TIOL-DDT 2813 · 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><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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2813</font><br> 23 03 2016<br> Wednesday</strong></font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Single Registration - an ambiguous Circular </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VIDE</strong> Board Circular 1016/4/2016-CX, Dated: February 29, 2016 it is informed that Notification No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2001/exnt01_36.htm" target="_blank">36/2001-Central Excise (NT)</a></strong>, dated 26.06.2001 has been amended vide Notification No. <strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTkzMDc=" target="_blank">19/2016-Central Excise (NT)</a></strong>, dated 01.03.2016 to provide that - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- if two or more premises of the<font color="#FF0000"><em><strong> same factory</strong></em></font> are located in a <font color="#FF0000"><em><strong>close</strong></em></font> area, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- these premises are within the jurisdiction of a Central Excise Range, and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- the process undertaken there are interlinked, and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- the units are not operating under any of the area based exemption notifications, </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">then the Commissioner of Central Excise, may, subject to proper accountal of the movement of goods from one premise to other and such other conditions and limitations, as may be prescribed, allow single registration. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Netizen writes -</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">It seems that the four circumstances narrated above are to be simultaneously satisfied inasmuch as they are not mutually exclusive to each other. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">Further, section 2(e) of the CEA, 1944 defines factory thus - </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">(e) "factory" means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on; </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">In this view of the matter, it is apparent that the premises for which a single registration is envisaged is other than the premises located in the precincts but located in a ‘close area'. What is ‘close' cannot be fathomed by a layman - is it the ‘closeness' as shown in the toothpaste advertisement? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">Suffice to say that if the ‘premises' are falling within the jurisdiction of the same Central Excise range, which jurisdiction can cover a few hundred square kilometres, they are to be considered as close to each other! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">It is felt that such a weird yardstick for granting a single registration has the propensity to aggravate and smother the mantra of ease of doing business, not to mention the increase in litigation! </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f1"></a>CENVAT extension - pumping of 'water'</font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>S.T.</strong> Vishesh, a netizen sent us this -</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annexure II to the JSTRU-II letter<strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=tru_letter/tru-2-2016.htm" target="_blank">F.No. 334/8/2016-TRU</a></strong> dated 29.02.2016 mentions - </font></p> <blockquote> <p align="justify"><em><font color="#993333" size="2" face="Verdana, Arial, Helvetica, sans-serif">"(b) CENVAT credit on inputs and capital goods used for pumping of water, for captive use in the factory, is being allowed even where such capital goods are installed outside the factory. [Amendment in rule 2 clause (a), sub-clause (A) condition (1A) and clause (k) sub-clause (ii) of the Rules refers]."</font></em></p> </blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendments have been made by notification <strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTkzMDU=" target="_blank">13/2016-CE(NT)</a></strong> w.e.f 01.04.2016 in the following fashion - </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Rule 2 of CCR, 2204, clause (a), in sub-clause (A), condition (1A) to read - </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>[(1A) outside the factory of the manufacturer of the final products for generation of electricity [<font color="#FF0000">or for pumping of water</font>] for captive use within the factory; or] </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In rule 2 of CCR, 2004, clause (k) "input"means- </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) all goods used for generation of electricity or steam [or pumping of water] for captive use; or </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly, a question arises as to why only "pumping of water"is mentioned? Cannot any other raw material take its place? And, what about service of maintenance of the pump/pump-house - will that be considered an Input service as a corollary to the above expansion? </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps, Board should consider these too. </font></em></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f2"></a>Customs Provisional Assessment - CAG Slams </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PROVISIONAL</strong> Assessment (PA) is a facilitation measure given to the importer/exporter under the provisions of Customs Act 1962 to avoid hardship by way of payment of demurrage charges or other financial losses. In addition, with the introduction of self - assessment system in the Finance Act, 2011, the importer or exporter is mandatorily required to self - assess the duty in terms of Section 17 of the Customs Act, 1962. This self - assessment is subject to verification by the proper officer of the Customs. In case an importer or exporter is unable to make self-assessment, he may, request the proper officer in writing for the assessment of the imported goods or export goods. In such cases and in other circumstances such as non - availability of relevant information or documents or due to any other reasons mentioned in Section 18 of the Customs Act, 1962, the proper officer wherever deems it necessary to make further enquiry may direct that the duty is to be assessed provisionally and allow clearance of such goods by taking bond with appropriate security as withholding clearance of goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are 94 Customs Commissionerates. Out of which Bills of Entry (BsE)/ Shipping Bills (SBs) and related records/documents pertaining to 42 Commissionerates on pan India basis covering the period from 2011 - 12 to 2013 - 14 were selected by the CAG for conducting audit on provisional assessments. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Out of 42 Commissionerates selected, 26 Commissionerates provided the information sought by Audit to varying extent and the remaining 16 Commissionerates had not furnished any information. However, all the 42 Commissionerates were audited by the various field formations of Customs Receipt Audit wing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit noticed that there was no provision to watch pendency of provisional assessments, receipt of test report documents, revalidation of bond or Bank Guarantee (BG) etc from the system. