covers february 2014 - bizsolindia.com · bizsol update february - 2014 ... bit of communicating...
TRANSCRIPT
1
Bizsol UPDATE February - 2014
Close on the heels of Manmohan Singh holding a
Press Conference, Rahul Gandhi also did his two-
bit of communicating with the masses through a
Television interview recently. It is obvious that the GOP
has suddenly discovered that in the process of
governance there is an entity called the people who
happen to be voters in an election. The party is now
on an overdrive to reach out to them. Rahul's interview
was part of this plan. The interview turned out to be
an unmitigated disaster is another matter. Rahul had
always been an enigma - a permanent bachelor and
a reluctant politician. Both are very "un-Indian" indeed.
For all those who wanted to know what our possible
future Prime Minister stood for, the interview only
helped to deepen that mystery. Possibly, as part of a
deal, Arnab Goswami who interviewed Rahul chose
to be civil, for a change. No person with an iota of
self-respect would want to be on his show normally,
for he, with his opinionated and judgmental stance
on all issues, becomes a panellist himself forgetting
his fundamental role as a neutral anchor of a talk show.
Be that as it may, Rahul the boy came prepared for
an examination selectively learning the subjects he
knew something about only to be asked questions on
topics on which he knew nothing about, which were
many. Rahul Gandhi's interview was remarkable for
its consistency.
For every question put to him he had only one
standard answer - the one he had come prepared
with. It was almost like a child reciting poetry. If it
forgets a line it starts from the beginning. By the time
the interview ended the boy had separated himself
from the men in the adult world of politics. If you cut
out the clichés and platitudes which he mouthed
repeatedly throughout the interview, the ninety -
minute interview would have been over in just under
twenty minutes! Thank God Arnab Goswami did not
ask him questions on subjects like global warming
and family planning. Had he done that you could
almost predict Rahul's responses - a lecture on RTI
FROM THE DESK OF THE CHAIRMAN
and the systemic problems of Indian polity! The best
part of the interview was after the interview. The spin
doctors of the Congress Party were working overtime
to project Rahul through the interview as a savant (in
simple English a learned person). Ask the same
question to a BJP spokesman prompt would come
the reply - Rahul suffers from 'savant syndrome' (again
in plain language, a condition in which an intellectually
challenged person shows streaks of brilliance normally
not associated with him). For all those looking to
decipher Rahul, he turned out to be 'a riddle wrapped
in a mystery inside an enigma' to quote Winston
Churchill, the wartime Prime Minister of Britain.
A recent nationwide survey projected that the BJP is
set to do well; perhaps even better than their own
expectation. So be it. That is not the point of
discussion here. The Survey has come out with an
interesting observation. Wherever there is a strong
Chief Minister in a State the party in power (Congress,
BJP or any other) appears to have done well even
fighting anti-incumbency. In the good old days when
the Congress had such a galaxy of powerful leaders
in the States across the country the overall
performance of the Central government run by
Congress also had improved. A charismatic leader
like Jawaharlal Nehru could carry such regional
satraps in his own party as a team. Once Indira
Gandhi took over the reins and brought about her
own brand of politics there was no room for
disagreements in the party apparatus at any level.
Dissent of any kind was branded as insubordination
and sycophancy became the order of the day. For
Indira Gandhi's Congress the State Chief Ministers
were like Branch Managers of a corporate set-up run
by circulars issued from the Head Office (read High
Command). While dismissing even genuine
differences of opinions as rebellious behaviour, the
party got rid of their tall leaders and insulated
themselves from the masses so much so that today it
is so difficult to find able leaders in the Grand Old
2
Bizsol UPDATE February - 2014
Party at any level. No surprise that people like Sushil
Kumar Shinde are so much in demand. Imagine that
he is now sitting in the same chair which was once
occupied by a leader called Sardar Vallabhbhai Patel!
When Rahul Gandhi laments about his party's
disconnect with the people and a small coterie running
the affairs of the nation he has to be reminded that
this is the handiwork of his own ancestors and he
himself is the beneficiary of this unholy arrangement.
Satyapal Singh the erstwhile Commissioner of Mumbai
sprang a surprise by opting for voluntary retirement
from his post and joined politics the next day raising
certain disturbing questions. Congress is crying foul
as Singh chose to join BJP. Recently R K Singh the
former Home Secretary after retirement joined BJP
and raised a stink against his former political boss
Sushil Kumar Shinde. The former Army Chief who
had a score to settle with the Government joined the
Anna movement and is now inching closer to BJP. It
is an open secret that the bureaucrats start planning
their second innings even before they demit office.
By currying favour with the ruling establishment they
make sure that once you join the government service
you never really retire. So is the case with the
appointments post retirement for judicial officers. The
service rules only provide that an officer after
retirement cannot take up a private sector job before
completing a mandatory cooling off period of two
years which is also observed more in breach as there
is no bar in engaging their services as consultants.
Appointment as Governor of a state is another window
of opportunity to the retired bureaucrats. The recent
incident of Satyapal Singh has brought this sordid state
of affairs more into focus. This practice has to stop.
One hopes that out of sheer pique that most of these
retirees are joining the Opposition the Central
government may enact some legislation which would
bar such patently unethical practices. This could very
well be an AAP Agenda to cleanse the system.
Corruption takes many forms and this is definitely one
of them.
On a day when the whole of Andhra Pradesh should
be celebrating the achievement of one of their own
who goes by the name of Satya Nadella on being
chosen to head Microsoft as its CEO, his folks back
home are engaged in a bitter dispute over the creation
of Telengana. Manmohan Singh and his government
have gone to seed is an accepted fact and the people
of the country have also resigned to that inevitable
fact. It is, however, dangerous that even in the dying
moments the government is still trying to spawn
anarchy and lawlessness. What the congress
government is doing is to preside over a dangerous
game of permanently damaging the social fabric in
every part of the nation pitting one against the other
all in the name of politics and for electoral gains. Even
if there is merit in the creation of a new state, the
present lame duck government should not be allowed
go ahead with its plan of bifurcating Andhra Pradesh,
for the present dispensation has no credibility left to
take such an important decision involving the future
of so many people in that region. As we go to press
the government is trying to hustle the Telengana Bill
through the Parliament by hook or by crook. One hope
it doesn't succeed. By the way when we celebrate
the achievement of Satya Nadella we are also passing
an indictment on our system which forces the potential
achievers to migrate out of the country if they have to
do what they have done - be it Nobel laureates,
business tycoons or whatever. By the way again, none
of these icons who have achieved something big are
Indian citizens; they may be of Indian origin.
The flavour of the season is undoubtedly what has
now come to be known as Dharna politics. No one is
interested in the old fashioned practice of raising
people's issues in Parliament (that is, if the Parliament
were to function, in the first place). There is much
better visibility and freedom at Jantar Mantar. Kejriwal
and his Aam Aadmi Party have made it fashionable
to sit on Dharna notwithstanding the cause and effect.
In the process Dharna Dharma is being reinvented
and rewritten. As of writing this piece there is this Chief
Minister of Andhra Pradesh sitting on Dharna against
his own government in Delhi; the Telengana
protagonists on a Dharna next to him demanding
creation of a separate state; Kejriwal & Co. back again
on the ground to announce to the world that their
earlier Dharna about wanting to bust the prostitution
and drug racket have been proved right and justified,
after all. At this rate it may be advisable for the Delhi
government consider building a Dharna Complex at
Jantar Mantar on the lines of a huge Exhibition Centre.
This would generate some much needed revenue for
the state government. Proper arrangements can be
made for the Ministers and Bureaucrats to visit the
concerned stalls where causes associated with their
ministries are being agitated upon. They will save
precious time and can plan their days better. This
3
Bizsol UPDATE February - 2014
could result in better traffic management, availability
of water for water-cannons, better employment
opportunities for catering services, event
management outfits and the like. Delhi would look
better organised. Moreover, Dharna as a concept
stands self authenticated as it has been invented by
none other than the original Gandhi (may his soul
rest in peace). On a serious note one sincerely hopes
that street democracy does not lead to meting out
street justice. Amen.
From Dharna politics let us now move to Statue
politics. News has just come in that the tallest statue
in the country would be that of Shivaji Maharaj off the
coast of Mumbai. In this highly competitive atmosphere
with elections round the corner every extra inch on
the statue could mean extra votes. Never mind the
cost. Whose money is it any way? Mayawati and her
handbag were criticised equally when she built her
own statue with her handbag during her tenure as
the Chief Minister of Uttar Pradesh. When Sardar
Patel, the real 'iron man' was to be resurrected through
a statue made of iron by Narendra Modi the congress
party was quick to criticise BJP. Now a Congress Chief
Minister himself has joined the bandwagon of
competitive statue politics. Prithviraj Chavan may have
won the battle but not the war yet. Remember there
are another 27 states left who are yet to announce
their decision to join the statue politics and their
budgets. Watch this space.
The chatterati in a society consisting largely of the
middle class serves a useful purpose. They serve
themselves very well even at the expense of others.
At one point in time recently it looked as though they
had lost their voice when the government at the Centre
decided that subsidised LPG cylinders would be
limited to 6 despite their vociferous protest. They had
their day when it was revised upwards to 9 a short
while later. They scored a decisive victory when Rahul
Gandhi in his newly acquired aggressive avatar at
the recent AICC session demanded this quota be
increased to 12 and the government obliged post-
haste. In the process what was rolled back was one
of the very few sensible reform measures introduced
by this government. Subsidy on LPG is a classic case
of misdirected subsidies even according to the
Governor of the Reserve Bank of India. The economist
Prime Minister then defended the earlier decision to
limit the quota to 6 by saying that "money doesn't
grow on trees". As it is still not growing on trees, at
least in India, will the government explain the rationale
for the recent decision? "Rob Paul to pay Peter" - so
goes the saying. In this instance it is robbing the poor
to pay the not-so-poor. The story of a puppet
becoming a pied piper is complete. Will the real
Manmohan Singh please stand up?
Mani Shankar Aiyar, the Congress Party's self
appointed ideologue wants the world to see him as
an erudite and scholarly politician belonging to a
different class. He kicked up a controversy recently
by contemptuously calling Narendra Modi an ordinary
chai-walla and not worthy of his attention even. In
one stroke he gave BJP a stick to beat the congress
with and also showed himself up as an intellectually
arrogant bigot. He belongs to that class which equates
command over the English language to uncommon
common sense and even some form of extreme
wisdom. His comment was not only in bad taste but
also obnoxious. With people like him the ruling party
is increasingly looking like a zoo where all kinds
inmates are allowed thrive with total protection.
Revolutionaries across the globe justify their actions
with the rationale that end justifies the means. In a
well entrenched system running on its own inertia
looking for volunteers to make change happen is
difficult, nay, impossible. Kejriwal the Chief Minister
of Delhi was pilloried by all the arms of the established
society like the government, the media, the judiciary,
the police and what have you when he took the unusual
step of sitting on a Dharna to demand action against
the Delhi Police for dereliction of duty. In doing so
Kejriwal did not endear himself to the puritans in the
society. But these tactics suited him politically and
helped him to highlight the rot in the police system
quite effectively though perhaps not so conventionally.
No police reform has come about through
conventional means all these years till date. It is
perhaps time that someone thinks out of the box to
force the hands of those who are well entrenched in
the establishment and use the police to do their
bidding. The jury is still out on whether the means
adopted by Kejriwal would indeed be condoned if it
results in cleansing the rotten system in which we all
live.
Thank you.
Venkat R. Venkitachalam
4
Bizsol UPDATE February - 2014
CUSTOMS
NOTIFICATIONS
Tariff
• Import of specified goods from the Republic of
Korea shall attract lesser duties on most of the
products since there is further reduction in rate
of customs leviable on specified goods w.e.f 1st
January 2014. [Notification No. 54/2013-Cus
dated 31-12-2013]
• Import of Tanks and other armoured fighting
vehicle (8710) and Hydraulic Turbines, Water
Wheels and regulators, Turbo Jets, other engines
(falling under 8410 to 8412) from Japan will
attract higher duties w.e.f 1st January 2014.
[Notification No. 55/2013-Cus dated
31-12-2013]
• Import of goods from Malaysia shall attract lesser
duties on most of the products since there is
further reduction in rate of customs leviable on
goods as described in the notification w.e.f 1st
January 2014. [Notification No. 56/2013-Cus
dated 31-12-2013]
• Import of specified goods from Member States
of the Association of Southeast Asian Nations
(ASEAN) shall attract lesser duties on most of
the products since there is further reduction in
rate of customs leviable on goods as described
in the notification w.e.f 1st January 2014.
[Notification No. 57/2013-Cus dated
31-12-2013]
• Exemption from payment of whole of customs
duty, additional duty, safeguard duty and anti-
dumping duty on material imported into India
against Advance Authorization meant for export
of prohibited item, subject to certain conditions
as specified in the notification. [Notification 01/
2014-Cus Dated 17-01-2014]
• Standard rate of customs duty has been
increased from 7.5% to 10% in case of following
chapter heading nos. pertaining to edible oils:
Sr.No. Chapter Heading Description of goods
56 15079010 All goods
58 1508, 1509, 1510, 1512, All goods, refined and
1513, 1514 or 1515 edible grade
59 1511 90 All goods
63 15121910 All goods
66 1514 19 or 15 14 99 All goods, edible grade
69 1516 20 All goods, edible grade
71 1517 10 21, 1517 90 10, All goods, edible grade
1517 90 20, 1518 00 11,
1518 00 21 or 1518 00 31
[Notification No. 02/2014-Cus dated
20-01-2014]
• Standard rate of custom duty on import of "Iron
ore pellets" under chapter heading 26011210 has
been increased to 5% from nil rate of duty as
provided in Notification No. 27/2011-Cus dated
01-03-2011. [Notification No. 03/2014-Cus
Dated 27-01-2014]
• Exemption for Tunnel Boring Machine has been
revised to read as under,
Table Chapter or AddiSr.No. Heading or Description of Stand- tional Condi-
sub-heading goods ard duty tionor tariff item rate rate No.
397 84 or any The followingother Chapter goods, namely :-
(A) Tunnel boring Nil - -machines(B) Parts and Nil - -
components of(A) for using theassembly of Tunnelboring machines
[Notification No. 04/2014-Cus Dated 03-02-2014]
5
Bizsol UPDATE February - 2014
• Rate of All Industry duty drawback has been amended for goods falling under chapter headings - 3, 42,
48, 57, 60, 61, 62, 63, 73, 84, 87 & 95 with effect from 25th January 2014. Details are given separately as
below.
1. In CHAPTER - 3, for Tariff item 030602 and the entries relating thereto, the following Tariff items
and entries shall be substituted, namely :-
030602 In frozen form other than Accelerated Kg 3.3% 14.6 2.3% 10.2
030603 Accelerated Freeze Dried Kg 1.8% 38 1% 21.1
2. In CHAPTER - 42, -
a) against Tariff item 420207, for the entry in column 5, the entry "70" shall be substituted;
b) against Tariff item 420207, for the entry in column 7, the entry "15.4" shall be substituted;
c) against Tariff item 420210, for the entry in column 5, the entry "70" shall be substituted;
d) against Tariff item 420210, for the entry in column 7, the entry "15.4" shall be substituted;
e) against Tariff item 420307, for the entry in column 5, the entry "42" shall be substituted;
f) against Tariff item 420307, for the entry in column 7, the entry "14.3" shall be substituted;
3. In CHAPTER - 48,-
a) against Tariff item 4820200001, in column 2, the words "or without", shall be omitted;
b) against Tariff item 4820200001, for the entry in column 4, the entry "6.7%" shall be substituted
c) against Tariff item 4820200001, for the entry in column 5, the entry "7.2" shall be substituted;
d) against Tariff item 4820200001, for the entry in column 7, the entry "3.5" shall be substituted;
e) against Tariff item 4820200009, for the entry in column 4, the entry "6.7%" shall be substituted;
f) against Tariff item 4820200009, for the entry in column 5, the entry "7.2" shall be substituted;
g) against Tariff item 4820200009, for the entry in column 7, the entry "1.8" shall be substituted;
4. In CHAPTER - 57,-
a) against Tariff item 570206, for the entry in column 5, the entry "53.5" shall be substituted;
b) against Tariff item 570206, for the entry in column 7, the entry "28.4" shall be substituted;
c) against Tariff item 570305, for the entry in column 5, the entry "53.5" shall be substituted;
d) against Tariff item 570305, for the entry in column 7, the entry "28.4" shall be substituted;
e) against Tariff item 570505, for the entry in column 5, the entry "53.5" shall be substituted;
f) against Tariff item 570505, for the entry in column 7, the entry "28.4" shall be substituted;
5. In CHAPTER - 60,-
a) after the Tariff item 600209 and the entries relating thereto, the following Tariff items and entries
shall be inserted, namely:-
Tariff
ItemDescription of goods Unit
Drawback when
Cenvat facility has
not been availed
Drawback when
Cenvat facility has
been availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
6
Bizsol UPDATE February - 2014
Tariff
ItemDescription of goods Unit
Drawback when
Cenvat facility has
not been availed
Drawback when
Cenvat facility has
been availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
600210 Of Man Made Fibres containing 5% or more
by weight of spandex/lycra/elastane (Grey) Kg 8.30% 60 3.10% 22.4
600211 Of Man Made Fibres containing 5% or more
by weight of spandex/lycra/elastane (Grey) Kg 8.80% 72 3.10% 25.4
600212 Of Cotton containing 5% or more by weight
of spandex/lycra/elastane (Grey) Kg 5.90% 34 1.60% 9.2
600213 Of Cotton containing 5% or more by weight
of spandex/lycra/elastane (Dyed) Kg 6.40% 40 1.60% 10
600214 Of Blend containing Cotton and Man Made
Fibre where MMF predominates by weight
and containing 5% or more by weight of
spandex / lycra / elastane (Grey) Kg 7.50% 57.3 3.10% 23.7
600215 Of Blend containing Cotton and Man Made
Fibre where MMF predominates by weight
and containing 5% or more by weight of
spandex / lycra / elastane (Dyed) Kg 8% 63.9 3.10% 24.8
600216 Of Blend containing Cotton and Man Made
Fibre where Cotton predominates by weight
and containing 5% or more by weight of
spandex / lycra / elastane (Grey) Kg 5.90% 37.9 1.30% 8.3
600217 Of Blend containing Cotton and Man Made
Fibre where Cotton predominates by weight
and containing 5% or more by weight of
spandex / lycra / elastane (Dyed) Kg 6.40% 50.1 1.30% 10.2
b) after the Tariff item 600409 and the entries relating thereto, the following Tariff items and entries shall be
inserted, namely:-
Tariff
ItemDescription of goods Unit
Drawback when
Cenvat facility has
not been availed
Drawback when
Cenvat facility has
been availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
600410 Of Man Made Fibres containing 5% ormore by
weight ofspandex/lycra/elastane (Grey) Kg 8.3% 60 3.1% 22.4
600411 Of Man Made Fibres containing 5% or more by
weight ofspandex/lycra/elastane (Dyed) Kg 8.8% 72 3.1% 25.4
600412 Of Cotton containing 5% or more by weight of
spandex/lycra/elastane (Grey) Kg 5.9% 34 1.6% 9.2
7
Bizsol UPDATE February - 2014
Tariff
ItemDescription of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback whenCenvat facility has
been availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
600413 Of Cotton containing 5% or more by weight of
spandex/lycra/ elastane (Dyed) Kg 6.4% 40 1.6% 10.0
600414 Of Blend containing Cotton and ManMade
Fibre where MMF predominates by weight and
containing 5% or more by weight of spandex/
lycra/elastane (Grey) Kg 7.5% 57.3 3.1% 23.7
600415 Of Blend containing Cotton and ManMade
Fibre where MMF predominates by weight and
containing 5% or more by weight of spandex/
lycra/elastane (Dyed) Kg 8% 63.9 3.1% 24.8
600416 Of Blend containing Cotton and Man Made
Fibre where Cotton predominates by weight
and containing5% or more by weight of
spandex/lycra/elastane (Grey) Kg 5.9% 37.9 1.3% 8.3
600417 Of Blend containing Cotton and ManMade
Fibre where Cotton predominates by weight
and containing5% or more by weightofpandex/
lycra/elastane (Dyed) Kg 6.4% 50.1 1.3% 10.2";
6. In CHAPTER - 61, after the Tariff item 611608 and the entries relating thereto, the following
611609 Gloves, specially designed for use in sports Per
namely Golf Gloves made of synthetic materials piece 7.6% 35.2 1.7% 7.9
7. In CHAPTER - 62, after the Tariff item 621607 and the entries relating thereto, the following
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
621608 Gloves, specially designed for use insports Per
namely Golf Gloves made of synthetic Piece 7.6% 35.2 1.7% 7.9
