TIOL-DDT 1826 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"
"http://www.w3.org/TR/html4/loose.dtd">
<html>
<head>
<title>Untitled Document</title>
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1">
</head>
<body>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14276"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt_1794.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font><font color="#663399" size="3">TIOL-DDT 1826 </font><br>
29.03.2012 <br>
Thursday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Board responds - No CENVAT Credit on 1% duty paid on Coal and Fertilisers </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> our Budget Analysis, we carried an article <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14611"><strong>Is CENVAT Credit admissible on 1% duty paid on coal now?</strong> </a>by a departmental officer. It was pointed out in the article that an amendment to CENVAT Credit Rules, 2004 is required to deny the unintended benefit of CENVAT Credit of 1% duty paid on goods like coal, which are now covered under Notification No 12/2012 CE. The CENVAT Credit Rules 2004 prohibit taking credit on goods exempted under Notification No 1/2011 CE. Now that some items like coal and fertilizers have been moved to Notification No 12/2012 CE, inadvertently, CENVAT Credit became admissible on these items. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has done a quick fire fighting and amended the CENVAT Credit Rules now. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the latest amendment, Coal and Fertilisers covered under Sl No 67 and 128 of Notification No 12/2012 respectively are also to be treated as exempted goods as per the amendment to Rule 2(d). Further CENVAT Credit shall not be admissible on these goods to the buyers in view of the latest amendment to Rule 3 (1)(i). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Had these changes been not brought in quickly, a huge amount of unintended CENVAT Credit would have been “legally admissible". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another important amendment has been made to exclusion provided under (BA) in Rule 2(l) of the CENVAT Credit Rules. The effect of this amendment is: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior to the amendment in the Budget, credit on services of General Insurance and Repair in respect of Motor Vehicles was admissible only in cases where the Motor Vehicles are admissible for CENVAT Credit as capital goods for assessees. During this year's Budget, an amendment has been made to this restriction with the objective of expanding the CENVAT Credit on the above two services to the manufactures of Motor Vehicles and Output service providers engaged in insurance / re-insurance of Motor Vehicles. But in the process, they have removed the assessees who are using Motor Vehicles as Capital goods from the eligibility. Now with the latest amendment, the same is restored by suitable amendment to the exclusion (BA) under Rule 2(l) of the CENVAT Credit Rules, 2004. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/exnt12_21.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 21/2012 – CX., (N.T.), Dated: March 27, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">And a new mistake in correcting a mistake - <font color="#663399">AND </font>in Rule 2(d) removed (inadvertently?)</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AT</strong> present, clause (d) of Rule 2 reads as follows: </font></p>
<p align="justify"><em><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty <font color="#663399">and </font>goods in respect of which the benefit of an exemption under notification No. 1/2011-CE, dated the 1st March, 2011 is availed; </font></strong></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the latest amendment, clause (d) ibid will be as follows: </font></p>
<p align="justify"><em><strong><font color="#0000FF" size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of <font color="#FF0000">duty goods</font> in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st March, 2011 or under entries at serial numbers 67 and 128 of Notification No. 12/2012-CE, dated the 17th March, 2012 is availed; </font></strong></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Prior to the amendment, “and” was separating the Nil rate of duty goods and goods covered under Notification No 1/2011 CE. After the latest amendment, “and” has disappeared, making the amendment meaningless. After the latest amendment, “exempted goods” includes Nil rated goods under Notification No 1/2011 CE and 12/2012 CE which are not really nil rate goods. This means, goods attracting 2% and 1% rate of duty are not exempted goods under Rule 2(d). </font></strong></font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can understand a mistake – but if you make another mistake while trying to correct the original one – that is the height! To err is human, but to really mess up, you need the Board! </font></strong></font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another corrigendum on the way? </font></strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Payment of arrears from CENVAT Credit earned at a later date - Board Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<strong><font color="#FF6633">CAN the arrears of duty be paid by utilizing the CENVAT credit, which has accrued subsequent to the period to which the arrears pertained?</font></strong>" This is the question from the field to the Board. