covers october 2012-final - bizsolindia services pvt.ltd · the us elections. mitt romney calls...
TRANSCRIPT
1
Bizsol UPDATE October - 2012
The world is turning left. In these columns a couple
of issues back it was predicted that the days of
romance with socialism shall become the order of the
day. So it is. From France to Indonesia, from India to
Venezuela the writing is on the wall. With people
running out of patience with capitalism it is not
surprising that it is happening now. Listen to the
electoral rhetoric coming out of the convention halls of
the US elections. Mitt Romney calls Barack Obama
an extreme liberal, a euphemism for a socialist. Welfare
state is the new buzzword replacing capitalism. Any
amount of lip service to capitalism with its semantic
variations can help revitalising a failed system
according to many. George Bush called the failed
system crony capitalism and called for compassionate
capitalism. Still the middle class in America is an angry
and unhappy lot. The communists of our land can take
heart from the fact that their day in the sun is once
again round the corner everywhere except in West
Bengal. In Bengal they have to contend with a firebrand
lady called Mamta Bannerjee who is more a communist
than the communists themselves.
Mitt Romney, whether he becomes the next President
of America or not, has at least made sure of making
his company Bain Capital famous. It is a multibillion
dollar company. But what many may not know is that
one of the Managing Directors of his company Mr.
Stephen Pagliuca is a Democrat with a track record of
having fought elections against Republican candidates!
That speaks something about professionalism or basic
value systems of individuals who can belong to different
and opposing political beliefs but still work together. It
must be a difficult time for Pagliuca working for his
boss Mitt Romney in Bain Capital but supporting
Barack Obama for President. Some democracy this.
In these days of hyper inflation nothing comes cheap -
democracy included. Sometimes you wonder how our
EDITORIAL
FROM DESK OF THE CHAIRMAN
democracy really functions; it does, nevertheless. They
say vision without action is delusion. So is criticism
without accountability which is akin to rumour
mongering. When you do not provide an alternate
solution to the one you are criticising, you are yourself
a part of the problem. Criticism of FDI in retail is a
case in point. I suspect, nay convinced, that those who
criticise the move hardly comprehend what it really is
and what it means to us. Politicians of all hues have
perfected the art of 'shoot-and-scoot' with impunity.
They know that they only need to criticise a move and
are not required either to buttress the criticism nor are
they called upon to give an alternative. The sad part of
the story is that the ruling dispensation is also not
equipped to sell economic reforms and the need for
such measures. I may be stating the obvious when I
say that even in the government or the ruling party a
vast majority of people do not even understand the
rudiments of these economic measures so as to defend
such initiatives. The educated elite in the government
and senior bureaucrats may be the only ones with the
wisdom to comprehend these measures for what they
are. That may not be surprising, however. What is
wrong is their obvious inability to articulate the vision
behind such policies and defend these initiatives
vigorously with conviction. As a result what we see
today is an aggressive Opposition tearing into the
government for policies on which the latter appears to
be hopelessly on the defensive. In a way history is
repeating itself. When Value Added Tax was
introduced, the BJP ruled states objected to it tooth
and nail only to quietly implement it when they saw
the advantage on a later date. When Indira Gandhi
decided on expanding the television network to the
whole country there were howls of protests from all
political parties. When Rajiv Gandhi even before
becoming the Prime Minister of the country wanted
television broadcast in colour he was hauled over the
2
Bizsol UPDATE October - 2012
coals. Can you today imagine a world without television
and that too in colour? Look at where the critics are.
They are in the studios making use of these facilities
to criticise and hold court (the kangaroo variety) on
television criticising without accountability. That is
Indian politics for you. Democracy may be all about
criticism and cacophony. Large population of the
country is illiterate lending itself to exploitation by even
those who are equally illiterate on matters of state to
score political brownie points. In the good old days
(there is no pun) those countries who did not want to
develop themselves were compared to Burma (now
Myanmar) as that country had consciously decided to
grow into an inward looking society with minimal GDP
growth for decades. Today even that country has
changed. Myanmar has opened up and other countries
are vying with each other to Yangon with investments
of magnitudes not seen recent times. That may give
an opportunity to India to benchmark itself to the
position vacated by Myanmar. I am not here holding a
brief for the government. But the irresponsible way in
which you criticise for the sake of criticism should stop.
Just imaging if you have half a dozen Mamtas in the
country! Imagine also what Congress would do after
2014 when they move over to the Opposition slot. The
first thing they would do would be to criticise FDI in
retail! A gullible population has become political fodder
for those who would do anything to grab and cling on
to power. It may sound pontificating; but the prospect
is alarming.
Politics in India has reached new levels with innovative
manoeuvres sometimes resembling a theatre of the
absurd. The story goes something like this. In order to
take the focus of the people away from the coal scam
the second generation of reforms are timed to hit the
headlines almost immediately after the CAG report is
published. NCP on its part want to divert the attention
of the people from its own irrigation scam at the state
level by staging a resignation drama of the deputy chief
minister at time when the Congress is battling one scam
after another. In order to take the heat away even from
the irrigation scandal they arrange for a whistleblower
to implicate the BJP President in the scam. But for the
fact that all these are happening in real time one would
have thought of juicy plot hatched for a Bollywood
movie. It is anybody's guess what tomorrow morning
will bring.
Mamta Bannerjee mimicked Manmohan Singh recently
and all the sycophants (there is no dearth of them in
Congress) cried foul and threatened to take Mamta to
court for defaming the prime minister of the country.
The irony, however, was hard to miss. One was that
she did such a lousy job of it that she has no chance
of getting even a petty role in a C grade Bengali play
for acting. Probably she has botched her chance of
having an alternate career post politics. The only
reason for which Manmohan Singh himself could object
to her doing the mimicry can be her bad Hinglish
spoken with a heavy Bengali accent. Yet another irony
in this was that it was she who ordered the arrest of a
cartoonist for his caricature of her only the other day!
Strange are the ways the politicians work.
The recent order of the Supreme Court on the
Presidential reference consequent to its earlier
judgment on 2G may have been a reprieve for the
Government and a disappointment for the Opposition.
It is a classic instance of bringing in clarity when you
look at issues clinically (read legally). It is not open to
the judiciary to lay down public policies. The caveat,
however, is that these policies shall not be whimsical
or flawed through corrupt practices. In one stroke the
Supreme Court drew a subtle yet clear demarcating
line between the Executive and the Judiciary as
envisaged by the Constitution.
When Anna Hazare came calling to Delhi recently, he
looked a poor caricature of himself of yore. With his
aura diminishing to the status of his diminutive physical
self, he appears to have given up on his cause. He
looks like a shadow of his fasting days. His movement,
however, should be an object lesson for all. It does
not happen all too often anywhere. India identified itself
with his noble goal. However, without being patient
and with a faulty strategy his movement faltered. He
could have taken a giant step in the process of
eradicating corruption when he, with the people of India
held the Government of the day to ransom. He could
have negotiated a decent compromise deal with the
Government. Even that would have been great victory
against corruption. Instead of taking that step he
wanted to take the establishment head-on perhaps with
an intention of leaving a personal legacy. That moment
we lost a golden opportunity in our fight against
corruption. After being hailed a Gandhian, Anna
wanted to be a Gandhi. His slogans reflected his
3
Bizsol UPDATE October - 2012
i i i
ambitions, however noble it might be. After forty long
years we had a chance to get a decent architecture of
a legal framework against corruption in high places.
By taking the stand 'all-or-nothing' Anna failed all of
us. Anna for a moment forgot that means are as
important as end. Gandhi's own long and arduous
struggle for independence should have provided the
all important lesson to Anna that the process is as
important as the goal. The Gandhian in Anna perhaps
thought that he was delivering a second independence
to India. That was not to be. Anna lost a struggle and
we lost a dream.
BJP is weighing the options of calling for a special
session of Parliament to pass a motion to vote the
Government out of power. When the Parliament is in
session the party does not want to have anything to
do with it. Now a special session to discuss exactly
the same issues! Every ally in UPA wants more and
more cabinet berths. After getting plum portfolios
leaders like Mamta Bannerjee do not want their
ministers to attend Cabinet meetings. What kind of
accountability criteria do we apply to ourselves? As
far as Mamta Bannerjee is concerned no one is equal
to her in her party and she does not what anyone to
make an attempt to match her. Dinesh Trivedi tried
and promptly lost his job despite being an able Minister.
