TIOL-DDT 328 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#996699" size="3">TIOL-DDT
328</font><br>
23 03 2006<br>
Thursday</strong></font></p>
</div>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cenvat
Credit Rules amended – Credit for DTA clearances </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT
325 - 20 03 2006</strong> had pointed out</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Cenvat
Credit Rules amended but important changes yet to come. - But then Board has
totally forgotten about the required amendments consequent to the 2006 budget.
There is a formula for taking credit on inputs received from EOUs. Now the formula
is meaningless in view of the changed amount of duty payable by EOUs. With the
budget most likely to be passed next week, Board can slip in this notification
too.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Government has indeed amended the Cenvat Credit Rules to prescribe the new formula
for taking credit for inputs received from EOUs after 1.3.2003. The formula
is <strong>X multiplied by {(1+BCD/400) multiplied by (CVD/100)}</strong>. Don't
get confused; the whole idea is credit available is the duty (excise) paid and
this is what credit is all about. With or without these complicated formulae.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
recap:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
this Budget Notification No. 23/2003 – Central Excise was amended to fix
the duty payable by EOUs to 25% of the customs duties and the applicable excisable
duties. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assume
the value is 100; customs duty is 10% and excise duty is 20%, as per the formula
in the notification itself, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value =
100</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs
duty = 2.5% = 2.5 ( 25% of customs duty)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total
= 102.5</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CVD
(excise) = 102.5 x 20% = <strong>20.5 (this is the amount which a buyer
from EOU can take as credit)</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
as per the formula given in the latest amendment to the Cenvat Credit Rules,
<strong>X multiplied by {(1+BCD/400) multiplied by (CVD/100)}.,</strong> the
credit would be 100 x 410/400 x 20/100 = 100 x 1.025 x 0.2 = <strong>20.5 (this
is the credit allowed)</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>LHS
= RHS</strong> : </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>QED</strong>
(SEE TODAY'S GREEK AND LATIN)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But
why was this not done on 1.3.2006 when the notification was amended and what
was the credit eligibility till now?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2006/exnt06_06.htm">NOTIFICATION
NO. 6/2006-Central Excise (N.T.), Dated: March 20, 2006</a></strong></font></p>
<p align="center"><font color="#006600"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Controversial
4% additional duty – certain exemptions withdrawn</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
per Notification No. 20/ 2006-Customs, March 1, 2006, all goods which are not
chargeable to customs duties or additional duties of customs are exempted from
the 4% additional duty also. Now this notification is amended to add that the
exemption is not applicable to goods exempted under the following notifications.</font></p>
<table width="450" border="1" align="center" cellpadding="1" cellspacing="1">
<tr>
<td> </td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification
No.</font></p></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">details</font></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.</font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">236/89-Customs,
dated the 1st September, 1989</font></p></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">goods imported
from specified countries</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">28/95-Customs,
dated the 16th March, 1995</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Imports from
Mauritius, Seychelles or Tonga</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">85/98-Customs,
dated the 5th November, 1998</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Imports from
Nepal</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">105/99-Customs,
dated the 10th August, 1999</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">import of
specified goods from SAARC Countries</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26/2000-Customs,
dated the 1st March, 2000</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">specified
goods of origin of Sri Lanka</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">60/2000-Customs,
dated the 12th May, 2000</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tea and Yeasts
imported from Sri Lanka</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">40/2002-Customs,
dated the 12th April, 2002</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Imports from
Nepal</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">76/2003-Customs,
dated the 13th May, 2003</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">specified
products imported from Afghanistan</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">85/2004-Customs,
dated the 31st August, 2004</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Imports from
Thailand</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">72/2005-Customs,
dated the 22nd July, 2005</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of
specified products from Bangladesh, China, Korea or Sri Lanka</font></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2006/ctariff06_029.htm">NOTIFICATION
NO. 29/2006-Cus., Dated: March 20, 2006</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Is
the 4% additional duty payable under DEPB?</strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You
will have to wait for a day for our article on this subject.</font></p>
<P align=center><B><IMG height=62 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_txt.jpg" width=375></B></P>
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<TD><IMG height=67 hspace=5 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_word.jpg" width=67 align=absMiddle vspace=5><B><I> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">Q.E.D.</font></I></B></TD>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
- an abbreviation of the Latin phrase "<strong>quod erat demonstrandum</strong>"
(which was to be demonstrated). Q.E.D. may be written at the end of mathematical
proofs to show that the result required for the proof to be complete has been
obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How
nice it would be if Law was as precise as mathematics!</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#993300">The
trouble with law is lawyers.</font></strong></font></p>
<p align="center"><font color="#993300"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clarence
Darrow (1857-1938)</font></strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Until
Tomorrow with more 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"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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