materials
8
Bizsol UPDATE February - 2014
8. In CHAPTER - 63, for Tariff items falling under heading 6307 and the entries relating thereto, the following
Tariff items and entries shall be substituted, namely :
Tariff Description of goods Unit
Drawback when Cenvatfacility has
Drawback when Cenvatfacility has been
Drawback Drawbackcap per
Drawback Drawbackcap per
630701 Fabric Swatches Kg 7.2% 69.2 1.8% 17.3
630702 Others (excluding fabricswatches)
63070201 Of Cotton Kg 7.2% 75 1.8% 18.7
63070202 Of Blend containing Cotton and
Man Made Fibre Kg 8.2% 84 1.5% 15.4
63070203 Of Man Made Fibres Kg 9.2% 94 1.1% 11.2
63070204 Of Silk (other than containing noil silk) Kg 7.8% 414.5 4% 212.6
63070205 Of Noil Silk Kg 7.8% 129 4% 66.2
63070206 Of Wool Kg 7.2% 108 1.8% 27
63070207 Of Others Kg 7.2% 69.2 1.8% 17.3
9. In CHAPTER - 73, after Tariff item 732643 and the entries relating thereto, the following Tariff item and
the entries shall be inserted, namely:-
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
732644 Steel Cops/Pirn/Bobbins 1.9% 1.9%
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
8436 Other agricultural, horti-cultural, forestry,
poultry-keeping or bee- keeping machinery,
including germi-nation plant fitted with
echanical or thermal equipment; poultry
incubators and brooders
843601 Poultry equipment and parts thereof Kg 7.2% 10 1.7% 2.3
843699 Others 1.7% 1.7%
10. In CHAPTER - 84, for Tariff item 8436 and the entries relating thereto, the following Tariff items and
entries shall be substituted, namely :-
9
Bizsol UPDATE February - 2014
11. In CHAPTER - 87, for all the Tariff items and the entries relating thereto, the following Tariff items and
entries shall be substituted, namely :-
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
8701 Tractors (otherthantractors of heading 8709) 1 No. 6.5% 26000 2% 8000
8702 Motorvehiclesforthetransport
Oftenormorepersons,including the driver
870201 CommercialVehicleofGVWupto
7.5 MT in CBU/SKD/CKD Condition 2% 2%
870202 Commercial Vehicles of GVW
above7.5MTinCBU/SKD/CKD condition 2% 2%
870299 Others 2% 2%
8703 Motor cars and other motor vehicles principally
designed for the transport ofpersons (other
thanthoseofheading 8702), including station
wagons and racing cars
870301 Rear Engine Auto Rickshaw in
CKD/ SKD/ CBU condition 2% 2%
870302 Motor cars having Manual Transmission 1 No. 2.85% 25000 2.85% 25000
870303 Motor cars having Automatic Transmission 1 No. 3.67% 34000 3.67% 34000
870399 Others 2% 2%
8704 Motorvehiclesforthetransport ofgoods
870401 CommercialVehicleofGVWupto
7.5 MT in CBU/SKD/CKD Condition 2% 2%
870402 Commercial Vehicles of GVW
above7.5MTinCBU/SKD/CKD condition 2% 2%
870499 Others 2% 2%
8705 Special purpose motor vehicles, other than
those principally designed for the transport of
persons or goods (for example, break down
lorries, crane lorries, firefighting vehicles,
concrete- mixers lorries, spraying lorries,
mobile workshops, mobile radiological units)
870501 CommercialVehicleofGVWupto
7.5 MT in CBU/SKD/CKD Condition 2% 2%
870502 Commercial Vehicles of GVW
above7.5MTinCBU/SKD/CKD condition 2% 2%
1 0
Bizsol UPDATE February - 2014
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
870599 Others 2% 2%
8706 Chassis fitted with engines, for the motor
vehicles of headings 8701 to 8705
870601 Front EngineThree Wheeler Drive away
Chassis in CKD/ SKD/CBU condition 2% 2%
870602 Chassis,with or without cabin, for Commercial
Vehicle of GVW upto 7.5 MT in CBU/SKD/CKD
Condition 2% 2%
870603 Chassis,with or withoutcabin, for Commercial
Vehiclesof GVW above 7.5MTinCBU/SKD/CKD
condition 2% 2%
870699 Others 2% 2%
8707 Bodies (including cabs), for the motor vehicles
of headings 8701 to 8705 2% 2%
8708 Parts and accessories of the motor vehicles of
headings 8701 to 8705
870801 Nozzles Kg 7.2% 17.0 2% 4.7
870802 Piston Pin/ GudgeonPin Kg 7.2% 17.0 2% 4.7
870803 Steel Anchor Pin Kg 7.2% 17.0 2% 4.7
870804 BB Axle Kg 7.2% 17.0 2% 4.7
870805 Brake shoe plate Kg 7.2% 17.0 2% 4.7
870806 Chain Cover Hinges Shakle Plates
Made of CRCA Sheet Kg 7.2% 17.0 2% 4.7
870807 ConnectingRods Kg 7.2% 17.0 2% 4.7
870808 Crank for chain wheel Kg 7.2% 17.0 2% 4.7
870809 FrontAxlebeam/I-Beam, made of Alloysteel Kg 7.2% 17.0 3% 7.1
870810 Front Axle beam/I-Beam, made of
non-alloy steel Kg 7.2% 17.0 2% 4.7
8708011 FullTensionSleeve Kg 7.2% 17.0 2% 4.7
8708012 Spokes (Galvanised) Kg 7.2% 17.0 2% 4.7
8708013 Machined trailor ball/ hitch pin/Linkage pin Kg 7.2% 17.0 2% 4.7
8708014 Push rod Kg 7.2% 17.0 2% 4.7
1 1
Bizsol UPDATE February - 2014
8708015 RadiatorCap Kg 7.2% 17.0 2% 4.7
8708016 SleeveShaftandBallJoint Kg 7.2% 17.0 2% 4.7
8708017 Slip StubShaft Kg 7.2% 17.0 2% 4.7
8708018 Spindles Kg 7.2% 17.0 2% 4.7
8708019 Sprocket with central axle Kg 7.2% 17.0 2% 4.7
8708020 V-BeltCoverBcP Kg 7.2% 17.0 2% 4.7
8708021 Valve Tappets Kg 7.2% 17.0 2% 4.7
8708022 Automotive Radiator Core of Copper/Brass
construction Kg 7.2% 49.5 2% 13.7
8708023 Automotive Radiator assembly with radiator
core of Copper/ Brassconstruction Kg 7.2% 49.5 2% 13.7
8708024 Automotive Radiator assembly with radiator
core of Steel/Brass construction Kg 7.2% 34.0 2% 9.4
8708025 Roller for auto break shoe Kg 7.2% 17.0 2% 4.7
8708026 SplineHubforClutchPlates Kg 7.2% 17.0 2% 4.7
8708027 Front/rear axle shaft Kg 7.2% 17.0 2% 4.7
8708028 Auto Parts Double Brake Chamber
Type 24 L/S Kg 7.2% 17.0 2% 4.7
8708029 Auto Parts Brake Chamber Type 16L/S Kg 7.2% 17.0 2% 4.7
8708030 Auto Parts Brake Chamber Type 20L/S Kg 7.2% 17.0 2% 4.7
8708031 Auto Parts Brake Chamber Type 24L/S Kg 7.2% 17.0 2% 4.7
8708032 Auto Parts Brake Chamber Type 30L/S Kg 7.2% 17.0 2% 4.7
8708033 Auto Parts Brake Chamber Type 30 S/S Kg 7.2% 17.0 2% 4.7
8708034 Steering Knuckle Kg 7.2% 17.0 2% 4.7
8708035 TractorParts-Top Link Assembly and
Parts thereof Kg 7.2% 17.0 2% 4.7
8708036 Tractor Parts-Stabilizer Assembly/Chain
Assembly and Parts thereof Kg 7.2% 17.0 2% 4.7
8708037 Tractor Parts- Lift Arm/Lower
Link and Parts thereof Kg 7.2% 17.0 2% 4.7
8708038 Tractor Parts-Draw Bar Kg 7.2% 17.0 2% 4.7
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
1 2
Bizsol UPDATE February - 2014
8708039 Tractor Parts- Ratchet Jack
AssemblyandParts thereof Kg 7.2% 17.0 2% 4.7
8708040 Tractor Parts- Levelling Assembly and
Parts thereof Kg 7.2% 17.0 2% 4.7
8708041 Tractor Parts-BallforTractor Parts Kg 7.2% 17.0 2% 4.7
8708042 Tractor Parts-Reducing Bush Kg 7.2% 17.0 2% 4.7
8708043 Deleted
8708044 Tractor Parts-StubAxle/Front Axle Spindle Kg 7.2% 17.0 2% 4.7
8708045 Tractor Parts- Tie Rod End and Parts thereof Kg 7.2% 17.0 2% 4.7
8708046 Deleted
8708047 Deleted
8708048 ConeSleeve/Axle Stud sleeve 2% 2%
8708049 Rear Axle Assembly for LCV/
HCV (Assembly/SKD) 2.6% 2.6%
8708050 RockerArm/Rocker Shaft made of Steel 2% 2%
8708051 Aluminium Pistons, in fully machined conditions 2% 2%
8708052 Clutch Cover Assembly 2% 2%
8708053 Clutch Plate /Disc Assembly/Driven plate 2% 2%
8708054 Brake Drums madeof Alloy Cast Iron 2% 2%
8708055 Nut and Shaft Assembly for Automobile 2% 2%
8708056 Rear Axle Housing Assembly for LCV/HCV 2% 2%
8708057 Chrome/Nickel Plated wire wheel
For all types of car 2% 2%
8708058 ShockAbsorber 2% 2%
8708059 Power takeoffs /clutches 2% 2%
8708060 Diffuserand parts thereof 2% 2%
8708061 Distributor Type Fuel Injection Pump 3.3% 3.3%
8708062 End-Cap Assembly 2% 2%
8708063 General Purpose Metal Fitted/ Metal Bonded /
Metal Un-bonded Automobile Rubber Parts
(Moulded/Extruded) including Engine Mounting Kg 3% 17.1 3% 17.1
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
1 3
Bizsol UPDATE February - 2014
8708064 Identifiable ready touse machined Parts/
components made whollyor predominantly of
iron / carbon steel /Non Alloy Steel/Alloy steel
(other than StainlessSteel) (not less than 90%
by weight) manufactured through casting
process, not else where specified. 2% 2%
8708065 Identifiable ready touse machined Parts/
components madewhollyor predominantly of
Stainless Steel (not less than 90% by weight)
manufactured through casting process, not else
where specified. Kg 2.6% 6.2 2.6% 6.2
8708066 Identifiable ready touse machined parts/
components made whollyor predominantly of
carbon steel / Non Alloy Steel/ (not less than
90% by weight) manufactured through forging
process, not else where specified. 2% 2%
8708067 Identifiable ready touse machined parts/
components made wholly or predominantly of
Alloy Steel (not less than 90% by weight)
manufactured through Forging process, not else
where specified Kg 3% 6.5 3% 6.5
8708068 Identifiable ready touse machined parts /
components made wholly or predominantly of
Stainless Steel (not less than 90% by weight)
manufactured through Forging process, not
else wheres pecified Kg 3% 14.4 3% 14.4
8708069 Cast articles including parts/components of
Aluminium, not else where specified 2% 2%
8708070 Alloy Steel Forgings (Machined) Kg 3% 6.5 3% 6.5
8708099 Others 2% 2%
8709 Works trucks, self-propelled, not fitted with
lifting or handling equipment, of the type used
infactories, warehouses, dockareas or airports
for short distance transport of goods; tractors
of the type usedon railway station platforms;
parts of the foregoing vehicles 2% 2%
87100000 Tanks and other armoured fighting vehicles,
motorized, whether or notfitted with weapons,
and parts of such vehicles Nil Nil
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
1 4
Bizsol UPDATE February - 2014
871102 Automotive Steel Wheel Rims14"- 16"
(Excluding Wire Wheels) Kg 7.2% 14.2 2% 3.9
871103 Scooter (in CKD/SKD/CBU condition) 2% 2%
871104 Motor Cycle (inCKD/SKD/CBU condition) 2% 2%
871105 Moped (in CKD/SKD/CBU condition) 2% 2%
871199 Others 2% 2%
8712 Bicycles and other cycles (including delivery
tricycles), not motorized
871201 Complete Bicycle singlespeed 1 No. 11.7% 439.5 2% 75.1
871202 Complete Bicycle having multi- Speed
chain wheel and crank with multi-speed
freewheel 1 No. 13.3% 608 4.3% 196.6
871203 Multi-speed complete bicycle with geared hubs 1 No. 13.3% 608 4.3% 196.6
871299 Others 2% 2%
8713 Carriages for disabled persons, whether or not
motorised or otherwise mechanically propelled 2% 2%
8714 Partsandaccessoriesofvehicles of headings
8711 to 8713
871401 BB axle 100 11.4% 351 2% 61.6
Pcs
871402 BBCup set of 3 1 Set 11% 2.7 2% 0.5
871403 Deleted
871404 Brakeset 1 Set 11.4% 10.9 2% 1.9
871405 Chain 100 11% 661 2% 120.2
Pcs
871406 Chain Adjuster Per 11% 0.5 2% 0.1
pair
871407 Single speed Chain wheel and Crank
(Crank madeof steel) 1 Set 11% 17.3 2% 3.1
871408 Cotter pin-Set of 2 1 Set 11% 0.6 2% 0.1
871409 FramemadeofsteelwithoutB.B. cup and axle Per 8% 53 2% 13.2
piece
871410 Fork 100 11.4% 1658.7 2% 291
Pcs.
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
1 5
Bizsol UPDATE February - 2014
871411 ForkFitting 1 Set 10.5% 3.8 2% 0.7
871412 Freewheel single speed 100 10.5% 472.5 2% 90
Pcs.
871413 Handle bar madeof steel 1 Set 10.5% 23.7 2% 4.5
871414 Handle stem madeof steel 100 11.4% 345 2% 60.5
Pcs.
871415 Hub (front orrear)madeofsteel 100 10.5% 672 2% 128
Pcs.
871416 Lamp bracket 100 11.4% 135.7 2% 23.8
Pcs.
871417 Mudguard (pair) Per 11.4% 22.4 2% 3.9
Pcs.
871418 Pedal (pair) Per 11.4% 8.2 2% 1.4
Pcs.
871419 Rim(pair)madeof steel Per 11.4% 37.2 2% 6.5
Pcs.
871420 Saddle 100 11.4% 2297 2% 403
Pcs
871421 Seat Pillar 100 11.4% 169.8 2% 29.8
Pcs
871422 Spokes set of144 pieces 1 Set 11.4% 13.7 2% 2.4
871423 Single speed Chain wheel and Crank
(Crank made of aluminium) Kg 10% 25.8 2% 5.1
871424 Cranks madeout of aluminium Kg 10% 45 2% 9
871425 Triplechainwheelandcrank set 1 Set 10% 29.1 2% 5.8
871426 Handle Bar Switch Per 10% 29.1 3% 8.7
piece
871427 Half Collets for engine valves Per 10% 6.8 2% 1.3
piece
871428 Industrial Roller Chain/Motor cycles including
Moped Chain/Automotive Timing Chains
(all types includings pares) Kg 10% 25.8 2% 5.1
871429 Chain wheel Per
piece 10% 51.6 2% 10.3
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
1 6
Bizsol UPDATE February - 2014
871430 Multispeed freewheel Per
piece 10% 34.3 2% 6.8
871499 Others Kg 10% 17.1 2% 3.4
8715 Baby carriages and parts thereof Kg 7.2% 14.2 2% 3.9
8716 Trailers and semi-trailers; other vehicles,
not mechanically propelled; parts thereof
871601 Truck and Trailer Wheels Kg 7.2% 14.2 2% 3.9
871602 Earth Moving Wheel Components, namely,
Bead Seat Ring, Gutter Band Fixed Flange
and Lock Ring Kg 7.2% 14.2 2% 3.9
871603 Others 2% 2%
TariffItem
Description of goods Unit
Drawback when Cenvatfacility has
not been availed
Drawback when Cenvatfacility has been
availed
DrawbackRate
Drawbackcap per
unit in Rs.
DrawbackRate
Drawbackcap per
unit in Rs.
12. In CHAPTER - 95,-
a) against Tariff item 950304, in column 3, the
entry "Kg" shall be inserted;
b) against Tariff item 950304, for the entry in
column 4, the entry "4.7%" shall be
substituted;
c) against Tariff item 950304, in column 5, the
entry "26.9" shall be inserted;
d) against Tariff item 950304, in column 7, the
entry "9.7" shall be inserted;
e) against Tariff item 950305, in column 3, the
entry "Kg" shall be inserted;
f) against Tariff item 950305, for the entry in
column 4, the entry "4.7%" shall be
substituted;
g) against Tariff item 950305, in column 5, the
entry "26.9" shall be inserted;
h) against Tariff item 950305, in column 7, the
entry "9.7" shall be inserted;
i) against Tariff item 95069962, for the entry
in column 3, the entry "set" shall be
substituted;
j) against Tariff item 95069962, for the entry
in column 4, the entry "7.2%" shall
besubstituted;
k) against Tariff item 95069962, for the entry
in column 5, the entry "470" shall be
substituted;
l) against Tariff item 95069962, for the entry
in column 7, the entry "111" shall be
substituted;
[Notification No. 05/2014-Cus (N.T) Dated 21-
01-2014]
• Prohibition for import of goods from Bhutan will
not be applicable in case of import of machinery
and equipment, which were exported to Bhutan
from countries other than India through an Indian
place of entry subject to condition notified.
[Notification No. 07/2014-Cus (N.T) Dated 28-
01-2014]
• Tariff value of following items has been revised:
Sr. Chapter / heading / Description Tariff value US $No. sub-heading / of goods (Per Metric
tariff item Tonne)
1 1511 10 00 Crude Palm Oil 857
2 1511 90 10 RBD Palm Oil 880
3 1511 90 90 Others - Palm Oil 869
4 1511 10 00 Crude Palmolein 896
5 1511 90 20 RBD Palmolein 899
6 1511 90 90 Others - Palmolein 898
1 7
Bizsol UPDATE February - 2014
7 1507 10 00 Crude Soyabean Oil 917
8 7404 00 22 Brass Scrap 3959
(all grades)
9 1207 91 00 Poppy seeds 3195
10 71 or 98 Gold, in any form, in 404 per 10respect of which the gramsbenefit of entries atserial number 321and 323 of the Notifi-cation No. 12/2012-Customs dated17.03.2012 is availed
11 71 or 98 Silver, in any form, in 635 perrespect of which the kilogrambenefit of entries atserial number 322and 324 of the Notifi-cation No. 12/2012-Customs dated
17.03.2012 is availed
12 080280 Areca nuts 1816"
[Notification No. 08/2014-Cus (N.T) Dated
31-01-2014]
Safeguards
No new notifications!!
Anti Dumping Duty
• Name of producer/exporter "Grodno
Khimvolokno" has been substituted by "JSC
Grodno Azot" for anti-dumping duties on import
of Nylon Tyre Cord Fabric Notification No. 121/
2009-Cus dated 30-10-2009, against serial no.
1 & 2. [Notification No. 01/2014-Cus (ADD)
Dated 03-01-2014]
• Anti-dumping duty on imports of Compact
Fluorescent Lamps originating in or exported
from China PR was imposed vide Notification No.
55/2009-Cus dated 26-05-2009 without any time
limit. Explanation has been added to the above
said notification as - anti-dumping duty imposed
against serial nos. 1 to 28 shall remain in force
up to and inclusive of the 20-11-2014.
[Notification No. 02/2014-Cus (ADD) Dated
03-01-2014]
• Anti-dumping duty on Caustic Soda, falling under
Chapter 28, originating in, or exported from
People's Republic of China, imposed vide
Notification No. 137/2008-Cus dated 26-12-2008
valid till date 25-12-2013 has been further
extended by 1 year to date 25-12-2014.
[Notification No. 03/2014-Cus (ADD) Dated
16-01-2014]
• Anti-dumping duty on Caustic Soda, falling under
Chapter 28, originating in, or exported from
Korea RP, imposed vide Notification No. 95/
2011-Cus dated 03-11-2011 valid till date 25-
12-2013 has been further extended by 1 year to
date 25-12-2014. [Notification No. 04/2014-
Cus (ADD) Dated 16-01-2014]
• Anti-dumping duty on imports of Nonyl Phenol
(falling 29071300) originating in or exported from
Chinese Taipei, imposed vide Notification No. 94/
2007-Cus dated 22-08-2007 valid till date 21-
08-2013 has been imposed further for another
5 years from the date of publication of this
notification in the Official Gazette. [Notification
No. 05/2014-Cus (ADD) Dated 16-01-2014]
• Anti-dumping duty on Acrylonitrile Butadiene
Rubber, originating in, or exported from Korea
RP, imposed vide Notification No. 01/2009-Cus
dated 02-01-2009 valid till date 01-01-2014 has
been further extended by 1 year to date 01-01-
2015. [Notification No. 06/2014-Cus (ADD)
Dated 23-01-2014]
• Anti-dumping duty on imports of Float Glass of
thickness 2 mm to 12 mm (both inclusive) of clear
as well as tinted variety (other than green glass)
but not including reflective glass, processed glass
meant for decorative, industrial or automotive
purposes falling under heading 7005, originating
in, or exported from, China PR and Indonesia
imposed vide Notification No. 04/2009-Cus dated
06-01-2009 valid till date 05-01-2014 has been
further extended by 1 year till date 05-01-2015.
[Notification No. 07/2014-Cus (ADD) Dated
23-01-2014]
• Anti-dumping duty on imports of Hexamine falling
under tariff item 2921/2910, originating in or
exported from the Saudi Arabia and Russia,
imposedvide Notification No. 89/2007-Cus dated
25-07-2007 valid till date 24-07-2013 has been
imposed further for another 5 years from the date
1 8
Bizsol UPDATE February - 2014
of publication of this notification in the Official
Gazette. [Notification No. 08/2014-Cus (ADD)
Dated 23-01-2014]
• Anti-dumping duty has been imposed on imports
of Diamino Stilbene , Disulphonic Acid (DASDA)
falling under Chapter 29, originating in, or
exported from the People's Republic of Chinafor
a period of 5 Years from the date of publication
of this notification in the Official Gazette.
[Notification No. 09/2014-Cus (ADD) Dated
23-01-2014]
• Anti-dumping duty on imports of Phosphoric Acid
- Technical Grade and Food Grade(including
Industrial Grade), falling under Sub-heading
280920 originating in, or exported from People's
Republic of China, imposed vide Notification No.
17/2008-Cus dated 19-02-2008 has been
imposed further for another 5 years from the date
of publication of this notification in the Official
Gazette. [Notification No. 33/2013-Cus (ADD)
Dated 31-12-2013]
• Anti-dumping duty on imports of Recordable
Digital Versatile Disc (DVD) of all kinds originating
in or exported from Vietnam, imposed vide
Notification No. 98/2010-Cus dated 28-09-2010
has been amended to modify the quantum of
anti-dumping duty. [Notification No. 34/2013-
Cus (ADD) Dated 31-12-2013]
CENTRAL EXCISE
Notifications
Tariff
• The excise duties on Pan Masala and Pan
Masala containing tobacco classified under 2106
90 20 and 2403 99 90 has been increased in the
range of 5% to 8% in case of Pan Masala and
around 28% in case of Pan Masala containing
tobacco. Accordingly apportionment of total
excise duties into Central Excise duties, National
Calamity Contingent duties, ED Cess and SHE
cess has also been changed. [Notification no.
01/2014-CE dated the 24/01/2014]
• The excise duties on Chewing tobacco classified
under tariff item 2403 99 10, unmanufactured
tobacco classified under Heading 2401 and
Jarda scented tobacco classified under 2403 99
30, notified under section 3A is being enhanced.
[Notification No.02/2014-CE dated the 24/01/
2014]
Non-Tariff
• Cenvat Credit Rules has been amended w.r.t.
remission of duties on finished goods. Now
Cenvat Credit availed on input and input services
also will be required to be reversed. However
the procedure to identify the input services is not
been specified in the rules, this will lead to
confusion. Moreover, there will be a conflict of
Cenvat Credit reversal required under sub rule
3(A) of Rule 6 of Cenvat Credit Rules 2004 vis-
à-vis reversal of cenvat on input service required
for remission. The formula of how to arrive
reversal of input services has not been defined
and therefore there will be always disputes and
permission of remission may be denied.
[Notification No. 01/2014 - Central Excise
(N.T.) dated 08/01/2014]
• Confusion created by audit team w.r.t. date of
payment of duty for removal of input as such and
capital goods after use has been clarified and
the same has been aligned with payment of duty
on finished goods i.e. on or before 5th of the
following month except for the month of March
which is on 31st March [Notification No. 01/
2014 - Central Excise (N.T.) dated 08/01/2014]
• Recovery provision of Cenvat Credit in
accordance with Rule 14 of Cenvat Credit Rules
2004 has been extended to recovery / reversal
of duties in case of remission of the duties under
Rule 21 of Central Excise Rules, 2004.
[Notification No. 01/2014 - Central Excise
(N.T.) dated 08/01/2014]
• Omission of inclusion of notification 1/2010 has
been corrected so as to include the said
notification in the Rule 12 of CCR Rules 2004,
which grants special dispersion to inputs
manufactured in factories located in specified
areas like north east region, Kutch district of
Gujarat, J&K & Sikkim. Now Cenvat credit of
duties paid input and capital goods will be allowed
even in case such goods are manufactured by a
Unit located in Jammu & Kashmir and claiming
1 9
Bizsol UPDATE February - 2014
exemption under notification 1/2010-CE.
[Notification No. 02/2014 - Central Excise
(N.T.) dated
20/01/2014]
• Deemed number of pouches per operating
packing machine per month has also been
revised to higher side under Pan Masala packing
machine (capacity determination and collection
of duty) Rules 2008. The form for submission of
return has been revised in line with
apportionment of excise duties as mentioned in
tariff notification. [Notification No. 03/2014 -
Central Excise (N.T.) dated 24/01/2014]
• Deemed Capacity of production per packing
machine per month for chewing tobacco
(including Filter Khaini) ,unmanufactured tobacco
and Jarda scented tobacco (number of pouches)
has been revised on higher side under Chewing
Tobacco & Unmanufactured tobacco packing
machine (capacity determination and collection
of duty) Rules 2010. [Notification No. 04/2014
- Central Excise (N.T.) dated 24/01/2014]
Circular
• Education Cess and the Secondary and Higher
Education Cess are not to be calculated on
cesses which are levied under Acts administered
by Department/Ministries other than Ministry of
Finance (Department of Revenue) but are only
collected by the Department of Revenue in terms
of those Acts. Necessary instruction has been
issued to departmental officer to clear all pending
assessment may be finalized accordingly.
