TIOL-DDT 126 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#6633CC" size="3">TIOL-DDT 126</font><br> 01 06 2005<br> Wednesday</b></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Duty paid goods returned to the factory; What is the document for taking credit?</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 16 of the Central Excise Rules, when duty paid goods are returned to the factory, the manufacturer is entitled to take Cenvat credit of the duty paid as if such goods are inputs under the Cenvat Credit Rules. Now what is the document under which these goods are to be returned and credit to be taken? This interesting question reached the Chennai Bench of the Tribunal recently. The goods were returned by the buyer under the cover of a letter and the assessee took credit on the basis of the triplicate copy of the invoice already available with him. The department took strong objection on the ground that the triplicate copy originally retained with the manufacturer is not a valid document for taking credit as this invoice does not show the manufacturer as the consignee. Production of a valid document is a mandatory requirement for taking credit. The Tribunal observed that the intricate requirements under the erstwhile Central Excise Rules are absent in the simplified Cenvat Credit Rules. It further observed that any of the regular copies of a manufacturer’s invoice is a document for Cenvat Credit. Therefore the triplicate copy available with the manufacturer is an appropriate document and could be used for availing of Cenvat Credit. Though this is not a final decision but a stay order, the Tribunal appears to be convinced that any copy of the invoice is a perfectly good document for taking credit. <br> <br> See </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2005/2005-TIOL-448-CESTAT-MAD.htm">2005-TIOL-448-CESTAT-MAD</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> <br> <font color="#006633"><b>But the larger question still remains</b></font><br> <br> The Cenvat credit rules do not prescribe that credit should be taken only on the duplicate copy of the invoice. So there can be no dispute as to which copy should be used for taking credit. But when it comes to Rule 16, the situation is slightly different. The goods returned can be the original goods manufactured in the same factory or they could also be goods manufactured by others. There is no requirement under Rule 16 that only the goods manufactured by that factory should be brought back. That is goods manufactured by <b>A </b>originally cleared to<b> B</b> can be brought to <b>C</b> and <b>C</b> is eligible to take credit under Rule 16. Now what is the document that <b>B</b> can give to <b>C</b>? A’s invoice? But that will not show <b>C</b> as a consignee. <br> <br> There no time limit before which duty paid goods can be brought to a factory. So technically goods cleared in 1986 can also be brought back and credit taken. But, on what document is the question. If the person who is sending back the duty paid goods is a manufacturer availing credit, there should be no problem as he can send these goods on his invoice which should be a good document for taking credit by the original manufacturer. But if this person is not a manufacturer, the problem comes. Why not return the original or duplicate copy of the invoice, you may ask. Easier said than done! <br> <br> Take the case of a transformer manufacturer, who sells and cleared 100 transformers in an invoice to a state Electricity Board. Now this Electricity Board installs these transformers in 100 different locations. Power doesn’t flow through Central Excise Rules and some of these transformers are damaged. Now the Electricity Board sends 20 of these transformers to five manufacturers including the original manufacturer. Now how will these five manufacturers repairing the transformers take credit? Even if the original duplicate copy of the invoice is available, it can be sent to only one manufacturer. The department will invariably deny credit to four manufacturers and probably to the original manufacturer also. Under the old Rule 173H there was a provision for the Assistant Commissioner to allow bringing in of these duty paid goods without original duty paying documents. Simplification has seen many procedural requirements guillotined. The Rules have gone from the statutes but not the minds of the officers. Rule 16(3) provides for the Commissioner to issue instructions in case of any difficulty in following the procedure. In the guise of removing difficulties many Commissioners had actually prescribed difficulties. <br> <br> The fact remains that it is not possible to have a proper duty paying document showing the manufacturer as consignee in case of duty paid goods brought to the factory under Rule 16. Further the rule does not mention anything about duty paying documents; it only says that credit can be taken as if such goods are received as inputs and it no where mentions that the procedure under the Cenvat Credit Rules has to be followed for taking credit. The requirement of following the procedure is only in respect of utilization of the credit, not for taking that credit. This must have been a consciously framed rule as it is not practically feasible to always produce a duty paying document in case of returned goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006633">CBDT notifies Banking Cash Transaction Tax Rules, 2005</font></b><br> <br> CBDT has notified the Banking Cash Transaction Tax Rules which come into force from today.