Mukul Roy knows his priorities better. The party office
in Kolkata is his headquarters; not Rail Bhavan in Delhi.
A recent report commissioned by the UN has some
uncomfortable conclusions especially for developing
nations like India. By 2050 there will be more people
above the age of 60 than those below the age of 15.
The population above 60 would cross one billion by
2050, a majority of them in the developing countries.
This actually means an enormous amount of focus on
affordable healthcare which is in a shambles even as
of now. With public healthcare plagued by corruption
and apathy it is indeed going to be a daunting task.
Even in developed nations healthcare issues are the
most predominant concern areas. In India with
governance standards being what it is what the future
holds remains to be seen. It is not an easy task even
for a well governed state.
The Supreme Court in a recent landmark judgment in
the case of Fiat India decreed that a commercially
justifiable price need not necessarily be a commercially
prudent price thanks to some convoluted logic
ingrained in certain legal fictions associated with the
valuation rules in Central Excise. Hold on to your
inventories and incur a loss or sell them incurring a
loss and pay excise duty on that loss also. Damn if
you do and damn if you don't - a classic case where
primacy of commerce is given a go-by in a business
situation. I shudder to think what could happen if the
Income Tax department take a cue from this case. You
could be taxed based on your earning capacity and
not based on your earnings. Be prepared for a midnight
knock by the taxman.
Varghese Kurien, father of the Indian White Revolution
died at Anand recently. With his death India lost one
of the most famous indigenously made icons. There
was a time when two stalwarts from two entirely
different rural parts of the country with different
personal backgrounds dominated the headlines for all
the right reasons. One was Kurien from the West and
the other was Piloo Modi from the Tata Empire in
Jamshedpur in the eastern part of the country -
extraordinary men who inspired ordinary men to do
extraordinary things. Kurien, the less flamboyant of the
two was a genius in peasant's clothes. This man who
preferred a peg of scotch to a glass of milk (he hated
milk other than as a commodity for sale) showed the
country what self-reliance really means and how to
sustain one's self-esteem. May his soul rest in peace.
Before signing off let me welcome the new entrant to
the Bizsol stable. Bizsol Projects & Infrastructure
Solutions LLP is the new arrival. The LLP is in the
business of infrastructure consultancy and project
management services in the field of real estate across
all sectors. On behalf of all Bizolites here are the good
wishes to the new entrant. Welcome and Good Luck.
Thank you
Venkat R. Venkitachalam
4
Bizsol UPDATE October - 2012
CUSTOMS
NOTIFICATIONS
Anti Dumping
• Anti-dumping duty on imports of 'phosphoric acid,
technical or food grade (including industrial
grade), falling under 280920, originating in, or
exported from, China PR-imposed vide
notification number 17/2008 - Cus. Dt: 19th
February, 2008 has been extended up to 12th
September, 2013. (Notification No. 45/2012 Dt:
25th September, 2012)
• Anti-dumping duty on imports of Pre-sensitized
positive Offset Aluminum Plates/PS Plates,
originating in, or exported from, China PR-
imposed vide notification number 108/2007 - Cus.
Dt: 25th September, 2007 has been extended up
to 23rd September, 2013. (Notification No. 44/
2012 Dt: 25th September, 2012)
• Anti-dumping duty on imports of Resin or other
organic substances bonded wood or ligneous
fiber boards of thickness below 6mm, except
insulation boards, laminated fiber boards and
boards which are not bonded either by resin or
other organic substances, originating in, or
exported from, China PR, Indonesia, Malaysia
and Sri Lanka has been imposed. The anti-
dumping duty imposed under this notification shall
be effective for a period of 6 months. (Notification
No. 43/2012 Dt:21st September, 2012)
• Anti-dumping duty on imports of 'Paracetamol'
falling under heading 2922, originating in, or
exported from, China PR-imposed vide
notification number 99/2007 - Cus. Dt: 3rd
September, 2007 has been extended up to 3rd
September, 2013. (Notification No. 42/2012 Dt:
19th September, 2012)
• Anti-dumping duty on imports of Ductile iron pipes,
originating in, or exported from, China PR-
imposed vide notification number 103/2007 - Cus.
Dt: 14th September, 2007 has been extended up
to 12th September, 2013. (Notification No.
41/2012 Dt. 13th September, 2012)
Safeguard Duty
• No new notification!!
Tariff
• Indian Oil Corporation Limited, Hindustan
Petroleum Corporation Limited or Bharat
Petroleum Corporation Limited can import the
LPG @ 'NIL' rate of customs duty on import of
LPG for supply to household domestic
consumers. Earlier it was restricted to import of
LPG for supply to household domestic consumers
at subsidized prices only. (Notification No. 55/
2012 Dt:18th September, 2012)
• Maize bran under Chapter heading 23021010 is
exempted from basic custom duty (Notification
No. 54/2012 Dt:17th September, 2012)
• Following list of goods has been exempted from
payment of basic custom duty subject to the
conditions as specified in the said notification.
Entry No. Description of goods
(zc) Bobbin elastic
(zd) Textile flowers
(ze) Water soluble lining, poly pouch, high
density sticker, heat transfer steaker
(zf) Anglets on draw strings-hooded jacket
(zg) Bra cup, bust cup, moulded cups for bra
and metal underwire for bra
(zh) Hook and bar, extra button covers plain,
ribbons, waist bands, shooter pin, O ring,
thermo strips and metal clip
(zj) Pin bullets for packing, plastic tags, bows,
ring & slider and rings
5
Bizsol UPDATE October - 2012
(Notification No. 51/2012 Dt: 13th September, 2012)
• The port Irungattukattai, SIPCOT Industrial Park,
Kattrambakkam village, Sriperumbudur Taluk,
Kanchipuram District, Tamil Nadu has been
added along with Tondiarpet (TNPM), Chennai &
accordingly notification no. 53/2003,54/2003,90/
2004 to 97/2004, 32/2005, 41/2005, 89/2005 40/
2006, 73/2006, 90/2006, 91/2006, 14/2009, 91/
2009 to 112/2009 has been amended to include
the port. (Notification No.50/2012 Dt:10th
September, 2012)
• BCD will be exempted on import of Goods
required specified Mega Power project (list 32A
of the Notification) certified by an officer not below
the rank of Joint Secretary to the Govt. of India in
the Ministry of Power before the 19th day July,
2012 only.
Also BCD exemption on the goods required for
the expansion of any existing Mega Power project
has been now restricted expansion of only two
specified Mega Power Projects namely
Vindhyachal Power Project and UNOSUGEN
CCPP, Gujarat. [Notification No. 49/2012
Dt:10Th September, 2012]
• Notification 125/2011 Cus dated 30.12.2012
providing partial exemption on goods imported
from Pakistan & Srilanka has been amended and
exemption limit modified for certain goods .
[Notification No. 48/2012 Dt: 6th September,
2012]
EOU / SEZ
• Duty Free Re- import of goods rejected by buyer
and exported by EOU/EHTP/BTP is permitted.
Earlier the condition restrictive was covering
cases only where the foreign buyer has failed to
take the delivery. (Notification No. 53/2012
Dt:13th September, 2012)
• Import of parts, components of aircraft replaced
or removed during the course of maintenance,
repair or overhaul of the aircraft in SEZ are
exempted from payment of custom duty even
when the aircraft pertains to domestic unit.