[Circular No. 978/02/2014-CX dated
07/01/2014]
• Guidelines have been issued to Departmental
Officer while applying the Supreme Court
Judgement in case of Fiat India. Some of the
guidelines are as under,
a) No general inference should be taken from
the judgement that duties will arise in case
the manufacturer has sold goods at a price
lower than manufacturing cost. Hon'ble
Supreme Court has cited two instances
where a manufacturer may sell goods at a
price lower than the cost of manufacture and
profit when the company wants to switch
over its business or where a manufacturer
has goods which could not be sold within a
reasonable time. The Hon'ble Court has
further held that these examples are not
exhaustive. Therefore, mere sale of goods
below the manufacturing cost and profit
cannot be taken as the sole basis for
rejecting the transaction value.
b) Calculations of manufacturing cost may be
carried out using CAS-4 standards.
Information submitted by the manufacturer,
duly certified by a Chartered or Cost
Accountant should normally be accepted.
Only where a decision to investigate a case
has been taken at the level of the
Commissioner and it is considered
necessary in the interest of investigation,
steps such as ordering Cost Audit of the Unit
or summoning of the Costing data should
be undertaken.
c) Aspects such as the percentage of loss at
which sale has taken place , the period for
which such loss making price has prevailed,
reasons for sale at such loss making price,
whether such sales are contrary to the
standard and accepted business practices,
and whether such sale is leading to erosion
of capital of the company, may be looked
into. In addition, due care may be taken at
the level of the Commissioner to see
whether the case at hand is similar to the
facts and circumstances of the FIAT case.
d) For the period prior to the date of the
judgment, in cases where a show cause
notice has been issued on the grounds of
the FIAT judgment alone, there may not be
a case for invoking the extended period of
limitation. In such cases, only the normal
period of limitation will apply.
e) For the period after the date of the
judgment, i.e. from 29- 8-2012 onwards, if
there is a sale in the circumstances similar
to the case of M/s FIAT and yet transaction
value of goods is declared as the correct
assessable value, then such declaration
would amount to wilful misstatement of the
2 0
Bizsol UPDATE February - 2014
assessable value and accordingly extended
period will be applicable.
[Circular No. 979/03/2014-CX dated 15/1/2014]
• It has been clarified that the duties on Pan
Masala is determined based on deemed
production with respect to the number of
operating packing machines in the factory during
the month and the Retail Sale Price printed on
the pouches and not on the basis of actual
production by a unit. Therefore duty cannot be
re-determined on the basis of the speed of the
packing machine and actual production thereof,
which may be higher / lower than the deemed
production [Circular No. 980/04/2014-CX dated
24/01/2014]
Instructions
• No new instructions
SERVICE TAX
Notifications• Service tax exemption has been granted to
services by way of sponsorship of sporting events
organised by a national sports federation, or its
affiliated federations, where the participating
teams or individuals represent country. Earlier
this exemption was restricted to "district, State
or zone". [Notification No. 1/2014-ST Dated
10-01-2014]
• The definition of Government Authority has been
redrafted. Earlier in order to be fit into the
government authority, the authority needs to
satisfy both the conditions i.e. set-up by act of
the Parliament or a State Legislature and to be
established by Government. Now the new
definition states that the authority can be either
set-up by act of the Parliament / State Legislature
or established by Government. [Notification No.
2/2014-ST Dated 30-01-2014]
• Service providers providing services to the
member of a recognized association or a
registered association, in relation to a forward
contract will not be required to pay service tax
for the services rendered for the period 10-Sep.
2004 to 30-Jun. 2012. This is in accordance with
the practice prevalent during the said period and
power of the Government under Sec 11C Central
Excise Act, 1934. [Notification No. 3/2014-ST
Dated 3-02-2014]
Circulars:
• Following clarification have been issued in
case services provided by a Resident Welfare
Sr.No.
Doubt Clarification
1 (i) In a residential complex,
monthly contribution collected
from members is used by the
RWA for the purpose of mak-
ing payments to the third par-
ties, in respect of commonly
used services or goods [Ex-
ample: for providing security
service for the residential com-
plex, maintenance or upkeep
of common area and common
facilities like lift, water sump,
health and fitness centre, swim-
ming pool, payment of electric-
ity Bill for the common area
and lift, etc.]. Is service tax levi-
able?
(ii) If the contribution of a mem-
ber/s of a RWA exceeds five
thousand rupees per month,
how should the service tax li-
ability be calculated?
Exemption at Sl. No. 28 (c) in
notification No. 25/2012-ST is
provided specifically with ref-
erence to service provided by
an unincorporated body or a
non-profit entity registered
under any law for the time be-
ing in force such as RWAs, to
its own members.
However, a monetary ceiling
has been prescribed for this
exemption, calculated in the
form of five thousand rupees
per month per member con-
tribution to the RWA, for sourc-
ing of goods or services from
third person for the common
use of its members.
If per month per member con-
tribution of any or some mem-
bers of a RWA exceeds five
thousand rupees, the entire
contribution of such members
whose per month contribution
exceeds five thousand rupees
would be ineligible for the ex-
emption under the said notifi-
cation. Service tax would then
be leviable on the aggregate
amount of monthly contribution
of such members.
2 (i) Is threshold exemption un-
der notification No. 33/2012-
ST available to RWA?
(ii) Does 'aggregate value' for
the purpose of threshold ex-
emption, include the value of
exempt service?
Threshold exemption available
under notification No. 33/2012-
ST is applicable to a RWA,
subject to conditions prescribed
in the notification. Under this
notification, taxable services of
aggregate value not exceed
2 1
Bizsol UPDATE February - 2014
Association (RWA) to its own members:
• Clarification regarding issue of Discharge
Certificate under VCES and availment of
CENVAT credit thereof:As per Section 108 (2)
of the Finance Act, 2013, a declaration made
under Section 107 (1) shall become conclusive
only upon issuance of acknowledgement of
discharge under Section 107 (7). Thus Cenvat
credit can be availed only after payment of tax
dues in full and receipt of Acknowledgement of
Discharge in form VCES-3. [Circular 176/02/
2014-ST Dated 20-01-2014]
FOREIGN TRADE POLICY
Notifications• Export of commodities like cotton, jute, cotton
yarn and other commodities subject to obtaining
of registration certificate from respective Export
Promotion Council. The procedure of obtaining
Registration Certificate has been relaxed and
submission of hard copies has been dispensed
with and only online application needs to be done.
[Notification No. 63 (RE - 2013)/2009-2014
dated 03/01/2014]
• SHIS, SFIS and AIIS scrip's cannot be used for
payment of Custom duty for shortfall in EO in
Advance Authorisation or DFIA (i.e. default in EO
for authorisation issued under Chapter 4 of
Foreign Trade Policy. This is in line with policy
for utilisation of this scrip's which allows only
import of capital goods against these scrip's. In
other words scrip's cannot be utilised for payment
of duties in case of defaults / shortfall in export
obligation, except for EPCG. However scrip's can
be utilised for payment of composition fees.
[Notification No. 64 (RE - 2013)/2009-2014
dated 06/01/2014]
• An earlier condition has been relaxed for import
of customised cars and motor cars and parts
thereof required for race events. [Notification
No. 65 (RE - 2013) / 2009-2014 dated 8/1/2014]
• Export of Cotton Yarn is made eligible for benefits
under Incremental Export Incentivisation
Scheme for the entire financial year 2013-14.
[Notification No. 66 (RE - 2013)/2009-2014
dated 23/01/2014]
Sr.No.
Doubt Clarification
ing ten lakh rupees in any fi-nancial year is exempted fromservice tax. As per the defini-tion of 'aggregate value' pro-vided in Explanation B of thenotification, aggregate valuedoes not include the value ofservices which are exemptfrom service tax.
3 In Rule 5(2) of the Service Tax(Determination of Value) Rules,2006, it is provided that expen-diture or costs incurred by aservice provider as a pureagent of the recipient of ser-vice shall be excluded from thevalue of taxable service, sub-ject to the conditions specifiedin the Rule.
For illustration, where the pay-ment for an electricity bill raisedby an electricity transmissionor distribution utility in the nameof the owner of an apartmentin respect of electricity con-sumed thereon, is collectedand paid by the RWA to theutility, without charging anycommission or a considerationby any other name, the RWAis acting as a pure agent andhence exclusion from the valueof taxable service would beavailable. However, in the caseof electricity bills issued in thename of RWA, in respect ofelectricity consumed for com-mon use of lifts, motor pumpsfor water supply, lights in com-mon area, etc., since there isno agent involved in thesetransactions, the exclusionfrom the value of taxable ser-vice would not be available.
If a RWA provides certain ser-
vices such as payment of elec-
tricity or water bill issued by
third person, in the name of its
members, acting as a 'pure
agent' of its members, is ex-
clusion from value of taxable
service available for the pur-
poses of exemptions provided
in Notification 33/2012-ST or
25/2012-ST ?
4 Is CENVAT credit available to
RWA for payment of service
tax?
RWA may avail cenvat credit
and use the same for payment
of service tax, in accordance
with the Cenvat Credit Rules.
[Circular No. 175/01/2014-ST Dated 10-01-2014]
2 2
Bizsol UPDATE February - 2014
Public Notices
• The Standard Input Output Norms (SION) for
export product under Sr.No. A-1730, has been
modified as under:
Export Qty. Sr. Import Qty.
Product No. Product Allowed
Ambre- 1 kg 1 Trimethyl Orthoformate 0.1.724 kg
ttolide
2 Britol 1.020 kg
(Paraffinic Mineral Oil)
3 Glycerine 3.053 Kg
4 Seedlac 12.757 Kg
[Public Notice No. 45 (RE: 2013)/2009-2014
dated 06/01/2014]
• Now manufacturer exporter or other exports
exporting through third party may be also able
to claim the benefits under EDI systems provided
third party exporter do not claim such benefits.
9.14 For claiming benefits under EDI system in
respect of Third Party exports the process will
be initiated by the First party who will link shipping
bills and BRCs to repository. If the First Party
chooses not to claim benefit for a particular
shipping bill item/s, it may authorize Third Party
to claim benefit for such shipping bill item/s. After
such authorization by First party, Third Party will
be able to utilize the shipping bill item/s in its
application".
Guidelines for adopting currencies for claiming
such benefits have been notified.
9.15 (a) Currencies, where Exchange rates are
notified by CBEC
The foreign exchange realized (as mentioned by
bank in the EBRC) is converted to Indian Rupee
(INR) using the monthly exchange rates
published by CBEC.
(b) Currencies, where Exchange rates are not
notified by CBEC
In such cases, total realized value in INR (as
mentioned by bank in the EBRC), will be
converted into US$ by using the US$ /INR
exchange rate prevailing on the date of
realization as published by CBEC."
[Public Notice No. 46 (RE: 2013)/2009-2014
dated 08/01/2014]
• Procedure for processing of claims in respect of
realization of export proceeds through insurance
agency is being introduced. After para 2.25.2 of
HBP (Vol. I) two new sub para 2.25.2 (a) & (b)
are being added.
"2.25.2 (a) An applicant realizing export proceeds
through Insurance Agency will approach the
concerned RA with the proof of payment issued
by the concerned Insurance Agency. RA after
satisfying itself of the bona fide of the claim will
obtain approval of Additional DGFT (EDI) and
then will upload the value (in lieu of EBRC value)
in EDI system of DGFT for processing of the case.
"2.25.2 (b) If the proof of payment issued by the
Insurance Agency mentions claim value both in
foreign exchange and INR, RA will use the foreign
exchange value for processing. If the claim value
is mentioned only in equivalent INR, RA will
convert this INR value in equivalent US$ using
the exchange rate (published by CBEC)
applicable on the date of settlement of insurance
claim"
[Public Notice No. 47 (RE: 2013)/2009-2014
dated 08/01/2014]
• Installation of capital goods under EPCG scheme
is required in six months however it can be
extended maximum upto 18 months from the
date of completion of imports by regional
authorities. This clarification will avoid lot of
difficulties faced by the exporters and importers
.[Public Notice No. 48 (RE: 2013)/2009-2014
dated 10/01/2014]
• Nine new Pre Shipment Inspection Agencies
(PSIA) have been notified in following Areas:
Malaysia, UAE, Singapore, Tanzania, Mexico,
Namibia, Thailand, Gabon, Congo, Latvija,
Australia, Lebanon, Saudi Arabia, Jordan,
Bahrain, Angola, Vietnam & Thailand as one
territory, Russia, South America with Brazil as
head office. [Public Notice No. 49 (RE: 2013)/
2009-2014 dated 31/01/2014]
Policy Circulars
• The list of the countries from which the list of
International accredited agencies for issuance
of type Approval Certificate / COP as notified by
2 3
Bizsol UPDATE February - 2014
United Nations Economic and Social Council has
been notified. [Policy Circular No. 12 (RE-
2013)/2009-14 dated 15/01/2014]
INCOME TAX
Notification• Central Government has specified the officer of
the rank of Secretary who is responsible for
implementation of National Food Security Act,
2013 on behalf of respective government.
[Notification 1/2014 dated 6th Jan 2014]
• Government of Republic of India & the Council
of Ministers of Republic Albenia has entered into
Avoidance of Double Taxation and respective
Articles for DTAA have been issued.
[Notification 2/2014 dated 7th Jan 2014]
• The Government of the Republic of India and
the Government of Belize has entered into
agreement to facilitate the exchange of
information with respect to taxes. [Notification
3/2014 dated 7th Jan 2014]
• Central government has notified Orissa State
AIDS Control Society, a body constituted by the
Government of Orissa for the income arising to
that society namely "amount received in the form
of grants-in-aid from the Central Government"
for claiming exemption u/s 10(46) of Income Tax
act, 1961. [Notification 4/2014 dated 10th Jan
2014]
• Government has notified Contributory Health
Service Scheme of the Department of Space for
the purposes of claiming deduction under section
80D of Income Tax Act, 1962. [Notification 6/
2014 dated 15th Jan 2014]
• For the purpose of taxation of FII from securities
or CG arising from their transfer (Sec 155 AD),
government has specified Foreign Portfolio
Investors registered under SEBI Regulations,
2014 as FII. [Notification 9/2014 dated 22nd
Jan 2014]
Circular
• Clarification has been issued for non deduction
of TDS on the service tax component in case
the service tax has been separately charged.
[Circular 1/2014 dated 13th Jan 2014]
• Now Department has realised the need to issue
explanatory notes to the provision of the Finance
Act, 2013 subsequent to enactment of the Act.
[Circular 3/2014 dated 24th Jan 2014]
Maharashtra VAT
Notification1. Determination of sales price and purchase price
in respect of sale of transfer of property in India
involved in the execution of works contract under
Rule 58 of MVAT Rules 2005 has been modified
to the extent of note inserted with effect from
20.06.2006 when separate accounts are not
maintained. Now cost of the land also to be
deducted from the total quantum of contract value
so as to arrive amount to be deducted as
specified in the table. However onus of proving
the value of land so deducted will be on assessee
subject to providing that value of land is higher
as per authorities including Town Planning, Ready
Reckoner rate adopted for payment of stamp
duty. And if land cost so deducted is lower than
that of such rates refund application can be
made.
2. If such value cannot be determined or assessee
choses the option not to determine than while
determination of value of works contract for the
purpose of VAT valuation should be done in
accordance with the following table and
accordingly rule 1(B)(a) has been inserted.
S No. Stage during which the developer enters Amount to be
into a contract with purchaser deducted as
value of goods
involved in WC
1 Before issue of commencement certificate 100%
2 From commencement certificate to
completion of plinth level 95%
3 After completion of plinth level to
completion of 100% RCC framework 85%
4 After completion of 100% RCC frame
work to Occupancy Certificate 55%
5 After the Occupancy Certificate NIL
[Vat Notification 1513/CR-147/Taxation dated
29th Jan 2014]
2 4
Bizsol UPDATE February - 2014
Trade Circulars
• Date of submission of VAT audit report in form
704 has been extended with respect to
imposition of penalty for dealers opting for
composition scheme if filed within one month from
the due date i.e. on or before 15th Feb 2014.
[Trade Circular 2T dated 7th Jan 2014]
• Special Amnesty Scheme 2013 declared by the
Department of Industries. Amnesty scheme is
made applicable for the units not in operation
and not able to rehabilitation only. Such units
should fulfil the conditions under earlier state
government package scheme and now obtains
such certificate for their eligibility under the
scheme from Ministry of Industry. The scheme
will be valid up to 31.03.2014. Amnesty Scheme
exempts interest and penalty provided pending
dues is paid in one instalment only. Such units
needs to make in application in prescribed form
to Assistant Commissioner VAT or Jt
Commissioner (Recovery) Mazgaon as the case
may be along with following documents
1. Eligibility Certificate as mentioned above
2. Challan of payment of such type of dues
3. Withdrawal of appeal if any from competent
authority
4. Declaration by the transferor if any
5. Acceptance of transferee for the dues of
future along with interest and penalty
No application can be processed of which
payment has not been made on or before
31.03.2014. And after submission of application
and verification of same no due certificate to be
obtained. [Trade Circular 3T dated 24-01-2014]
• Registered Dealers will be relieved from the pains
of obtaining C forms since online procedure has
been introduced. The new procedure prescribed
will substantially reduce human interference and
eligible cases shall receive electronic forms on
email, detailed trade circular is as follows.
1. Procedure to be followed by the applicants:
a. Digital CST declarations in non-editable
PDF Format shall be issued in case of all
the applications made on or after 01 Feb
2014, The procedure for filling on-line
application i.e. Statement of Requirement,
has been revised and shall come in to force
from 1 February 2014.
b. The requisite utility for the said purpose has
been made available on the sales tax
Department's website www.mahavat.gov.in
c. The new proposed SOR is slightly changed
over the existing SOR so as to contain the
invoice vise purchase annexure. Three
separate Annexure(s) have been prescribed
for each of the forms / Declarations viz,
i. Declarations/certificates in both Form
C and F,
ii. Certificates in Form H.
iii. Declarations/certificates in Form E-I
and E-II
d. Before making an application for the CST
declarations the applicant shall ensure that
the turnover of interstate transactions for
which the application is being made is within
the limits of the turnover of interstate
transactions shown by him in the return
covering the period of transactions. If the
turnover of interstate transactions shown in
the return is less than the turnover of
interstate transactions mentioned in the
SORs filed by the dealer then the applicant
shall file the revised return, admit the
additional turnover and then apply for the
CST declarations.
e. The applicant dealer shall neither be
required to upload any document as an
attachment nor submit any physical
documents in respect of the SOR.
f. The applicants with six monthly periodicity
are presently unable to make quarterly
applications for the CST declarations. Such
applicants, at the beginning of the year, have
an option of changing their periodicity to the
quarterly and apply for the CST declarations
on quarterly basis,
g. The applicant shall first down load the
requisite template of the SOR from the
appropriate link on the web site, fill in the
requisite details and validate the template
of the SOR. If such validations throw any
2 5
Bizsol UPDATE February - 2014
errors then the same shall be corrected by
the applicant. In case of error free template
a rem.txt file of the SOR shall get generated.
h. The SOR shall mandatorily contain email
address and contact mobile telephone
number (10 digit) of the applicant for the
SDM (Service delivery purpose). The action
taken by the department in respect of said
SOR will be communicated on aforesaid e-
mail address and the mobile telephone
number.
i. The applicant shall upload the rem.txt file
of the SOR on the appropriate link on the
wwww.mahavat.gov.in. After the successful
uploading an acknowledgement will be
generated and shall be available to the
applicant through his access on the web site.
j. All the SORs uploaded till 6 p.m. on any day
shall be processed overnight and the same
will be further processed by Central
Repository Officer on the next working day,
k. The applicant dealer may withdraw the SOR
till 6 p.m. of the day of uploading of SOR,
2. Online validation checks at the time of
uploading of the SOR.
a. The system will check for the validity of the
TIN of the applicant i.e, unless the applicant
holds a valid TIN under the CST Act 1956
as issued by the Maharashtra Sales Tax
department the SOR will not get uploaded.
b. The system will check the validity of the TIN
under the CST Act 1956 of the selling
dealer. Unless the selling dealer holds a
valid 11 digit TIN, the SOR will not get
uploaded. However, this validation does not
apply to the SORs wherein the applicant
requires CST forms/declarations in respect
of the purchases from the state of Tamil
Nadu and union territory of Daman.
c. The dealer whose registration is cancelled
may apply online for the CST declarations
pertaining to the period of validity of their
registration under the CST Act, 1956.
d. The system will not allow the dealers who
have been identified by the department as
suspicious to upload the SOR.
e. The system will not allow the dealers to
upload more than two SORs for a particular
period covered by the return. However, the
3rd SOR in respect of a particular period
covered by the return can be uploaded only
with the permission from the Additional CST
of the concerned location.
3. Internal verifications by the system after
the SOR is uploaded:
After the SOR is uploaded the system will verify
the following four things and the results thereof
will be available to the concerned CR officer in
the verification report.
a. Whether the applicant dealer has filed all
the returns for earlier periods.
b. Whether the turn-over of within state and
inter-State sales/ purchases or, as the case
may be, branch transfer/consignment
transfer has been disclosed appropriately
in the return for the period vis-a-vis the said
turn-over mentioned in the SOR.
c. Whether the applicant dealer has any
outstanding dues under MVAT Act 2002,
CST Act 1956 or any other allied Act
administered by the Sales Tax Department
or/and has any return related dues.
d. Whether the applicant dealer (if he is liable
to file Audit Report in Form No. 704 as
provided under section 61 of the MVAT Act
2002} has filed Audit Report in Form 704
for all the periods starting from 1.4.2008 till
the period for which due date for submission
of Audit Report is over.
4. Verifications to be done by the Central
Repository Officer:
The SOR filed by the dealers get allocated to
CR officers on random basis. The CR officer with
the help of MAHAVIKAS shall verify the following
aspects:
a. In case of requisitions of Form F - Whether
the address and TIN/CST Registration No.
of Branch / Branches outside the
Maharashtra State are incorporated in the
registration record of the applicant.
b. In case of requisitions of all the CST
2 6
Bizsol UPDATE February - 2014
declarations - Whether the applicant dealer
fulfils all the conditions /restrictions in
respect of the commodity stated in the SOR
and commodity details available in
MAHAVIKAS. (Refer to Trade Circular No,
22T of 2012 issued on 26th November
2012).
5. Applications to be kept on hold and
the issuance of Defect Notice:
a. If the verification by the system and the CR
officer results into finding of defects, the
concerned Central Repository Officer shall
inform the same to the applicant through
an e-mail. The applicant dealer shall be
required to correct these defects within 15
days from the date of receipt of said e-mail.
During the intervening period the application
shall be kept on hold.
b. The concerned officer may also hold the
application if he is of the opinion that further
verification is necessary before issuance of
declaration.
c. If the applicant does not comply with
requirements of the Defect notice within 15
days then the relevant application (SOR)
shall be automatically rejected.
d. In case the said compliance is either not
accepted by the Officer concerned or is
rejected by the MAHAVIKAS System then,
the Officer concerned will communicate such
rejection to the applicant dealer.
e. If dealer submits the compliance in
pursuance to the defect memo so issued
and proves to the satisfaction of the CR
officer that the defects have been complied
with then the CR officer shall approve the
application.
f. In case the applicant is pointed out to be a
short filer of return but the applicant is in a
position to prove it otherwise then the
applicant shall first approach the concerned
returns branch for correction in the
Mahavikas. After such correction the
Mahavikas data shall get corrected
automatically and the defect shall also get
closed automatically.
However, this needs to happen within 15 days
allowed for the compliance of the defect notice
issued to the applicant.
6. Electronic issuance of statutory declarations
/ forms under the CST Act 1956:
In case of applications (SORs) successfully
uploaded and verified for no defects by the CR
officer and in other cases after the defects have
been rectified, the statutory declarations/forms
under the CST Act 1956 shall be electronically
issued to the applicant through an email. The
applicant is therefore needed to furnish the
correct and authentic email address in the SOR.
7. Procedure for cancellation of
the declarations issued :
The existing system of online application for the
CST declarations shall be deactivated with effect
from 31.01.2014. In case of rectification/
cancellation of the declarations/certificates
issued on or before 31.01.2014, the applicant
shall submit manual application to the concerned
authority as per the existing procedure. The
officer in-charge shall rectify/deface the
declarations submitted along with such
applications as they case may be.
