The Problems
EXPORT and BRC: For Rebate claims for Exports, department is insisting on production of Bank Realisation Certificate (BRC) whereas the Rules do not require for the same as it is clear from Supplementary Instructions. BRC is relevant for RBI and has no relevance for Excise purposes. In fact, Drawback Rules make such a condition but not Excise Rules. This is causing lots of inconvenience and delay in getting refunds besides other reasons.
Normally the Department does not insist on production of Bank Realisation Certificate ( BRC ). It is done only in certain rare cases when there are doubts.
Input Services:
Audit Team are insisting on reversal of credit taken on "input services" which are not connected with manufacturing activity. The law is settled on this issue that as long as services are used for Business purposes, credit should be allowed.
In Service Tax, there are many issues which are yet to settle down. Apart from the appellate remedies, the assessees can approach senior officers of the Department for sorting out difficulties.
Summons: Despite CBEC Circular 137/39/2007- Cx - 4 dt.26.2.2007 that no summons is to be issued for service tax matters, department is regularly issuing summons which is causing problems for the industry.
It is only as a last resort that summons are issued.
++ Some companies are manufacturing 'X' item which is cleared on payment of duty on the basis of Transaction Value (Price agreed between seller and buyer). However, customer asks the company to supply certain other items also. The company buys these items from open market and sends directly to the factory/ godown of customer. With the delivery of his own item and bought out item, the seller's responsibility is completed. What the buyer does with these goods is not the concern of the manufacturer. The audit is invariably asking "value" of these bought out items to be included in the value of manufactured item cleared from the factory. The excise duty, as we understand, is on the act of manufacture. Secondly, the duty has to be paid at the time of clearance at the rate the prevailing at that time. Thirdly, bought out items dispatched directly are already duty paid. Further, sometimes, the manufacturer may go to the site of the customer and many also undertake installation, or fix bought out items, on the "manufactured item" on the request of the customer. The manufacturer in such cases enters into three different contracts i.e
++ sale of his own goods (Excise duty is paid);
++ sale of bought out items (Sales Tax is paid) and
++ installation (service tax is paid).
Kindly note that in such cases no new product is emerging at site. Further, bought out items are duty paid and not brought into the factory of the manufacturer and no credit is availed. Thirdly, the service tax is paid on installation/commissioning of the item. Kindly clarify whether on bought out items, duty should be paid again?
The question of manufacture has to be studied in each case.
Coercive Action when appeal is pending:
Department is insisting that duty should be paid immediately after an order is passed against a company. The department is sending letter stating that if dues are not paid, coercive action will be taken. When an assessee is filing an appeal With Tribunal, along With stay petition, Tribunal may take few months to decide the stay. But department is insisting on payment of dues, while appeals are pending. If assessee pays the due pending disposal of stay by Tribunal the very right of appeal after dispensation of pre deposit provided under the law becomes infructuous . Suppose Tribunal grants stay (after pre deposit). Will the department grant refund?
In the case of a first appeal, no coercive action will be taken during the period when there is time to appeal.
Company A has a factory in Balanagar . He is shifting his factory to Uppal which is in another Commissionerate. Following issues may be clarified:-
++ Should he take a new Registration?
++ Should he take prior permission to shift?
++ Should he take permission to shift capital goods, inputs?
++ Should he take permission or give intimation to Asst. Commissioner?
++ Sometimes, a unit is closed permanently. He will have some unutilized CENVAT Credit? Can he claim refund? A proper procedure is to be put in for such cases.
(a) to (d): He has to take a new registration and there is a procedure in place for this.
(e) : When the unit is closed, along with the credit, he should also be having some goods and the credit can be used to clear those goods. But what happens when there are no goods but credit balance? In that case refund will be given.
Personal Hearing – Adjudicating Authority not available:
Many a time when assesses are going for attending personal hearings, they are told that personal hearing is postponed, as officer is not available. The, industry has no complaints on this issue. It is suggested that there should be a system in place to inform the assessee (wherever possible) before hand, so that inconvenience caused is avoided. Further, it is suggested that in all personal hearings intimations telephone no/cell nos of some officer is given so that assessee can check before coming whether the concerned officer is available or not. Sometime consultants are coming from outside Hyderabad, hence, please look into this issue.
Whenever PH is postponed by the officer, the assessee will be informed in advance. It is certainly not correct to call an assessee for personal hearing and then postpone it without informing him.
Duty on Samples: As per Excise Rules, no duty, is required to be paid on 'samples' if they are kept within the factory premises, for attending to any complaints etc. Such samples are required tobe kept as per Pesticides Act or under other statutes like Drugs Act etc. After one or two years, these samples lose their validity and they become scrap/waste. These are thrown or destroyed. Private records are maintained for these samples. These samples are taken from the manufacturing area in loose condition and taken to the lab. Since these samples are not packed in the normal packing, no entry is made in RGl Register. The department is demanding "duty" on samples on the ground that assessee can not destroy these samples. The department has issued show cause notices. Please clarify the correct legal position.
The correct legal position is that duty is payable on manufacture unless exempted.