(Notification No.52/2012 Dt.13th September,
2012)
Non-Tariff Notification
• The new All Industries Drawback Rates 2012-13
has been notified effective from 10.10.2012 with
certain clarification and conditions. Please visit
www.bizsolindia.com for new DBK rates with
comparison. [Notification No. 92 / 2012-
Customs (N.T.), dated 4th October, 2012]
• Tariff value for RBD Palmolein, Brass Scrap (all
grades), Poppy Seeds, Gold and Silver has been
revised to USD 1012/MT, USD 4103/MT, USD
5346/MT, USD 573 per 10grams, and USD
1102.50per kilogram respectively. [Notification
90/2012-CUS (N.T.) Dt:28th September, 2012]
• E-payment of custom duty made mandatory for
importers registered under Accredited Clients
Programme & importers paying customs duty of
one lakh or more per bill of entry. (Notification
No.83/2012 Dt: 17th September, 2012)
• Kattupalli of Tamil Nadu State is notified to be
used for the purpose of unloading of imported
goods and loading of export goods or any class
of such goods. Earlier this Port was permitted to
use for the purpose of Unloading of imported
goods in containers for trans-shipment and
loading of goods transshipped in containers for
export. (Notification No. 82/2012 Dt. 14th
September, 2012)
CIRCULARS
Broad aspects of changes notified in All Industries
Drawback Rates 2012-13 has been provided.
a) In continuation of a transitory arrangement, most
of the items incorporated in last years (2011-12)
duty drawback schedule, from the erstwhile DEPB
scheme, will see a reduction in the AIR rates.
b) The existing residuary rate of 1% ad valorem (all
customs) will now be either 1% composite rate
with 0.3% customs component, or it will see an
increase to 1.5% (customs component) or 2%
(customs component).
c) With certain exceptions, the drawback caps have
not been assigned where the higher of the
composite rate/customs component of the rate is
3.5% or lower. Where the AIR will be above 3.5%,
not every entry has been assigned the drawback
6
Bizsol UPDATE October - 2012
caps. Where drawback caps have been assigned,
these will by and large see a relative increase.
d) In certain cases separate tariff entries have been
created, as for calcined bauxite, silicon dioxide,
gauze swabs, dairies with leather covers, leather
insoles, sarees with or without blouse piece under
chapters 50, 52 and 54, womens/girls blouses
with tightening at the bottom, footwear with TPR/
PU soles and canvas uppers, worked human hair,
imitation jewellery made up of iron, motor cars
with manual transmission, motor cars with
automatic transmission, multi-speed bicycles etc.
Under heading 3004 (medicaments), dosage and
pack-size specifications for many items have been
removed. Composite rates have been assigned
in a few cases such as under heading 7321, 7415
and 8535.
e) The unit for the drawback cap has been changed
from litre to kilogram for printing inks of heading
3215.
f) Drawback has been restored for export of Guar
Gum (Tariff Item No. 130201) by providing a
specific composite rate with a specific customs
component.
g) In order to continue with the existing classification
of sports gloves under the drawback schedule,
an appropriate exception, to the principle of
alignment at four digit level with the First Schedule
to the Customs Tariff Act, 1975, has been
specified in the Notes and Conditions in the
Notification.[Circular No. 27 / 2012-Cus dated
05th October, 2012]
• All Central and State Public Sector Undertakings
shall be exempt from furnishing Bank guarantee
or other form of security for storing sensitive goods
in the duty free shops operated by them for storing
sensitive goods in private bonded warehouses.
[Circular No. 26 /2012-Cus Dt. 10th Sept. 2012]
• Central Excise Department has been instructed
to verify the periodical utility bills (containing the
address) as one of the means for verification of
installation/operation/license premises for
address verifications or Installation Certificate
verifications requested by the Customs
authorities. [Circular No. 25 /2012-Cus dated 6th
September, 2012]
INSTRUCTIONS
• The procedures laid down in the Hon'ble Supreme
Court Orders dated 6th September, 2007 shall
be followed until the code comes into play. All
concerned authorities shall ensure strict
compliance of the said order before permitting
entry any vessel into Indian Territorial Waters for
breaking purposes and shall oversee the ship
breaking arrangements and implementation of
recommendations of CTE. (F. No. 405/2/2001-
Cus.III Dt:4th September, 2012)
CENTRAL EXCISE
NOTIFICATIONS
Tariff
• Now Indian Oil Corporation Limited, Hindustan
Petroleum Corporation Limited or Bharat
Petroleum Corporation Limited supplying the
Liquefied Propane and Butane mixture, Liquefied
Propane, Liquefied Butane and Liquefied
Petroleum Gases (LPG) to the household
domestic consumers will attract Nil rate of Excise
duty. [Notification No. 36/2012 CE dated 18th
September, 2012]
• Central Excise Duty on Motor Spirit (petrol)
intended for sale without brand name has been
reduced upto Rs. 1.20 per liter and now High
Speed Diesel intended for sale without brand will
attract the duty rate Rs. 1.46 per liter. [Notification
No. 35/2012 CE dated 14th September, 2012]
• Now only Ultra-Mega Power Projects and Mega
Power Projects as specified in the notification and
approved upto 19th July 2012 is entitled for
exemption of Excise Duty. Further, expansion of
Mega Power Projects namely, Vindhyachal STPP
Stage-V (Expansion Unit) - 500 MW (NTPC) and
UNOSUGEN CCPP, Gujarat (An expansion unit
of Sugen CCPP of 1147.5 MW)- 382.5(1) MW (M/
s. Torrent Power Ltd.) so certified before the 19th
day of July, 2012 is only entitled for Excise Duty
exemption as compared to exemption to
expansion of all the mega power projects earlier.
[Notification No. 34/2012 CE dated 10th
September, 2012]
7
Bizsol UPDATE October - 2012
Non-Tariff
No new Notifications.
CIRCULARS
No new Circulars
SERVICE TAX
NOTIFICATIONS
• Form 'ST-3' required to be submitted by the 25th
day of October, 2012 shall cover the period
between 1st April to 30th June, 2012 only.
(Notification 47/2012 Dt:28th September 2012)
INSTRUCTION
• Service Tax return for the period 1-7-2012 to 30-
9-2012 will have to be furnished in a revised
format. The revised format of the return and the
last date for filing it will be indicated separately.
(Instruction F.No.137/22/2012 Dt. 28th
September 2012).
FOREIGN TRADE POLICY
NOTIFICATION
• Export of 5,000 bales of Assam Comilla Cotton
will be exempted from any export restrictions
subject to registration with DGFT. Registration
Certificate for such exports will be valid for 30 days
only. [NOTIFICATION NO. 18 /(RE-2012) / 2009-
2014 Dt: 1st October 2012]
• The Procedure and conditions for export of cotton
w.e.f 1st October 2012 have been notified.
[NOTIFICATION NO. 17 /(RE-2012) / 2009-2014
Dt: 1st October 2012]
• Following goods under the India-Sri Lanka Free
Trade Agreement (ISFTA) can be imported from
any EDI Port.
ITCHS Description of Goods
25151100 Crude of roughly trimmed
25151220 Slabs of marble, travertine, building stone
etc.
25151210 Blocks of marble, travertine, building
stone etc.
25151290 Other
68021000 Tiles, cubes and similar articles, whether
or not rectangular (including square), the
largest surface area of which is capable
of being enclosed in a square the side of
which is less than 7 cm.; artificially
coloured granules, chippings and powder
68022110 Marble blocks or tiles
68022120 Marble monumental stone
68022190 Other
68022200 Other calcareous stone (ITCHS deleted)
68029100 Marble, travertine and alabaster
68029200 Other calcareous stone
Earlier the above goods can be imported only from
Kolkata Port.
[NOTIFICATION NO. 16 /(RE-2012) / 2009-2014
Dt. 26th September 2012]
TRADE NOTICE
• Allocation of Import quantity of 6 Lakh MT of
Rough Marble and Travertine Blocks for Financial
Year 2012-13 has been done and accordingly the
DGFT has notified list of 449 applicants with the
quantity that can be imported by such applicant.
[Trade notice No 4/2012 dt. 14th September,
2012].
PUBLIC NOTICE
• Format and Guidelines for applicants of export
license in the ANF 2 D have been amended to
make it more user friendly. [Public Notice No.