8. Procedure in case of the lost declarations:
In case of the lost declarations there is no change
in the procedure except that after completion of
requisite procedure, the Officer in-charge shall
cancel the lost declarations/certificates.
Wherever necessary the dealer shall upload the
application on e-CST system and shall get digital
forms in lieu of such lost declarations/certificates.
9. Procedure for the applications pending for
disposal as on 31.01.2014:
a) The new system of electronic issuance of
declarations/certificates under CST Act shall
come into force from 01.02.2014. All the
applications made up to 31.01.2014 shall
be processed by the department as per the
existing system unless the applicant dealer
desires to withdraw his pending application
and apply afresh for the e CST declarations.
b) Any applicant who desires to withdraw any
application i.e. Statement of Requirement
(SOR) made up to 31.01.2014 shall submit
his request for withdrawal of the said
2 7
Bizsol UPDATE February - 2014
application (as per concerned existing
system) to the e mail id of concerned desk.
The e-mail so send shall specify the
transaction id in respect of such SOR i.e.
the application which is to be cancelled. After
receiving the request for withdrawal of the
application through e mail the application
related to the transaction id mentioned by
the applicant shall be rejected. This will not
apply to the SORs for which the CST
declarations/certificates have already been
printed.
c) All the applications made up to 31.01.2014
for which the applicants have not preferred
withdrawal shall be processed for issuance
of printed CST forms as per the existing
system. The dealers who have applied for
CST forms up to 31.01.2014 shall ensure
that they do not apply under the new
system of e CST forms for the same
transactions as per the SORs uploaded upto
31.01.2014 unless they apply for the
cancellation of SOR as per the existent
system.
10. Help Desks and assistance from
the department:
The procedure of obtaining CST declaration is
self-explanatory. The same is made available on
the Web site of the Department. Help desks are
being created at every Central Repository
locations. In case of any difficulty, the dealers
are requested to approach to the concerned
Central Repository officers. This new procedure
for issuance of declaration is available online for
the declarations pertaining to period from
01.04.2008 onwards only. [Trade Circular 4T
dated 28th Jan 2014]
COMPANY LAW
Notifications• No new notifications!!
Circular
• It has been instructed that Regional Directors
(RDs) before filling report under section 394A of
Companies Act, 1956 in response to the notice
issued to the Central Government where ever
cases involving arrangement / compromise
(under section 391) or reconstruction /
amalgamation (under section 394), should invite
specific comments from Income Tax Department
within 15 days of receipt of notice. Similar
feedback must also be obtained from other
sectoral regulator on cases where it is required.
[General Circular No. 01 /2014, dated :
15/01/2014]
Circular NumberDate of
IssueDepartment Subject Meant for
RBI CIRCULARS - JANUARY 2014
RBI/2013-2014/478Ref: DBOD.No.Ret.BC.93/12.01.001/2013-14
31.1.2014 Department ofBanking
Operations andDevelopment
Section 42(1) of the ReserveBank of India Act, 1934 andSection 24 of the BankingRegulation Act, 1949 - FCNR(B)/NRE deposits - Exemptionfrom Maintenance of CRR/SLRand Exclusion from ANBC forPriority Sector Lending
All Scheduled Commer-cial Banks (ExcludingRegional Rural Banks)
RBI/2013-2014/477DBOD.No.Dir.BC.92/
13.03.00/2013-14
31.1.2014 Department ofBanking
Operations andDevelopment
Interest Rates on FCNR (B)Deposits
All Scheduled Commer-cial Banks (ExcludingRRBs)
RBI/2013-2014/475RPCD.CO.RRB.RCB.BC.No. 82/03.05.33/2013-14
29.1.2014 Rural Planningand Credit
Department
Bank Rate The Chairmen/Chief Ex-ecutive Officers, All Re-gional Rural Banks /State and Central Co-operative Banks
FEMA / RBI
2 8
Bizsol UPDATE February - 2014
Circular NumberDate of
IssueDepartment Subject Meant for
RBI/2013-2014/474RPCD.CO RRB.BC.No./
81/03.05.100/2013-14
29.1.2014 Rural Planningand Credit
Department
Inclusion in/exclusion from theSecond Schedule to the Re-serve Bank of India Act, 1934-Regional Rural Banks (RRBs)
All Regional Rural Banks
RBI/2013-2014/473A.P.(DIR Series)
Circular No.99
29.1.2014 Foreign ExchangeDepartment
Foreign investment in India bySEBI registered Long term in-vestors in Government datedSecurities
All Authorised Persons
RBI/2013-2014/472RPCD.RRB.RCB.BC.No.
80/07.51.014/2013-14
28.1.2014 Rural Planningand Credit
Department
Collection of Account PayeeCheques - Prohibition on Cred-iting Proceeds to Third PartyAccount
The Chairmen / CEOs ofAll Regional Rural Banks/State and Central Co-operative Banks
RBI/2013-2014/471FMD.MOAG. No.
97/01.18.001/2013-14
28.1.2014 Financial MarketsDepartment
Marginal Standing Facility All Scheduled Commer-cial Banks (excludingRRBs)
RBI/2013-2014/469UBD.BPD.(PCB).Cir.No.
46/16.11.00/2013-14
28.1.2014 Urban BanksDepartment
Revision in Bank Rate All Primary (Urban) Co-operative Banks
RBI/2013-2014/468DBOD.No.Ret.BC.
88/12.01.001/2013-14
28.1.2014 Department ofBanking
Operations andDevelopment
Bank Rate All Scheduled Commer-cial Banks & Local AreaBanks
RBI/2013-2014/466RPCD.CO.RRB.RCB.BC.No.79/03.05.33/2013-14
28.1.2014 Rural Planningand Credit
Department
Legal Guardianship CertificatesIssued under the Mental HealthAct, 1987 and National Trustfor the Welfare of Persons withAutism, Cerebral Palsy, Men-tal Retardation and MultipleDisabilities Act, 1999
The Chairmen/Chief Ex-ecutive Officers, All Re-gional Rural Banks /State and Central Co-operative Banks
RBI/2013-2014/465UBD.BPD.(PCB).Cir.No.
45/13.05.000/2013-14
28.1.2014 Urban BanksDepartment
Housing Sector: New Sub-Sec-tor CRE-Residential Housing(CRE-RH) Segment within CRESector & Rationalisation of Pro-visioning and Risk Weight
The Chief Executive Of-ficers of All Primary (Ur-ban) Co-operativeBanks
RBI/2013-2014/470FMD.MOAG. No.
96/01.01.001/2013-14
28.1.2014 Financial MarketsDepartment
Liquidity Adjustment Facility -Repo and Reverse Repo
All Scheduled Commer-cial Banks (excludingRRBs) and StandalonePrimary Dealers
RBI/2013-2014/467DCM(Plg) No.G-17/
3231/10.27.00/2013-14
28.1.2014 Department ofCurrency
Management
Withdrawal of all old series ofBanknotes issued prior to 2005
The Chairman / Manag-ing Director/ Chief Ex-ecutive Officer AllScheduled CommercialBanks Primary(Urban)Co-operative Banks/RRBs
2 9
Bizsol UPDATE February - 2014
Circular NumberDate of
IssueDepartment Subject Meant for
RBI/2013-2014/464REF.No.MPD.BC. 371/
07.01.279/2013-14
28.1.2014 Monetary PolicyDepartment
Standing Liquidity Facilities forBanks and Primary Dealers
All Scheduled Banks [ex-cluding Regional RuralBanks(RRBs)] and Pri-mary Dealers
RBI/2013-2014/462A.P. (DIR Series)
Circular No. 98
27.1.2014 Foreign ExchangeDepartment
Exim Bank's Line of Credit ofUSD 19.50 million to the Gov-ernment of the Socialist Re-public of Vietnam
All Category - IAuthorised Dealer banks
RBI/2013-2014/461DNBS(PD).CC. No 368 /
03.10.01 /2013-14
24.1.2014 Department ofNon BankingSupervision
Prepaid Payment Instrumentsissued by Non-Banking Institu-tions
All Non Banking Finan-cial Companies
RBI/2013-2014/459DNBS.CO. PD. No. 367/
03.10.01/2013-14
23.1.2014 Department ofNon BankingSupervision
Review of Guidelines on Re-structuring of Advances byNBFCs
All NBFCs excludingPrimary Dealers
RBI/2013-2014/458DBOD.BP.BC.No. 87/
21.01.001/2013-14
22.1.2014 Department ofBanking
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Collection of Account PayeeCheques - Prohibition on Cred-iting Proceeds to Third PartyAccount
The Chairmen / ChiefExecutives of All Sched-uled Commercial Banks(excluding RRBs)
RBI/2013-2014/458ARPCD.CO.RRB.BC.No.78/
03.05.33/2013-14
22.1.2014 Rural Planningand Credit
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The Chairmen All Re-gional Rural Banks
RBI/2013-2014/457DPSS.CO.EPPDNo.1583/04.03.01/
2013-14
22.1.2014 Department ofPayment andSettlement
System
NEFT - Customer Service andCharges - Adherence to Proce-dural Guidelines and Circulars
The Chairman and Man-aging Director / ChiefExecutive Officer ofmember banks partici-pating in NEFT
RBI/2013-2014/456UBD.BPD.(PCB) CIR
No.44/13.01.000 /2013-14
21.1.2014 Urban BanksDepartment
Legal Guardianship CertificatesIssued under the Mental HealthAct, 1987 and National Trustfor the Welfare of Persons withAutism, Cerebral Palsy, Men-tal Retardation and MultipleDisabilities Act, 1999
The Chief Executive Of-ficers of All Primary (Ur-ban) Co-operativeBanks
RBI/2013-2014/455A.P. (DIR Series)
Circular No.97
20.1.2014 Foreign ExchangeDepartment
Know Your Customer (KYC)norms/Anti-Money Laundering(AML) standards / Combatingthe Financing of TerrorismMoney changing activities
All Authorised Persons
RBI/2013-2014/460DNBS (PD) CC. No.35/SCRC/26.03.001/
2013-2014
23.1.2014 Department ofNon BankingSupervision
Conversion of debt into shares,consent level of security en-forcement actions and permis-sion to acquire debt from otherSC/RCs
The Chairman/ManagingDirector/Chief ExecutiveOfficer All registeredSecuritisation Compa-nies/ReconstructionCompanies
3 0
Bizsol UPDATE February - 2014
Circular NumberDate of
IssueDepartment Subject Meant for
(CFT) Obligation of AuthorisedPersons under Prevention ofMoney Laundering Act,(PMLA), 2002, as amended byPrevention of Money Launder-ing (Amendment) Act, 2009
RBI/2013-2014/454A.P. (DIR Series)
Circular No. 96
20.1.2014 Foreign ExchangeDepartment
Facilities for Persons Residentoutside India - Clarification
All Category - IAuthorised DealerBanks
RBI/2013-2014/453DBOD.BP.BC.No.86/21.01.023 /2013-14
20.1.2014 Department ofBanking
Operations andDevelopment
Lending against Gold Jewellery All Scheduled Commer-cial Banks (excludingRRBs)
RBI/2013-2014/452A.P. (DIR Series)
Circular No.95
17.1.2014 Foreign ExchangeDepartment
Merchanting Trade Transac-tions
All Category - IAuthorised DealerBanks
RBI/2013-2014/451FMD.MOAG. No.95/01.01.001/2013-14
17.1.2014 Financial MarketsDepartment
Liquidity Adjustment Facility-Reverse Repo
All Scheduled Commer-cial Banks (excludingRRBs) and StandalonePrimary Dealers
RBI/2013-2014/450DCM (CC) No.G-16/
03.39.01/2013-14
16.1.2014 Department ofCurrency
Management
Distribution of Banknotes &Coins - Review of Incentives& Penalties
The Chairman & Manag-ing Directors/Chief Ex-ecutive Officers AllScheduled CommercialBanks(Including RRBs,UCBs, State Coopera-tive Bank & District Cen-tral Cooperative Banks)
RBI/2013-2014/449A.P. (DIR Series)
Circular No. 94
16.1.2014 Foreign ExchangeDepartment
Conversion of External Com-mercial Borrowing andLumpsum Fee/Royalty intoEquity
All Category - IAuthorised Dealer banks
RBI/2013-2014/446A.P. (DIR Series)
Circular No. 92
13.1.2014 Foreign ExchangeDepartment
Risk Management and InterBank Dealings
All Category - IAuthorised Dealer banks
RBI/2013-2014/448DBOD.No.BP.BC.
85 /21.06.200/2013-14
15.1.2014 Department ofBanking
Operations andDevelopment
Capital and Provisioning Re-quirements for Exposures toentities with Unhedged ForeignCurrency Exposure
The Chairman and Man-aging Director/Chief Ex-ecutive Officer AllScheduled CommercialBanks (Excluding RRBsand LABs)
RBI/2013-2014/447A.P. (DIR Series)
Circular No.93
15.1.2014 Foreign ExchangeDepartment
Clarification- Establishment ofLiaison Office/ Branch Office/Project Office in India by For-eign Entities- General Permis-sion
All Authorised DealerCategory - I Banks
RBI/2013-2014/445A.P.(DIR Series)Circular No. 91
13.1.2014 Foreign ExchangeDepartment
Exim Bank's Line of Credit ofUSD 125 million to the Govern-ment of the Republic of Sudan
All Category - IAuthorised Dealer banks
3 1
Bizsol UPDATE February - 2014
Circular NumberDate of
IssueDepartment Subject Meant for
RBI/2013-2014/444DBOD.No.Leg.BC.84/
09.07.005/2013-14
13.1.2014 Department ofBanking Opera-tions and Devel-opment
Legal Guardianship CertificatesIssued under the Mental HealthAct, 1987and National Trust forthe Welfare of Persons withAutism, Cerebral Palsy, Men-tal Retardation and MultipleDisabilities Act, 1999
All Scheduled Commer-cial Banks (excludingRRBs)
RBI/2013-2014/443DNBS(PD).CC. No 366/
03.10.42/2013-14
10.1.2014 Department ofNon BankingSupervision
Implementation of Section 51-A of UAPA, 1967 -Updates ofthe UNSCR 1267 (1999) /1989(2011) Committee's Al QaidaSanctions List and Consoli-dated List
All Non Banking Finan-cial Companies / Re-siduary Non BankingCompanies
RBI/2013-2014/442Ref.DBOD.No.Ret.BC /83/12.06.097/2013-14
10.1.2014 Department ofBanking
Operations andDevelopment
Alteration in the name of "De-velopment Credit Bank Lim-ited" to "DCB Bank Limited" inthe Second Schedule to theReserve Bank of India Act,1934
All Scheduled Commer-cial Banks
RBI/2013-2014/441RPCD. RRB. RCB.
AML. BC. No.75/07.51.018/2013-14
9.1.2014 Rural Planningand Credit
Department
Know Your Customer (KYC)Norms /Anti-Money Laundering(AML) Standards/ Combatingof Financing of Terrorism(CFT)/Obligation of banks un-der Prevention of Money Laun-dering Act (PMLA), 2002 -Amendment to Section 13(2)
The Chairmen / CEOs ofall Regional Rural Banks/State and Central Co-operative Banks
RBI/2013-2014/440A.P. (DIR Series)
Circular No. 90
9.1.2014 Foreign ExchangeDepartment
Provisions under section 6 (4)of Foreign Exchange Manage-ment Act, 1999 - Clarifications
All Category- IAuthorised DealerBanks and AuthorisedBanks
RBI/2013-2014/439A.P. (DIR Series)
Circular No. 89
9.1.2014 Foreign ExchangeDepartment
Exim Bank's Line of Credit ofUSD 42.61 million to the Gov-ernment of the Republic ofBenin
All Category - IAuthorised Dealer banks
RBI/2013-2014/438A. P.(DIR Series)
Circular No. 88
9.1.2014 Foreign ExchangeDepartment
Memorandum of Instructionsfor Opening and Maintenanceof Rupee / Foreign CurrencyVostro Accounts of Non-resi-dent Exchange Houses
All Authorised DealerCategory - I Banks
RBI/2013-2014/437A.P.(DIR Series)Circular No. 87
9.1.2014 Foreign ExchangeDepartment
Resident Bank account main-tained by residents in India -Joint holder - liberalization
All Banks Authorised todeal in Foreign Ex-change
RBI/2013-2014/436A.P.(DIR Series)Circular No. 86
9.1.2014 Foreign ExchangeDepartment
Foreign Direct Investment-Pricing Guidelines for FDI in-struments with optionalityclauses
All Category - IAuthorised Dealer banks
RBI/2013-2014/435DNBS.CC.PD.No.
365/03.10.01/2013-14
8.1.2014 Department ofNon BankingSupervision
Lending Against Security ofSingle Product - Gold Jewellery
All NBFCs (excludingPDs)
3 2
Bizsol UPDATE February - 2014
Circular NumberDate of
IssueDepartment Subject Meant for
RBI/2013-2014/434RPCD. CO. RRB. BC.
No. 74/03.05.33/2013-14
7.1.2014 Rural Planningand Credit
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Guidelines for Classificationand Valuation of Investments
The Chairmen All Re-gional Rural Banks
RBI/2013-2014/433RPCD.RCB.BC.73/07.51.012/2013-14
7.1.2014 Rural Planningand Credit
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Application of Minimum Capi-tal Adequacy Norms to Stateand Central Cooperative Banks(StCBs/CCBs)
The Chairman / Manag-ing Director All Stateand Central CooperativeBanks
RBI/2013-2014/432DPSS. CO. AD. No.1502 / 02.27.005 /
2013-14
7.1.2014 Department ofPayment andSettlement
System
Implementation of Section 51-A of UAPA, 1967 - Updates ofthe UNSCR 1267 (1999) /1989(2011) Committee's AlQaida Sanctions List and Con-solidated List
CEOs of all the Pay-ment System OperatorsAuthorised under thePSS Act, 2007
RBI/2013-2014/431DPSS. CO. AD. No.
1503/02.27.005/2013-14
7.1.2014 Department ofPayment andSettlement
System
Anti- Money Laundering (AML)/ Combating of Financing ofTerrorism (CFT) - Standards
Chief Executive Officersof All the Payment Sys-tem OperatorsAuthorised under thePSS Act, 2007
RBI/2013-2014/430DBOD.No.BP.BC.82/
21.06.217/2013-14
7.1.2014 Department ofBanking
Operations andDevelopment
Banks' Exposure to CentralCounterparties (CCPs) - InterimArrangements
The Chairman and Man-aging Director/ ChiefExecutive Officer of AllScheduled CommercialBanks (Excluding Re-gional Rural Banks)
RBI/2013-2014/429A.P. (DIR Series)
Circular No. 85
6.1.2014 Foreign ExchangeDepartment
External Commercial Borrow-ings (ECB) Policy -Liberalisation of definition ofInfrastructure Sector
All Category - IAuthorised Dealer banks
RBI/2013-2014/428A.P. (DIR Series)
Circular No.84
6.1.2014 Foreign ExchangeDepartment
Issue of Non convertible/ re-deemable bonus preferenceshares or debentures - Clarifi-cations
All Category - IAuthorised Dealer banks
RBI/2013-2014/427A.P. (DIR Series)
Circular No. 83
3.1.2014 Foreign ExchangeDepartment
Overseas Direct Investments- Rollover of Guarantees
All Category - IAuthorised DealerBanks
RBI/2013-2014/426DNBS(PD).CC. No 364/
03.10.42/2013-14
1.1.2014 Department ofNon BankingSupervision
Anti-Money Laundering (AML)/Combating of Financing of Ter-rorism (CFT) - Standards
All Non Banking Finan-cial Companies exclud-ing Residuary Non Bank-ing Companies
RBI/2013-2014/425DNBS.PD.363 /
03.10.38/2013-14
1.1.2014 Department ofNon BankingSupervision
Advances guaranteed by CreditRisk Guarantee Fund Trust forLow Income Housing(CRGFTLIH) - Risk Weightsand Provisioning
All NBFC-MFIs
RBI/ 2013-14/476DBOD. No .Dir. BC.90/13.03.00/ 2013-14
31.1.2014 Department ofBanking
Operations andDevelopment
Deregulation of Interest Rateson Non-Resident (External)Rupee (NRE) Deposits
All Scheduled Commer-cial Banks (ExcludingRRBs)
3 3
Bizsol UPDATE February - 2014
CBEC Notified Exchange Rate for Conversion of Foreign Currency w. e. f.7th February 2014 [Notification No. 09/2014-Customs (N.T) dated 06-02-14]
SCHEDULE - I
S.No. Foreign Currency
Rate of exchange of one unit of foreign currency
equivalent to Indian rupees
(For Imported Goods) (For Export Goods)
1. Australian Dollar 56.65 55.25
2. Bahrain Dinar 170.35 161.05
3. Canadian Dollar 57.10 55.80
4. Danish Kroner 11.50 11.15
5. EURO 85.45 83.45
6. Hong Kong Dollar 8.10 8.00
7. Kuwait Dinar 227.35 214.40
8. New Zealand Dollar 52.10 50.80
9. Norwegian Kroner 10.15 9.85
10. Pound Sterling 102.90 100.65
11. Singapore Dollar 49.75 48.55
12. South African Rand 5.80 5.45
13. Saudi Arabian Riyal 17.15 16.20
14. Swedish Kroner 9.70 9.40
15. Swiss Franc 69.95 68.05
16. UAE Dirham 17.50 16.55
17. US Dollar 62.95 61.95
S.No. Foreign Currency
Rate of exchange of 100 units of foreign currency
equivalent to Indian rupees
SCHEDULE-II
(For Imported Goods) (For Export Goods)
1. Japanese Yen 62.25 60.75
2. Kenya Shilling 74.60 70.45
3 4
Bizsol UPDATE February - 2014
INPUT SERVICES & INPUT SERVICE
DISTRIBUTION UNDER CENVAT CREDIT
RULES 2004By CMA Ashok B. Nawal
Input Service is defined in Rule 2 (l) of Cenvat Credit
Rules 2004 and it has been revised in the year 2008
and subsequent to that in 2011. It is very important to
Earlier definition was amended wide notification No.
10/2008 CE(NT) dtd.1st March 2008 replacing the
word "from the place of removal" to "upto the place of
removal".
However, the number of litigations were made by the
department disputing cenvat credit on output services
on the grounds that manufacture and clearance of
the goods upto the place of removal is only entitled
for cenvat credit. However, it has been held in number
of decisions and also held by held by Hon Tribunal in
the case of in the case of COMMISSIONER OF CUS.
& C. EX., HYDERABAD-IV Vs POKARNA LTD. 2013
(292) E.L.T. 316 (Tri. - Bang.) wherein it has been
held that
understand the difference and the rationale of the
change of the definition.
Quote :
7. I have carefully considered the submissions.
(i) Whether the respondents were entitled to
claim CENVAT credit on GTA service/CHA
service availed for export of excisable goods
during the relevant period.
