certifications will be considered asa material document in assessments andaudits.

• Physical Verification of assets to ascertainthe assets for which there is no useful lifeand still some value appears in the books,then the same needs to be transferred toretained earnings.

• Restructuring of Fixed Asset Register toincorporate the recommendedamendments.

PART C of Schedule II stating useful life isattached for ready reference

Nature of assets Useful Life

I. Buildings [NESD](a) Buildings (other than factory

buildings) RCC Frame Structure 60 Years

(b) Buildings (other than factorybuildings) other than RCC FrameStructure 30 Years

(c) Factory buildings -do-

(d) Fences, wells, tube wells 5 Years

(e) Others (including temporarystructure, etc.) 3 Years

II. Bridges, culverts, bunders, etc.[NESD] 30 Years

III. Roads [NESD](a) Carpeted roads

(i) Carpeted Roads-RCC 10 Years

(ii) Carpeted Roads-other than RCC 5 Years(b) Non-carpeted roads 3 Years

IV. Plant and Machinery(i) General rate applicable to plant and

machinery not covered under specialplant and machinery

(a) Plant and Machinery other thancontinuous process plant not coveredunder specific industries 15 Years

(b) continuous process plant for whichno special rate has been prescribedunder (ii) below [NESD] 8 Years

(ii) Special Plant and Machinery(a) Plant and Machinery related to

production and exhibition of MotionPicture Films

1. Cinematograph films – Machineryused in the production and exhibitionof cinematograph films, recordingand reproducing equipments, developing machines, printingmachines, editing machines,synchronizers and studio lightsexcept bulbs 13 Years

2. Projecting equipment for exhibitionof films - do -

(b) Plant and Machinery used in glassmanufacturing

1. Plant and Machinery except directfire glass melting furnaces -Recuperative and regenerativeglass melting furnaces 13 Years

2. Plant and Machinery exceptdirect fire glass melting furnaces -Moulds [NESD] 8 Years

3. Float Glass Melting Furnaces[NESD] 10 Years

(c) Plant and Machinery used in minesand quarries-Portable undergroundmachinery and earth movingmachinery used in open cast mining[NESD] 8 Years

(d) Plant and Machinery used inTelecommunications [NESD]

1. Towers 18 Years

2. Telecom transceivers, switchingcentres, transmission and othernetwork equipment 13 Years

3. Telecom - Ducts, Cables and opticalfibre 18 Years

4. Satellites - do -

(e) Plant and Machinery used inexploration, production andrefining oil and gas [NESD]

1. Refineries 25 Years


29

2. Oil and gas assets (including wells),processing plant and facilities - do -

3. Petrochemical Plant - do -

4. Storage tanks and related equipment - do -

5. Pipelines 30 Years

6. Drilling Rig - do -

7. Field operations (above ground)Portable boilers, drilling tools,well-head tanks, etc. 8 Years

8. Loggers - do -

(f) Plant and Machinery used ingeneration, transmission anddistribution of power [NESD]

1. Thermal/ Gas/ Combined CyclePower Generation Plant 40 Years

2. Hydro Power Generation Plant -do-

3. Nuclear Power Generation Plant -do-

4. Transmission lines, cables andother network assets -do-

5. Wind Power Generation Plant 22 Years

6. Electric Distribution Plant 35 Years

7. Gas Storage and Distribution Plant 30 Years

8. Water Distribution Plant includingpipelines -do-

(g) Plant and Machinery used inmanufacture of steel

1. Sinter Plant 20 Years

2. Blast Furnace -do-

3. Coke ovens -do-

4. Rolling mill in steel plant -do-

5. Basic oxygen Furnace Converter 25 Years

(h) Plant and Machinery used inmanufacture of non-ferrous metals

1. Metal pot line [NESD] 40 Years

2. Bauxite crushing and grindingsection [NESD] -do-

3. Digester Section [NESD] -do-

4. Turbine [NESD] -do-

5. Equipments for Calcination [NESD] -do-

6. Copper Smelter [NESD] -do-

7. Roll Grinder 40 Years

8. Soaking Pit 30 Years

9. Annealing Furnace -do-

10. Rolling Mills -do-

11. Equipments for Scalping, Slitting,etc. [NESD] -do-

12. Surface Miner, Ripper Dozer, etc.,used in mines 25 Years

13. Copper refining plant [NESD] -do-

(i) Plant and Machinery used inmedical and surgical operations[NESD]

1. Electrical Machinery, X-ray andelectrotherapeutic apparatus andaccessories thereto, medical,diagnostic equipments, namely,Cat-scan, Ultrasound Machines,ECG Monitors, etc. 13 Years

2. Other Equipments. 15 Years

(j) Plant and Machinery used inmanufacture of pharmaceuticalsand chemicals [NESD]

1. Reactors 20 Years

2. Distillation Columns -do-

3. Drying equipments/Centrifugesand Decanters -do-

4. Vessel/storage tanks -do-

(k) Plant and Machinery used in civilconstruction

1. Concreting, Crushing, PilingEquipments and Road MakingEquipments 12 Years

2 Heavy Lift Equipments-

Cranes with capacity of more than100 tons 20 Years

Cranes with capacity of less than100 tons 15 Years

3. Transmission line, TunnelingEquipments [NESD] 10 Years

4. Earth-moving equipments 9 Years

5. Others including MaterialHandling/Pipeline/WeldingEquipments [NESD] 12 Years

(l) Plant and Machinery used in saltworks [NESD] 15 Years


30

V. Furniture and fittings [NESD](i) General furniture and fittings 10 Years

(ii) Furniture and fittings used inhotels, restaurants and boardinghouses, schools, colleges andother educational institutions,libraries; welfare centres; meetinghalls, cinema houses; theatresand circuses; and furniture andfittings let out on hire for use onthe occasion of marriages andsimilar functions. 8 Years