18 (RE-2012) / 2009-14 Dt: 28th September,
2012]
• SION No. A-1691 has been amended to reflect a
more specific name for the export product i.e. from
'Nylon Fabric' to "Relevant Nylon Tyre Cord
Fabric. In case of two SIONs No. H-207 (Export
Product : Polyester Chips (Textile Grade) PTA
Route) and H-278 (export product: PVC Rigid
Film/Sheet (General purpose/Stationary Grade),
permissible quantities of some inputs have been
changed. [PUBLIC NOTICE NO.17/(RE-2012)/
2009-2014 Dt: 20/09/2012]
8
Bizsol UPDATE October - 2012
28 28 53050020 53050010 COIR MATTRESS FIBRE 08.07.2010
COIR BRISTLES FIBRE, COIR MATTRESS
FIBRE, COIR SHORT FIBRE, COIR BIT FIBRE,
DECORTICATED COIR FIBRE
08.07.2010
29 29 53051130 53050030 CURLED / MACHINE TWISTED COIR FIBRE 02.03.2009
31 31 53051190 53050090 OTHER: FIBRE PRODUCED FROM
COCONUT HUSK BY MECHANICAL /
MANUAL PROCESS
02.03.2009
34 34 53110029 53110015 OTHERS: WOVEN GEOTEXTILES OF COIR 08.07.2010
35 35 53079010 56079010 COIR, CORDAGES & ROPES, OTHER THAN
OF COTTON
02.03.2009
Sr.No.
VKGUYProduct
Code
ExistingITC (HS)
Code
RevisedITC (HS)
Code
DescriptionEffective
DateRemark
1 1 060310 06031100
06031200
06031300
06031400
06031900
CUT FLWRS &
FLOWER BUDS
SUITABLE FOR
BOQETS OR
ORNAMENTAL
PURPOSES, FRESH
02.03.2009 Shipping Bill containing the
existing/revised ITC (HS)
Codes would be eligible to
claim benefit.
Sr.
No.
FPS
Product
Code
Existing
ITC (HS)
Code
Revised
ITC (HS)
CodeDescription Effective Date
27 27 53051110 53050010 COIR BRISTLE FIBRE 02.03.2009
COIR BRISTLES FIBRE, COIR MATTRESS
FIBRE, COIR SHORT FIBRE, COIR BIT FIBRE,
DECORTICATED COIR FIBRE
08.07.2010
28 28 53051120 53050020 COIR MATTRESS FIBRE 02.03.2009
• Certain errors have been noticed in terms of Sr.
No., Product Description etc for the items eligible
for benefit under Chapter 3 of FTP. These errors
have been rectified vide this notification.
Secondly, due to harmonization of ITC (HS)
Codes, new Codes with description have been
mentioned which would be eligible for incentives
under Appendix 37A & 37D; those are as under.
a. In Appendix 37A (VKGUY), the ITC (HS)
Codes are being revised at column 4 of table
below [existing codes are at column 3]:
9
Bizsol UPDATE October - 2012
Note: Shipping Bill containing the existing/revised
ITC (HS) Codes would be eligible to claim benefit.
[PUBLIC NOTICE NO. 16 (RE2012)/2009-14
Dt. 6th September, 2012]
• The spelling error in the name of import item for
SION A2337 - [Plaster of Paris (Dental Grade)]
presently appearing as Hydrocol Cement is
corrected to read as Hydrocal Cement. There is
no other change. [PUBLIC NOTICE NO: 15 (RE
2012) /2009-2014 Dt: 6th Sept., 2012]
CIRCULARS
• It is reiterated that requests for clubbing of
advance authorizations filed by the exporters on
or before 31st March 2012 should be disposed of
as per the provision of the Handbook of Procedure
prior to the revised edition/annual supplement
dated 05.06.2012. (Policy Circular No. 05
(RE-2012)/2009-1 Dt. 21st October 2012)
INCOME TAX
NOTIFICATIONS
• Now income of a Charitable Trust if invested in
Debt Instruments issued by any Infrastructure
Finance Company registered with Reserve Bank
of India shall not be included in the Total Income
of the previous year of the Charitable Trust in
which the Investment is made. [NOTIFICATION
NO. 40/2012 DATED 20/09/2012]
• An assessee not being a resident of India,
required to obtain a certificate reffered to in section
90(4) and 90A(4) shall be in the form specified in
Rule 21(AB) of the Income Tax Rules, 1962. An
assessee, being a resident of India, for the
purpose of an agreement reffered to in Section
90 and section 90A shall make an application in
Form 10FA and receive the certificate in Form
10FB, format for both of which are now specified
in Apppendix-II after Form 10F. [NOTIFICATION
NO. 39/2012 DATED 17/09/2012]
• Cost- Inflation Index for the Financial year 2012-
13 will be "852". [NOTIFICATION NO. 38/2012
DATED 17/09/2012]
• Shri H.L.Karwa Vice-president of Income tax
Appellate Tribunal is appointed as President of
that Tribunal in officiating capacity till the post is
filled on regular basis. [NOTIFICATION NO.
12023/2/2011-ADMIN. III (LA) DATED 13/9/2012]
CIRCULARS
• The Central government have notified conditions
with respect to Loan agreement, issue of Bonds
and the rate of interest which should be complied
with, in place of obtaining approval from Central
Government in respect of each Loan Agreement/
Bond issue and the rate of interest, to be eligible
for lower rate of withholding tax @ 5% for monies
borrowed by Indian Companies in foreign
currency from a source outside India. [CIRCULAR
No. 7/2012 dated 21/09/2012]
MVAT (MAHARASHTRA VAT)
CIRCULARS
• Land Developers will now have to file year wise
annexures for all the return periods upto 31-10-
2012 and will be in addition to return to be filed by
the dealers. [CIRCULAR NO. 18T OF 2012
DATED26/09/2012]
• Extension is provided to Developer required to
take registration under MVAT to pay MVAT on
sale of under construction flat to 15th Oct for
obtaining registration and 31st Oct for filing of
return and payment of Tax. [CIRCULAR NO. 17T
OF 2012 DATED 25/09/2012]
GVAT (Gujarat Vat)
NOTIFICATIONS
• Taxability of the following class or purchase of
sale is changed w.e.f 17/09/2012:
ä Now exemption from VAT to the extent to
which the amount of tax exceeds five paise
including additional tax at the rate of one
paisa in the rupee is available for Rail
coaches, Engines and Wagons and parts
thereof sold to any dealer. Earlier such
exemption was available only on sales to
Indian Railways.
ä Further, class of sales or purchases of Metro
rail coaches and parts of Metro rail coaches
10
Bizsol UPDATE October - 2012
when sold to any Metro rail company is now
taxable @ 2% for the sales made till 31st
March 2014 which was exempt from whole
of tax w.e.f. 14/07/2007.
[NOTIFICATION NO. (GHN-21)VAT-2012-
S.5(2)(35) DATED 17/09/2012]
KVAT (KARNATAKA VAT)
NOTIFICATIONS
• Now exemption from entry tax to SEZ Developer
or Co-Developer & SEZ Unit under Karnataka Tax
on Entry of Goods Act, 1979 (Karnataka Act 29
of 2004) on entry of any specified goods,
excluding petroleum products is restricted to
goods intended to be used in processing area of
Special Economic Zone.
[NOTIFICATION NO. FD 116 CSL 2012 DATED
12/09/2012 (NOTIFICATION-I)]
• Now exemption from special entry tax to SEZ
Developer or Co-Developer & SEZ Unit under
Karnataka Special Tax on Entry of Certain Goods
Act, 2004 (Karnataka Act 29 of 2004) on entry of
any notified goods, excluding petroleum products
is restricted to goods intended to be used in the
processing area of Special Economic Zone.
[NOTIFICATION NO. FD 116 CSL 2012 DATED
12/09/2012 (NOTIFICATION-II)]
COMPANY LAW
NOTIFICATIONS
• E-form 23AC (for filing Balance Sheet & other
documents with the registrar) and e-Form 23ACA
(for filing Profit & Loss Account and other
documents with registrar) has been revised taking
effect of revised Schedule VI as applicable from
01.04.2011.[Notification No. GSR -(E) dated
21st Sept 2012]]
CIRCULARS
• Further extension for imposition of filling fee for
e-form 23B (Information by Statutory Auditor to
the Registrar) without fees is provided upto 23rd
December 2012.[Genereal Circular No.31/2012
dated 28th Sept 2012]
• Due date for filing of e-form 23AC and e-form
23ACA in Non-XBLR format as per new schedule
VI is extended in following manner:
Particulars Time limit
The Co's whose due date 03.11.2012 or within
of AGM on or before 30 days from the date
20.09.12 of AGM whichever is
later.