It has been argued on behalf of the appellant that the
definition of 'place of removal' is applicable only to
valuation of excisable goods for the purpose of levy
of duty. In this connection, reliance has been placed
on the Hon'ble Karnataka High Court's decision in the
case of Commissioner v. ABB Ltd. (supra). I find that
clause (t) of Rule 2 of the CENVAT Credit Rules, 2004
was not taken into account by the Hon'ble Karnataka
Definition of Input Service prior todated 01.03.2008
Definition of Input Service afterdated 01.03.2008 but prior to 20.06.2012
(l) "input service" means any service,
(i) used by a provider of taxable service for providing an
output service; or
(ii) used by the manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final
products and clearance of final products from the place
of removal,
and includes services used in relation to setting up,
modernization, renovation or repairs of a factory, premises
of provider of output service or an office relating to such
factory or premises, advertisement or sales promotion,
market research, storage upto the place of removal,
procurement of inputs, activities relating to business, such
as accounting, auditing, financing, recruitment and quality
control, coaching and training, computer networking, credit
rating, share registry, and security, inward transportation
of inputs or capital goods and outward transportation upto
the place of removal;
(i) "input service" means any service,
(i) used by a provider of taxable service for providing an
output service; or
(ii) used by the manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final
products and clearance of final products upto the place
of removal,
and includes services used in relation to setting up,
modernization, renovation or repairs of a factory, premises
of provider of output service or an office relating to such
factory or premises, advertisement or sales promotion,
market research, storage upto the place of removal,
procurement of inputs, activities relating to business, such
as accounting, auditing, financing, recruitment and quality
control, coaching and training, computer networking, credit
rating, share registry, and security, inward transportation
of inputs or capital goods and outward transportation upto
the place of removal;
3 5
Bizsol UPDATE February - 2014
High Court while holding that the definition of 'place
of removal' was applicable only to valuation of
excisable goods. As per Rule 2(t), words and
expressions used in these rules and not defined but
defined in the Excise Act shall have the meanings
respectively assigned to them in the said Act. It would
follow that the definition of 'place of removal' given
under Section 4(3) of the Central Excise Act would
be applicable to cases arising under the CENVAT
Credit Rules, 2004 also as there is no separate
definition of 'place of removal' under these Rules. The
expression 'place of removal' was examined by a
division bench of this Tribunal in the case of Kuntal
Granites (supra). The full text of the Tribunal's order
reads as follows :
Both these appeals raises common question of law
and facts pertaining to the same assessee and hence
they are taken up together for disposal as per law. By
O-I-O No. 1/05, dated 21-4-2005, the Commissioner
has rejected the application filed by the appellant
seeking revision of Central Excise duty under Rule
21 with regard to the goods dispatched to the lorry
which met with an accident resulting in spillage of 51
pieces of granite slabs meant for export leading it its
destruction. As a result of this rejection, the revenue
has confirmed the demand of duty by Order-in-Appeal
No. 5/06, dated 10-1-2006 on the ground that
assessee is required to discharge duty on the quantity
of polished granite slabs which were destroyed in the
accident as their prayer for remission of duty has been
rejected by the Commissioner. The appellants
contention is that in terms of Rule 21 of C.E. Rules
they are entitled to claim remission if the goods were
destroyed due to unavoidable accident at any time
before removal of the goods. It is the submission of
the assessee that the place of removal has been
defined under Section 4(3)(c) of the Central Excise
Act, 1944 which is as under :-
"a depot, premises of a consignment agent or any
other place or premises from where the excisable
goods are to be sold after their clearance from the
factory."
In this connection learned Counsel draws our attention
to the provisions in Central Sales Tax Act. He refers
to Section 5 of the Act which is noted herein below :-
"When is a sale or purchase of goods said to take
place in the course of import or export.
(1) A sale or purchase of goods shall be deemed to
take place in the course of export of the goods out of
the territory of India only if the sale or purchase either
occasions such export or is effected by a transfer of
documents of title to the goods after the goods have
crossed the Customs frontiers of India."
He points out that in respect of export goods, place
of removal will be only when the documents are
presented to the Customs Officers for export. The
finding given by the authorities that the place of
removal is factory is not correct in respect of export
goods as the sale comes into effect only when the
documents of title to the goods are presented at the
Customs office in the form of presentation of shipping
bills. He submits that when clearances are made
under bond, are deemed to be under overall customs
control. This has been so held by the Tribunal in the
case of Sangita Printers & Exporters v. CCE,
Allahabad [1994 (73) E.L.T. 182 (T)]. He also submits
that the Apex Court in the case of M.J. Exports Ltd. v.
CEGAT [1992 (60) E.L.T. 161 (S.C.)] has explained
the expression, for "home consumption" vis-à-vis
expression "warehousing". He also refers to the ruling
rendered by this Bench in the case of Koeleman India
Pvt. Ltd. v. CC, Bangalore [2005 (192) E.L.T. 866
(T-Bang.)] which has clearly held that when the goods
are damaged during transportation from factory to
the port of export, and due to reasons beyond the
control of appellants then, it has to be held that there
is no diversion for home consumption and demands
were set aside. He points out to another ruling of the
Mumbai Bench in the case Associated Capsules Pvt.
Ltd. v. CCE, Pune [2007 (207) E.L.T. 613 (Tribunal)
= 2006-TIOL-1497- CESTAT-Mum.] on the same
point which is in his favour. He submits that the
Revenue's reliance on the Northern Bench reliance
in the case of Ginni Filaments Ltd. v. CCE, Lucknow
[2005 (188) E.L.T. 45 (Tri.-Del.)] is sub silentio to the
provisions of Rule 4(3). However, Section 4(3) (c) of
the C.E. Act defines the "place of removal" to be read
with Section 5 of the Central Excise Act. Therefore
the Single Member Bench ruling in the case of Ginni
Filaments has no bearing in the matter.
2. Learned DR relies on the Single Member Bench
ruling rendered in the case of Ginni Filaments
Ltd.
3 6
Bizsol UPDATE February - 2014
3. We have considered the submissions and agree
with learned Counsel on the legal point. The SMB
in the case of Ginni Filaments has not examined
the provisions of Section 4(3)(12) of Central
Excise Act read with Rule 21 of Central Excise
Rules and Section 5 of the Central Excise Act.
When the goods are removed from the factory
for export purposes and the goods are destroyed
due to unavoidable reasons, accident caused to
the lorry, then in such a circumstances the goods
are not deemed to have been removed from the
factory gate in terms of Section 5 of the Central
Sales Tax Act as sale has not been completed.
Section 4(3)(c) of C.E. Act clearly explains that
the place of removal is the premises from where
excisable goods are to be sold after their
clearance from the factory. In the present case,
the goods were exported and when export
documents are presented to the Customs office,
then that is the place of removal as per Section
5 of C.E. Act. The same finding has been
rendered by this bench in the case of Koeleman
India Pvt. Ltd. v. CC Bangalore [2005 (192) E.L.T.
866 (T-Bang.)]. There is no reason to take a
different view from the same. The finding
recorded by SMB in Ginni Filaments Ltd., is sub
silentio without due consideration to the
provisions of law. Hence both the orders are set
aside by allowing the appeal with consequential
relief if any."
The learned Superintendent (AR) made an attempt
to distinguish the above case by submitting that the
above decision was rendered in respect of remission
of duty and not in respect of CENVAT credit. This
distinction is inconsequential in as much as there is
only one definition of 'place of removal' under the
Central Excise Act or the Rules framed thereunder -
whether for the purpose of valuation of excisable
goods or for the purpose of determination of claim of
CENVAT credit or for any other purpose whatsoever.
The question whether the port of export could be
considered to be 'place of removal' of excisable goods
was examined by the division bench in the above
case, with reference to the definition of 'place of
removal' under Section 4(3) of the Central Excise Act
as also to Section 5 of the Central Sales Tax Act. On
a harmonious construction of the provisions, it was
held that, in respect of the excisable goods cleared
from factory for export and subsequently shipped from
the port, the port of export could be held to be the
'place of removal'. In view of this decision, it has to be
held that the respondents were entitled to treat CHA
service/GTA service as 'input services' under Rule
2(1) of the CENVAT Credit Rules, 2004 as these
services were used for clearance of excisable goods
from the 'place of removal'.
It was submitted by the learned Superintendent (AR)
that the decision in Kuntal Granites case was
appealed against by the department. However, it was
not claimed that the Tribunal's decision was stayed
by the appellate court. The outcome of department's
appeal in Kuntal Granites case is also not available.
Hence the decision in Kuntal Granites case will be a
valid precedent for the present cases.
UnQuote :
Similarly, it was held in the case of M.P. BISCUITS
PVT. LTD. Versus COMMISSIONER OF C. EX.,
ALLAHABAD 2012 (282) E.L.T. 563 (Tri.- Del.), that :
Quote :
10. Input service is defined under Rule [2(l)(ii)] of
Cenvat Credit Rules, 2004 which reads thus :-
(ii) used by the manufacturer, whether directly
or indirectly, in or in relation to the
manufacture of final products and clearance
of final products from the place of removal,"
11. Reading of above provision clearly show that
outward transportation of the manufactured
product up to the place of removal falls within
the definition of input service. The appellant has
placed on record the authorization letter dated
15-3-2005 addressed by PBPL to Assistant/
Deputy Commissioner, Central Excise, Varanasi
authorising the appellant to manufacture biscuit
on their behalf. Further perusal of the terms and
conditions mutually agreed upon between PBPL
and the appellant would show that as per the job
work contract the appellant were required to
process and manufacture biscuit, carry out
inspection, packing and delivery to various depots
of PBPL located all over the country as directed
by PBPL. From the above stipulation in the
contract, appellants were under obligation to
transport biscuits to various depots of PBPL as
3 7
Bizsol UPDATE February - 2014
such obviously the place of removal was/were
depots where the appellant was required to
supply manufactured biscuit as per direction of
the appellant. Admittedly, the appellants have
transported the goods to the depots/premises
of the principal manufacturer and paid
transportation charges including the Service tax.
In this regard, the appellant have placed on
record photocopies of Form TR-6 for payment
of Service tax in respect of the period in question.
Thus, it is apparent that the appellant has paid
Service tax in respect of the input service i.e. the
outward transportation of the biscuits to the place
of removal. As such, in view of Rule 3 of Cenvat
Credit Rules the appellant has rightly availed
Cenvat credit.
12. Result of the above discussion is that the
impugned orders denying Cenvat credit to the
appellant is not sustainable. Appeal is, therefore,
accepted and the impugned order also order-in-
original are set aside.
Unquote :
Similarly, it was held in the case of COMMR. OF C.
EX., BANGALORE-III Versus TRIVENI ENGINEERING
& INDUS. LTD. 2012 (282) E.L.T. 223 (Kar.), wherein
it has been held, "If Service tax is paid on
transportation charges it fell within the phrase
"clearance of final products from the place of removal"
and assessee is entitled to Cenvat credit - Issue
squarely covered by decision of Division Bench of High
Court dated 23-3-2011 - Sections 65(50b) and
65(105)(zzp) of Finance Act, 1994".
CBEC has issued Circular No. 97/8/2007 dtd. 23rd
August, 2007, wherein it has been clarified that
ISSUE: Up to what stage a manufacturer/consignor
can take credit on the service tax paid on goods
transport by road?
COMMENTS: This issue has been examined in great
detail by the CESTAT in the case of M/s Gujarat
Ambuja Cements Ltd. vs CCE, Ludhiana [2007 (006)
STR 0249 Tri-D]. In this case, CESTAT has made
the following observations:-
"the post sale transport of manufactured goods is not
an input for the manufacturer/consignor. The two
clauses in the definition of 'input services' take care
to circumscribe input credit by stating that service
used in relation to the clearance from the place of
removal and service used for outward transportation
upto the place of removal are to be treated as input
service. The first clause does not mention transport
service in particular. The second clause restricts
transport service credit upto the place of removal.
When these two clauses are read together, it
becomes clear that transport service credit cannot
go beyond transport upto the place of removal. The
two clauses, the one dealing with general provision
and other dealing with a specific item, are not to be
read disjunctively so as to bring about conflict to defeat
the laws' scheme. The purpose of interpretation is to
find harmony and reconciliation among the various
provisions".
Similarly, in the case of M/s Ultratech Cements Ltd vs
CCE Bhavnagar 2007-TOIL-429-CESTAT-AHM, it
was held that after the final products are cleared from
the place of removal, there will be no scope of
subsequent use of service to be treated as input. The
above observations and views explain the scope of
the relevant provisions clearly, correctly and in
accordance with the legal provisions. In conclusion,
a manufacturer / consignor can take credit on the
service tax paid on outward transport of goods up to
the place of removal and not beyond that.
8.2 In this connection, the phrase 'place of removal'
needs determination taking into account the facts of
an individual case and the applicable provisions. The
phrase 'place of removal' has not been defined in
CENVAT Credit Rules. In terms of sub-rule (t) of rule
2 of the said rules, if any words or expressions are
used in the CENVAT Credit Rules, 2004 and are not
defined therein but are defined in the Central Excise
Act, 1944 or the Finance Act, 1994, they shall have
the same meaning for the CENVAT Credit Rules as
assigned to them in those Acts. The phrase 'place of
removal' is defined under section 4 of the Central
Excise Act, 1944. It states that,-
"place of removal" means-
I. a factory or any other place or premises of
production or manufacture of the excisable
goods;
II. a warehouse or any other place or premises
wherein the excisable goods have been
permitted to be stored without payment of duty ;
3 8
Bizsol UPDATE February - 2014
III. a depot, premises of a consignment agent or any
other place or premises from where the excisable
goods are to be sold after their clearance from
the factory; from where such goods are
removed."
It is, therefore, clear that for a manufacturer /
consignor, the eligibility to avail credit of the service
tax paid on the transportation during removal of
excisable goods would depend upon the place of
removal as per the definition. In case of a factory gate
sale, sale from a non-duty paid warehouse, or from a
duty paid depot (from where the excisable goods are
sold, after their clearance from the factory), the
determination of the 'place of removal' does not pose
much problem. However, there may be situations
where the manufacturer /consignor may claim that
the sale has taken place at the destination point
because in terms of the sale contract /agreement (i)
the ownership of goods and the property in the goods
remained with the seller of the goods till the delivery
of the goods in acceptable condition to the purchaser
at his door step; (ii) the seller bore the risk of loss of
or damage to the goods during transit to the
destination; and (iii) the freight charges were an
integral part of the price of goods. In such cases, the
credit of the service tax paid on the transportation up
to such place of sale would be admissible if it can be
established by the claimant of such credit that the
sale and the transfer of property in goods (in terms of
the definition as under section 2 of the Central Excise
Act, 1944 as also in terms of the provisions under the
Sale of Goods Act, 1930) occurred at the said place.
8.3 A doubt has been raised regarding admissibility
of CENVAT credit on service tax paid in respect of
mobile phones. In the Service Tax Credit Rules, 2002,
it was prescribed that credit of service tax was
admissible only on telephone connection installed in
the business premises. A clarification to this effect
was also issued vide circular No. 59/8/2003-ST, dated
20.6.2003, in the context of the Service Tax Credit
Rules, 2002. However, in the CENVAT Credit Rules,
2004 no such condition has been prescribed.
Therefore, w.e.f. 10.9.2004, credit of service tax paid
in respect of mobile telephone service is admissible,
provided the mobile phone is used for providing output
service or used in or in relation to manufacture of
finished goods considering the different decisions,
need was find to amend the law and allow the credit
upto the place of removal.
Hon. Tribunal has held in the case of M/s Ultratech
Cement Ltd V/s. CCE vide which the availability of
Cenvat Credit on Transportation charges ( GTA ) paid
on goods sold from factory gate to the customers place
/ Depot / premises of consignment agent has been
dealt with and the definition on place of removal is
explained /linked with the valuation of goods under
section 4 and section 4A. In terms of the said decision
now the matter has become more complicated as
TRIBUNAL held that, where the duty is chargeable at
specific rates or at the value determined under Section
4A and not at ad-valorem rates under Section 4, the
definition of 'place of removal' as given in Section
4(3)(c) of the Central Excise Act, 1944 would not be
applicable and as such the 'place of removal' will be
the factory gate. Therefore, in such cases, Cenvat
Credit cannot be availed with respect to service tax
paid on transportation of final products beyond the
factory gate.
In view of number of decisions as given below
following those services involved in relation to the
activities integrally connected with business of
assessee were allowed to avail cenvat credit.
Input Service
Favorable Judicial Decisions
GTA Service AMBUJA CEMENTS LTD.
Versus UNION OF INDIA; 2009 (236) E.L.T. 431 (P & H)
COMMISSIONER OF C. EX. & S.T., LTU, BANGALORE
Versus ABB LIMITED; 2011 (23) S.T.R. 97 (Kar.)
COMMISSIONER OF CUS. & C. EX., HYDERABAD-IV
Versus POKARNA LTD.;2013 (292) E.L.T. 316 (Tri. - Bang.)
DALMIA CEMENTS (BHARAT) LTD. Versus
COMMISSIONER OF C. EX., NEW DELHI; 2012 (284) E.L.T. 65 (Tri. - Del.)
3 9
Bizsol UPDATE February - 2014
PALCO METALS LTD. Versus COMMISSIONER OF C. EX., AHMEDABAD;
2012 (280) E.L.T. 299 (Tri. - Ahmd.)
INOX AIR PRODUCTS LTD. Versus COMMR. OF C. EX. & CUSTOMS,
NAGPUR; 2012 (277) E.L.T. 181 (Tri. - Mumbai)
SEMCO ELECTRIC PVT. LTD. Versus COMMISSIONER OF CENTRAL
EXCISE, PUNE-I; 2013 (30) S.T.R. 572 (Tri. - Mumbai)
Catering Service COMMISSIONER OF C. EX., NAGPUR
Versus ULTRATECH CEMENT LTD.; 2010 (260) E.L.T. 369 (Bom.)
PARAMOUNT COMMUNICATION LTD.
Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR; 2013 (287) E.L.T.
70 (Tri. - Del.)
COMMR. OF C. EX., MEERUT-II Versus HINDUSTAN COCO COLA
BEVERAGES LTD.; 2011 (274) E.L.T. 196 (Tri. - Del.)
SEMCO ELECTRIC PVT. LTD. Versus COMMISSIONER OF CENTRAL
EXCISE, PUNE-I; 2013 (30) S.T.R. 572 (Tri. - Mumbai)
SEMCO ELECTRIC PVT. LTD. Versus COMMISSIONER OF CENTRAL
EXCISE, PUNE-I; 2013 (30) S.T.R. 572 (Tri. - Mumbai)
Rent-a-cab Service DALMIA CEMENTS (BHARAT) LTD. Versus
COMMISSIONER OF C. EX., NEW DELHI; 2012 (284) E.L.T. 65 (Tri. - Del.)
PARAMOUNT COMMUNICATION LTD. Versus COMMISSIONER OF
CENTRAL EXCISE, JAIPUR; 2013 (287) E.L.T. 70 (Tri. - Del.)
COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II Versus J.K. CEMENT
WORKS; 2012 (277) E.L.T. 194 (Tri. - Del.)
COMMR. OF CUS. & C. EX., GUNTUR Versus CHOLAYIL (P) LTD.; 2013
(31) S.T.R. 29 (Tri. - Bang.)
Air Travel Agent Service COMMISSIONER OF C. EX., AHMEDABAD Versus FINE CARE
BIOSYSTEMS; 2009 (244) E.L.T. 372 (Tri. - Ahmd.)
GOODLUCK STEEL TUBES LTD. Versus COMMISSIONER OF C. EX.,
NOIDA; 2013 (32) S.T.R. 123 (Tri. - Del.)
EMCON TECHNOLOGIES INDIA PVT. LTD. Versus COMMR. OF C. EX.,
BANGALORE; 2013 (31) S.T.R. 441 (Tri. - Bang.)
COMMR. OF CUS. & C. EX., GUNTUR Versus CHOLAYIL (P) LTD.; 2013
(31) S.T.R. 29 (Tri. - Bang.)
Courier services PIRAMAL GLASS LTD. Versus COMMISSIONER OF CENTRAL EXCISE,
SURAT; 2012 (286) E.L.T. 414 (Tri. - Ahmd.)
COMMISSIONER OF C. EX. & SERVICE TAX (LTU) Versus LUPIN LTD.;
2012 (285) E.L.T. 221 (Tri. - Mumbai)
Input Service Favorable Judicial Decisions
4 0
Bizsol UPDATE February - 2014
KODAK INDIA PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE,
INDORE; 2012 (280) E.L.T. 453 (Tri. - Del.)
COMMISSIONER OF CENTRAL EXCISE, VAPI Versus PARLE
INTERNATIONAL PVT. LTD.; 2012 (278) E.L.T. 625 (Tri. - Ahmd.)
TUFROPES PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE,
VAPI; 2012 (277) E.L.T. 359 (Tri. - Ahmd.)
Security Agency service COMMISSIONER OF CENTRAL EXCISE, SURAT Versus HEUBACH
COLOUR PVT. LTD.; 2013 (288) E.L.T. 281 (Tri. - Ahmd.)
DALMIA CEMENTS (BHARAT) LTD. Versus COMMISSIONER OF C. EX.,
NEW DELHI; 2012 (284) E.L.T. 65 (Tri. - Del.)
C. CUBED SOLUTIONS PVT. LTD. Versus COMMISSIONER OF C. EX.,
BANGALORE; 2013 (293) E.L.T. 398 (Tri. - Bang.)
C.J. GELATINE PRODUCTS LTD. Versus COMMISSIONER OF C. EX.,
BHOPAL; 2012 (25) S.T.R. 109 (Tri. - Del.)
Insurance U.G. SUGAR & INDUSTRIES LTD. Versus COMMISSIONER OF C. EX.,
MEERUT-II; 2013 (287) E.L.T. 355 (Tri. - Del.)
SUNDARAM CLAYTON LTD. Versus COMMISSIONER OF C. EX., CHENNAI;
2012 (25) S.T.R. 172 (Tri. - Chennai)
CHA Service COMMISSIONER OF CUS. & C. EX., HYDERABAD-IV Versus POKARNA
LTD.;2013 (292) E.L.T. 316 (Tri. - Bang.)
COMMISSIONER OF C. EX., RAJKOT Versus ADANI PHARMACHEM P.
LTD.; 2008 (232) E.L.T. 804 (Tri. - Ahmd.)
COMMISSIONER OF C. EX., RAJKOT Versus ROLEX RINGS P. LTD.; 2008
(230) E.L.T. 569 (Tri. - Ahmd.)
RAJDHANI CRAFTS Versus COMMISSIONER OF CENTRAL EXCISE,
JAIPUR; 2013 (32) S.T.R. 607 (Tri. - Del.)
Canteen Service ADC INDIA COMMUNICATIONS LTD. Versus COMMR. OF C. EX.,
BANGALORE; 2012 (283) E.L.T. 415 (Tri. - Bang.)
BNY MELLON INTERNATIONAL OPERATIONS (I) P. LTD. Versus C.C.E.
(A), PUNE-III; 2013 (30) S.T.R. 567 (Tri. - Mumbai)
COMMR. OF C. EX. & S. T., LTU, BANGALORE Versus ACE DESIGNERS
LTD.; 2012 (26) S.T.R. 193 (Kar.)
Manpower Recruitment HINDUSTAN ZINC LTD. Versus COMMISSIONER OF CENTRAL EXCISE,
Agency Service JAIPUR; 2013 (288) E.L.T. 406 (Tri. - Del.)
COMMISSIONER OF C. EX. & SERVICE TAX (LTU) Versus LUPIN LTD.;
2012 (28) S.T.R. 291 (Tri. - Mumbai)
JBM AUTO SYSTEM PVT. LTD. Versus COMMISSIONER OF C. EX.,
CHENNAI; 2012 (27) S.T.R. 170 (Tri. - Chennai)
Input Service Favorable Judicial Decisions
4 1
Bizsol UPDATE February - 2014
Input Service Favorable Judicial Decisions
Commission on domestic WADPACK PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE,
Agent and foreign Agent BANGALORE; 2013 (293) E.L.T. 400 (Tri. - Bang.)
VISHAL PIPES LTD. Versus COMMISSIONER OF CENTRAL EXCISE,
NOIDA; 2013 (293) E.L.T. 386 (Tri. - Del.)
COMMISSIONER OF CUS. & C. EX., HYDERABAD-IV Versus POKARNA
LTD.; 2013 (292) E.L.T. 316 (Tri. - Bang.)
BIRLA CORPORATION LTD. Versus COMMISSIONER OF C. EX.,
LUCKNOW; 2013 (288) E.L.T. 427 (Tri. - Del.)
Chartered Accountant C. CUBED SOLUTIONS PVT. LTD. Versus COMMISSIONER OF
Service C. EX., BANGALORE; 2013 (293) E.L.T. 398 (Tri. - Bang.)