VI. Motor Vehicles [NESD]1. Motor cycles, scooters and other

mopeds 10 Years

2. Motor buses, motor lorries, motorcars and motor taxies used in abusiness of running them on hire 6 Years

3. Motor buses, motor lorries andmotor cars other than those usedin a business of running them onhire 8 Years

4. Motor tractors, harvestingcombines and heavy vehicles -do-

5. Electrically operated vehiclesincluding battery powered orfuel cell powered vehicles 8 Years

VII. Ships [NESD]1. Ocean-going ships

(i) Bulk Carriers and liner vessels 25 Years

(ii) Crude tankers, product carriersand easy chemical carriers withor without conventional tankcoatings. 20 Years

(iii) Chemicals and Acid Carriers:

(a) With Stainless steel tanks 25 Years

(b) With other tanks 20 Years

(iv) Liquified gas carriers 30 Years

(v) Conventional large passengervessels which are used for cruisepurpose also -do-

(vi) Coastal service ships of allcategories -do-

(vii) Offshore supply and supportvessels 20 Years

(viii) Catamarans and other high speedpassenger for ships or boats -do-

(ix) Drill ships 25 Years

(x) Hovercrafts 15 Years

(xi) Fishing vessels with wooden hull 10 Years

(xii) Dredgers, tugs, barges, surveylaunches and other similar shipsused mainly for dredging purposes 14 Years

2. Vessels ordinarily operating oninland waters-

(i) Speed boats 13 Years

(ii) Other vessels 28 Years

VIII Aircrafts or Helicopters [NESD] 20 Years

IX. Railways sidings, locomotives,rolling stocks, tramways andrailways used by concerns,excluding railway concerns[NESD] 15 Years

X. Ropeway structures [NESD] 15 Years

XI. Office equipment [NESD] 5 Years

XII. Computers and data processingunits [NESD]

(i) Servers and networks 6 Years

(ii) End user devices, such as,desktops, laptops, etc. 3 Years

XIII. Laboratory equipment [NESD](i) General laboratory equipment 10 Years

(ii) Laboratory equipments used ineducational institutions 5 Years

XIV. Electrical Installations andEquipment [NESD] 10 Years

XV. Hydraulic works, pipelinesand sluices [NESD] 15 Years

Notes:1. "Factory buildings" does not include offices,

godowns, staff quarters.

2. Where, during any financial year, any additionhas been made to any asset, or where any assethas been sold, discarded, demolished ordestroyed, the depreciation on such assets shallbe calculated on a pro rota basis from the dateof such addition or, as the case may be, up tothe date on which such asset has been sold,discarded, demolished or destroyed.


31

3. The following information shall also be disclosedin the accounts, namely:-

(i) depreciation methods used; and(ii) the useful lives of the assets for computing

depreciation, if they are different from thelife specified in the Schedule.

4. Useful life specified in Part C of the Schedule isfor whole of the asset. Where cost of a part ofthe asset is significant to total cost of the asset

and useful life of that part is different from theuseful life of the remaMng asset, useful life ofthat significant part shall be determinedseparately.

5. Depreciable amount is the cost of an asset, orother amount substituted for cost, less its residualvalue. Ordinarily, the residual value of an assetis often insignificant but it should generally benot more than 5% of the original cost of the asset.


32

Greece, right from ancient times, has been famousfor never easily ceding to ultimatums from foreignaggressors. History buffs might recall the War ofMarathon or Thermopylae; movie buffs will rememberthe epic war scenes from 300. But in today's world,the lines have grown exceedingly blurry regardingGreece's commitment to repay its dues. Reams havebeen written about this subject in every format; solet's focus on how the crisis 10,000 km away couldaffect the stability of the Indian corporate eco-system.

Greece is today sitting on a debt-pile of over EUR320 billion, the highest by any country in theEurozone. But then every country operates with acertain amount of debt on its books, the United Statesincluded. This debt could be procured from othercountries or from international institutions like the IMFor ECB. The storm-clouds truly began to appear whenit became apparent, through a combination ofirrational government spending and stubborn inaction,that the government would not be in any position torepay this debt and face bankruptcy. Worried creditorsbegan swarming, demanding that the country enforcestrict austerity measures, including deep cuts insalaries, pensions and health spending beforeexpecting leniency. This being a non-people friendlymove, Greece had its voters up-in-arms immediately,sandwiching the government from the other side. Inelections held in January this year, Alexis Tsipras ofthe anti-austerity party Syriza came upaces, withvoters expecting the party to dig them out of the crisisuntouched. To say that this has been an uphill taskfor the new Prime Minister would be anunderstatement of gargantuan proportions.

The radical Left government has rebuffed every offerfrom its creditors to re-work the repayment patternpresented to them. Although the party has tried tocoax, cajole, threaten and delay the final decision onrepayments and bankruptcy, it finally looks like Tsiprashas painted himself into a corner, with no option but

to cave-in to its creditors' demands. After missing itsfinal deadline for repayment on 30th June '15, Tsiprascalled for a referendum on 5th July '15, with votersgetting to decide on whether to default on its debtand leave the Eurozone. The party, which has askedfor a 30 % haircut on the debt amount and a 20-yearextension for repayment of the rest, has threatenedto resign in case the result of the referendum wentagainst them. Greece might still have a few moreoptions, namely bail-out talks with Russia or China,but this could jeopardize the European nation'sstanding due to an external benefactor.

