TIOL-DDT 589 · the untouched capture
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<p align="justify" class=section1><font color="#660000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">TIOL-DDT
589</font><br>
<font color="#000000">10.04.2007<br>
Tuesday</font></b></font></p>
<p class=section1 align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Rebate
on goods manufactured in North East, J&K etc., and subsequently exported
under rule 18 of the Central Excise Rules</b> <b>– Board clarifies</b></font></p>
<p align="justify" class=section1><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
issue is rebate of duty on export goods – and connected with J&K and North
East</font></p>
<p align="justify" class=section1><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please
refer to <b>DDT 532 - 15.01.2007</b></font></p>
<div align="justify" >
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>North
East exemption – no refund and rebate – once duty is refunded it is no more
“duty paid”</b></font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It’s
almost a year since we carried an interesting article by one of our regular
columnists “<b><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3570"><font color="#0000CC">Region
specific exemption and rebate of duty - Having the cake and eating it too!!</font></a>”.</b></font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
article delved into the issue of rebate of goods manufactured and cleared
by units availing region-specific exemption notification and subsequently
exported under Rule 18 of the Central Excise Rules. </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>The
issue in brief :-</u></b> Rule 18 of the Central Excise Rules provides for
grant of rebate of duty paid on exported goods. In terms of the relevant exemption
notifications, exemption from excise duty is available only to the extent
it is in excess of the amount paid out of CENVAT credit. However, the said
exemption notifications come into effect only when payment of duty on finished
goods at the appropriate rate is made and that too by way of refund of duty
paid in cash. </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One
of the questions raised by the author was “Whether the goods cease to
be duty paid goods for the purpose of granting rebate given the fact
that cash refund of the same has been availed by the manufacturer” .
Given Board’s clarification
that <b>“ As there appears to be no legal bar, the Board desires the claim
( read rebate claim ) should be processed as per the existing provisions
of law”,</b> it appeared the issue was well and truly settled and rebate
could not be denied of the quantum of cash refund availed by the manufacturer.
In spite of the same, the author signed off pondering aloud <b>“Hope there
is no scope for interpretation now ? Or is it too early to hazard such a
statement !!!” </b></font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No
way this <b><i>“la Nostradamus”</i></b> prediction could have come a cropper.
This matter was referred to the Law Ministry by the Board who has since opined
that the term 'duty paid' used in rule 18 does not include that portion of
duty, which is subsequently refunded to the manufacturer. They have further
opined that the amount so refunded to the manufacturer is to be treated as
an exemption and rebate of the said amount cannot be paid. </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
clarification ends with a parting directive - “In view of the above statutory
position, it is hereby directed that all pending show cause notices may be
decided accordingly. Even pending rebate claims should be decided as per said
interpretation. Show Cause Notices may be issued in respect of sanctioned
claims, which are within the statutory time limit of one year.” </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
far as the field formations are concerned, the issue is quite clear now. Deny
rebate for pending rebate claims and issue demand notices in respect of sanctioned
claims which are within the statutory time limit – mercifully!!! </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However
a few questions beg answers.</font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a.
What happened to the earlier clarificatory letter stating that there is no
legal bar in grating rebate? </font></p>
<p align="justify" class=section1><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b.
Why again no circular and only a clarificatory letter? </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c.
Does the Law Ministry’s opinion imply ‘the statutory position” on the subject
matter? </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d.
Can the Board direct the adjudicating authority to decide all pending show
cause notices according to Law Ministry’s opinion? </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e.
Who is responsible for the loss of revenue in rebates already sanctioned?
</font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Maybe,
yet another clarification to clarify the above clarification!!!! </b></font></p>
</div>
<p align="justify" class=section1><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board
has indeed issued a fresh clarification to the effect that</font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" class="section1" align="justify">
It is seen that the units located in other parts of the country are permitted
to take full credit of duty paid on the inputs (procured from J&K, North
East, Sikkim and Kutch) under rule 12 of the CENVAT Credit Rules.<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" class="section1" align="justify">
This rule is a special dispensation to ensure that the manufacturing units
in North East, etc., are not placed at disadvantage vis-à-vis units outside
such areas.<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" class="section1" align="justify">
Further, there is no bar on utilizing this credit for payment of duty on goods
cleared for exports.<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" class="section1" align="justify">
The units located in other parts of the country manufacture the goods, and
pay the applicable excise duty on export of goods, and therefore, they are
eligible to claim rebate of said duties under rule 18 of the Central Excise
Rules.<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" class="section1" align="justify">
The Board’s instructions dated 08.12.2006 cannot be applied to such units
as it clarifies that the term ‘duty paid’ used in rule 18 of the Central Excise
Rules, 2002 does not include that portion of duty, which is subsequently refunded
to the ‘manufacturer’ (units availing area based exemption).<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" class="section1" align="justify">
<b>In the present case, the units located in other parts of the country are
the manufacturers, and no portion of duty paid by them is refunded to them,
therefore, rebate cannot be denied to such units.</b></font></li>
</ul>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Right
or wrong, the clarification is beneficial to the trade.</font></p>
<p align="justify" class=section1><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/instruct0307.htm">CBEC’s
F.No. 209/11/2005-CX-6 dated the April 3<sup>rd</sup>, 2007</a></u></b></font></p>
<p class=section1 align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Government
to reconsider levy of excise duty on textile machinery</b></font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Union
minister of state for textiles, E V K S Elangovan said in Coimbatore on Sunday
that the issue of reconsidering the decision of levying eight percent central
excise duty on textile machineries has already been taken up with the finance
ministry and was awaiting for a favourable decision.</font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
minister was Southern India Mills’ Association (SIMA) chairman S V Arumugam
at a conference, organised by Ahmedabad Textile Industry’s Research Association
(ATIRA), Bombay Textile Research Association (BTRA) and South India Textile
Research Association (SITRA).</font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
was submitted that imposing eight percent central excise duty on local machinery
would also attract eight percent countervailing duty on all the imported machinery
and will defeat the very object of strengthening weaving and processing, which
are the weakest of links of the textile chain.</font></p>
<p class=section1 align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The
cementing bond?</b></font></p>
<div align="justify" >
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Question:
Why do you think that the cement producers are ignoring Finance Minister Chidambaram's
call to reduce their prices? </font></p>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Answer:
This is yet another instance of hunting with the hounds and running with the
hares. The bond that cements the industrialists with the political establishment
is stronger than their product.</font></p>
<p align="right" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><i>Cho
Ramaswamy in Thuglaq</i></font></p>
</div>
<p align="justify" class=section1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6666">Until
tomorrow with more DDT</font></strong></font></p>
<p align="justify" class=section1><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have
a nice Day. </strong></font></p>
<p align="justify" class=section1 ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mail
your comments to</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a
href="mailto:vijaywrite@taxindiaonline.com"><b>vijaywrite@taxindiaonline.com</b></a></font></p>
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