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further the following deficiencies resulted in lack of monitoring of Provisional Assessment cases. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. No provision existed in the system to distinguish provisional duty bonds against bonds executed for various other schemes. The reasons for resorting to provisional assessment such as pendency of receipt of test report, valuation or any specific reason could not be ascertained from the system. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. Details such as date of finalization, reasons for non - finalization, revalidation of Bond/BG, details of provisional duty paid, final duty assessed could not be generated from the existing modules in EDI. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii. Manual finalization of provisional assessments still continued. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv. Final assessments were made manually up to November 2014 and as such the data on the pending provisional assessments shown in the EDI system did not match with the actual pendency position. Data as per EDI system and physical data maintained in the registers needs reconciliation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">v. Lapsed/cancelled bonds do not get reflected in the Bond Ledger/Bond Module in ICES module. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">vi. Separate reports on number of bills of entry/shipping bills assessed provisionally and finalized could not be generated from the EDI system. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">vii. Report on age - wise registration and pendency of provisional assessments could not be generated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">viii. Module for levy of Extra Duty Deposit (EDD) does not exist and the same is being levied manually. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ix. This module was unable to generate monthly reports, group - wise (within Commissionerate) and consolidated report for the Commissionerate. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">x. At ACC, Bengaluru, 1455 bills of entry filed under 34 bonds were closed during March 2015. However, the fact of their closure under bond management module could not be verified from the EDI system. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG wants CBEC to examine the impact of the above audit observations on its facilitation measures pan India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Scrutiny of records in 13 Commissionerates, revealed that 173 bills of entry were not eligible for provisional assessment as requisite clarifications/documents were available with the department. Despite having all the documents/clarifications, the department resorted to provisional assessment leading to postponement of recovery of duty for a period ranging from 1 to 4 years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The audit of provisional assessments of customs duty has revealed abnormal delay in finalization of provisional assessment and consequent delay in realisation of revenue. More than 36000 cases with bond value exceeding Rs.108389.37 crore were pending beyond 6 months for collection of Customs Revenue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There were several cases of non - compliance of Customs rules, regulation relating to provisional assessment, provisional duty bond and bank guarantee management. There was continuance of cases of operational malfunction and delays in finalization of the assessments pointed out in earlier audit report. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The module for finalisation of provisional assessment launched under ICES.1.5 with effect from April, 2014 needs to be streamlined with all its functionalities. Audit noticed issues worth Rs. 545.92 crore alongwith the issue of execution of bonds valued at Rs. 28679.48 crore without any security or Bank Guarantee, in addition to the systemic deficiencies which could not be quantified. </font></p> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Source: CAG Report No. 5/2016 </font></em></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f3"></a>Central Excise - Rebate - Both inputs and final products are entitled for rebate - 'OR' means 'AND': Supreme Court Rejects Revenue Review Petition </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> basic question of law is as to whether or not the manufacturer/exporter is entitled to rebate of the excise duty paid both on the inputs and on the manufactured product, when excise duty is paid on a manufactured product and also on the inputs which have gone into manufacturing the product and such manufactured product is exported? </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rule 18. Rebate of duty. </strong>- Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods <strong> or</strong> duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Rule stipulates that the Central Government may, by notification, grant rebate of duty paid on such excisable goods OR duty paid on material used in the manufacturing or processing of such goods. The word 'OR' which is used in between the two kinds of duties in respect of which rebate can be granted is the bone of contention and it is to be interpreted whether it postulates grant of one of the two duties or both the duties can be claimed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court in the Spentex Industries case <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NDA4" target="_blank"><strong>2015-TIOL-239-SC-CX</strong> </a>emphatically held, <em>"The inevitable conclusion is that the exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate."</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The aggrieved Revenue agitated the matter again in a review petition in the Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court recently held, "<em>We find no error, much less apparent,in the judgment impugned. The review petitions are,accordingly, dismissed.</em>"</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <em>Commissioner of Central Excise Vs Spentex Industries Ltd </em>- <strong> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTEyMjY4" target="_blank">2016-TIOL-34-SC-CX </a></strong> </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f4"></a>Customs Assistant Commissioner Arrested by DRI </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is learnt that a Customs Assistant Commissioner in Ahmedabad was recently arrested by the DRI and is under judicial custody. The Assistant Commissioner is charged with smuggling of foreign currency worth three crore rupees. Five others including three ladies were arrested in this case. </font></p> <p align="justify"><font color="#0099CC" size="2" face="Verdana, Arial, Helvetica, sans-serif">It's a long weekend- tomorrow is Holi; day after Good Friday</font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday 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 weekend. </font></strong></p> <p align="justify"><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" target="_blank"><strong>vijaywrite@tiol.in</strong> </a></font></p> </body> </html>