Although Greece accounts for less than 2% of theEurozone's GDP figures, the crisis could trigger panic-mode in the area, breaking psychological barriersmore than economic or financial ones.

Since the crisis began in 2010, most internationalinstitutions and investors have exited their holdingsin the country, and other debt-ridden countries likeSpain, Portugal and Ireland have taken measures tooverhaul their economic systems.RBI chiefRaghuramRajan stated recently that the Indian Rupeecould see indirect volatility based on the outcome ofthe crisis, although the country had very limited directfinancial or trade exposure to Greece. In eitherscenario, with our strong forex reserves (a record USD355.6 billion in June) and with strong fundamentalssupporting the country, the markets should manageto tide over the contagion from Europe. But with thefate of Greece hanging in balance, any adversedevelopments in the coming days could cause theINR to show a knee-jerk reaction in the very short-term.

From an economic perspective, high volatility in theEUR could start a move towards safe-havencurrencies like the Yen and the USDollar, causingcapital outflows from India. Also, the crisis couldensure a rise in interest-rates in Europe, causingfurther outflows. India could also face some tensions

GREECE : A GREEK TRAGEDY!"An avowal of poverty is no disgrace to any man;

to make no effort to escape it is indeed disgraceful."

— By Adwait V.


33

regarding exports of software and engineering goodsto the Eurozone, which accounts for over 25% of totalexports in both categories.

The RBI, which was expected to cut interest-rates aftera better-than-expected monsoon and benign inflation,could hold-off on the same now that Greece haddecided to vote 'No' over the weekend. India must,going forward, focus on strengthening internal drivers,rather than lay high expectations from external driverslike FIIs.

Greece, caught between the devil and the deep sea,had to either accept the terms presented to them orface the possibility of an exit from the Eurozone. Itsdecision would ultimately have affected the EuropeanUnion extensively, causing a wave that could havereached Indian shores too.

The people of Greece spoke on Sunday, 5th July '15with an emphatic 'No' vote in the referendum, decliningany possibility of engaging with creditors for adopting

austerity measures. Although most polls showed thatthe people of Greece wished to remain within the Eurozone, they also believed it was impossible to acceptthe terms placed before them by the country'screditors.

Finally, with uncertainty looming, Greece now has oneof two options ahead of it. Remaining in the EZ couldbe a possibility as no clear winner would rise fromGrexit. The other option would be Grexit and the re-birth of the Drachma, which could essentially helpGreece in the long-run. In the short-term the Drachmawould, of course, collapse against the Euro, causingboth Greek tourism and exports to enjoy somesuccess, helping the country re-build its economyslowly.

So the final act of this story stands in the hands of themembers of the EU, who are meeting on Tuesday,7th July '15 to provide Greece with a final proposal toaccept or reject. Greece's decision here, like in timespast, would decide the course of its own future.


34

Central Excisev Interest on Interest - Admissibility : Cenvat

Credit held ineligible by Tribunal, paid back underprotest when period for filling appeal before HighCourt has not expired, to enable assesse to getregistration transferred to its name fromtransferee company. Refund of deposit,comprising of principal amount with interest,sanctioned after High Court held assesse eligiblefor cenvat credit. Assessee claiming interest oninterest. Held: Claim of interest on interest ofprincipal refundable amount not sustainable asno provision for payment of interest on interestunder section 11BB of Central Excise Act, 1944.[2015 (320) ELT 289 (Tri. - Bang.)]

v Job Work: Demand of duty not sustainable fromprincipal manufacturer when goods completelymanufactured at job workers premises. [2015(320) ELT A 281 (SC)]

v Mandatory Pre-deposit: deposit of 7.5% or 10%as prescribed in section 35F of Central ExciseAct, 1944 w.e.f. 6.8.2014 but as held in case ofPramount Security amendment to section 35Fcannot be restricted only to appeals filed on orafter 6.8.2014 otherwise it would be violative ofArticle 14 of Constitution of India. Tribunal orderdirecting pre-deposit of 50% of stayed subject topre-deposit of 10% as per amended section 35F.[2015 (320) ELT 497(Raj]

v Performance Bonus: Such bonus received byassesse when refractory bricks manufactured bythem performed specified numbers of heats.Since performance bonus received afterclearance of goods for better performancethereof, same is not includible in assessablevalue. [2015 (320) ELT 622 (Tri. - Bang.)]

v Refund Claim under Rule 5 of CCR, 2004:Invoice raised by the Assessee on 30/06/2012clearly indicates that the same is for the services

rendered by them to an entity situated inMauritius. Assessee had debited the CENVATcredit register on 29/06/2012 indicating that creditis utilized for payment of ST on services exportedto Bain Capital, Mauritius. When the facts arevery clear and when there is export of servicesand the amounts have been debited in CENVATregister, there is no reason for the lowerauthorities to reject such a valid rebate claim.Hon'ble CESTAT has allowed rebate claims.[2015-TIOL-1035-CESTAT-MUM]

v CENVAT credit of duty paid on MS Plates,Sheets, Angles, Rounds: Assessee has usedthese goods in conjunction with certain capitalgoods/machinery for maintenance of machinery.Cenvat credit admissible. No infirmity in the orderof Commissioner (Appels) allowing cenvat credit.Appeal filed by the Revenue is rejected. [2015-TIOL-1032-CESTAT-BANG]

