TIOL-DDT 2819 · the untouched capture
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<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><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2819</font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
04 04 2016<br>
Monday</font></strong></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Responsive Board </font></em></strong></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#EDCCCB"><strong>THE</strong> TIOL effect - Anomaly in Rule 6 rectified </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During the Budget 2016, Rule 6 of the CENVAT Credit Rules, 2004 has been totally revamped aiming at some assessee friendly amendments. However, there is one anomaly even in the amended Rule. As per the amended Rule 6(3), a manufacturer or output service provider engaged in manufacture of dutiable and exempted goods/services shall </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">follow any one of the following options applicable to him, namely:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (i) pay an amount equal to six per cent. of value of the exempted goods and seven per cent. of value of the exempted services <u><strong>subject to a maximum of the total credit available in the account of the assessee</strong></u> at the end of the period to which the payment relates; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (ii) pay an amount as determined under sub-rule (3A): </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A plain reading of the above would indicate that the 6%/7% amount is subject to a maximum of CENVAT Credit balance available in the account of the assessee at the end of the period, after debiting all the duties payable during the period. However, this was not the intention of the legislature as the idea was to restrict the 6%/7% amount to total credit taken on all the inputs and input services. In fact, the JS (TRU) letter clearly explained this amendment as: </font></p>
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<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) sub-rule (3) of rule 6 is being amended to provide that when a manufacturer manufactures two classes of goods for clearance upto the place of removal, namely, exempted goods and final products excluding exempted goods or when a provider of output services provides two classes of services, namely exempted services and output services excluding exempted services, then the manufacturer or the provider of the output service shall exercise one of the two options, namely, (a) pay an amount equal to six per cent of value of the exempted goods and seven per cent of value of the exempted services, subject to a maximum of the <strong>total credit taken</strong> or (b) pay an amount as determined under sub-rule (3A).</font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not many observed this in fine print, but during TIOL Budget discussions, we raised this issue and pointed out that the Rule has not been properly drafted to reflect the intention of the Government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">My editorial colleague Raghavendra Rao explained the situation in <a href="https://youtu.be/FYt1b5Pd6W8" target="_blank"><strong>https://youtu.be/FYt1b5Pd6W8</strong> </a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2829_1.jpg" alt="Legal Corner Icon" width="528" height="255" hspace="5" border="0" align="center"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I asked a panel of experts the same question. Their views in <a href="https://youtu.be/XbPiHFD4tis" target="_blank"><strong>https://youtu.be/XbPiHFD4tis</strong> </a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2819_2.jpg" alt="Legal Corner Icon" width="528" height="255" hspace="5" border="0" align="center"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the responsive Board has done the needful. An amendment has been made to sub-rule (3) of Rule 6. The amended Rule reads: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) pay an amount equal to six per cent. of value of the exempted goods and seven per cent. of value of the exempted services subject to <u>a maximum of the sum total of opening balance of the credit of input and input services available at the beginning of the period to which the payment relates and the credit of input and input services taken during that period</u>; or”; </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per this amended provision, assuming during a month, the value of exempted goods to be Rs one crore, the 6% amount would be Rs 6,00,000/-. However, if the opening balance of the credit of input and input Services plus the credit taken on all inputs and input Services during that month is Rs 1,20,000/- only, then the 6% amount would be restricted to Rs 1,20,000/- only. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All is fine, but even this new amendment has a problem. While Table No 6 of the ER1 return (CENVAT statement) has separate columns for fresh credit of inputs, input services and Capital goods, the opening balance of credit at the beginning of the Month does not have item-wise break up. This means, the opening balance of Credit includes capital goods credit and it is not possible to identify the “opening balance of credit on inputs and input services available” for the purpose of Rule 6(3). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps it is not easy to solve the problems created by this Rule which was born as Rule 57CC with several congenital defects. Even the surgery performed in 2016 budget seems to have side effects. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">May be it is time to totally scrap the entire Rule 6 and accept the Cost accountant or Chartered Accountant Certificate of inputs/input services contained in exempted goods and seek reversal of that amount. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sub-rule (1) of Rule 7B has also been amended to substitute the words "<em>invoices, issued in terms of the provisions of the Central Excise Rules, 2002,</em>” with "<em>documents specified under rule 9</em>,". This Rule enables a manufacturer having multiple units to avail credit on inputs received from its warehouse. Prior to this amendment, the warehouse can pass on credit of inputs received under cover of invoice issued under CE Rules, 2002 only. With the amendment, the credit on even the imported inputs and inputs received from dealers can be passed on. Invoice alone is not the prescribed document. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTk0ODY=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 23 /2016- Central Excise (N.T.)