<br> <br> Every scheduled bank has to pay the amount of such tax to the credit of the Central Government by remitting it into any branch of the RBI or of the SBI or of any authorised bank accompanied by a banking cash transaction tax challan. Every branch of a scheduled bank shall keep and maintain in Form No. 1 the particulars of taxable banking transactions entered into in that branch. Further, every branch of a scheduled bank which is maintaining its daily account on a computer media, is required to keep and maintain the particulars as referred to in sub-rule (1), on a computer media.<br> <br> Every scheduled bank is required to furnish a statement of taxable banking transactions in respect of which it is required to collect tax during a month, in Form No 2 to the income tax authority specified in this behalf by the Board on or before the expiry of the month immediately<br> following the said month on a computer media, in accordance with the following,-<br> <br> (a) the computer media conforms to the following specifications:-<br> <br> i) CD ROM of 650 MB capacity or higher capacity; or<br> <br> ii) 4mm 2GB/ 4GB (90M/ 120M) DAT Cartridge; or<br> <br> iii) Digital Video Disc;<br> <br> (b) if the data relating to the schedules is copied using data compression or backup software utility, the corresponding software utility or procedure for its decompression or restoration shall also be furnished;<br> <br> (c) the statement shall be accompanied by a certificate regarding clean and virus free data. Return of taxable banking cash transactions is also required to be furnished on or before the 31st July immediately following that financial year under sub-section (1) of section 98 of the Act in Form No 3 and be verified in the manner indicated therein.<br> <br> The return is required to be signed and verified in the case of a scheduled bank, being a company, by the managing director or a director thereof; and in the case of a scheduled bank, not being a company, by the principal officer thereof. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/pdfnoti/pdfcbdt/pdf2005/it05not156.pdf"><b>See Banking Cash Transaction Tax Rules, 2005</b></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006633">Foreign Trade Policy amended – Easing of documentation requirements is back</font></b><br> <br> Pending the finalization of Single Common Document (SCD) for international trade, the Government Departments dealing with exports and imports will honour the permission/license/certificate issued by the other Government departments based on the verification of the export documents Like shipping bill, bank realization certificate, Packing list, bill of lading etc .and will not insist upon fresh submission of these documents.<br> <br> However, this para was omitted in the FTP 2005-06. Now the same has been brought back again vide DGFT Notification 04(RE-2005)/ 2004-2009<br> <br> Also Para 4.1.4 has been amended to the effect that the exclusion of exemption from payment of anti dumping and safeguard duties has been made for deemed exports under para 8.2 (i) and (j) against the earlier exclusion for supplies under 8(h) and (j)<br> <br> <b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2005/dgft05not004.htm">(See full text of Notification in <font size="-1" face="Verdana, Arial, Helvetica, sans-serif">4 (RE-2005)/2004-2009, Dated: May 30, 2005)</font></a></b><br> <br> <font color="#006633"><b>EPCG Scheme – Hand Book of procedures amended</b></font><br> <br> Para 5.3.2 of Hand Book of Procedures has been amended as :<br> <br> “The licence holder shall produce to the concerned licensing authority a certificate from the jurisdictional Central Excise authority confirming installation of Capital goods at the factory/premises of the licence holder or his supporting manufacturer(s) vendor(s) within six months from the date of completion of imports.<br> <br> However, licence holders who are not registered with Central Excise Authorities and service providers can give a certificate either from the jurisdictional excise authority or an independent Chartered Engineer confirming installation of movable and immovable capital goods at the premises of the licence holder/supporting manufacturer.”<br> <br> Prior to this amendment, the licence holders who are not registered with the Central Excise Authorities did not have the option of certification by the Chartered Engineer and they were required to get a Certificate only from the Central Excise Authorities.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2005/dgft05pn014.htm"><b>See full text of Notification in <font size="-1" face="Verdana, Arial, Helvetica, sans-serif">1</font></b><font size="-1" face="Verdana, Arial, Helvetica, sans-serif"><strong>4 (RE-2005) /2004-2009, Dated: May 30, 2005</strong></font></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6666">Until Tomorrow with more DDT<br> <br> Have a Nice Day<br> <br> Mail your comments to</font></b> <b>vijaywrite@taxindiaonline.com</b> </font></p> </body> </html>