v Utilization of Cenvat Credit account forpayment of output transportation: Assesseeutilized their Cenvat credit account for paymentof output transportation service. Revenue soughtto deny utilization of Cenvat credit account forpayment of output transportation service andrelied on CBEC Circular 97/8/2007. Period in thepresent case is March, 2006 to March, 2007 andCBEC has issued said Circular only on23.08.2007 which is after the period in dispute.Therefore, said Circular have no relevance tofacts of this case. It is not in dispute that assesseehas paid ST by availing cenvat credit as well asin cash. Suo moto credit can be taken byassessee of duty paid twice or excess. [2015-TIOL-1030-CESTAT-DEL]

v CENVAT credit of capital goods on the spareparts, purchased for replacement of thedamaged parts caused due to a fire accidentin 2006: Impugned Cenvat credit was disallowed


35

only on the premise that the original equipmentwas purchased in 1991 where no credit schemewas in force. Prima facie, no such provision inCenvat rules for denial of capital goods credit onthe parts imported for replacement, particularlyduring that period original equipments were notcovered under modvat scheme. Compensationscheme from the insurance company has norelevance for availment of credit on capital goodspurchased in 2006. Assessee have made out acase for waiver of pre-deposit of demand inquestion. [2015-TIOL-1028-CESTAT-MAD]

v Proper show cause Notice to be issuedbefore rejection of Refund: Even if theCENVAT credit was considered to have beentaken wrongly, disallowing the same requiresquasi-judicial process involving issuance of SCNfollowed by a speaking order. [2015-TIOL-1044-CESTAT-DEL]

v Cenvat credit of Gardening services isadmissible: Gardening Service is essentialunder Pollution control laws to maintain qualityof ambient air the same is necessarily businessrelated expenses for the manufacturer. CenvatCredit admissible. Revenue appeal dismissed.[2015-TIOL-1050-CESTAT-MUM]

v Security services provided at residentialcolony/club room, repair of mixer used incanteen, civil work at colony, furniture/wooden partition done for VIP rooms andtelephone lines installed at residence of theofficers/club rooms. Whether credit of STadmissible? Hon'ble CESTAT held that What ispermitted as CENVAT credit is the tax paid oninput services which are integrally connected withthe manufacturing of the final product.Residential colony for the employees and theclubs are welfare activity for the staff undertakenby the assessee while carrying the business buthas no nexus with the business of manufacturingthe final product. Hence cenvat Credit notadmissible. Appeals filed by Assessee is devoidof merits. [2015-TIOL-1065-CESTAT-MUM]

v Debit notes are valid documents foravailment of Cenvat Credit: All the particularsas required under Rule 9(2) of CCR, 2004 are

undisputedly appearing on the debit note.Therefore the debit note is at par with thedocuments prescribed under Rule 9(1) of CCR,2004. There is no dispute raised by thedepartment that the services were received andsame was accounted for in the books of accountof the Assessee. Debit note is a valid documentfor availing CENVAT credit and hence CenvatCredit admissible. [2015-TIOL-1064-CESTAT-MUM]

v Remission of duty on goods lost due tonatural causes: Revenue filed appeal againstthe order of Hon'ble Tribunal holding that noremission application is required for the loss ofgoods within permissible limits. Hon'ble HighCourt held that the notification only prescribesouter limit up to which excisable goods can besaid to have been lost in natural course, withreference to the particular good. Suchprescription of the outer limit will not mean thatthe statutory provisions for claiming suchremission are to be given a go by. It is not opento the assessee to himself determine theremission because of alleged loss even if it iswithin the permissible limits. It is settled principleof law that if law requires something to be donein a particular manner it has to be done in thatmanner or not at all. Even if the assessee claimsremission from excise duty of goods said to havebeen lost in natural course, within the permissiblelimit, as per the circulars, he has to follow theprocedure prescribed under Rule 21 of the Rules.Only after an order is made granting remissionin respect of the goods so lost due to naturalcircumstances, he could be exempted frompayment of excise duty. Hon'ble Tribunal has notexamined the aforesaid aspect of the matterwhile allowing the appeal filed by the assessee.The order of the Tribunal cannot be legallysustained and is quashed. Hence the matter isremanded to the Tribunal to decide afresh in thelight of the observations. [2015-TIOL-1415-HC-ALL-CX]

v Cenvat credit not liable to be reversed ifexempted goods are exported: Assesseemanufacturing biscuits which are exempt frompayment of duty. Assessee availing CENVAT


36

credit on the inputs used in manufacture of suchbiscuits. Revenue was of the view that sincebiscuits were exempt, Assessee are not eligiblefor availing CENVAT credit even if goods areexported. Hon'ble CESTAT held that issue isalready settled in favour of Assessee by theBombay High Court decision in Repro India Ltd.2007-TIOL-795-HC-MUM-CX, Appeals allowedwith consequential relief. [2015-TIOL-1075-CESTAT-MUM]

v Cenvat credit cannot deny on proceduralgrounds: Credit availed on documents pertainingto unregistered premises of assessee atChandrapur and Amravati. Assessee in theirletter dated 16/12/2004 have stated that they maybe given permission to have only one registeredplace in terms of Rule 3(a) of STR, 1994. Suchrequest can be considered as an application forcentralized registration. Not applying in theproper format is not a reason to deny substantialbenefit which should follow from centralizedregistration. In any case centralized registrationwas granted subsequently on 26/03/2013.Department has not disputed that the inputservices were received at the branch office andfurther that they were utilized for providing outputservices. No reason for disallowing CENVATcredit on documents pertaining to branch offices.Credit on services of telephone bills addressedin the Director's name but the office mentionedis the office premises of assessee. There is noground to deny Cenvat credit. [2015-TIOL-1087-CESTAT-MUM]