Advertisement C. CUBED SOLUTIONS PVT. LTD. Versus COMMISSIONER OF C. EX.,
BANGALORE; 2013 (293) E.L.T. 398 (Tri. - Bang.)
COMMISSIONER OF C. EX. & SERVICE TAX (LTU) Versus LUPIN
LTD.;2012 (285) E.L.T. 221 (Tri. - Mumbai)
Housekeeping services C. CUBED SOLUTIONS PVT. LTD. Versus COMMISSIONER OF C. EX.,
BANGALORE; 2013 (293) E.L.T. 398 (Tri. - Bang.)
BALKRISHNA INDUSTRIES LTD. Versus COMMR. OF C. EX.,
AURANGABAD; 2010 (254) E.L.T. 301 (Tri. - Mumbai)
Clearing & Forwarding C. CUBED SOLUTIONS PVT. LTD. Versus COMMISSIONER OF C. EX.,
Service BANGALORE; 2013 (293) E.L.T. 398 (Tri. - Bang.)
ASHIRVAD PIPES PVT. LTD. Versus COMMISSIONER OF C. EX.,
BANGALORE-I; 2012 (31) S.T.R. 693 (Tri. - Bang.)
Repair & Maintenance CASTROL INDIA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE,
Service VAPI; 2013 (291) E.L.T. 469 (Tri. - Ahmd.)
G.H.C.L. LTD. Versus COMMISSIONER OF CENTRAL EXCISE,
BHAVNAGAR; 2009 (242) E.L.T. 468 (Tri. - Ahmd.)
SEMCO ELECTRIC PVT. LTD. Versus COMMISSIONER OF CENTRAL
EXCISE, PUNE-I; 2013 (30) S.T.R. 572 (Tri. - Mumbai)
Management and CASTROL INDIA LIMITED
Consultancy services, Versus COMMISSIONER OF CENTRAL EXCISE, VAPI; 2013 (291) E.L.T.
469 (Tri. - Ahmd.)
SEMCO ELECTRIC PVT. LTD. Versus COMMISSIONER OF CENTRAL
EXCISE, PUNE-I; 2013 (30) S.T.R. 572 (Tri. - Mumbai)
Online Information and CASTROL INDIA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE,
Data Base Access service, VAPI; 2013 (291) E.L.T. 469 (Tri. - Ahmd.)
Port service CASTROL INDIA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE,
VAPI; 2013 (291) E.L.T. 469 (Tri. - Ahmd.)
COMMR. OF C. EX. & CUS. Versus MUNDRA PORT & SPECIAL ECONOMIC
ZONE LTD.; 2011 (21) S.T.R. 361 (Guj.)
4 2
Bizsol UPDATE February - 2014
Storage and CASTROL INDIA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE,
Warehousing service VAPI; 2013 (291) E.L.T. 469 (Tri. - Ahmd.)
COMMR. OF C. EX. & CUS. Versus MUNDRA PORT & SPECIAL
ECONOMIC ZONE LTD.; 2011 (21) S.T.R. 361 (Guj.)
Event Management CASTROL INDIA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE,
Service VAPI; 2013 (291) E.L.T. 469 (Tri. - Ahmd.)
ONE ADVERTISING & COMMUNICATION SERVICES LTD. Versus
C.S.T.,AHMEDABAD; 2012 (27) S.T.R. 344 (Tri. - Ahmd.)
Technical Inspection CASTROL INDIA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE,
services VAPI; 2013 (291) E.L.T. 469 (Tri. - Ahmd.)
COMMISSIONER OF C. EX., AHMEDABAD-II Versus CADILA HEALTHCARE
LTD; 2013 (30) S.T.R. 3 (Guj.)
Pest control ADC INDIA COMMUNICATIONS LTD. Versus COMMR. OF C. EX.,
BANGALORE; 2012 (283) E.L.T. 415 (Tri. - Bang.)
NIRMA LTD. Versus COMMISSIONER OF C. EX. & S.T., VADODARA-I; 2013
(32) S.T.R. 622 (Tri. - Ahmd.)
SUNDARAM CLAYTON LTD. Versus COMMISSIONER OF C. EX., CHENNAI;
2012 (25) S.T.R. 172 (Tri. - Chennai)
AMC for plant ADC INDIA COMMUNICATIONS LTD. Versus COMMR. OF C. EX.,
BANGALORE; 2012 (283) E.L.T. 415 (Tri. - Bang.)
SUNDARAM CLAYTON LTD. Versus COMMISSIONER OF C. EX., CHENNAI;
2012 (25) S.T.R. 172 (Tri. - Chennai)
Maintenance & Repair SEMCO ELECTRIC PVT. LTD. Versus COMMISSIONER OF CENTRAL
of garden EXCISE, PUNE-I; 2012 (276) E.L.T. 94 (Tri. - Mumbai)
NIRMA LTD. Versus COMMISSIONER OF C. EX. & S.T., VADODARA-I; 2013
(32) S.T.R. 622 (Tri. - Ahmd.)
Renting on immovable ORACLE GRANITO LTD. Versus COMMISSIONER OF C. EX., 2013 (30)
property S.T.R. 357 (Tri. - Ahmd.)
ETP Services ANAR CHEMICALS PVT. LTD. Versus COMMISSIONER OF C. EX.,
AHMEDABAD; 2011 (24) S.T.R. 32 (Tri. - Ahmd.)
COMMISSIONER OF C. EX. & SERVICE TAX (LTU) Versus LUPIN LTD.;
2012 (28) S.T.R. 291 (Tri. - Mumbai)
Input Service Favorable Judicial Decisions
It can be appreciated from the above that Input of
services which are related to business and also relates
to manufacturing operations are entitle for availment
of cenvat credit.
Subsequently, definition which was revised in 2008
was further revised vide. Notification 3/2011 C.E.
(N.T.) - dated 01-03-2011, whereby comparison is
given below :
4 3
Bizsol UPDATE February - 2014
Definition of Input Service after dtd. 01.03.2008but prior to 20.06.2012
Definition of Input Service as amended upto01.03.2011
(l) "input service" means any service,-
(i) used by a provider of taxable service for providing an
output service; or
(ii) used by the manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final
products and clearance of final products upto the place
of removal,
and includes services used in relation to setting up,
modernization, renovation or repairs of a factory,
premises of provider of output service or an office
relating to such factory or premises, advertisement
or sales promotion, market research, storage upto the
place of removal, procurement of inputs, activities
relating to business, such as accounting, auditing,
financing, recruitment and quality control, coaching
and training, computer networking, credit rating, share
registry, and security, inward transportation of inputs
or capital goods and outward transportation upto the
place of removal;
(l) "input service" means any service, -
(i) used by a provider of taxable service for providing an
output service; or
(ii) used by a manufacturer, whether directly or indirectly,
in or in relation to the manufacture of final products
and clearance of final products upto the place of
removal, and includes services used in relation to
modernization, renovation or repairs of a factory,
premises of provider of output service or an office
relating to such factory or premises, advertisement
or sales promotion, market research, storage upto the
place of removal, procurement of inputs, accounting,
auditing, financing, recruitment and quality control,
coaching and training, computer networking, credit
rating, share registry, security, business exhibition,
legal services, inward transportation of inputs or
capital goods and outward transportation upto the
place of removal; but excludes services,-
(A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq),
(zzzh) and (zzzza) of clause (105) of section 65 of
the Finance Act (hereinafter referred as specified
services), in so far as they are used for-
(a) construction of a building or a civil structure or a
part thereof; or
(b) laying of foundation or making of structures for
support of capital goods, except for the provision
of one or more of the specified services; or
(B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of
clause (105) of section 65 of the Finance Act, in so
far as they relate to a motor vehicle except when used
for the provision of taxable services for which the credit
on motor vehicle is available as capital goods; or
(C) such as those provided in relation to outdoor catering,
beauty treatment, health services, cosmetic and
plastic surgery, membership of a club, health and
fitness centre, life insurance,
It is important to note the change in definition and
input service definition, which was earlier more broader
on account of wording which was included "activities
relating to business, such as". Numbers of disputes
were raised by the department disallowing the cenvat
credit on number of services on account of not relating
to manufacture and clearance of finished products.
Therefore larger view was taken by the judicial
authorities that any services which is relating to
business and linkage has been established w.r.t.
business Cenvat Credit was allowed by the judicial
authorities considering "Such as" is the illustrative and
not specific. Definition was amended to restrict the
same and therefore "activities relating to business,
such as" has been deleted and also certain exclusions
were added.
Further, Input Service definition as stands now after
incorporating all amendments is given below :
4 4
Bizsol UPDATE February - 2014
"Input service" means any service :
(i) used by a provider of "output service" for
providing an output service; or
(ii) used by a manufacturer, whether directly or
indirectly, in or in relation to the manufacture of
final products and clearance of final products upto
the place of removal, and includes services used
in relation to modernisation, renovation or repairs
of a factory, premises of provider of output
service or an office relating to such factory or
premises, advertisement or sales promotion,
market research, storage upto the place of
removal, procurement of inputs, accounting,
auditing, financing, recruitment and quality
control, coaching and training, computer
networking, credit rating, share registry, security,
business exhibition, legal services, inward
transportation of inputs or capital goods and
outward transportation upto the place of
removal;
but excludes :
(A) service portion in the execution of a works
contract and construction services including
service listed under clause (b) of section 66E of
the Finance Act (hereinafter referred as specified
services) in so far as they are used for
(a) construction or execution of works contract
of a building or a civil structure or a part
thereof; or
(b) laying of foundation or making of structures
for support of capital goods, except for the
provision of one or more of the specified
services; or";
(B) specified in sub-clauses (o) and (zzzzj) of clause
(105) of section 65 of the Finance Act, in so far
as they relate to a motor vehicle which is not a
capital goods; or
specified in sub-clauses (d) and (zo) of
clause (105) of section 65 of the Finance Act,
in so far as they relate to a motor vehicle
which is not a capital goods except when used
by -
(a) a manufacturer of a motor vehicle in respect
of a motor vehicle manufactured by him; or
(b) a provider of output service as specified in
sub-clause (d) of clause (105) of section 65
of the Finance Act, in respect of a motor
vehicle insured or reinsured by him; or.
(C) such as those provided in relation to outdoor
catering, beauty treatment, health services,
cosmetic and plastic surgery, membership of a
club, health and fitness centre, life insurance,
health insurance and travel benefits extended
to employees on vacation such as Leave or
Home Travel Concession, when such services
are used primarily for personal use or
consumption of any employee"
In view of the above, Input Services relating to
manufacture and upto the place of removal and those
services which are related to specific functions as
specified in the definition are entitled for cenvat credit
to the manufacturer or output service provider.
Similarly, input service is utilized at the place of
manufacture i.e. factory or the place from which
service/s are provided. However, services are utilized
at various places of the business and therefore
concept of Input Service Distributor was brought in.
(m) "Input Service Distributor" means an office of
the manufacturer or producer of final products or
provider of output service, which receives invoices
issued under rule 4A of the Service Tax Rules, 1994
towards purchases of input services and issues
invoice, bill or, as the case may be, challan for the
purposes of distributing the credit of service tax paid
on the said services to such manufacturer or producer
or provider, as he case may be;
Office includes Registered Office, Corporate Office,
Head Office, Marketing Offices, Warehouses or any
other premises where manufacturer of final product
or providers of output service is receiving the services
from service providers. Registration also needs to be
obtained either at each location or centralized
registration can be obtained from where centralized
billing or accounting is done.
Manner of distribution of credit has been specified in
Rule 7 of Cenvat Credit Rules 2004 prior to
17.03.2012, the provisions were as follows:
Manner of distribution of credit by input service
distributor: The input service distributor may
distribute the cenvat credit in respect of the service
tax paid on the input service to its manufacturing units
4 5
Bizsol UPDATE February - 2014
or units providing output service, subject to the
following condition namely:
a. The credit distributed against a document
referred to in rule 9 does not exceed the amount
of service tax paid thereon or.
b. Credit of service tax attributable to service use
in a unit exclusively engaged in manufacture of
exempted goods or providing of exempted
services shall not be distributed.
Methodology of distribution was so simple and left to
assessee to distribute the credit wherever it is required
without putting any restriction except for not to transfer
the cenvat credit of the services which were exclusively
for exempted goods or services and distribution
should not be more than cenvat credit.
It is very important to note decisions in the case of
following :
COMMISSIONER OF C. EX., BANGALORE-I Versus
ECOF INDUSTRIES PVT. LTD. 2013 (29) S.T.R. 107
(Kar.)
Cenvat credit of Service tax - Restriction regarding
distribution of credit - Assessee is entitled to distribute
the Cenvat credit on input services on its
manufacturing unit or other units providing the output
services - View taken in the order-in-appeal that the
distribution of credit is for advertisement of the
product, which is not at all manufactured at Malur unit
cannot be accepted - Finding that assessee is entitled
to take credit only in the unit where the product is
manufactured is not the mandate of Rule 7 of Cenvat
Credit Rules, 2004. [paras 4, 5]
VALCO INDUSTRIES LTD. Versus COMMISSIONER
OF C. EX., CHANDIGARH 2012 (28) S.T.R. 457 (Tri.
- Del.)
Cenvat credit - Input service - Bills received at
Headquarters transferred to one factory - It does not
amount to distribution of service - Credit could be
taken by the factory based on duty paying documents
addressed to main office, without assessee getting
registered as 'input service distributor' - It was more
so in view of proviso to Rule 9(2) of Cenvat Credit
Rules, 2004. [para 10]
Thereafter, the methodology was changed w.e.f.
01.04.2012 vide Notification no. 18/2012 CE (NT) dtd.
17.03.2012, whereby changes were made and
methodology to be adopted is given below:
7. Manner of distribution of credit by input service
distributor. - The input service distributor may
distribute the CENVAT credit in respect of the service
tax paid on the input service to its manufacturing units
or units providing output service, subject to the
following conditions, namely:-
(a) the credit distributed against a document referred
to in rule 9 does not exceed the amount of
service tax paid thereon;
(b) credit of service tax attributable to service used
in a unit exclusively engaged in manufacture of
exempted goods or providing of exempted
services shall not be distributed;
(c) credit of service tax attributable to service used
wholly in a unit shall be distributed only to that
unit; and
(d) credit of service tax attributable to service used
in more than one unit shall be distributed prorata
on the basis of the turnover of the concerned
unit to the sum total of the turnover of all the
units to which the service relates.
Explanation 1.- For the purposes of this rule, unit
includes the premises of a provider of output service
and the premises of a manufacturer including the
factory, whether registered or otherwise.
Explanation 2.- For the purposes of this rule, the total
turnover shall be determined in the same manner as
determined under rule 5.
One more composition was imposed vide notification
no. 28/2012 CE(NT) dtd. 20.06.2012 made w.e.f.
1.07.2012 which is given below:
(d) Credit of service tax attributable to service used
in more than one unit shall be distributed pro
rata on the basis of the turnover during the
relevant period of the concerned unit to the sum
total of the turnover of all the units to which the
service relates during the same period.
Explanation 3. - (a) the relevant period shall be the
month previous to the month during which the
CENVAT credit is distributed.
(b) In case if any of its unit pays tax or duty on
quarterly basis as provided in rule 6 of Service
Tax Rules, 1994 or rule 8 of Central Excise Rules,
4 6
Bizsol UPDATE February - 2014
2002 then the relevant period shall be the quarter
previous to the quarter during which the CENVAT
credit is distributed.
(c) In case of an assessee who does not have any
total turnover in the said period, the input service
distributor shall distribute any credit only after
the end of such relevant period wherein the total
turnover of its units is available.
The impact of the above are as follows:
1. Distribution of service tax should not be more
than actual service tax paid
2. Service tax amount needs to be distributed to
such unit where services were exclusively to be
used
3. No service tax to be distributed to exempted unit
or exempted output service provider
4. The service tax needs to be distributed based
on the turnover of respective unit
5. Total turnover means sum total of the value of -
• all excisable goods cleared during the
relevant period including exempted goods,
dutiable goods and excisable goods
exported;
• export turnover of services determined in
terms of clause (D) of sub-rule (1) above
and the value of all other services, during
the relevant period; and
• all inputs removed as such under sub-rule
(5) of rule 3 against an invoice, during the
period for which the claim is filed.
6. Service tax to be distributed in the proportion of
previous months total turnover.
Value to be determined of exempted services
especially for trading services is a difficult
exercise since purchase value and sales value
of such goods needs to be tracked and difference
of the same needs to be considered as value of
exempted service and not as total trading
turnover otherwise there will be a loss of cenvat
credit.
Conclusion:
1. There is no time limit for availing the cenvat
credit, but it should be taken immediately in
accordance with the law subject to
entitlement in accordance with the definition
of the "Input Service"
2. Service tax in relation to specified functions
in the inclusive part of definition may not
need one to one relationship of
manufacturing activity.
3. Service tax can be availed subsequent to
registration even pertaining to prior period.
4. Distribution of service tax should be strictly
on monthly basis and therefore
determination of turnover as stated above is
must including that of ascertaining of value
of trading services.
5. Minor defects on the invoices which are
curable in nature will not be hurdle for
availing cenvat credit, however defects to be
removed.
6. Since there are number of changes in the
definition of input services and manner in
which service tax can be distributed, proper
care needs to be taken to avail the cenvat
credit based on such entitlement at the time
of availing services and taking cenvat credit
subsequently, since there is no time limit.
7. Jurisdiction to decide entitlement of cenvat
credit of input services will be at the place
where service tax is availed, however
jurisdiction of deciding entitlement of input
service tax credit distributed will be at the
place where ISD registration is taken and not
at different places where credit has been
distributed.
4 7
Bizsol UPDATE February - 2014
BACKGROUND:
The Companies Act 2013 ushered in the concept of
class action suits formally to India for the first time. In
order to understand the implications of this path
breaking legal process it is necessary to know what
class action suits are all about. Under the Indian laws
if and when you have a cause of action against anyone
it is always a personal right against someone or other.
Accordingly it has always been and still is an individual
right which you alone can exercise against someone
else. To some extent this personal right is allowed to
be exercised collectively in some of the labour laws
in the country where a duly constituted and authorised
trade union could exercise such rights on behalf of all
its members where the goal of the members
collectively happen to be the same.
DEFINITION:
A class action is a procedural device that permits one
or more plaintiffs to file and prosecute a lawsuit on
behalf of a large group - also known as "class".
One can get the nature and rationale of class action
suits from the preamble of the Class Action Fairness
Act 2005 passed by the United States Congress thus:
"Class-action lawsuits are an important and valuable
part of the legal system when they permit the fair and
efficient resolution of legitimate claims of numerous
parties by allowing the claims to be aggregated into a
single action against a defendant that has allegedly
caused harm".
In a fight between David and Goliath the odds are
naturally against the former. But all Davids put
together could become a Goliath to fight a Goliath.
That is the essence of class action suit. A class for
the purpose of this nature of dispute can be
employees, creditors, debtors, customers and what
have you all of whom collectively suffer from a
common enemy.
ADVANTAGES:
There are some distinct advantages in collectively
taking up the causes of various persons or entities.
Some of them are:
1. The biggest advantage of a class action suit is
that aggregation of litigation improves the
efficiency of legal process and reduces the costs
of such litigations.
2. A litigant for small recoveries may fight shy of
approaching the courts however justified he may
be.
3. A class action suit is more equitable as all those
who file the suit gets proportionate sums unlike
in the case where the proceeds are enjoyed by
the first litigants on the basis of 'first-come-first-
served' where the funds provided as relief is are
limited.
4. One other important advantage of class action
suits is that no incompatible standards are set
by different courts ruling differently.
THE INTERNATIONAL SCENE:
Let us now look at how other countries around world
are dealing with class action suits, if at all. United
States has a well evolved system of this category of
litigation. Austrian laws permit class action suits to be
filed on behalf of consumer organisations. Canada
like the US allows class actions. Under the French
law an association can represent the collective interest
of the consumers with the caveat that all individual
claimants must be named in the suit. Germany permits
what is called sample proceedings arising from mass
capital market transactions and for nothing else. Italy
has a class action legislation written into law. The Dutch
law allows class action for associations and
foundations wherever their bye laws permit such
action. Spanish law permits nominated consumer
associations to take such collective action. The
Switzerland law does not allow any form of class
CLASS ACTION SUITS AND
THE COMPANIES ACT 2013 - A PRIMERBy Venkat R Venkitachalam
Company Secretary,
Article No. 5
4 8
Bizsol UPDATE February - 2014
action. From 1999 after the enactment of the Civil
Procedure Rules in UK collective actions are permitted
under limited circumstances.
THE INDIAN SCENE:
As far as India is concerned it may not be true to say
that class action suits are completely alien. Indian
jurisprudence has evolved, perhaps better than many
other countries if we take into account the Public
Interest Litigations (PIL). By loosening the locus standi
requirement the Supreme Court of India has allowed
suits to be filed on behalf of deprived sections of the
society by individuals, NGOs and the like. Though not
codified strictly as class action suit, PILs are essentially
that - Class Action Suits. In India an acute need for
codified provisions for class action suits was felt at
the time of Bhopal Gas tragedy. In the case of Bhopal
tragedy the legal procedures required by the US
system prevented a class action suit from being
brought against Union Carbide by the victims.
However, the Government of India sought to
represent the victims and negotiated with Union
Carbide under the supervision of the Supreme Court
of India deploying what is called the doctrine of parans
patriae (the inherent power of the State to protect
persons who are legally unable to act on their own
behalf). Recently Indians got to learn about class
action suits when the Satyam scam broke out and
investors in the US filed class action suits against the
company and its auditors. Indian investors on the
other hand could not have any effective legal recourse
against the company.
Now with the enactment of The Companies Act 2013
class action suits have found a place in the statute
books duly codified.
ESSENTIAL CONDITIONS:
The subject or point of litigation of a class action suit
could be different and varied; but two factors are
almost always present in a class action suit. They are:
1. The issues in question or subject matter of dispute
are common to all members of the class.
2. The persons affected are so large that it is
impracticable to bring them all together before
the judicial authority.
TYPICAL CLASS ACTION:
1. Employees who are subjected to racial or gender
discrimination by their employers.
2. Residents affected in a neighbourhood by a toxic
spill in the environment.
3. Consumers who are sold the same or similarly
defective goods by a company.
4. Patients given same medicines with side-effects.
5. Investors are cheated by fraud in the purchase
of shares or stocks.
THE COMPANIES ACT 2013:
Section 245 of the Companies Act 2013 and the Rules
made under this Section deal with class action suits
which are summarised below for general
understanding:
1. Eligibility: The following are entitled to initiate a
class action suit:
a. 100 or more Members of the company or
those who represent 10% or more of the
share capital of the company.
b. 100 or more Depositors of the company or
those who represent 10 % or more of the
Deposit in the company.
c. The Central Government in whose opinion
the affairs of the company are managed in
such a manner prejudicial to public interest.
2. Authority: An application for class action has to
be filed before the National Company Law
Tribunal (NCLT).
3. Redressal: Members or Depositors may file
class action suits when they are of the opinion
that the affairs of the company are being
conducted in a manner prejudicial to the
company or to seek following restraining orders:
a. to restrain the company from committing an
act which is ultra vires the Memorandum and
Articles of Association of the company;
b. to restrain the company from committing any
breach of any of the provisions of the
Memorandum and Articles of Association of
the company;
c. to declare a resolution earlier passed by
suppression of material facts or through
misstatement of facts for altering the
Memorandum and Articles;
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d. to restrain the company and its directors
from acting on such resolutions;
e. to restrain the company from doing an act
which is contrary to any provisions of the
Companies Act or any other law which is in
force;
f. to restrain the company from taking any
action contrary to any resolution passed by
members;
g. to claim damages and compensation or
demand any suitable action from or against
the company or its directors for fraudulent,
unlawful and wrongful acts, against the
auditor/s for fraudulent or misleading
statements in audit report or against any
expert/advisor/consultant for wrongful
statements and misleading particulars;
h. to seek any other remedy as the NCLT may
deem fit to award.
