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Central Excise
Inputs supplied by 100% EOU – Credit of Education Cess component cannot be denied to recipient manufacturer – Tribunal delivers a much-awaited decision
PRESCRIBING a formula for arriving at the Cenvat credit quantum that a consignee manufacturer is eligible to take in respect of inputs or capital goods produced or manufactured by a hundred percent EOU was for the first time laid down in rule 3 of the Cenvat Credit Rules, 2002 thanks to the case lost by the Revenue in the case of Vikram Ispat Ltd. [ ].
Now, the Revenue wants a further adaptation of the “ truncated ” clause to suit its needs.
The adaptation being that it wants to deny the Credit of Education Cess paid by these 100% EOU's on the ground that the said formula now contained in rule 3(7)(a) of the Cenvat Credit Rules, 2004 nowhere refers to the same. And the further reasoning given being - that rule 3(7) of the Cenvat Credit Rules, 2004 begins with the following non-obstante clause “ Notwithstanding anything contained in sub-rule (1) and sub-rule (4) ... ”
The matter is before the Tribunal.
Tail Cess: We suggest that it would be in the fitness of things that the Board gracefully takes cognizance of this order and brings out a Circular on the lines contained therein. If wishes were horses…
Customs:
Bank guarantee furnished to secure due performance of export obligation cannot be regarded as payment of duty – refund - limitation not applicable : Madras HC
THE Commissioner of Customs has filed this appeal with the following two substantial questions of law :
1. Whether the Tribunal is right in holding that time limit is not applicable to the refund of bank guarantee for Rs.12 ,58,190 /- being the difference in duty between actual rate of duty and concessional rate of duty by enforcing the bank guarantee realised by the appellant on 03.09.2001 and refund claim was filed only on 01.06.2005, i.e., beyond the period of six months as stipulated in section 27 of the Customs Act, 1962?
2. Whether the Tribunal is right in not considering the legal issue that whether the respondent is entitled for refund when the respondent has not discharged the export obligation within the stipulated time?
The High Court noted that
1. It has been repeatedly held that the bank guarantee furnished in order to secure the due performance of the export obligation cannot be regarded as payment of duty.
2. If that be so, the invocation of section 27 of the Customs Act, which provides for refund of any duty and interest, if any, paid on such duty in pursuance of an order of assessment, is misconceived, as there is no payment of duty in pursuance of an order of assessment.
3. The bank guarantee has been furnished in order to safeguard the interest of the revenue in the event of the importer committing default in performing the export obligation cast upon him for the purpose of availment of concession in importing the capital goods.
4. The differential duty was neither levied nor demanded.
Income Tax
Ranbaxy Laboratory loses Transfer Pricing case; ITAT upholds invocation of powers u/s 263 by CIT and finds many holes in assessee's audit report and method to calculate net margin
TRANSFER PRICING is a new area of taxation within the fold of Income Tax Act. And the latest Tribunal decision has gone against the billion-dollar case of Ranbaxy Laboratories Ltd. In a lengthy order, but in-depth analysis of voluminous facts, the Bench, headed by the President, Mr Vimal Gandhi , has upheld the invocation of powers u/s 263 by the CIT and found the AO's order erroneous and prejudicial to the interest of revenue. Although the Tribunal found many instances of non-application of mind by the AO to the facts of the case but it has also clarified that the Bench does not mean any disrespect to the AO nor any motive is attributed while pointing out errors in the assessment order. While dismissing the contention of the counsel of the assessee that the AO is competent and well within its power not to refer the international transactions to the Transfer Pricing Officer ( TPO ) as per the Board's Instruction No 3 of 2003, the Tribunal once again reiterated that this issue has been settled by the Delhi HC in the Sony India case ( ) and the Special Bench decision in the Aztac Software and Technology Services case ( ) that the Board's direction to the AO to refer cases involving international transactions exceeding Rs five crore is binding on the AO.
While allowing the order of the CIT for fresh examination of facts the Tribunal observed that the AO not at all applied its mind to the details of the assessee's international transactions with 17 of its Associated Enterprises ( AEs ) located in several continents nor paid any attention to the unique characteristics of the transactions. While finalising the selection of tested party, the AO should have taken into account many factors, including different geographical markets and different types of risks accounted by various sorts of contractual obligations entered into by the assessee. Even the selection of comparables was not done properly besides choosing a wrong method of calculating profit margins. The AO also did not attach the due important to the FAR analysis.
Service Tax - Export of services - Service providers are eligible for refund of un-utilised credit under Rule 5 of Cenvat Credit Rules even for exports made prior to 14.3.2006, if refund claims were filed after 14.3.2006 : CESTAT
ARE service providers eligible for refund of un-utilised credit under Rule 5 of Cenvat Credit Rules even for exports made prior to 14.03.2006? ‘YES', says CESTAT.
Sometimes enthusiastic departmental officers try to read conditions, which are not there in the Statute, just to reject any benefits the assessees are eligible otherwise and derive a vicarious satisfaction. And aggrieved assesses have no option but to knock at the doors of higher appellate forums for reddressal . This is exactly what happened in the case
You can see this case in our ST se GST tak tomorrow.
Until tomorrow with more DDT
Have a nice time.
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