v Mandatory Pre-deposit under Section 35F:Date of SCN and period involved is not relevant.Substituted Section 35F will be applicable to allthe appeals filed after the commencement of theFinance Act, 2014. Since pre-deposit not madeof 7.5%, appeals are not maintainable, henceappeal dismissed.[2015-TIOL-1093-CESTAT-MUM]

v Credit on 'air travel agent' service oncompany personnel business travelsallowed: Hon'ble CESTAT upholdsCommissioner (Appeal) order, allows CENVATcredit on 'Air Travel Agent' service whereassessee engaged in works contract and

company personnel travel for business purposesto and fro various work sites and Head Office.Hon'ble CESTAT rejects Revenue's contentionthat invoice raised by service provider pertainsto air tickets issued in name of companypersonnel and hence, service not rendered tocompany, not qualifying as 'input service' perRule 2(l) of CENVAT Credit Rules, 2004. Acceptsassessee's reliance on Bombay HC rulings inCoca Cola India (P) Ltd. and Ultratech CementLtd. to contend that air travel agent servicereceived for travelling of executives to differentlocations, integral to business purposes.Adjudicating Authority's findings erroneous ascompany being an artificial judicial person cannottravel by itself, and it exists only on paper in eyesof law. Hon'ble CESTAT observes, it is onlypersonnel who travel for business of companyand hence, CENVAT Credit in respect of AirTravel Agent service rightly allowed byCommissioner (Appeals). [TS-309-CESTAT-2015-ST]

v Automobile Cess a "duty of excise"; Rebateadmissible on export of two-wheelers: Hon'bleHigh Court quashes Revisional Authority orderand held that rebate of Automobile Cess andEducation Cesses thereon admissible under Rule18 of Central Excise Act r/w Notification No. 19/2004-CE (NT) on export of two-wheelers.Perusal of provisions of Industries (Development& Regulation) Act and Automobile Cess Rulesindicates that Central Excise Act and Rulesthereunder as applicable in relation to levy,collection and refund of duty, also apply toAutomobile Cess. 'Cess' is a "duty of excise"collected in terms of Central Excise Act, and Rule18 does not indicate that rebate cannot begranted in respect of any duty other than dutylevied u/s 3 of said Act. Automobile Cess andEducation Cesses thereon, though not expresslyspecified in Explanation - I, would beencompassed under Notification No. 19/2004-CE (NT) within the definition of phrase "duty".Concurs with Rajasthan HC's view in case ofBanswara Syntex Limited albeit same was incontext of Education Cess levied u/s 93 ofFinance Act 2004, observes that since assessee


37

established that such duty is levied and collectedunder Central Excise Act, Automobile Cessrebate claim cannot be rejected. [TS-307-HC-2015(KAR)-EXC]

v Under Rule 5 of CCR, payment receiptimmaterial; Services exported pre-April 2012not includible in subsequent period'sturnover: Hon'ble CESTAT rejects Revenueappeal, upholds Commissioner (Appeals) orderexcluding value of export services completedprior to March 31, 2012 for purpose of calculating'export turnover' towards CENVAT Credit refundfor quarter April - June 2012. According toCommissioner (Appeals), under Rule 5 ofCENVAT Credit Rules, receipt of paymentimmaterial and only actual export of service byway of provision & issuance of invoice relevantcriteria w.e.f. April 1, 2012. For calculating exportturnover of services, only those servicesrendered post said date need to be considered.Absent DTA supply of services by assessee,'export turnover' = 'total turnover', in terms ofclause (E) of Rule 5(1) of CCR, observedAppellate Commissioner. CESTAT further rejectsAdjudicating Authority's objection to refund claimbasis limitation period, observes that refund filedwithin 1 year of receipt of FIRC and hence, nottime barred, as held by coordinate bench inBechtel India Pvt. Ltd. [TS-287-CESTAT-2015-CUST]

v Can't enforce payment basis exemptedgoods value, where proportionate inputcredit reversed: Demand equal to 10% of salevalue of exempted final product under Rule6(3)(b) of CENVAT Credit Rules unsustainable,when assessee reversed proportionate credit oncommon inputs attributable thereto. Sinceamendment to Rule 6(3) stipulatingproportionate reversal of CENVAT credit as performula prescribed in Rule 6(3A), madeapplicable retrospectively vide Finance Act, 2010,assessee cannot be forced to pay 10% amount.Relies on Gujarat HC ruling in Rama MultitechLtd. to observe that, even if separate accountnot maintained, in view of retrospectiveamendment by Finance Act, 2010, amanufacturer using common inputs in or in

relation to manufacture of dutiable and exemptedfinal products, entitled to reverse proportionateCENVAT credit. Observes, "Once, the assesseehave foregone the proportionate cenvat creditin respect of input services used in or in relationof the manufacture of exempted final product,they have to be treated as complied with theprovisions of sub Rule (3) of Rule 6 and hence,there cannot be any demand of amount underRule 6(3)(b)". Distinguishes Bombay HC rulingin Nicholas Piramal (India) Ltd. stating that samepertains to period when Rule 6(3) not amendedretrospectively. [TS-286-CESTAT-2015-EXC]

