TIOL-DDT 2670 · the untouched capture
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<!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 color="#663399" size="3"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2670</font><br> 25 08 2015 <br> Tuesday </strong></font></p> <p align="center"><strong><em><font color="#FFFFFF" size="2" face="Georgia, Times New Roman, Times, serif"style="background-color:#006A00" span="span">Flying Ash -Mere Mention in Tariff is not enough to levy Excise Duty - Madras High Court quashes demand at SCN Stage </font></em></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Excisability/dutiabilty of Fly Ash is a matter of debate/dispute for some years now. </font></p> <p align="justify"><em><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#6633FF" span="span">History: </font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fly ash falling under chapter sub heading 26219000 was exempted till 28.02.2011, when a 1% duty was imposed by Notification No. 01/2011-CE dated 01.03.2011. The duty was increased from 1% to 2% vide notification No.16/2012 CE with effect from 17.03.2012 - without CENVAT Credit. There was also a duty of 5% and 6% with CENVAT Credit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was one school of thought that fly ash was not excisable at all and there was no need to exempt it. The 2011 Budget exercise of imposing 1% excise duty is therefore illegal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Writing in our Guest Column on 05.05.2011 - <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTI0NzE=" target="_blank"><strong>Excisability and exemption</strong></a>, Advocate V. Ravindran observed, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fundamental doubt that now arises in the minds of people concerned is whether the Government is trying to re-introduce and fasten duty liability on fly ash, which were declared to be not excisable. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Considering the fact the Ministry of Forest & Environment is taking so much of an effort in the area of pollution control in general and in particular in devising ways and means to dispose of fly-ash by thermal power stations across the country, the Finance Ministry would do well in consolidating the effort and not create conflict of interests through the attempted levy of excise duty. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier the Board clarifies the matter, better would be results. Otherwise this would lead to a collision course between legislature and judiciary, besides igniting spate of litigations . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We carried an article by Advocate Joseph Prabakar on 09 05 2011 -<strong> <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTI0ODU=" target="_blank">Fly Ash generated in Thermal Power Plant - Applicability of Excise Duty</a></strong>. He observed, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>‘Fly Ash' is generated in the course of manufacture or production of ‘Electrical energy' and apparently, it may seem that Fly Ash may be liable to Excise Duty. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, it is important to note that vide Central Excise Notification No 89/95 dated May 18, 1995, the Government had exempted waste and scrap arising out of manufacture of exempted products from payment of Excise Duty. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘Fly Ash' arising in the course of generation of electricity in a Thermal Power Plant would continue to be exempt from payment of Excise Duty under Notification No 89/95 dated May 18, 1995, notwithstanding the fact that the Government had notified ‘Fly Ash' under Notification No's. 1 and 2 of 2011 dated March 1, 2011. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We carried an article by Anu Nair on 13.05.2011 - <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTI1MDY=" target="_blank"><strong>The Coal Ash and Fly Ash Debate</strong></a>, where she took the stand: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But naturally, ‘Fly Ash' becomes chargeable to duty on account of withdrawal of exemption notification and as mentioned, it attracts 5% rate of duty in terms of notification no. 2/2011-CE, Sr. no. 14 of the same . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CA Sunil Kejriwal in his article on<strong> <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjA3MTU=" target="_blank">Fly Ash Excisability</a></strong> - 23.06.2014 noted, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, excise duty still may not be leviable on fly ash for the reason that the same is not an outcome of any manufacturing process as held by the Hon'ble Apex Court in the case of Ahmedabad Electricity Co. Ltd. (supra) and the issuance of Notification No. 1/2011 and Notification No. 2/2011 may not be of any help to the department for fetching additional revenue. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With the issuance of the above notifications, the CBEC is once again required to clarify the position of law with respect to exigibility of fly ash which was settled by the Hon'ble Apex Court after a long litigation. The same would also facilitate non-cumbersome removal of polluting fly ash which the Ministry of Environment and Forests has been continuously striving for. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQ0OTY=" target="_blank"><strong>2014-TIOL-1088-CESTAT-MUM</strong></a>, the Mumbai Bench of the CESTAT observed, <em>The issue is whether fly ash is a manufactured item or not. Merely because fly ash is marketed, it cannot be concluded that fly ash is “manufactured goods”. Inasmuch as the item was held to be non-excisable by the lower appellate authority relying on the decision of the Hon'ble Apex Court in the case of UOI Vs. Ahmedabad Electricity Co. - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2003/2003-TIOL-17-SC-CX.htm" target="_blank"><strong>2003-TIOL-17-SC-CX</strong></a>, the Revenue has not made out a case for grant of stay of the order. Accordingly, stay petition filed by the Revenue is dismissed</em>. </font></p> <p align="justify"><em><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#6633FF" span="span">But Revenue does not relent : </font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently, this issue came up before the Madras High Court from a Show Cause Notice, praying for quashing of the Show Cause Notice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is Fly Ash? Fly Ash' is a fine powder recovered from the gases of burning coal during the production of electricity. <em>Fly ash, also known as flue-ash, is one of the residues generated in combustion, and comprises the fine particles that rise with the flue gases. Ash which does not rise is termed bottom ash. In an industrial context, fly ash usually refers to ash produced during combustion of coal. Fly ash is generally captured by electrostatic precipitators or other particle filtration equipment before the flue gases reach the chimneys of coal-fired power plants, and together with bottom ash removed from the bottom of the furnace is in this case jointly known as coal ash. Depending upon the source and makeup of the coal being burned, the components of fly ash vary considerably, but all fly ash includes substantial amounts of silicon dioxide (SiO2) (both amorphous and crystalline) and calcium oxide (CaO), both being endemic ingredients in many coal-bearing rock strata.</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before this Court is, whether the 'fly ash' and 'fly ash bricks' included as items in the entries to the First Schedule to the Central Excise Tariff Act, per se make the same exigible to excise duty? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue made a plea that electricity is not excisable, even though it finds a place in the tariff. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why I mentioned above the articles we carried is because the High Court considered these very issues. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court made some important observations: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clear that to be subjected to levy of excise duty "excisable goods" must be produced or manufactured in India. For being produced and manufactured in India, the raw material should have gone through the process of transformation into a new product by skillful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone through the process of manufacture. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Simply because goods find mention in one of the entries of the First Schedule, does not mean that they become liable for payment of excise duty. It is essential that the goods have to satisfy the test of being produced or manufactured in India. Excise duty is a duty leviable only on the manufactured goods. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fly ash has not gone under the process of manufacture and it cannot be said to be a manufactured product . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court held that<em> "fly ash" does not involve any manufacturing activity and it does not fall under the purview of excisable good so as to attract levy of excise duty.</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Show Cause Notice was set aside in so far as it concerned to the imposition of excise duty, interest and penalty in respect of 'fly ash' . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At least now the Department should stop this ash flying. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For more details of the case, <strong>please see</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24495" target="_blank">Breaking News</a></strong>.</font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"style="background-color:#006A00" span="span">Simplification of procedure for Bonds to be submitted to Customs </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a recent Trade Facilitation meeting in the JN Customs, an importer raised this issue: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>There is facility to give yearly Bonds to Customs, however, practically not getting implemented. We give different bonds: </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">End use bonds for Advance licence (Exports). </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For advance licence with EODC, for 1 licence if 20 imports take place, we give 20 </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">bonds for post imports, whereas, for new licence registration for prior import, we give only one-time bond for all imports. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Our request to give One Time Bond licence wise for post import also. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department replied: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this connection, it is to inform that for import under Advance Authorization, wherein, EODC has been issued by DGFT, the requirement of executing End use bond for each import at the time of importation has been prescribed under Exemption Notification itself. As in case of clearance under Advance Authorization as per Notification 18/2015 Cus dated 01.04.2015, it is prescribed as under - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"that in respect of imports made after the discharge of export obligation in full, if facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or “sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or of CENVAT Credit Rules, 2004 has been availed, then the Importer shall, at the time of clearance of the imported materials furnish a bond to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, binding himself, to sue (sic use) the imported materials in his factory or in the factory of his supporting manufacturer for the manufacture of dutiable goods and to submit a certificate, from the jurisdictional Central Excise officer or from a specified chartered accountant within six months from the date of clearance of the said materials, that the imported materials have been so used: </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that if the importer pays additional duty of customs leviable on the imported materials but for the exemption contained herein, then the imported materials may be cleared without furnishing a bond specified in this condition and the additional duty of customs so paid shall be eligible for availing CENVAT Credit under the CENVAT Credit Rules, 2004."</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, regarding execution of single continuity End Use Bond, as advised by the trade, its modalities with respect to ICES System and further monitoring thereof are being examined by the group. Once such a system is finalized, it will be properly enforced & communicated by way of suitable Public Notice/Facility Notice. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"style="background-color:#006A00" span="span">The Law - When Officers get transferred </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> another Trade Facilitation meeting in the JN Customs, an importer submitted that while discharging their duties, Customs is also monitoring other allied acts and every time there is mass transfer of operational officers the trade faces difficulties with the new officers. He desired to know whether there is any standing mechanism for training, sensitizing the new officers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department replied:</font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the standing orders, public notices are uploaded on the JNCH website. Further, the department undertakes regular training of all the newly posted officers. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fact is the Law is what the officer says it is and this view changes with the officer and as far as Customs is concerned, the officer is a few places above the Supreme Court. What you need is not the Law but the ability to convince the officer. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"style="background-color:#006A00" span="span">FTP - Onions - Minimum Export Price hiked sharply </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT </strong>has increased the Minimum Export Price of onions from USD 425 to USD 700 F.O.B. per Metric Ton. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bangladesh newspapers prominently reported that Onion prices jumped in Bangladesh after India raised minimum export prices to USD 700 (Tk 54,460) per ton from USD 425 (Tk 33,065). </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg0Mzk=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 18/2015-2020, Dated: August 24, 2015</font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#FFFFFF"style="background-color:#006A00" span="span">Get Ready for GST - FM to CBEC Officers</font></em></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2670_arun.jpg" alt="Legal Corner Icon" width="470" height="285" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FINANCE</strong> Minister Arun Jaitley addressing the Chief Commissioners' conference of CBEC yesterday in New Delhi. He told the officers that they should be in readiness to implement the GST by having model draft laws and Information Technology preparedness. </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> <p align="justify"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></strong></p> <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@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p> </body> </html>