., Dated: April 01, 2016</font></strong></a></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#EDCCCB">Baggage Rules -Duty Free Allowance - Foreign Tourist welcome </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26604" target="_blank"><strong>DDT 2818</strong></a>, we pointed out that in the amended Baggage Rules, the Indian Tourist appeared twice and the foreign tourist went missing. The Board has corrected it immediately and the second Indian tourist is corrected as foreign tourist. There seems to be a big attitudinal change in the Board. They are now willing to listen, correct and assist in ease of doing business. This augurs well for the Indian business. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/etariff2016.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Corrigendum., Dated:April 01, 2016</font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f1"></a>Bill of Entry Becomes Integrated Declaration </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BILL</strong> of Entry (Electronic Declaration) Regulations, 2011 are amended and the rules have become the Bill of Entry (Electronic Integrated Declaration) Regulations. The electronic form is as given in the website https:// <a href="http://www.icegate.gov.in" target="_blank"><strong>www.icegate.gov.in</strong></a>. There is however a small hitch - the website does not open most of the times. Hopefully they will rectify it soon. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The site pronounces, </font></p>
<p align="justify"><font color="#0000FF" size="2" face="Verdana, Arial, Helvetica, sans-serif">New Integrated declaration of <font color="#FF0000">BE's</font> has<font color="#FF0000"> implemented</font> w.e.f. 1st April 2016.Users are requested to file documents & also get their applications <font color="#FF0000">modify</font> accordingly. RES package from NIC is available at <a href="http://ices.nic.in/Ices/home.aspx" target="_blank"><strong><em>http://ices.nic.in/Ices/home.aspx</em></strong> </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And that site proclaims: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#CCCCCC" span="span">Fresh Package with Single Window changes for all users is available under Download Sec. Users may download the same as Res/Imports Fresh Package dated 31Mar2016. Existing Users may take the backup of their Database,Send and Checklist Folder. This application will give you the option to import the Supplier,IEC and Item Directory from your existing RES Database. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTk0ODQ=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 45/2016-CUSTOMS(N.T.)., Dated: April 01, 2016 </font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f2"></a>Customs - Fees for Rendering Services by Customs Officers - No Fee in 24/7 operations </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the Customs (Fees For Rendering Services by Customs Officers) Regulations, 1998,<em> On a request made in that behalf by any person, a fee as given in the Table shall be levied for rendering of services by the Customs Officers. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Board has amended the regulations to insert a proviso, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that where the working hours in respect of clearance of cargo in Customs ports or Customs airports, has been prescribed as twenty- four hours on all days for customs clearance, no fee shall be leviable in such locations for the services rendered by the officers. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe this is another <em>"ease of doing business"</em> step. As such the rates are not very high. The fee for getting a Superintendent/Appraiser is a maximum of Rs. 180 per hour. You can get him for Rs. 1440 for eight hours during the night and Rs. 1120 during the day on a holiday. The Government pays him more than double that sum. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact, the CAG had raised an objection in 2014 that the Government has not revised the rates thus losing revenue. The CAG observed, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"MOT rates were increased by more than 100 per cent with effect from October 1998 by revising the existing rates prescribed in Regulations of 1968 consequent to 3 to 3.5 times pay hike of the Central Government employees after implementation of recommendations of the 5th Pay Commission. After implementation of recommendations of the 6th Pay Commission in August 2008, basic pay of Central Government employees was again hiked by 2.42 to 3.23 times as compared to the pay prescribed by 5th Pay Commission. However, corresponding revision of MOT rates has not been carried out so far by the Board and accordingly MOT charges are still being levied at rates prescribed in September 1998. Board did not contemplate periodical revision of the MOT rates subsequent to the revision of pay scales on implementation of the Pay Commission's recommendations."</font></em></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Small Money! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTk0ODU=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 46/2016-CUSTOMS(N.T.)., Dated: April 01, 2016 </font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f3"></a>Target Achieved - Now Focus on Key Areas of Work </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<strong><em>WE</em></strong><em> have exceeded the RE of Rs 7,02,000 Crore for the year 2015-16</em>.”, says the CBEC Chairman Najib Shah in a D.O. letter to the Chief Commissioners. Of course he admits that the steep hike in excise duty on petroleum products has helped him in reaching the target. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now that the target is achieved, the Chairman wants the officers to focus on key areas of work - adjudication, refunds, arrears, audit, anti-evasion/anti-smuggling, scrutiny of returns, withdrawal of complaints/appeals/prosecutions where necessary. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He wants the officers to strive to make the Service responsive and responsible, and ensure that they act as true facilitators of genuine trade. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTk0ODc=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Chairman D.O. No. 47/2016., Dated:April 01, 2016 </font></strong></a></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 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"><strong>vijaywrite@tiol.in </strong></a></font></p>
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