v Allows credit on inputs found defectiveduring processing / assembling of wristwatches: Hon'ble CESTAT allows MODVATcredit on inputs found defective duringprocessing / assembling of wrist watches, interms of Rule 57D of erstwhile Central ExciseRules, 1944. Rejects Revenue's contention thatinputs were defective before being put to use,Commissioner's observation that wasteemanating as a result of R&D, is conclusive offact that inputs were found defective duringcourse of manufacturing or R&D, which is integralpart of manufacturing process. Further,Commissioner's observation that, ripping openof manufactured watches is not an essentialrequirement for manufacture, effectively meansthat emergence of waste is either prior to or aftermanufacturing process. Relies on SC ruling inFlex Engineering and Delhi HC ruling in AsahiIndia Safety. Also finds no shortage of inputs,accepts assessee's contention that shortage andexcesses are due to fact that stock accountingis done on weighment basis, since physicalaccounting not possible. [TS-284-CESTAT-2015-EXC]

Customsv Appeal to Tribunal - Admission: Case involved

penalty of Rs. 5000/-. Appellant has statutoryright of appeal against the order passed byCommissioner, irrespective of any amountinvolved. In terms of proviso to section 129ATribunal has no discretion to refuse or admitappeal in respect of order passed by the


38

Commissioner under clause (a) of 129A. [2015(320) ELT 325 (Tri.-Mumbai)]

v Valuation (Customs): Ship demurrage chargesnot includible in assessable value of importedgoods prior to Customs Valuation Rules 2007.Excess payment of duty in one set of Bills of Entryis not permissible to adjust it against shortpayments made for another set. [2015 (320) ELT294 (Tri.-Mumbai)]

v Extension of time for installation of capitalgoods imported under Notification No. 97/2004: Installation in six months provided in thesaid Notification is merely procedural in nature.Notification does not restrict itself to the periodfor which extension can be granted by competentauthority. The genuineness and bona fide ofdelay is required to be assessed by authority fromvarious circumstances available in a particularcase. Assessee is a Government Undertakingand is primarily depended upon the funds to beprovided by the Government and apparentlydelay occasioned due to lack of funds. Moreover,the Pollution Control Project is a huge onerequiring time beyond normal period forinstallation of capital goods. On facts, requestfor extension of time till December 2015 allowedand seeking further extension on genuinereasons may be considered by theCommissioner. Order declining extension of timeset aside by the Hon'ble CESTAT. [2015-TIOL-1037-CESTAT-BANG]

v Hob'ble CESTAT rejects Revenue's relianceon void Circular; No Cess where import dutyexempt: Hon'ble CESTAT upholdsCommissioner (Appeals) order and held that 2%Education Cess inapplicable on goods importedunder Target Plus Scheme, when basic customsduty (BCD) and additional customs duty (CVD)exempt vide Notification No. 32/2005-Cus.Hon'ble CESTAT rejects Revenue's contentionthat only basic customs duty and additionalcustoms duty exempt under Target PlusScheme, not Education Cess and that CircularNo. 5/2005-Cus provides for such levy andcollection on imports. Assessee has correctlypointed out that said Circular struck down as nulland void by Gujarat HC in Gujarat Ambuja Exports

Ltd. Upholds Commissioner (Appeals) findingsthat absent duty collection upon exempt goodsor those chargeable at NIL rate, debitingEducation Cess from certificate issued under saidScheme not justified. Relies on Gujarat HC rulingin Pasupati Acrylon Ltd. and dismisses Revenueappeals. [TS-311-CESTAT-2015-CUST]

Service Taxv Benefit of Section 80 to waive penalty is

applicable only where non-payment ofservice tax is on account of bonafide belief:Assessee a registered service provider havingfull knowledge of payment of his tax liability,neither filed the returns nor discharged tax liabilityfor several years. This conduct reflects malafideson the part of the Assessee. Hence Assessee isnot entitled to the benefit of Section 80 of theFinance Act. But Ld. Assistant Commissionerextending same benefit simpliciter withoutassigning any reasons is wholly unwarranted.Plea of financial difficulty inconsequentialbecause there was suppression or misstatementof nonpayment of the tax, longer period oflimitation legitimately invoked and penalprovisions also would get attracted. [2015-TIOL-1026-CESTAT-BANG]

v Legislative intent of section 80 precisely isto ensure that assessees who did not paythe tax can make the payment with interesttaking a lenient view based on assessee'slack of knowledge and reasonable cause forfailure to discharge tax liability: Assessee haspaid entire amount of demand along with interestbefore issuance of show cause notice.Reasonable cause shown by the Assessee andhence penalty waived. Demand and interestupheld as not contested. [2015-TIOL-1041-CESTAT-BANG]

v Non-speaking order: Order of Commissioner(Appeals) allowing appeal neither discussed theservices received nor nexus between input/output service. Further no discussion as to theapplicability of Board circular to the facts/circumstances of the case. Impugned orderhence set aside. Matter remanded to decideafresh and pass a reasoned order. Revenue