The Co's whose due 22.11.2012 or within
date of AGM on or after 30 days from the date
21.09.12 of AGM whichever is
later
[General Circular No.30/2012 dated 28th Sept 2012]
• In case of Conversion of a Co-operative Society
(not registered as Multi State Society) in to a
Producer Company under Section 581 J(5) of
Companies Act, 1956 the ROC will seek a written
consent from the Local Co-Operative Department
of the concerned State certifying that the society
desirous of being converted into producer
company has 'no dues' payable to the State and
the Co-Operative department has 'no objection'
for such conversion. [General Circular No.29/
2012 dated 10th Sept 2012]
Circular NumberDate of
Issue
RBI/2012-2013/229
D B O D . N o . R e t . B C . 4 8 /
12.02.001/2012-13
28.9.2012 Department of
Banking
Operations and
Development
Department Subject Meant for
Section 24 of the Bank-
ing Regulation Act, 1949
Maintenance of Statu-
tory Liquidity Ratio
(SLR) - Local Area
Banks
All Local Area Banks
FEMA / RBI
RBI Circulars October-2012
11
Bizsol UPDATE October - 2012
Circular NumberDate ofIssue
Department Subject Meant for
RBI/2012-2013/228R P C D . N o . F S D . B C . 3 1 /
05.04.02/2012-13
28.9.2012 Rural Planning
and Credit De-
partment
Union Budget - 2012-13
- Interest Subvention
Scheme - 2 per cent in-
terest subvention and 3
per cent additional sub-
vention for short-term
crop loans in 2012-13
The Chairman/Manag-
ing Director All Public
Sector Banks
RBI/2012-2013/227
DBOD.DIR.No.46/04.02.001/
2012-13
27.9.2012 Department of
Banking Opera-
tions and Devel-
opment
Interest Rate Ceiling on
Lines of Credit with
Overseas Banks
All Scheduled Commer-
cial Banks (excluding
RRBs)
RBI/2012-2013/226
UBD.BPD (PCB) Cir. No.13/
14.01.062/2012-13
27.9.2012 Urban Banks
Department
Uploading of Reports in
'Test Mode' on FINnet
Gateway
The Chief Executive Of-
ficer of All Primary (Ur-
ban) Co-operative
Banks
RBI/2012-2013/225
A.P. (DIR Series) Circular
No. 37
26.9.2012 Foreign
Exchange
Department
Deferred Payment Pro-
tocols dated April 30,
1981 and December 23,
1985 between Govern-
ment of India and erst-
while USSR
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/224
UBD.BPD.(PCB) Cir No.12/
09.16.900/2012-13
26.9.2012 Urban Banks
Department
Financial Restructuring
of UCBs
The Chief Executive Of-
ficers All Primary (Ur-
ban) Co-operative
Banks
RBI/2012-2013/223
A.P. (DIR Series) Circular
No. 36
26.9.2012 Foreign
Exchange
Department
Foreign Direct Invest-
ment (FDI) in India - Al-
lotment of Shares to per-
son resident outside In-
dia under Memorandum
of Association (MoA) of
an Indian company -
Pricing guidelines
All Category - I
Authorised Dealer banks
RBI/2012-2013/222
A.P. (DIR Series) Circular No.
35
25.9.2012 Foreign
Exchange
Department
Establishment of Liaison
Offices (LO) /Branch Of-
fices (BO) / Project Of-
fices (PO) in India by
Foreign Entities - Re-
porting requirement
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/221
FMD.MSRG. No.71/
02.02.001/2012-13
25.9.2012 Financial Markets
Department
Reporting of OTC Call/
Notice/Term Money
transactions
The Chairmen/Chief Ex-
ecutives of All Sched-
uled Commercial Banks
(excluding RRBs)/ Co-
operative Banks / Pri-
mary Dealers
12
Bizsol UPDATE October - 2012
Circular NumberDate ofIssue
Department Subject Meant for
RBI/2012-2013/220
A.P. (DIR Series) Circular
No. 34
24.9.2012 Foreign
Exchange
Department
Foreign Exchange Man-
agement Act, 1999-Im-
port of gold in any form
including jeweller y
made of gold/precious
metals or / and studded
with diamonds / semi
precious / precious
stones - clarification
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/219
A. P. (DIR Series)Circular No.
33
24.9.2012 Foreign
Exchange
Department
Know Your Customer
(KYC) norms/Anti-Money
Laundering (AML) stan-
dards / Combating the Fi-
nancing of Terrorism
(CFT) Obligation of
Authorised Persons un-
der Prevention of Money
Laundering Act, (PMLA),
2002, as amended by
Prevention of Money
Laundering (Amend-
ment) Act, 2009 - Money
changing activities
All Authorised Persons
in Foreign Exchange
RBI/2012-2013/218
UBD.BPD (PCB) Cir. No.11/
14.01.062/2012-13
24.9.2012 Urban Banks
Department
Implementation of Sec-
tion 51-A of UAPA,
1967- Updates of the
UNSCR 1267 (1999) /
1989 (2011) Sanctions
List - Primary (Urban)
Co-operative Banks
The Chief Executive
Officer of All Primary
(Urban) Co-operative
Banks
RBI/2012-2013/217
A.P.(DIR Series) Circular
No. 32
21.9.2012 Foreign
Exchange
Department
Foreign investment in
Single-Brand Product
Retail Trading/ Multi-
Brand Retail Trading /
Civil Aviation Sector /
Broadcasting Sector /
Power Exchanges -
Amendment to the For-
eign Direct Investment
Scheme
All Category-I
Authorised Dealer
Banks
RBI/2012-2013/216
RPCD.CO.RCB.RRB.BC.No.
28/07.02.01/2012-13
21.9.2012 Rural Planning
and Credit
Department
Section 42(1) of the Re-
serve Bank of India Act,
1934 - Maintenance of
Cash Reserve Ratio
(CRR)
All Scheduled State Co-
operative Banks/ Re-
gional Rural Banks
13
Bizsol UPDATE October - 2012
Circular NumberDate ofIssue
Department Subject Meant for
RBI/2012-2013/215
UBD.BPD (PCB) Cir. No. 10/
14.01.062/2012-13
18.9.2012 Urban Banks
Department
Implementation of Sec-
tion 51-A of UAPA,
1967- Updates of the
UNSCR 1267 (1999)/
1989 (2011) Commi-
ttee's Al Qaida Sanc-
tions List-Primary (Ur-
ban) Co-operative
Banks
The Chief Executive Of-
ficer of All Primary (Ur-
ban) Co-operative
Banks
RBI/2012-2013/214
RPCD.MSME&NFS.BC.No.30/
06.11.01/2012-13
18.9.2012 Rural Planning
and Credit
Department
The Scheme of 1% Inter-
est Subvention on Hous-
ing Loans up to Rs.
15.00 lakh
The Chairman/Manag-
ing Director/Chief Ex-
ecutive Officer All
Scheduled Commercial
Banks (excluding Re-
gional Rural Banks)
RBI/2012-2013/213
RPCD.CO RRB. RCB. AML.
BC. No. 29 /03.05.33 (E)/2012-
13
18.9.2012 Rural Planning
and Credit
Department
Uploading of Reports in
'Test Mode' on FINnet
Gateway
The Chairmen / CEOs of
all Regional Rural Banks
and State and Central
Co-operative Banks
RBI/2012-2013/212
UBD.BPD. (SCB). CIR.No. 4 /
12.03.000/2012-13
17.9.2012 Urban Banks
Department
Section 42(1) of Reserve
Bank of India Act, 1934
- Maintenance of Cash
Reserve Ratio (CRR)
The Chief Executive Of-
ficers of All Scheduled
Primary (Urban) Co-op-
erative Banks
RBI/2012-2013/211
A. P.(DIR Series) Circular No.
31
17.9.2012 Foreign
Exchange
Department
Establishment of Liaison
Office (LO) / Branch Of-
fice (BO) / Project Office
(PO) in India by Foreign
Entities - Clarification.