4. Parties: Class action suits can be filed against
the company, any of its directors, its auditor/s or
any expert/advisor/consultant.
5. Procedure:
A. On receipt of an application for a class action
suit NCLT shall examine the following before
admitting the same:
a. whether the member/depositor is acting in
good faith;
b. whether any evidence is produced showing
involvement of other persons other than the
directors or officers;
c. whether the cause of action could be
pursued by the complainant other than as
a class action suit;
d. whether there exists any evidence as to the
views of other members/depositors of their
personal interest;
e. whether the company can authorise the
action before it occurs or ratify it if it occurs
thereafter;
f. whether the cause of action which has
already occurred can be ratified by the
company.
B. NCLT on admitting the application shall:
a. issue public notice to all the members of the
class within seven days;
b. require the company to put a public notice
on its website;
c. consolidate all similar applications, if any,
lying in all jurisdictions into a single
application;
d. not allow two applications to survive for the
same cause of action.
C. A copy of every application filed shall be served
on the Regional Director or Registrar of
Companies.
D. NCLT will give notice to the Central Government
of the application for its say, if any.
E. NCLT can order damages not exceeding Rupees
One Lakh to the other party if is found that the
application is frivolous or vexatious.
6. Order: An order passed by NCLT shall be binding
on the company, its members, depositors,
auditors and consultants. The cost of publication
of the public notice shall be borne by the party
responsible for the oppressive act. It is important
to note here that relating to class action suit are
not applicable to banking companies.
CONCLUSION:
Finally the concept of class action suit is here. Whether
it is here to stay in a litigious society like ours and
how it would pan out remains to be seen. Having
brought in the concept through a procedure
dominated legislation like the Companies Act the
chances of it getting implemented well are pretty high.
It would be worthwhile to remember that this piece of
innovative legislation has not come one day too soon.
Investors, particularly the smaller ones have suffered
enough. One has to keep in mind that only members
and depositors can resort to class action suits and
not bankers, creditors, debtors, consumers, etc. at
present under the Act. Be that may, there is some
light at the end of the tunnel. One thing can be said
with certainty. Class action is bound to usher in more
responsible management practices to corporate
India.
5 0
Bizsol UPDATE February - 2014
"For all of its uncertainty, we cannot flee the
future." – Barbara Jordan
Treasury management is a treacherous task, at best.
Treacherous not only for the corporate but also for
the management team, who might end up second-
guessing each decision. With currency markets as
volatile as a sea during a storm, oftentimes, there is
no perfect solution. Like disaster management,
treasury management is all about hoping for the best,
but being prepared for the worst-case scenario at all
times. Hence, the requirement for impeccable financial
controls has touched virtually every area of a
company's business.
It is commonly observed that most corporates manage
their currency exposures by taking a subjective view
on market variables and accordingly take decisions
on hedging or otherwise. In the manner, it has been
experienced that the risk management process has
become rather arbitrary and entirely view driven. Thus,
if the view on market variables were to hold well, the
corporate would end up making forex gains. But, if
the view were to go wrong, there would be losses.
Another drawback of this system of Risk Management
is that corporates are unable to quantify the profits or
losses which they are running on their open positions.
Consequently, the corporate would be unable to
estimate whether its anticipated product profits have
been protected or are being diluted by forex
fluctuations. The main short-coming of the current
system is that at the time of decision making, the
treasury team has no benchmarks to protect and no
targets to achieve. Consequently, there is a lot of
subjectivity and there are no inbuilt checks and
controls to stop losses or to freeze profits.
A well-defined forex policy would help address some
of the above issues. It would ensure that the decision
making process acquires a far more objective flavor
and will also be predominantly system-driven. There
is also an accurate quantification of profits or losses
of the treasury function. A strict adherence of the
policy would go a long way towards ensuring that
business profits are not only protected but also
improved upon due to scientific decision making and
losses, if any, are within predetermined levels of
acceptance.
New RBI circulars and corporate governance
requirements have made it mandatory for corporates
to have a Foreign Exchange Risk Management Policy
in place.
The broad contours of an FX Policy could be:
• To identify the FX risks the company is exposed
to due to the nature of its business activity
• To decide the process of management of these
risks through a variety of risk management tools
• To establish processes to monitor and control
the risks as per these processes
• To create an efficient process for reporting the
key parameters measuring the risks and the
performance of the Risk Management Tools
Due to the nature of this document, no two FX Policies
would ever be the same. As each company has a
unique treasury set-up, the FX Policy must be tailor-
made to meet the requirements of each corporate.
But, in most cases, a common work-flow exoskeleton
can be followed to better strengthen the basic structure
of the FX Policy. The main topics to consider are:
1. Define Policy Objectives
This first step is to establish a framework for the
policy. It outlines the principal business lines and
overall corporate objectives and stipulates those
areas where the company is either willing or not
willing to take risks. In most cases, companies
do state their intention to offset their FX risks
since it is not an area in which the company has
a competitive advantage.
2. Identify & Quantify Exposures
The next step involves identification &
quantification of major exposures. Generally,
these exposures are grouped under the nature
Foreign Exchange Policy - A Map
in the LabyrinthBy Adwait V.
5 1
Bizsol UPDATE February - 2014
of exposures: translational, transactional and
economic.
• Translational exposures would relate to
protecting the value of overseas
investments and reported income.
• Transactional exposures would relate to
buying or selling in any foreign currency.
• Economic exposures might be the most
difficult to capture because they relate to
issues that usually arise from foreign
competition.
Some companies may use sophisticated
modeling techniques such as value-at-risk to
measure exposures. Equally valid approaches
are simpler and rely upon measuring recent
historical changes of currency relationships and
their impact on exposures.Whatever the
approach, the objective is to define which
exposures are significant. Any hedging activity
should be proportional to the exposure.
3. Define Risk Management Policies
This step includes allocation of specific actions
and responsibilities. Exposures that present
significant risks to the company are identified and
designated for hedging. The chain of
responsibility for making decisions and executing
them is formally established. Ranges of
acceptable hedging activity should also be
established. For example, a company might elect
to hedge no less than 50% but no more than
70% of foreign sales forecast over a specified
time period. Each exposure must be
systematically addressed. This step will
necessarily be complex as it represents the heart
of any hedging policy. Most companies include
in this section an explicit statement that
speculative activities should not be undertaken
under any circumstances. Speculative activities
would include any action that would add to, rather
than reduce, the financial risks of the company.
4. Identify & Execute strategies
In this step, derivative strategies to manage risks
are explicitly identified. Approved derivatives will
reflect the procedures established in Step Three.
In order to provide additional flexibility, most
companies will specify a range of approved
derivatives, including forward contracts,
purchased options, and forward-equivalent
option-combination strategies. The specific
hedging technique selected will depend on the
circumstances of each exposure. For example,
if certainty of an outcome is the main objective,
forwards are likely to be the required derivative.
Alternatively, for competitive reasons, a company
may need upside potential from currency
movements. In this case, authorizing purchased
options and option-combination strategies will
provide the desired trade-off of protection against
adverse market moves while preserving upside
potential from the underlying exposure. It is
advisable to provide a broad choice of hedging
instruments at the outset itself since amending
the policy later to include more choices is usually
administratively burdensome.
5. Monitor executed Strategies
Once risk management actions have been taken,
the process does not end there. Monitoring must
become a standard practice. The hedge actions
need to be monitored for performance to ensure
validity in dynamic market conditions. The
underlying exposures must be monitored on an
on-going basis to ensure that the position does
not become over or under hedged and escalation
procedure should be in place if there is ever any
evidence of an erroneous outcome or
impropriety.
6. Review performance
Risk management should be a process of
continuous improvement. The policy itself should
be viewed as a living document. Within the policy,
there should be an explicit commitment to review
the policy on a periodical basis to confirm that it
is meeting its compliance objectives of risk
reduction and enabling the company to reach its
financial goals. This process should be
documented, reviewed, approved and signed so
that the mandated officers can attest to the
integrity of the system on an on-going basis.
To sum up, the purpose of the FX policy is to
provide clear guidances on the foreign currency
management functions and the importance of
corporate treasury department in the foreign
currency management process, as well as the
responsibilities of affiliate and subsidiary
personnel involved.
5 2
Bizsol UPDATE February - 2014
CENTRAL EXCISE:v Cenvat credit allowable when duty has been
paid: Assessee is the holder of Advance Licence/
Advance Authorization. Since, Assessee was not
in a position to follow the procedure prescribed
under Notification No. 44/2001-CE dated
26.06.2001 for duty free procurement of the
goods, duty has been paid and availed the credit.
Department has denied the cenvat credit on the
ground that Assessee was entitled to clear the
goods duty free after following the procedure
under Not. 44/2001 supra, hence duty paid by
them has to be considered as deposit with Govt.
Hon'ble CESTAT has observed that there is no
specific provision under Central Excise Law or
Rules requiring assessee to clear the goods
under Not. No. 44/2001 Supra and there is no
loss to Department if credit taken of duty paid
amount. Cenvat Credit allowed. [2014(299)
E.L.T.91(Tri.Mumbai)]
v Allegation w.r.t. clandestine removal of
goods to be proved by producing
corroborative evidences: Department's
allegation was that Assessee has removed
finished goods clandestinely without payment of
duty and availed ineligible Cenvat credit of the
products the quantity of which was short received
in their factory. Allegation was made only on the
basis of overwriting made by the Assessee in
their records which was done as by the Assessee
as objection was taken by the Auditors of the
ISO hence, it is not a reliable evidence unless
corroborated by any other incriminating
evidences such as discrepancy in raw material
used and clearance of finished goods. Hence,
Demand is not sustainable. [2014(299) E.L.T.65
(Tri.Ahmd.)]
v Appeal before Hon'ble High Court: Appeal
before Hon'ble High Court can be filed against
interim orders passed by the Hon'ble Tribunal,
as per sub section (2) of the 35G of the Central
Excise Act, 1944. Once pre-deposit/interim order
is passed, it is for party aggrieved to decide,
whether to comply the Order or to file appeal
before Hon'ble High Court. While passing order
for waiving pre-deposit, CESTAT goes into prima
facie case and based on such factual
consideration, taking note of hardship pleaded/
proved by assessee and considering interests
of Revenue. Whether substantial question of law
would arise in such cases would depend upon
facts and circumstances of each case.
Further, it has been also held that legislative
intent has to be gathered from plain language of
particular provision of law when there is no
ambiguity in reading it. When lower Courts take
aid from the decisions of Superior Courts, while
interpreting particular word or phrase in
enactment, such exercise cannot be faulted
unless express restriction is made in said
decision itself. [2014(299)E.L.T.3(Mad. H.C.)]
v Liberal interpretation can be given to a
beneficial Notification in favour of Assessee
and not against them: Assessee is
manufacturer of Refined Rice Bran Oil and for
meeting the standards as laid down in the Food
Regulations, they have removed the impurities
from Rice Bran Oil in the form of Gums/Waxes
and recovered oil and further cleared them
without payment of duty claiming exemption
under Not. No. 89/95-CE dated 18.05.95 which
exempts waste arising in the course of
manufacture of exempted goods. Department
has denied the benefit on the ground that cleared
goods are neither waste nor scrap, as they have
marketability. Since said Notification not
mentioning waste of 'Nil' value nor restricts its
application to SSI Units or expressly excludes
5 3
Bizsol UPDATE February - 2014
'by-product' from ambit of 'waste', exemption
cannot be denied to the Assessee. [2014(299)
E.L.T.116(Tri.Mum)]
v Once Duty of final product accepted by Dept.,
Cenvat Credit need not be reversed: Whether
particular activity carried out by a person amount
to manufacture or not or it is only a process in a
series of activity, will depend on the facts and
circumstances of each case. In the present case,
Assessee receives the chassis. After inspection
of the same, he sent to the job worker who
undertake the body building activities. These
activities of the Assessee would not be
considered Assessee as manufacturer of motor
vehicle and hence, cenvat credit is not admissible
to them. But in view of the judgement of Ajinkya
Enterprises [2013(294)E.L.T.203(Bom.) once
duty of final product accepted by Dept., Cenvat
Credit need not be reversed even if said activity
not amounting to manufacture. [2014(299)
E.L.T.49 (Tri.Mum)]
v Settlement Commission attracts severe
strictures from Delhi High Court for letting
off clandestine removal case by ignoring
evidence: Assesse has not produced
documents like ledgers, GR receipts, third party
documents before Adjudicating Authority in the
matter of allegation of clandestine removal, but
produced all documents two years later before
Commissioner (Investigation) appointed by
Settlement Commission, who gave them clean
chit. In this matter Hon'ble High Court has held
that such evidences could not be accepted by
the Settlement Commission. If assessee had
those documents in its factory, most natural thing
to do was to place them before Adjudicating
Authority to clear themselves of charge of
clandestine manufacture of goods. Where
complex issues of fact and law are involved for
which a detailed inquiry is necessary, Settlement
proceedings cannot act as substitute for a
Adjudication proceedings and they should refer
matter back to Adjudicating Officer. [2013(298)
E.L.T.653 (Del.H.C.)]
v Gift items supplied to whole sellers/
showrooms/retailers and amount recovered
towards advertising expenses: Assesee has
supplied gift items to wholesalers, showrooms
and retailers for sale promotion of their products
and recovered part of the amounts towards
advertisement expenses. Department has failed
to establish that how part recovery of cash of gift
items depressed the value of clearance of
excisable goods. Since there is no nexus
between gifts and the goods cleared, demand
not sustainable. [2013(298)E.L.T.739(Tri.Del.)]
v Vacation of Stay Order when delay in
disposal of appeal by more than 6 months:
Under Section 35C(2A) of the Central Excise Act,
1944, appeal required to be disposed of within
three years from the date of filling and within 180
days from date of Stay Order 'where it is possible
to do so.' Section 35C(2A) ibid introduced to
ensure disposal of pending appeals within
reasonable time and curtail delays, but not to
legislative intent to curtail/withdraw powers of
Tribunal to grant stay beyond six months in
appropriate cases. In the present case, there is
no evidence that delay on account of dilatory
tactics adopted by Assessee, and no time period
mentioned in the Stay Order, hence its duration
to be treated as co-terminus with disposal of
appeal. [2013(298)E.L.T.749(Tri.Del.)]
v Department is bound by its own Circular:
Appeal has been filed by the Department before
Hon'ble High Court prior to the issuance of
C.B.E.C Instruction File No. 390/Misc./163/2010-
JC dated 20.10.10 which was regarding fixing
monetary limits below which appeal shall not be
filed in the Tribunal, High Court and in the
Supreme Court, but the said appeal was
admitted after the said Circular was in force. In
the present case, amount involved was less than
prescribed in the said Circular and Department
has not brought to the notice of the Hon'ble High
at the time of admission of the appeal, appeal
filed by the Department has been dismissed.
[2013(298)E.L.T699(Guj.H.C.)]
v Area based exemption: Assessee has takeover
business and unit of Axles India Limited and
sought to continue to avail exemption under
Notification No. 50/2003-CE dated 10.06.2003.
Assessee has also filed declaration with
Jurisdictional Authorities before availing of the
5 4
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benefit of the exemption Notification. Further,
Circular No.960/3/2012-Cx dt. 17.02.12 has
clarified that when there is change in the
ownership of a Unit already availing of the benefit
of an area- based exemption, would not
jeopardise the admissibility of exemption for the
remaining part of the 10 years, subject to the
condition that, the new owner exercises his option
in writing to avail of the benefit of the exemption
Notification before effecting the first clearance,
Assessee is entitled to exemption. [2013(298)
E.L.T.710 (Uttarakhand H.C.)]
v Strictures against CESTAT Registry for
improper maintenance of appeal files: In the
CESTAT, New Delhi, it is experienced that
second folder of the Appeal set does not contain
copies of the Order sheets which was available
in first file. Further, it was also noticed that bundle
of papers were kept inside second folder instead
of in different folders for easy handling of files. It
was also experienced that names of certain
Advocates appears in Cause List whose
Vakalatnama is not available on record and name
of the Advocate does not appear in Cause List
in spite of Vakalatnama filed. Such working sends
bad messages to the Society that records of
Tribunal are not maintained properly and some
Advocates controls the Registry causing
determinant to the interest of Justice. Hence,
Registrar directed to submit report within a month
for passing appropriate order against erring
officials. [2014(299)E.L.T.205(Tri.Del.)]
v Admissibility of Cenvat credit on the
underground telephone cables used in the
factory for the purpose of providing
communication within the factory: Assessee
has availed the Cenvat credit on the Telephone
Cables which were used in factory for the
purpose of providing communication within the
factory premises between different locations.
Department has rejected the cenvat credit on the
ground that the capital goods should have nexus
to the final product. Since the Telephone cables
falls under Heading 85.44 of the Central Excise
Tariff Act, 1985 and not under the excluded item
as per definition of the 'Capital Goods', Assessee
was entitled for the Cenvat Credit. [2014(299)
E.L.T.176(Mad.HC.)
v Penalty not imposable when issue involve
legal dispute: Goods were manufactured on job
work basis. Supplier has supplied raw material
and paid Job work charges. Since valuation of
the goods to be done with reference to Central
Excise Act, 1944 and Central Excise Valuation
(Determination of Price of Excisable Goods)
Rules, 2000, value of raw materials plus value
of job work charges plus manufacturing profit and
manufacturing expenses to be considered.
Traders loss cannot result in reduction of
assessable value of the goods then their profit
also cannot form part of the assessable value.
Penalty is also not imposable as issue involved
of legal interpretation. [2014(299) E.L.T.249
(Tri.Chennai.)]
v Scope of Section 35F of the Central Excise
Act, 1944: Section 35F of the Central Excise Act,
1944 makes it mandatory to Hon'ble Tribunal to
impose necessary conditions to safeguard
interest of Revenue in case it is of view that Pre-
deposit would cause undue hardship to the
Assessee. In the said section, payment of duty
confirmed is a precondition prescribed for
entertaining the statutory appeal. Burden is on
the Assessee to show that payment of duty or
penalty would cause undue hardship to them.
Undue hardship cannot be decided without
consideration of Prima facie and without
safeguarding the interest of Revenue.
[2014(299) E.L.T.199(Mad.H.C.)]
v Recovery of Government Dues: Assessee's
appeal was pending before Hon'ble CESTAT due
to non-reconstitution of Bench and not lapse on
the part of the Assessee. In such situation,
Revenue ought to have refrained from issuing
any demand notice of recovery of dues till the
stay application was considered by Hon'ble
CESTAT. In view of the pendency of the large
number of the matters, Hon'ble High Court has
issued mandamus to Union of India to constitute
as many as Benches as required for Southern
States for speedy disposal of appeals.
[2014(299) E.L.T.197(Kar.H.C.)]
5 5
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v Cutting of carpet rolls into smaller sizes- not
amount to manufacture: In present matter issue
involved was, whether the process of cutting of
carpet matting in rolls and stitching the edges
and providing a lining to the cut sizes to facilitate
to use it as floor mats amounts to manufacture
or not. This activity does not alter the basic
characteristic of the raw material and end product
and the process do not bring into existence any
new and distinct product. Therefore the
impugned process does not amount to
manufacture. [2014(299)E.L.T.206(Tri-LB-
Chennai)]
v When the position of law is settled as a result
of decision of Larger Bench then there
cannot be allegation of suppression: Hon'ble
Tribunal's Larger Bench in the matter of
Mahindra & Mahindra [2005(190)E.L.T.301(Tri-
LB) has resolved the issue by holding that
structures or parts thereof mentioned in Chapter
Heading 73.08 of Central Excise Tariff in their
movable state will be subject to Excise duty
notwithstanding the fact that they are
permanently fixed in the structures. In the
Assessee's case issue involved was same then,
Department cannot made allegation of
suppression of fact on the part of the Assessee,
merely on the ground that Assessee had not
applied for a license and has not paid the duty.
Priam facie case made out for grant of complete
waiver of Pre-deposit of duty, matter remanded
to Hon'ble Tribunal for final disposal. [2014(299)
E.L.T.171(Bom.)]
v When the facts are established with adequate
evidence and Authorities are satisfied then,
Rules of procedure cannot be used to deny
the benefit of Rules: Assessee has received
back their goods sold to various purchasers due
to various reasons, such as goods were not as
per their specification or not as per their
requirements. After receipt of such goods back
in their unit, Assessee has used these goods in
its re-manufacturing process to enable to claim
the refund of duty paid by them on such returned
goods. Assessee has proved the fact that they
actually received the goods from their respective
purchasers and same were then actually used
in remixing in their manufacturing process.
Revenue was not able to dispute the factual
position hence, Assessee's refund claim cannot
be rejected. [2014(299)E.L.T.164 (Chhatisgarh
H.C.)]
CUSTOMSv Whether MMRDA is a Road Construction
Corporation body or not, to avail benefit of
Notification No. 21/2002-Cus: Assessee has
imported machines after taking benefit of
Notification No. 21/2002-Cus and claimed that,
they have complied with the condition No. 40 of
the said Notification, as goods imported under
Contract with MMRDA is Road Construction
Corporation body as per decision in the case of
Patel Eng. Ltd. (2013(295) E.L.T.243].
Department has denied the benefit of Not. No.
21/2002 on the ground that Assessee has not
complied with the condition No. 40 of the said
Notification, as MMRDA is not a Road
Construction Corporation as per decision in case
of Shreeji Construction. Due to divergent views
of the Hon'ble Tribunal on the same issue,
present matter has been referred to a President
for constitution of Larger Bench to decide
whether MMRDA is a Road Construction
Corporation or not. [2014(299)E.L.T.81(Tri.
Mumbai)]
v Demand cannot be made on the basis of
presumption and assumption: Evidences
produced by the Department to show
undervaluation and basis of enhancement of
transaction value of the goods was not proper.
Demand of differential duty has been made on
the basis of computer printouts, statement of
partner which was retracted later,
contemporaneous import and LME price.
Department has worked out demand without
considering the provisions of Customs Valuation
Rules for contemporary import and relied on the
evidences retrieved from computer printouts.
Further, Report prepared by the assessee of
comparative data of contemporaneous import of
aluminium scrap at various port in India not
considered by the Department. Hence, matter
remanded back to the Adjudicating Authority.
[2014(299) E.L.T.83(Tri.Mumbai)]
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v CESTAT being final fact-findings forum,
should consider documents- It is not
sufficient to merely indicate page numbers
of the documents in the appeal paper book:
There was delay on the part of the assessee for
conversion of duty free shipping bills into DEEC
shipping bills and assessee's justification that
delay was detected at later point of time was
rejected by the Adjudicating Authority on the
ground that contemporaneous documentary
evidences has been not produced by the
Assessee. Further Hon'ble CESTAT has allowed
conversion on the ground that contemporaneous
documents were in existence at time of goods
were exported without indicating how those
documents proved contemporaneous nature of
transaction. CESTAT being final forum for facts,
its order should contain factual finding supported
by reason. [2013(298)E.L.T.698(Mad.H.C.)]
v Drawback when goods for exports procured
from traders in open market: Drawback was
disallowed to the Petitioner on the ground that
Petitioner has procured the goods for export from
traders in open market and not from a
manufacturer - exporter or got the garments
manufactured under job work. Hon'ble Delhi High
Court in their earlier decision in the matter of
Kultar Export [2013(288)E.L.T.187(Del.)] has
held that Rule 3 of the Customs, Central Excise
Duties and Service Tax Drawback Rules, 1995
did not make any distinction between
manufacture/job work exporter on one hand and
traders or merchant- exporter on other. Further,
there was no any suppression of facts, fraud on
the part of the Petitioner. Hence, Department is
not entitled to recover the drawback amount
which was paid to the Petitioner. [2013(298)
E.L.T.649(Del.)]
v CESTAT cannot transfer appeal to another
Authority when appeal is not maintainable:
Appeal filed before Hon'ble Tribunal involving
issue of rejection of duty drawback claim, was
not maintainable before Tribunal as per Section
129A(1) of the Customs Act, 1962. Hon'ble
Tribunal has transferred the appeal to the Joint
Secretary, GOI for further action. Since, Tribunal
in terms of Clause (c) to the proviso to sub
section(1) of the Section 129A of the Customs
Act, 1962, has no jurisdiction to entertain the
appeal then the Tribunal could not have
exercised any of powers specified in sub-section
(1) of Section 129B of the Custom Act. Only option
was to reject such appeal as being not
maintainable or return the papers back to
assessee for presentation before appropriate
forum. [2014(299) E.L.T.180(Guj.H.C.)]
v Statement of co-accused recorded under
Section 108 of Customs Act, 1962 can be
used against co-accused: When there is
Statement of co-accused revealing all facts of
the case and admission on his part then such
statement can be used against co-accused in
that case. Further it was also held that, as per
Section 87 of the Code of Criminal Procedure,
1973 there should be some genuine ground to
issue a non-bailable warrant against the accused
in first instance, where normally a summon
should be issued and if the accused does not
respond to the Summon, in that event a warrant
may be issued which may be bailable or not.