39

appeal allowed. [2015-TIOL-1054-CESTAT-BANG]

v Job Work: Assessee registered with CEdepartment for manufacture of goods fallingunder Chapter 29 of CETA, 1985. Assessee hadcarried out job work on goods supplied by clientand returned the same after processing withoutpayment of duty. Revenue's contention is thatthe processing charges received is taxable underthe category of Business Auxiliary services.Demand confirmed and, therefore, appeal filedbefore Hon'ble CESTAT. Hon'ble CESTAT heldthat Assessee is undertaking job work ofconverting Para Nitro Cumene into ParaCumidine and the process involved is a chemicalprocess. This activity is definitely an activity of'manufacture' inasmuch as the finished goodscoming into existence are different from theinputs which are put into use. On perusing thechemical formula and the properties of the inputsand of the final goods it is found that there is adifference between the two which would meanthat the finished goods 'Para Cumidine" is arisingout of a manufacturing process. Hence activityundertaken by Assessee would amount tomanufacture even if it is under a job-workprocedure. Order demanding Service Tax underBusiness Auxiliary Service is unsustainable,hence set aside. [2015-TIOL-1062-CESTAT-MUM]

v Refund : Lower authorities have rejected refundclaim in r/o ST credit availed on premium paidtowards group mediclaim insurance foremployees and families/dependants and on STpaid for car parking place rented and consultancycharges incurred for review of performance ofemployees. Hon'ble CESTAT held that issue isno longer res integra in view of decision in PCSSoftware (I) P. Ltd., issue is squarely settled infavour of Assessee. Principal Bench has also heldin favour of assessee in case of KPMG 2013-TIOL-761-CESTAT-DEL in view of authoritativejudicial pronouncements, order set aside andappeal allowed with consequential relief. [2015-TIOL-1073-CESTAT-MUM]

v Hon'ble CESTAT quashes penalty applying'revenue neutrality' principle, though tax paid

after show cause: Hon'ble CESTAT sets asiderecovery of interest and imposition of penalty onground of 'revenue neutrality', where service taxpaid after show cause notice issuance but beforepassing of adjudication order, since credit thereofadmissible to assessee. Also rejects Revenue'scontention that, since service tax paid only afterdetection by Dept, no bonafide belief attributableto assessee. Applies LB ratio in Jay Yushin Ltd.after considering guidance drawn by SC in KitPly Industries. Observes, 'revenue neutral'situation comes about in relation to creditavailable to assessee himself and not by way ofavailability of credit to anyone else. In presentcase, since credit of service tax paid on reversecharge basis is available to assessee, entireexercise 'revenue neutral', therefore, no mensrea established for imposition of penalties. [TS-305-CESTAT-2015-ST]

v Abatement available upon suo moto reversalof ineligible CENVAT credit: Hon'ble CESTATallows abatement under Notification No. 1/2006-ST, where ineligible CENVAT credit reversedalongwith interest by assessee suo motu, uponrealisation that CENVAT credit wrongly availed.Relies on coordinate bench decision in KhyatiTours & Travels to hold that reversal of CENVATcredit by assessee amounts to non-availmentthereof, consequently, benefit of Notificationavailable. Revenue's reliance on SC ruling inChandrapur Magnet Wires to say that assesseeentitled to avail benefit of Notification only ifCENVAT credit reversed before utilization, ismisplaced. Said Hon'ble Apex Court rulingdistinguishable since observations therein werein the context of manufacture of goods, whileassessee in present case provides tour operatorservice, such ruling only an obiter dicta and infact,Hon'ble SC has quoted that reversal ispermissible and exemption available. Also,quashes interest demand observing that date ofdeposit of cheque into treasury construable as"date of service tax payment" in terms of Rule6(2A) of Service Tax Rules, despite realisationat a later date. [TS-301-CESTAT-2015-ST]

v Trademark royalty non-taxable; Technicalassistance constitutes 'export', albeit


40

taxable as "management consultancy":Hon'ble CESTAT quashes service tax demandon 'royalty' received towards allowing use oftrademark, holding same classifiable as"Intellectual Property Service" w.e.f. September10, 2004. However, assessee not merely allowinguse of trademark, but engaged in providingoperational improvements and technical skills inareas like cost management, manufacturing &distribution, hence would fall under the scope of"Management Consultancy Service" u/s 65(65)r/w 65(105)(r) of Finance Act. Althoughconsideration received called 'royalty',assessee's duties clearly include services whichare covered under said taxable category.However, no tax payable thereon since samerendered to 3 foreign companies and wouldqualify as 'export of services'. Revoking extendedlimitation period, rejects Adjudicating Authority'sobjection that assessee neither claimedexemption benefit for export of services norsubmitted relevant figures in ST-3 Returns beforeissuance of show cause notice, holds thatassessee is well within its right to claim exemptionwhen its service is held taxable underManagement Consultancy Service. [TS-291-CESTAT-2015-ST]

v Hon'ble CESTAT grants input credit refundof rent to holding company through debitnote: Hon'ble CESTAT allows refund of servicetax credit on 'renting of immovable property'service to assessee, pursuant to sub-leasearrangement with holding company. Hon'bleCESTAT rejects Commissioner's finding thatdebit note, through which rent was paid, not aproper document under Central Excise Rules,and that renting of immovable property servicedid not have any nexus whatsoever with outputservice provided by assessee. Observes, it isaxiomatic from Explanation (c) to Sec 67 ofFinance Act that holding company is liable toservice tax on mere recording of debit or creditnotes w.r.t. a transaction with an associatedenterprise. Burden shifts on Revenue to establishthat debit note is a fraudulent instrument, notreflecting true transaction between parties,observes that a suspicion, howsoever grave,

cannot be a foundation for a logical conclusionof fact. Further, refuting Revenue's claim thatrent pertains to earlier period while exports mademuch later, CESTAT states that CBEC Circulardated January 19, 2010 and various judicialrulings, clearly enjoin principle that there existsno requirement of a precise or one-to-onecorrelation between an input service leading toan output service. [TS-290-CESTAT-2015-ST]