All Category-I
Authorised Dealer
Banks
RBI/2012-2013/210
D N B S ( P D ) . C C . N o 3 0 4 /
03.10.42/2012-13
17.9.2012 Department of
Non Banking
Supervision
Anti-Money Laundering
(AML)/Combating of Fi-
nancing of Terrorism
(CFT) - Standards
All Non Banking Finan-
cial Companies /Residu-
ary Non Banking Com-
panies
RBI/2012-2013/209
D B O D . N o . R e t . B C . 4 4 /
12.01.001/2012-13
17.9.2012 Department of
Banking
Operations and
Development
Section 42(1) of the Re-
serve Bank of India Act,
1934 - Maintenance of
Cash Reserve Ratio
(CRR)
All Scheduled Commer-
cial Banks (Excluding
Regional Rural Banks)
RBI/2012-2013/208
D B O D . N o . B P . B C / 4 2 /
21.04.048/2012-13
14.9.2012 Department of
Banking
Operations and
Development
NPA Management - Re-
quirement of an Effective
Mechanism and Granu-
lar Data
The Chairman and Man-
aging Director/Chief Ex-
ecutive Officer of All
Scheduled Commercial
Banks (Excluding RRBs)
RBI/2012-2013/207
DNBS (PD) CC. No.303/
Factor / 22.10.91/ 2012-13
14.9.2012 Department of
Non Banking
Supervision
The Non-Banking Finan-
cial Company -Factors
(Reserve Bank) Direc-
tions, 2012
All NBFCs
14
Bizsol UPDATE October - 2012
Circular NumberDate ofIssue
Department Subject Meant for
RBI/2012-2013/206
UBD.BPD (PCB) Cir. No. 8/
14.01.062/2012-13
13.9.2012 Urban Banks
Department
Know Your Customer
(KYC)/Anti-Money Laun-
dering (AML)/Combating
of Financing of Terrorism
(CFT) - Risk Categoriza-
tion and Updation of Cus-
tomer Profiles - Primary
(Urban) Co-operative
Banks
The Chief Executive Of-
ficer of All Primary (Ur-
ban) Co-operative
Banks
RBI/2012-2013/205
D B O D . N o . B P . B C . 4 1 /
21.06.009 / 2012-13
13.9.2012 Department of
Banking
Operations and
Development
Prudential Guidelines on
Capital Adequacy and
Market Discipline- New
Capital Adequacy
Framework (NCAF) - Eli-
gible Credit Rating
Agencies - SME Rating
Agency of India Ltd.
(SMERA)
The Chairman / CMD /
MD / CEO All Scheduled
Commercial Banks (Ex-
cluding Local Area
Banks and Regional Ru-
ral Banks)
RBI/2012-2013/204
A.P.(DIR Series) Circular No.
30
12.9.2012 Foreign
Exchange
Department
Comprehensive Guide-
lines on Over the
Counter (OTC) Foreign
Exchange Derivatives -
Cost Reduction Struc-
tures
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/203
A.P. (DIR Series) Circular No.
29
12.9.2012 Foreign Ex-
change Depart-
ment
Overseas Direct Invest-
ments by Indian Party -
Rationalisation
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/202
A.P. (DIR Series) Circular
No. 28
11.9.2012 Foreign Ex-
change Depart-
ment
Trade Credits for Import
into India
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/201
A.P. (DIR Series) Circular
No. 27
11.9.2012 Foreign Ex-
change Depart-
ment
External Commercial
Borrowings (ECB)
Policy - Bridge Finance
for infrastructure sector
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/200
A.P.(DIR Series)Circular No.
26
11.9.2012 Foreign Ex-
change Depart-
ment
External Commercial
Borrowings(ECB) Policy
- Repayment of Rupee
loans and/or fresh Ru-
pee capital expenditure
- USD 10 billion scheme
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/199
D B O D . B P . B C . N o . 4 0 /
21.04.172/2012-13
11.9.2012 Department of
Banking Opera-
tions and Devel-
opment
Bank Finance to Factor-
ing Companies
All Scheduled Commer-
cial Banks (excluding
RRBs)
RBI/2012-2013/198
A. P. (DIR Series) Circular
No. 25
7.9.2012 Foreign Ex-
change Depart-
ment
Overseas Investment by
Indian Parties in Paki-
stan
All Category - I
Authorised Dealer
Banks
15
Bizsol UPDATE October - 2012
Circular NumberDate ofIssue
Department Subject Meant for
RBI/2012-2013/197
DBOD. AML.BC.No.39/
14.01.001/2012-13
7.9.2012 Department of
B a n k i n g
Operations and
Development
Uploading of Reports in
'Test Mode' on FINnet
Gateway
The Chairmen/CEOs of
all Scheduled Commer-
cial Banks(Excluding
RRBs)/ Local Area
Banks / All India Finan-
cial Institutions
RBI/2012-2013/196
DNBS (PD).CC. No 302 /
03.10.42 /2012-13
7.9.2012 Department of
Non Banking Su-
pervision
Implementation of Sec-
tion 51-A of UAPA, 1967
- Updates of the UNSCR
1267 (1999) /1989
(2011) Committee's Al
Qaida Sanctions
All Non Banking Finan-
cial Companies / Re-
siduary Non Banking
Companies
RBI//2012-2013/195
A. P. (DIR Series) Circular
No. 24
6.9.2012 Foreign Ex-
change Depart-
ment
Exim Bank's Line of
Credit of USD 20 million
to the Government of
Mongolia
All Category - I
Authorised Dealer
Banks
RBI/2012-2013/194
DPSS. CO. AD. No. 427 /
02.27.005/2012-13
6.9.2012 Department of
Payment and
Settlement Sys-
tems
Implementation of Sec-
tion 51-A of UAPA, 1967
- Updates of the UNSCR
1267 (1999) and 1989
(2011) Committee's Al
Qaida Sanctions List
CEOs of all the Payment
System Operators
Authorised under the
PSS Act, 2007
RBI/2012-2013/193
DPSS. CO. AD. No. 426/
02.27.005/2012-13
6.9.2012 Department of
Payment and
Settlement Sys-
tem
Anti- Money Laundering
(AML) / Combating of Fi-
nancing of Terrorism
(CFT) - Standards
Chief Executive Officers
of All the Payment
S y s t e m O p e r a t o r s
Authorised under the
PSS Act, 2007
RBI/2012-2013/192
UBD.BPD.Cir.No.7/13.01.000
/ 2012-13
6.9.2012 Urban Banks De-
partment
Interest Rate on Depos-
its
The Chief Executive Of-
ficer All Primary (Urban)
Co-operative Banks
RBI /2012-2013/191
DBOD.No. Leg.BC. 38/
09.07.005/2012-13
5.9.2012 Department of
Banking Opera-
tions and Devel-
opment
Banking facilities to visu-
ally challenged / persons
with disabilities
All Scheduled Commer-
cial Banks (excluding
RRBs)
RBI/2012-2013/190
DPSS.CO.CHD.No .399 /
04.07.05 / 2012-13
3.9.2012 Department of
Payment and
Settlement Sys-
tem
Standardisation and En-
hancement of Security
Features in Cheque
Forms-Migrating to CTS
2010 standards
The Chairman and Man-
aging Director / Chief
Executive OfficerAll
Scheduled Commercial
Banks including RRBs /
Urban Co-operative
Banks / State Co-opera-
tive Banks / District Cen-
tral Co-operative Banks/
Local Area Banks
RBI/2012-2013/189
IDMD.PCD.No.718/14.03.05/
2012-13
3.9.2012 Internal Debt
Management De-
partment
Applicability of credit ex-
posure norms for bonds
guaranteed by the Gov-
ernment of India
All Standalone Primary
Dealers
16
Bizsol UPDATE October - 2012
FEMA Circulars
A.P.(Dir Series) Date Title
Circular No. 37 26.09.2012 Deferred Payment Protocols between Government of India and erstwhile USSR
Circular No. 36 26.09.2012 Foreign Direct Investment (FDI) in India - Allotment of Shares to person resident
outside India under Memorandum of Association (MoA) of an Indian company -
Pricing guidelines
Circular No. 35 25.09.2012 Establishment of LO /BO / PO in India by Foreign Entities - Reporting requirement
Circular No. 34 24.09.2012 FEMA 1999-Import of gold in any form including jewellery - clarification
Circular No. 33 24.09.2012 KYC norms/AML standards/CFT Obligation of Authorised Persons under PMLA
2002, as amended by PML Amendment Act, 2009 - Money changing activities
Circular No. 32 21.09.2012 Foreign investment in Single-Brand Product Retail Trading/ Multi-Brand Retail Trad-
ing / Civil Aviation Sector / Broadcasting Sector / Power Exchanges - Amendment
to the Foreign Direct Investment Scheme