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the First proviso to rule 3(4) of the CENVAT Credit Rules, 2004, "<em>while paying duty of excise or service tax, as the case may be, the CENVAT credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be." </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Doubts have been raised whether these restrictions will be applicable to duty payable in terms of Section 11A or duty paid after due date in terms of rule 8 of the Central Excise Rules, 2002. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board explains:</font></strong></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A harmonious reading of rule 8 of Central Excise Rules 2002 and first proviso to rule 3 (4) of the CENVAT Credit Rules, 2004 indicates that the restriction with regard to the utilization of CENVAT credit is relating to the normal payment of duty in terms of rule 8 of the Central Excise Rules, 2002, where duty for a particular month or quarter is to be discharged by the 5th of the next month. For this proviso, the CENVAT credit allowed to be used is what was in balance on the last date of that month or quarter and not what accrued thereafter. Even in case of duty paid late in terms of rule 8, the credit available for utilization will remain same i.e. the credit in balance on the last date of month or quarter, as the case may be. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further duty payable under rule 8 is on a different footing from duty payable under Section 11A. Duty under Rule 8 is paid after self determination by the assessee unlike Duty payable under Section 11A where generally the duty is determined by the Central Excise officer and the payment is mandated after such determination. There is no time limit prescribed under Section 11A i.e., monthly or quarterly unlike the date prescribed under Rule 8 (i.e., 5th of the next month). </font></em></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And Clarifies:</font></strong></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, the restriction on the utilization of the CENVAT credit accruing subsequent to the last date of the month or quarter in which the arrears arise, is not applicable to the demands confirmed under Section 11A of the Central Excise Act, 1944 . </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT had in the <em>Arjay Apparel Industries case -</em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2008/2008-TIOL-1446-CESTAT-MAD.htm" target="_blank"><font size="1">2008-TIOL-1446-CESTAT-MAD</font></a></strong> had held that <em>there is no prohibition in the assessee paying the short paid/unpaid/defaulted amount using the CENVAT credit</em>. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2012/excircular962.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 962/05/2012-CX, Dated: March 28, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exchange rates for the month of April 2012 notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Government has notified exchange rates for conversion of foreign currency into Indian Rupees for the purpose of import and export of goods, for the month of April 2012. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2012/cnt12_026.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 26/2012- Cus.,(NT.), Dated: March 28, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sanction of Prosecution of Public Servants - Time Limit </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Vigilance Commission has been emphasising the need for prompt and expeditious disposal of requests of sanction for prosecution received from CBI/other investigating agencies under the Prevention of Corruption Act, 1988. The Supreme Court had in the case of <em>Vineet Narain & Ors. Vs. Union of India</em> <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-203-SC-PIL.htm" target="_blank"><font size="1">(2002-TIOL-203-SC-PIL)</font></a></em></strong> in its judgment dated 18.12.1997, issued directions to the effect that "Time limit of three months for grant of sanction for prosecution must be strictly adhered to. However, additional time of one month may be allowed where consultation is required with the Attorney General (AG) or any other Law Officer in the AG's office". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Vigilance Commission has been empowered to review the progress of applications pending with the Competent Authorities for sanction of prosecution under the PC Act, 1988. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taking into account delays involved and the lack of appreciation on the part of Competent Authorities as to what is to be done while processing such requests, the Commission had prescribed detailed guidelines based on various decisions of the Supreme Court including the <em>Vineet Narain</em> case, to be followed strictly by the Competent Authorities while processing requests for sanction for prosecution vide its office order No. 31/5/05 dated 12.05.2005. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the recent judgment of the Supreme Court dated 31.01.2012, in the matter of <em>Dr. Subramanian Swamy Vs. Dr. Manmohan Singh & anothe</em>r<strong> <font size="1"><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2012/2012-TIOL-06-SC-MISC.htm" target="_blank">(2012-TIOL-06-SC-MISC</a><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2012/2012-TIOL-06-SC-MISC.htm">)</a></em></font></strong> while reiterating the time limits prescribed for grant or otherwise of sanction for prosecution, the Apex Court, also observed that the guidelines laid down by the Central Vigilance Commission in its office order dated 12.05.2005 are in conformity with the law laid down by the Apex Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CVC says, “The grant of sanction is an administrative act and the purpose is to protect the public servant from harassment by frivolous or vexatious prosecution and not to shield the corrupt. The question of giving opportunity to the public servant at that stage does not arise and the sanctioning authority has only to see whether the facts would prima facie constitute the offence. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the above, the CVC reiterates its guidelines dated 12.05.2005 and also advises all <strong>concerned</strong> Competent Authorities that while processing requests of sanction for prosecution under Section 19 of PC Act, 1988, the time limits laid down by the Apex Court are adhered to in letter and spirit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Who listens to the CVC? </strong>While the CVC is serious about following the time frame of three/four months for sanctioning prosecution, the CVC itself publishes a monthly report about sanction for prosecution pending for more than four months. And as per the report for February 2012, there are 29 cases involving 47 officers where sanction for prosecution is pending for more than four months. The oldest case is pending for more than three years in respect of a Commissioner of Income Tax. Out of the 47 officers, 26 are from the Revenue Department - CBDT and CBEC. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cvccir/2012/circvc_12_007.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Vigilance Commission Letter No. 005/VGL/011, Dated: March 28, 2012 </font></strong></a></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Friday's cases</font></strong></font></strong></font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left">Central Excise </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Cenvatted capital goods taken re-possession by finance company as assessee defaulted in re-payment of loan - confiscation of machines was proposed u/s 9 of the CEA, 1944 whereas original authority confiscated same u/r 173Q of CER, 1944, u/r 25 of CER and imposed redemption fine which quantum was reduced by Commr(A) - under Rule 25, manufacturer, purchaser and registered dealer are covered and the appellants are neither a purchaser, manufacturer or registered dealer – proceedings initiated are not covered under Central Excise Rules – appeal allowed: CESTAT </font></strong></font></p>
<p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>M/s ELECTRONIC</strong> Leasing & Finance Ltd. (ELFL) are doing the business of financing and leasing. The respondents had sold machinery to M/s Jaina Cast Ltd. (JCL), a Central Excise assessee on hire-purchase basis. The buyer took CENVAT credit of excise duty paid on the machinery and utilized it for payment of duty on excisable goods manufactured by them. However, since the buyer JCL defaulted in paying the amounts to EFLF, they took possession of the equipment and machinery as per the terms of hire-purchase agreement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income Tax </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
tax - Whether when new housing project is carried out on a piece of land
where few buildings stand constructed, new project is to be construed as
extension of existing buildings, and thus cannot be allowed benefits of
Sec 80IB(10) - Benefits available: Bombay HC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues
before the HC are - Whether for the purpose of Sec 80IB(10), an approval
granted by the local authority to a building plan is to be construed as an
approval for a 'housing project'; Whether when the expression 'housing project'
in not defined in the Act, it is to carry the common meanng of the term;
Whether when a new housing project is carried out on a piece of land where
a few buildings stand constructed in the past, the new project is to be treated
as an extension of the existing buildings, and thus cannot be allowed benefits
of Sec 80IB(10); Whether the size of the plot of land in Sec 80IB(10) is
to be construed as the size of the housing project and Whether the size of
the plot of land specified in Sec 80IB(10) as one acre is to be taken as
a vacant plot ...</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Service Tax</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Policy of Government not to burden the exports comes to rescue of assessee - Tribunal allows CENVAT Credit on CHA Service, as there was no exemption for services used in export of goods prior to 7.7.2009.</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> question before the Tribunal was whether the appellant is entitled for CENVAT Credit of service tax paid on CHA Service. The said service was used for export of goods. Before the Tribunal, the appellants cited a number of judgements wherein the benefit of <em>CENVAT Credit</em> had been extended to the CHA service by holding that the place of removal in case of goods exported is the port of shipment. However, the Tribunal did not find that the said case laws are well founded. However, in this case the Tribunal finally allowed the CENVAT Credit by holding that: “It is the undisputed policy of the Government not to burden the export goods with domestic taxes as has been noted in various decisions of the Tribunal. The reasons are obvious. We do not want to make domestically produced goods, when exported to the foreign market, to become uncompetitive”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Tomorrow for the judgements</font></strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT</strong></font></p>
<font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com</strong></a></font>
</body>
</html>