v Stationery charges, godown rent reimbursedto C&F Agent, non-taxable; Valuation Rulesinapplicable: Fixed stationery charges, godownrent and establishment charges reimbursed byclient not includible in gross value of taxableservices rendered by C&F Agent. Rule 5 ofService Tax (Determination of Value Rules) 2006inapplicable, said Rules came into effect fromApril 19, 2006 whereas present dispute pertainsto prior period. Moreover, said Rule struck downby Delhi HC in Intercontinental Consultants andTechnocrats Pvt Ltd. Upholds Asst.Commissioner finding that case governed byRule 6(8) of Service Tax Rules 1994 which statesthat service tax dischargeable on value receivedon taxable service in relation to C&F Agent.Accepts assessee's reliance on co-ordinatebench rulings in Nandini Warehousing &Sangamitra Services Agency, which were upheldby Karnataka & Madras HCs respectively to settlethat reimbursable expenses cannot be includedin gross value for discharge of service tax liability.[TS-281-CESTAT-2015-ST]

VATv Hon'ble High Court allows concessional tax

claim; AO bound to permit subsequentstatutory forms submission: Hon'bleKarnataka High Court quashes assessmentorder, tax at higher rate on account of non-submission of statutory forms unsustainable andheld that Assessing Officer (AO) bound toconsider belatedly submitted forms in view ofCircular No.9/2006-07 dated June 7, 2006.Observes that "even on belated production ofstatutory forms, the statutory authority is boundto take into consideration the same and give thebenefit of reduction of the tax". Assessee's


41

reliance on SC decision in Gujarat AmbujaCement well placed, provisions requiring filingof declaration forms along with return a directoryprovision and not mandatory provision. Hon'bleHigh Court fortifies decision by placing relianceon Rule 12(7) of CST Rules, which provides thatdeclaration Forms can be filed at subsequentpoint of time and not necessarily along withReturns. Absent hardship to Revenue in givingassessee one more opportunity to producedeclaration Forms, remands matter to AssessingAuthority. [TS-321-HC-2015(KAR)-VAT]

v Hon'ble High Court interprets Rule 41-D ofBST Rules; Absent principal scrap sale, set-off reduction unjustified: Hon'ble High Courtgrants set-off to an EOU under Rule 41-D ofBombay Sales Tax (BST) Rules in respect of taxpaid on consumables used in manufacture &export of steel files and rasps and sets asideconcurrent conclusion of Revisional Authority &Tribunal that assessee had in fact purchased'components, parts and accessories of capitalassets' and merely treating them as'consumables' would not change their nature,therefore 4% of purchase price must be retainedin terms of Rule 41-D(3)(b). If dealer has treatedgoods as consumables and only parts,components and accessories of capital assets

qualify for 4% retention, it is the obligation & dutyof authorities to indicate same and absentcontrary evidence on record, set-off / refundshould not have been denied. HC also quashesorder which further reduced percentage of set-off in terms of proviso below Rule 41-D(1)(ii) bycorrelating export sale turnover with ratio of localsale of scrap. Revisional Authority & Tribunalhave completely ignored the words "consistsprincipally of sales of waste or scrap goods" insaid proviso, since assessee primarilymanufacturing goods out of purchased rawmaterials/consumables, further set-off reductionby 1.5% unjustified. [TS-320-HC-2015(BOM)-VAT]

Miscellaneousv To arrest first and then proceed with the rest

is despicable: Department has neither issuedshow cause notice before arresting to thePetitioner nor filed complaint filed after arrest.Department has no idea when the investigationprocess will be completed. Further detention ofthe petitioner, in such facts and circumstances,amounts to taking away his liberty in the absenceof any complaint having been filed against him.Hon'ble High Court has ordered Bail. [2015-TIOL-1405-HC-P&H-ST]


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v India signs Agreement with WB for USD 400 mn loan for TN Urban Development Project

v Former IB Director Asif Ibrahim appointed as Special Envoy for Counter Terrorism and Extremism in NSCSecretariat

v India Railways to form JV with 20 States to speed up projects

v SRO awarded Space Pioneer Award for its Mars mission by the US National Space Society

v Bombay HC permits Nestle to export Maggi Noodles

v Coal Scam: Former MoS(Coal) says all decisions relating to allocation of coal blocks were taken by DrManmohan Singh

v DGFT revamps official website and launches mobile app

v Pramod Kumar ITAT Member transferred to Ahmedabad Bench

v Kolkata Airport Customs seizes gold worth Rs 1.58 Crore from different pax

v Delhi Law Minister arrested in fake degree case

v Chennai Income tax searches premises of Chettinad Group of Companies at 37 places

v Nagpur Airport Customs seizes 3 kg gold concealed in music system

v Kota CBN seizes 14.7 kg opium; arrests one person

v DRI seizes foreign cigarettes worth Rs. 50 lakhs and also country craft at Jamnagar

v CBI charge-sheets five MLAs accused of bribery during Rajya Sabha polls

v Mangalore Airport Customs seizes 18250 Saudi Riyals; 1075 UAE Dirham; 860 Kuwai Dinars; 3650Qatar Riyals, 735 Omani Riyal, 55 Bahrain Dinar and USD 500 from pax hailing from Kerala

v Vizag Airport Customs detains dozens of pax on alleged charges of carrying about 50 kg gold and electronicitems


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NOTES


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NOTES

bizsolindia july 2015 · pdf fileis wanted by the indian government for alleged money ......

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