Circular No. 31 17.09.2012 Establishment of Liaison Office (LO) / Branch Office (BO) / Project Office (PO) in
India by Foreign Entities - Clarification
Circular No. 30 12.09.2012 Comprehensive Guidelines on OTC Foreign Exchange Derivatives - Cost Reduction
Structures
Circular No. 29 12.09.2012 Overseas Direct Investments by Indian Party - Rationalisation
Circular No. 28 11.09.2012 Trade Credits for Import into India
Circular No. 27 11.09.2012 ECB Policy - Bridge Finance for Infrastructure Sector
Circular No. 26 11.09.2012 ECB Policy - Repayment of Rupee loans and/or fresh Rupee capital expenditure -
USD 10 billion scheme
Circular No. 25 07.09.2012 Overseas Investment by Indian Parties in Pakistan
Circular No. 24 06.09.2012 Exim Bank's Line of Credit to the Government of Mongolia
17
Bizsol UPDATE October - 2012
CBEC Notified Exchange Rate for Conversion of Foreign Currency
w.e.f. 05/10/2012 (Notification 91/2012-Customs (NT) dated 04/10/2012)
SCHEDULE-I
S.No. Foreign Currency
Rate of exchange of one unit of foreign currency
equivalent to Indian rupees
(For Imported Goods) (For Export Goods)
1. Australian Dollar 54.30 52.80
2. Bahrain Dinar 143.05 134.85
3. Canadian Dollar 53.90 52.55
4. Danish Kroner 9.20 8.90
5. EURO 68.45 66.65
6. Hong Kong Dollar 6.80 6.70
7. Kenya Shilling 63.50 59.55
8. Kuwait Dinar 192.00 180.60
9. New Zealand Dollar 43.75 42.40
10. Norwegian Kroner 9.30 9.00
11. Pound Sterling 85.45 83.40
12. Singapore Dollar 43.05 41.90
13. South African Rand 6.45 6.05
14. Saudi Arabian Riyal 14.40 13.55
15. Swedish Kroner 8.00 7.75
16. Swiss Franc 56.65 55.05
17. UAE Dirham 14.70 13.85
18. US Dollar 52.85 51.85
S.No. Foreign Currency
Rate of exchange of 100 units of foreign currency
equivalent to Indian rupees
SCHEDULE-II
(For Imported Goods) (For Export Goods)
1. Japanese Yen 67.95 66.00
18
Bizsol UPDATE October - 2012
ROLES & RESPONSIBILITIES OF OFFICERS' DEALING
IN SERVICE TAX & AUDITORS OF THE COMPANY
By CMA Ashok Nawal,E-mail: [email protected] • Mobile: +91 98901 65001
In the New Era of Negative List of Services, all activities
carried out by one person for another for consideration
including declared services are covered under ambit
of Service tax except for :
I- Immovable Goods
M- Money
A - Actionable Claims
G- Goods
E - Employee providing services to employers
In other words, if activities not covered under "IMAGE"
and fees paid to Court are covered under the ambit of
service tax.
Declared services includes service portion of deemed
sales and more so, "Agreeing to the obligation to refrain
from an act, or to tolerate an act or a situation, or to do
an act" will cover most of the activity in day-to-day
business irrespective whether manufacturing, trading
or services.
It is important to understand the followings:
• What is service?
• What is consideration?
• Money, Actionable Claim and Securities
• Important Definitions
• Taxability of Services including exemptions
• Negative List
• Declared Services
• Exempted Services
• Reverse Charge
• Works Contract
• Valuation
• Abatement
• Rules of Interpretation (Bundled Services)
• Point of Taxation
• Service Tax Rules / Cenvat Credit Rules
Amendment
• Place of Provision of Services
• Accounting transactions and Implications on
Service Tax
There is a need to analyze the transaction with respect
to :
• Purchase
• Sales
• Expenses
• Income
• Capital Expenditure and also analyze all
expenditures and income from Source - Invoice /
Debit Notes, Service Provider, Nature of Contract,
Account Head
Moreover, it is necessary to take the following actions:
• Creation of Matrix - Service Provider, Nature of
Expense and A/c Head
• Creation of New accounting codes
• Standard Accounting Entries
• Inter Group / Inter Unit Transaction Analysis
• Identification of Transactions between Taxable
Territory and Non Taxable Territory
• Analysis of Transactions for Import of services
and taxability in view of Place of Provision of
Service Rules, 2012
• Analysis of Transactions for Export of Service and
taxability in view of Rule 6A of Service Tax Rules,
1994
• Analysis of Ageing of Service Creditors and
entitlement of Cenvat Credit thereto
• Aging Analysis of Service Debtors and decision
of credit notes and adjustment of the service tax
payment
• Rebate of Service and Linkage with Input Services
/ Inputs
19
Bizsol UPDATE October - 2012
It is also pertinent to note as an effective deterrence
against tax evasion and for ensuring high level of
compliance, prosecution provisions were introduced
in the year 2011 in Service Tax law by way of section
89 in the Finance Act, 1994.
Let us understand the provisions under Section
89(1)(a) as it then existed is extracted below -
(a) provides any taxable service chargeable to service
tax under sub-section (1) of section 68 or receives any
taxable service chargeable to tax under subsection
(2) of said section, without an invoice issued in
accordance with the provisions of this Chapter or the
rules made there under; or"
Pursuant to the above, it has been clarified by CBE&C
vide Circular No. 140/9/2011 -ST, dated 12.05.2011
that clause (a) of section 89(1) of Finance Act, 1994,
is meant to apply, inter alia , where services have been
provided without issuance of invoice in accordance with
the prescribed provisions and invoice is required to be
issued within 14 days from the date of completion of
the taxable service.
The said clause (a) of section 89 (1) of the Finance
Act, 1994 has been substituted by the Finance Act,
2012 effective from 28th May, 2012 and it reads as
under:
[(a) knowingly evades the payment of service tax under
this Chapter; or]"
The CBE&C vide letter D. O. F. No 334/1/2012- TRU
dated 16th March, 2012 mentions the following about
the aforesaid amendment:
"Clause (a) of section 89 relating to prosecution for
non-issue of invoice is being replaced with the words
"knowingly evades payment of service tax". This will
meet the demand of business that mere non-issue of
invoices should not be made punishable with
prosecution, while giving a comprehensive coverage
to offences and also aligning with other indirect laws .
Simultaneously process of compounding of offences
will be operationalized and the enabling rule making
power has been obtained in the Act."
Thus, the said clause (a) of section 89(1) post
amendment has cast a huge uncertainty on the
applicability of prosecution provision for want of specific
narrative. Though, it has been clarified that mere non-
issuance of invoice would not be punishable with
prosecution but indication of comprehensive coverage
in line with other indirect tax laws may have far-
reaching impact on the future transactions and
apprehension may loom large in the trade.
Since the CBE&C clarification dated 16th March, 2012
is indicative of giving a comprehensive coverage to
offences aligning with other indirect tax laws,
apprehension of the trade is justified that the difficulties
arising out of such ambiguous wording may take an
ugly shape under the new negative-list based regime
which is in a nascent stage. I n these challenging times,
there is a pressing need to draw a clear intended scope
of the said clause (a) of section 89(1) in order to
achieve the broad objective of compliance.