[2014(299)E.L.T.151(All. H.C.)]
v Enhancement of transaction price of
imported goods from related persons:
Assessee has imported auto spare parts at
higher prices than original equipment parts for
manufacture of vehicles imported from related
group of companies. Thereafter loading of 10%
on transaction value declared by the Assessee
on auto spare parts was enhanced further 10%
by the Department. Issue before Hon'ble Tribunal
was that whether there can be two prices for
import of the same goods for manufacture or as
spare parts. In the matter of Volvo India Pvt. Ltd.
[2005(180)E.L.T.489(Tri.)] and in South India
Television [2007(214)E.L.T.3(S.C.)] held that just
because spare parts cost much more than
original equipments, one cannot enhance value
of original equipment for assessment purpose.
Transaction price cannot be enhanced unless
established by the Department that relationship
between importer and supplier influenced
transaction price or if said transaction value
higher than that of contemporaneous imports.
In the instant case, Department has not produced
5 7
Bizsol UPDATE February - 2014
any evidence on record to support that
transaction value influenced by import from
related person or any other evidence warranting
rejection of transaction value. Hence, Order set
aside. [2014(299)E.L.T.209(Tri. Mumbai)]
SERVICE TAX:v Applicability of Notification No.17/2009-S.T.
Dated 07.07.2009 for exports made prior to
issuance of the said Notification: Refund
claim filed for exports made prior to issuance of
Not. No. 17/2009-ST in the said Notification
instead of fill ing under old Notification.
Department has rejected the refund claims on
the ground that Refund claims should have been
filed under old Notification No. 41/2004-ST dated
06.10.2007. Board Circular No. 354/256/2009-
TRU dated 01.01.2010 clarified that New
Notification No. 17/2009-ST does not bar
applicability to exports prior to issuance and
therefore, refund claim filed within one year under
said Notification No.17/2009-S.T. Dated
07.07.2009 cannot be rejected. [2013(32)
S.T.R.668 (Tri.Del.)]
v Abatement of duty: Assessee's abatement
claim of duty filed under Rule 10 of the Chewing
Tobacco and Unmanufactured Tobacco Packing
Machines (Capacity Determination and Collection
of duty, Rules, 2010 was rejected by the
Department on the ground that, in the month of
December, 2011 the unit was closed for a period
less than 15 days hence, abatement cannot be
allowed. But Rule 10 ibid does not provide that
the period should be confined to any calender
month and period of 15 days may fall within a
month or more than one month provided that it
should be continuous. Since factory was closed
continuously for a period from 21.12.2011 to
20.02.2012 which is more than 15 days, hence
benefit of abatement granted by the appellate
authority was right. [20139298) E.L.T.484
(All.H.C.)]
v Notional interest earn on the security deposit
not includible in value of Renting Service:
Department has made demand of the service
tax on the security deposit received by the
Assessee while renting of their immovable
property. The security deposit has no nexus with
the area of the property and it cannot be said
that the notional interest has influenced the
consideration received for the Renting of
Immovable Property Service. Therefore, the ratio
of Hon'ble Supreme Court's decision in the matter
of CCE, Mumbai-III V. ISPL Industries Ltd.
2003(154)E.L.T.3(SC) is applicable wherein held
that notional interest on the advances taken by
the Assessee, from the buyers cannot be added
to the Assessable Value of the goods cleared.
Unconditional waiver from pre-deposit granted
to the Assessee. [2014(33)(S.T.R.)53
(Tri.Mumbai)
v Export of Service - Promotion and Marketing
of products of Foreign entities in India:
Assessee has provided Marketing and Sales
Support Services to the Tandus US and Tandus
China for their products to be sold in the India.
Inconsideration of the Services to be provided
by it, the assessee will receive service fees in
freely convertible foreign Exchange from them.
Assessee's location is within taxable territory and
service recipients are located in Abroad. The
service proposed to be provided does not figure
in the Negative List specified in Section 66D of
the Finance Act, 1994. Since, the case meets all
the requirements of Rule 6A of the Service Tax
Rules, 1994 the provision of Service by the
Assessee to the two recipients will amount to
export of service. [2014(33)S.T.R.33(A.A.R)]
v Co-oprative Society form to help cultivators
and providing common marketing platforms,
not treatable as clearing and forwarding
agency: Co-operatives Societies are formed for
improvement of tapioca cultivation and sago,
starch industry and economic condition of
cultivators. Consignment of sale brought directly
by Principal to the premises of the Society for
Auction and Society did not clear consignments
from their premises. Handling goods on receipt
raising invoices on sale or maintaining of records
as to stock availability showed Society only as
offering storage facility, which could not be
convert the transaction as that of Clearing and
Forwarding Agency. Essential predominant
character of activity of Society was one of
5 8
Bizsol UPDATE February - 2014
facilitating sale of products, apart from providing
storage facilities. [2014(33)S.T.R.16(Mad. HC)]
v Admissibility of Cenvat Credit in case of
amalgamation of companies: Assessee is the
brand name owner of 'Ghari Detergent Cake and
Powder' and they allowed M/s. Rohit Surfactants
Pvt. Ltd. to use their Brand name and further
service tax has been paid on the same franchise
service. Department after noting that the
appellant had filed an amalgamation scheme
before the Hon'ble High Court for amalgamation
of appellant and M/s. Rohit Surfactants Pvt. Ltd.
denied the Service Tax credit on the ground that
both the entities have become one. In this case,
Hon'ble CESTAT Delhi held that when service
tax has been paid, service receiver is entitled to
credit of service tax and High Court allowing
amalgamation will not effect assessee's
entitlement to credit of service tax. [2014(33)
S.T.R.30 (Tri.Del.)]
v Assessee cannot claim that they have
voluntarily paid Service Tax and then asked
for Refund: Show Cause Cum Demand Notice
was issued to the Assessee asking to produce
evidences in support of their defense and
whether they wanted to be heard in person and
liberty to submit their reply to SCN. Also, show
cause notice was not issued by the Authority who
had to decide and pass Order-In-Original. Hence,
Assessee's plea that show cause notice revealed
that Adjudicating Authority has already formed
opinion and decided the issue, is rejected by the
Hon'ble Delhi High Court. Further, Assessee
cannot claim that they had voluntarily paid
Service Tax and then ask for refund of the same
as it is self contradictory claim. [2014(33)
S.T.R.12(Del.)]
v Service tax collected but not deposited -
Criminal Court alone competent to try these
offence punishable under Section 89 of the
Finance Act, 1994: Assessee has collected
Service Tax from the client but not deposited with
Government. This offence has been defined and
penalty has been provided under Section 89 of
the Finance Act, 1994. But in absence of any
specific provision in the Finance Act, 1994 for
trial of the offence or authority to try the offence
under Section 89, only Criminal Courts are
competent to try the offences punishable under
Section 89 in accordance with the Code of
Criminal Procedure, 1973 and not by the
Commissioner or Officers of the Central Excise
Department. Further it is also held that
Opportunity to be given to the accused when he
offers to meet his tax liability [2014(33)STR 7
(Chattisgarh)]
v Freezing of Bank Accounts when not
sustainable: After issuing Show Cause Notice,
without deciding the matter finally and without
calling for any hearing, Department has issued
Order invoking power under Section 87 of the
Finance Act, 1994 and frizzed all the Bank
accounts of the Assessee. Under Section 87 of
the F.A. 1994 any amount payable means that
amount adjudged after hearing the show cause
notice and Section 87 of F.A. 1994 is one of the
methods of recovery of amount due and payable
after adjudication is done. Hence, order of
freezing the bank accounts is not sustainable in
eye of the law having been passed without any
jurisdiction. [2014(33) S.T.R.23 (Uttarakhand)]
v Value of taxable service is gross amount
charged by Service Provider: Assessee is
engaged by I.B.P. Company and IOC as
contractors, for running outlets for retail sale of
petroleum products and to render other services
at the said premises. Assessee's contention is
that expenses incurred by them on behalf of
I.B.P./IOC like Tea, Coffee, consumable salary
of employees, handling losses generator set
expenditure, Bank Charges, Electricity charges
are reimbursed by the I.B.P. Company and IOC
and therefore, not liable to Service Tax. Value of
taxable service is gross amount charged by
Service Provider and it does not provide for any
deduction therefrom. Hence, Assessee's plea
that no service tax was payable on reimbursable
expenses borne by them, is rejected.
[2014(33)S.T.R.60 (Tri.Del.)]
v Construction of residential complex service:
Assessee has engaged by NGO for doing
construction of residential unit Fisherman.
Assessee's contention was that houses
constructed were for personal use of fisherman
5 9
Bizsol UPDATE February - 2014
and hence will not fall within the definition of
'residential complex'. Hon'ble CESTAT has
considered that if the property in the residential
unit is transferred to another person then
residential unit may not be considered to be for
a personal use even if such transfer is done
without any consideration. This activity of
construction of residential complex was covered
by Section 65(105)(zzzh) of the Finance Act,
1994 and taxable w.e.f. 16.06.2005, Assesse has
directed to pre-deposit of Rs. 10 lakhs.
[2014(33)S.T.R.36(Tri.Chennai)]
v Edit and Data fee service: Assessee has
provided edit and data fee services and
marketing and other support services to their
sister concern situated in U.K. In this case it is
undisputed fact that assessee has received the
consideration in convertible foreign exchange and
rendered the services from India, therefore
services would merit classification as 'export of
services and hence service tax liability will not
attract. [2014(33)S.T.R.83(Tri.Mumbai)]
v When no suppression on part of the
Assessee, penalty not imposable: Assessee
has made short payment of service tax on
'Cleaning Service and 'Manpower Recruitment
and Supply Agency Service. After disclosure of
difference between gross taxable value shown
in ST-3 Returns vis-à-vis Bank statement,
Assessee has deposited service tax with interest.
The fact that the receipt has been disclosed in
the invoices and the amounts were also shown
in the invoices as well as in Bank Statements,
itself indicates that assessee has been bonafide.
Hence Penalty under Section 78 of the Finance
Act, 1994 has been set aside. [2014(33) S.T.R.94
(Tri.Kolkata)]
v Sport Stadium is non commercial
construction and not liable to service tax:
Assessee has constructed a Sports Stadium
Complex for Government of Maharashtra, which
is now known as 'Shiv Chhatrapati Sports
Complex'. In this case issue involved was that
whether the said complex constructed for the
purpose of holding games can be considered as
commercial or industrial construction merely on
the ground that the stadium is allowed to be used
by the public and others on payment of user
charges. The Sport Stadium is public facility for
the recreation of the public and does not come
under the category of commercial and industrial
construction and hence not liable to service tax.
[2014(33)S.T.R.77(Tri.Mumbai)]
INCOME TAXv When the Books of accounts are not rejected by
the Assessing Officers and accepted the sales,
no addition can be made u/s 68 or 69 of the
Income Tax Act, 1961 merely on the basis that
the notices sent to debtors were returned
unserved without appreciating that the assessee
specifically requested to issue summons after
giving correct addresses of debtors. [INCOME
TAX OFFICER WARD-1(1), MUZAFFAR
NAGAR Vs MANISH KUMAR PROP M/s
MANISH KUMAR & COMPANY]
v In case, an assessee has not produced books
of accounts neither before the Assessing Officers
nor before the Commissioner of Income Tax, its
gross profit can be calculated on estimation
basis. After such estimation any further addition
cannot be made on account of shortage of any
unexplained liability. [INCOME TAX OFFICER
WARD-1, HALDIABASUDEVPUR Vs PRAVATI
DEY VILL & P O BOYAL]
v If Assessee has no further or additional
evidences to produce before the Commissioner
of Income Tax (Appeals), then remand of the
case to the same authority is a futile exercise. In
such scenario, Tribunal can decide the issue on
the basis of existing evidences only. Case
remanded to the Hon'ble Tribunal to decide the
issue on the basis of existing material.
[GUJARAT STATE FERTILISERS AND
CHEMICALS LTD Vs DEPUTY COMMISSIONER
OF INCOME TAX]
v Deduction u/s 10B is to be calculated without
setting off of carried forward business loss
and unabsorbed depreciation: Deduction u/s
10B is to be calculated without setting off of
carried forward business loss and unabsorbed
depreciation. The assessee is entitled to
deduction u/s 10B, provided the other conditions
6 0
Bizsol UPDATE February - 2014
mentioned under the section are satisfied. [M/s
MINDTREE LTD Vs ASSTT COMMISSIONER
OF INCOME TAX (LTU) BANGALORE]
EXPORT ORIENTED UNITv Duty liability on the Cotton waste arises
during manufacture of Cotton Yarn: Assessee
is 100% EOU and has cleared cotton waste
without payment of duty under exemption
Notification No. 6/97-CE dated 01.03.97 and 23/
2003-CE dated 31.03.03. Department was of the
view that, Assessee was required to pay customs/
excise duty in respect of imported/indigenous
procured raw material. As per Notification No.
52/2003-Cus and 23/2003-C.E to avail the
benefit of these Notifications, rejects, waste etc.
arising out of processing should be cleared to
the DTA on payment of applicable duty of excise.
Since, both Notification No. 6/97-CE dated
01.03.97 and 23/2003-CE dated 31.03.03
exempts cotton waste when manufactured by
EOU and allowed to be sold in India. Thus
assessee has made prima facie case for
complete waiver of pre-deposit. [2013(298)
E.L.T.721(Tri-Mumbai)
CST / M VATv Classification of goods under VAT- It is
immaterial how product is advertised/
marketed under what name and title: Usability
of product is not sole factor to decide
classification of product. Most important and
paraamount test of fixing classification is whether
impugned product is distinct marketable
commodity. Commodity should be
distinguishable from its mother product in its
character, ingredients, nature, form, look, use,
pack etc. and as recognized as independent
separate commodity in market. Marketable
connotes that product is salable in market and
establish its own identity as commodity in eyes
of consumer. Usability of a product cannot be a
sole factor to decide its classification. [2014(299)
E.L.T.38(Bom. H.C.)]
6 1
Bizsol UPDATE February - 2014
v CESTAT, Mumbai declares near bankruptcy and stops sending hearing notices, Orders and
communications to the Parties/Advocates as Postal Department stopped services to CESTAT, Mumbai
for default of payment. Electricity and Telephone Department also likely to strike soon.
v Custom Department has issued 'Traveller's Guide' for Travellers explaining Baggage Rules
v Cenvat credit not to be reversed if raw material sent to Job Worker
v Finance Ministry has clarified that Supreme Court judgment in the Fiat Case would not be blindly applied
to all cases
v Capital goods removed after use for more than 2 years not treatable as clearance "as such"
v Government okays 18,000 additional posts in Indirect Tax Wing
v International Customs Day: 16 Customs officials to receive WCO Certificate of Merit
v IMF projects only 4.6% growth in current fiscal
v Growing smuggling into India: Pakistan bans gold imports for second time in six months
v Global unemployment rose by 5 mn in 2013; likely to grow to 13 mn by 2018
v India, Korea sign MoU for Digital Signature to facilitate trade
v NO TDS on Service Tax - CBDT Clarifies
v Deconstructing Confusion on Works Contract Tax
v Central Excise mop-up down by 4.5% in 9 months; Total stands at Rs 3.55 lakh crore
v Seven IRS officers posted as Under Secretary with CBEC
v India, UK sign MoU for skill development and employment services
v India has 13.6 lakh companies registered with RoC but 1.4 lakh have filed no returns for last three years;
about 3 lakh closed down
v CBI to create specialised cell to probe sports frauds
v Income tax withdraws exemption granted to four Cricket Associations - Baroda + Maharashtra + Saurashtra
+ Kerala - on charges of commercial activities
v Foreign Tourist Arrivals: December logs negative growth in Dollar terms
v Growing gold smuggling worries North Block; Govt may consider reducing import tariff to cut premium on
smuggling
v CBI books NTPC officials & others for supply of poor quality imported coal
v National Archives: India joins hands with Turkey and Oman
v Govt finalises criteria for giving Arjuna Award to Sports Persons
v FM hints at increasing number of subsidised LPG cylinders
v PARAM Supercomputer rated as one of most power efficient systems in world
v Govt extends deadline for subscription of Inflation Indexed National Savings Securities till March 31,
2014
v AP High Court grants Stays on Audit by CAG of private Company
6 2
Bizsol UPDATE February - 2014
v Charges framed against former Punjab and Haryana High Court Judge Mirmal Yadav in Cash-at Judge's
door scam.
v ST- Arrest - Applicant accused of collecting and not paying ST of Rs 2.17 Cr - Conditional bail granted on
undertaking that entire amount will be paid in three months
v Chennai Service Tax arrests hotelier for tax evasion of Rs 1.4 Cr
v Kolkata Service Tax Commissionerate arrests Mining Services entrepreneur for alleged tax evasion of
Rs 13 Cr; Assessee had opted for VCES but did not pay tax
v Bangalore Service Tax Commissionerate arrests MD of M/s Entask Consultancy for alleged tax evasion
of Rs 1.16 crore; Same firm was also booked in past for alleged duty evasion of Rs 1.44 Cr
v Neemuch CBN seized over 2 kg heroin; nabs Chennai-based smuggler having Lankan links
v Trichy Airport Customs seizes gold worth Rs 60 lakhs from pax coming from Kuala Lumpur
v Lucknow Airport Customs seizes 6 gold biscuits from pax coming from Oman & gold worth Rs 23 lakh,
concealed as metallic part of suitcase
v Delhi Service Tax arrests CFO of helicopter chartering company for tax evasion of above Rs one crore
and fraudulent availment of Cenvat Credit of Rs 30 lakh
v The Week after VCES - 50% not paid - Assessee arrested
v IGI Airport Customs seizes US Dollar worth Rs 1.23 Crore from pax heading for Dubai; 18 bundles of
1000 Dollar denomination found concealed in books
v Ahmedabad DRI detects Rs 200 Cr duty evasion racket involving zero duty EPCG Scheme
v CBDT issues transfer order of NINE CITs; R K Choubey goes as ADG, NADT
v Kolkata Airport Customs seizes 53 kg Red Sanders + gold bars worth Rs 11 from two different pax
v Income tax - Whether claim of assessee based on seized material can be ignored merely because
confirmations collected during assessment proceedings are faulty
v CBI arrests Email alleged hacker for hacking over 900 email accounts
v MD of Vigneshwara Developers arrested by service tax for not paying 50 per cent of tax dues of Rs 6.5
Crore declared under VCES
v CIT Sanjay Srivastava sentenced to jail for contempt by Delhi HC
v Rajen Dhruv, Partner of Orbit Enterprises & Director of Midcity Infrastructures arrested by service tax in
Mumbai for evading service tax of Rs. 3 Crore
v Director of Oxygen Infrastructure & Developers arrested by Service Tax in Noida for evading service tax
of Rs 1.5 Crore
6 3
Bizsol UPDATE February - 2014
Programmer to Team Leader
"We can't do this proposed project. **CAN NOT**. It will involve a
major design change and no one in our team knows the design
of this legacy system.
And above that, nobody in our company knows the language in
which this application has been written. So even if somebody
wants to work on it, they can't. If you ask my personal opinion, the
company should never take these type of projects."
Team Leader to Project Manager :
"This project will involve a design change. Currently, we don't have any staff that has
experience in this type of work.
Also, the language is unfamiliar to us, so we will have to arrange for some training if we take
this project. In my personal opinion, we are not ready to take on a project of this nature."
Project Manager to 1st Level Manager :
"This project involves a design change in the system and we don't have much experience in
that area. Also, not many people in our company are appropriately trained for it.
In my personal opinion, we might be able to do the project but we would need more time
than usual to complete it."
1st Level Manager to Senior Level Manager :
"This project involves design re-engineering. We have some people who have worked in
this area and others who know the implementation language. So they can train other people.
In my personal opinion we should take this project, but with caution."
Senior Level Manager to CEO :
"This project will demonstrate to the industry our capabilities in remodeling the design of a
complete legacy system. We have all the necessary skills and people to execute this project
successfully. Some people have already given in house training in this area to other staff
members.
In my personal opinion, we should not let this project slip by us under any circumstances."
CEO to Client :
"This is the type of project in which our company specializes. We have executed many
projects of the same nature for many large clients. Trust me when I say that we are the
most competent firm in the industry for doing this kind of work.
It is my personal opinion that we can execute this project successfully and well within the
given time frame.
6 4
Bizsol UPDATE February - 2014
Bizsolindia provides consultancy in the following areas through
associate companies and professional firms of the Directors
Bizsolindia Services Private Limited Consultancy & Audit in the area of
• Strategic Management Consultancy
• Direct Taxation including Domestic and International Transfer Pricing
• Indirect Taxation(Customs, Central Excise, Service Tax, VAT/ CST, LBT)
• FEMA
• Foreign Trade Policy (Export Promotional Schemes, EPCG, Advance
Authorization, DFIA, Duty Drawback, Brand Rate Fixation)
• EOU / EHTP / STP /BTP
• SEZ
• Project Consultancy (Industrial Parks, Clusters , Agro Economic Zone, Food
Park, etc)
• New Business Set up in India
• Valuation including Business Valuation
• Internal Audit
• Corporate Law & Procedures
Bizsolindia Outsourcing Pvt. Ltd. Knowledge Process Outsourcing in the area of
• Indirect Taxation
• Accounts
• Inventory management
• Fixed Assets Management
• Implementation of Company Law Matters
Bizsolindia IT Services Private Limited Specialized IT consulting and Solutions / modules along with ERP Integration
and following areas
• Specialized Software for EOUs and SEZs
• Expert in Application programming using Java and ERP Connectivity
• Data Migration
• Offers bucket of Add On Products for EXIM related solutions for the
• Complete industry needs
• ERP Consulting / Implementation
Bizsolindia Forex Services Pvt. Ltd. Forex Services dealing with :
• Treasury Audit
• Information Services
• Advisory Services
• Policy Consulting
• Treasury Outsourcing
• Interest Rates Advisory
• Treasury Operations Training
• Banking Advisory Services
• International Syndication
Bizsolindia HR Services Private Limited Strategic Consultancy in the area of HR & Soft skills Training
Bhagwati Shipping Private Limited Custom House Agent (11/578), Custom Clearance of Export and Import
consignments
A.B. Nawal & Associates, Cost Accountants Practicing Cost Accountant, Cost Audit, Central Excise, Adjudication matters
up to CESTAT, VAT Audit.
Behede Joshi & Associates, Practicing Chartered Accountants, Statutory Audit & Tax Audit, VAT Audit,
Chartered Accountant Transfer Pricing.
R. Venkitachalam, Company Secretary Practicing Company Secretary.
Nawal & Sonaje Associates, Cost Accountants Practicing Cost accountants, Cost Audit
Bizsol Projects & Infrastructure Solutions LLP Infrastructure Consultancy, Project Management Services in respect of Real
Estate solution for Industrial, Residential, Trade & Commerce & Consultancy
related to Finance & Investments
O U R S E R V I C E S