Though the Board has in its Circular No. 140/9/2011 -
ST dated 12.05.2011 clarified that the provisions
relating to prosecution are to be exercised with due
diligence, caution and responsibility on the part of
departmental officers but such expansion of provision
without proper narrative or outline may expose the
assessee to the threat of unnecessary prosecution.
It has also mentioned in paragraph 9 of the aforesaid
Circular that each offence described in section 89(1)
of the Finance Act, 1994 has an inherent mens rea;
delinquency by the defaulter of service tax itself
establishes his 'guilt'; if the accused claims that he did
not have guilty mind, it is for him to prove the same
beyond reasonable doubt; thus, burden of proof
regarding non-existence of ' mens rea' is on the
accused.
So, the department has smartly positioned itself to
plead for every evasion having inherent mens rea to
be covered under the terms "knowingly evades" and
liable for prosecution .
In such a situation, it is expected that the Departmental
officers exercise the provisions of prosecution with due
diligence, caution and responsibility.
It is also important to understand the following
important provisions of Finance Act,1994 :
Sections Provisions
72A Special Audi t by Pract ic ing Chartered
Accountant and Cost Accountants if assessee
fails to declare or determine value of taxable
services correctly or Cenvat availment and
utilization are not in the normal limit or availed
20
Bizsol UPDATE October - 2012
by fraud/ collusion / suppression of facts /
willful misstatement or where operation of the
company are spread out at multiple locations
Sec 73(1) Time limit for issue of Show Cause notice
extended to 18 months
Sec 73(2) Deeming provision for issuance of Show
Cause Notice for subsequent period has been
introduced if grounds relied upon remain the
same for the earlier period - Limitation of 18
months will not apply in such cases.
Sec 73(4A) Provision of payment of service tax, interest
and penal ty equal to 1% each month
maximum to 25% will not be applicable in the
case where service tax not levied or paid or
short levied or short paid or erroneously
refunded will not be applicable if it is on
account of fraud / collusion / suppression of
facts / willful misstatement.
In other words, issuance of Show Cause Notices and
invoking extended larger period will not be at all difficult
to the Revenue Department considering the nature of
disclosures and reply to the communications which is
generally made by the Assessees' and as stated
above, invoking the provisions of prosecution will be
easy if, proper controls and systems are not been set-
up.
One has to undertake the following exercises so as to
be 100% Statutory complaint and also to avail correct
Cenvat of "Capital goods, Input and Input Services"
and also " Reverse Cenvat Amount " in accordance
with Rule 6 (3A) of Cenvat Credit Rules, 2004.
• Review of the Trial Balance and identification of
the Accounts for further review and analysis of
each transactions reflecting in Books of Accounts
• Review of Contracts with various Service
Providers including job-workers, WCT,
transportation, etc
• Review of each of the identified Accounts and the
transactions there under
• Mapping the transactions in the Ledger Accounts,
linking it with Service Provider Master and
identifying the coverage under Service and impact
on the service Tax liability
• Review of the mechanism for availment of Service
Tax Credit
• Providing Guidelines for change in system of
Accounting entries, required if any to facilitate the
identification of the Service Tax Liability as
mentioned above
• Providing guidelines for changes in system of
Credit Availment, taking into account the revised
reverse charge scenario
• Amending Contract terms of the various contracts
with Service Providers to have minimum impact
of service tax within the Legal framework and
reduce the complexities under Reverse Charge
Mechanism and Cenvat Credit Reversal
Mechanism
• Continuous Training to the Accounts team and
Indirect Tax team for implementation of the new
system in the New Era of Negative List of Services
The actions needs to be initiated not only for the
Officers' of Accounts Department and Indirect Tax
Team of company but also to the Statutory Auditor and
Tax Auditor who will be certifying the correctness of
Payment of Government dues and also of Cost
Accountant who will be doing the Cost Audit and report
Indirect Tax Reconciliation in his Audit report.
i i i
21
Bizsol UPDATE October - 2012
CENTRAL EXCISEä CENVAT/MODVAT Credit on Inputs: Notification
No.14/97-CE(NT) restricting users of specified
petroleum products from local refineries to take
Modvat credit only to the extent of 10% ad
valorem. HC held. it is ultra vires to the Articles
14 and 19(1) (g) of Constitution of India. Same
rules of law and remedies should be applicable
to all persons within India territory, irrespective of
difference of circumstances, all persons similarly
circumstanced shall be treated alike, both in
privileges conferred and liabilities imposed. No
action should treat uneuqals as equals.
[2012(282) E.L.T. 33 (Guj. HC)]
ä Practice and Procedure- Person whose case
is based on falsehood, has no right to
approach court,: One who comes to court, must
come with clean hands, process of court can not
be allowed to be abused by unscrupulous persons
as convenient lever to retain illegal gains
indefinitely and person whose case is based on
falsehood, has no right to approach court, he can
be summarily thrown out at any stage of the
litigation. [2012(282) E.L.T. 67(Tri. Chennai)]
ä Exports Rebate not admissible as no proof for
use of inputs in exported goods: Fundamental
requirement for claiming rebate of duty paid on
inputs is that the use of duty paid inputs in the
manufacture of export goods. Applicant failed to
submit any records proving use of said duty paid
inputs in manufacture of export goods; said lapse
cannot be treated as a procedural lapse, rebate
claim not admissible under Rule 18 of Central
Excise Rules, 2002. [2012(282) E.L.T. 153 (GOI)]
ä Exports Rebate allowed when duty paid under
Rule 3(4) or (5): rebate claims on exported used
aluminium engraved (printing) cylinders after
payment of duty discharged under Rule 3(5) of
CCR, 2004 on the 'transaction value'. These
claims had been rejected inter alia on the grounds
that i) the goods were exported directly from
factory / warehouse of their manufacturer but from
applicant's own factory, ii) the cenvatable export
goods were exported after use and not as such
and iii) duty paid under Cenvat Credit is not
covered under definition of duty for rebate
purpose. But Government set aside the impugned
orders and confirmed that an amount reversed
under Rule 3(4) when inputs are removed as such
is to be treated as payment of excise duty. Further
when exporter has submitted proof of actual
export, the substantial benefit of due rebates
should not be denied. [2012(282) E.L.T. 137
(GOI)]
ä Undervaluation of few clearances cannot be
applied to all: It cannot be applied to all
clearances of assessee as evidence of
undervaluation has to be available for each
removal. Demand cannot be confirmed when
there is probability that in all cases assessee may
not be guilty of same transgression, however
extrapolation is justified if reliable pattern shows
beyond doubt a probability that same level of
undervaluation was there in respect of all
impugned clearances. [2012(282) E.L.T. 112 (Tri.
Bang.)]
ä Export rebate: Time limit of one year under
Section 11B applicable: Where the statute
provides a period of limitation, the provision has
to be complied with as a mandatory requirement
of law. In the present case petitioner had filed an
application for rebate on 17th July 2007 which
was beyond the period of one year from 12th
February 2006 being the relevant date on which
the goods were exported. Since, section 11B of
Central Excise Act, 1944 specifically
comprehends an application for rebate of excise
duty on goods exported or materials used in their
manufacture, hence Rule 18 of Central Excise
Rules, 2002 cannot be read independent of
requirement of limitation prescribed in section 11B
22
Bizsol UPDATE October - 2012
ibid. Mere presentation of ARE-1 form does not
constitute the filling of a valid application for
rebate. [2012 (282) E.L.T. 481 (Bom.)]
ä Cenvat Credit is admissible in relation to tool
kit and first aid kit sold as accessories
alongwith two wheelers: Clause 4(b) of Rule 138
of Central Motor Vehicle Rules, 1989 makes it
incumbent on driver of every vehicle to carry the
tool kit prescribed by the manufacturer. Since,
carrying of the tool kit and first aid kit are
necessary accessories of the motor vehicle
because driving of the vehicle without those
accessories would be violative of Rule 138 ibid
hence, kits supplied to the buyers as per statutory
requirements are squarely covered under
definition of 'input' under section 2(k) of Cenvat
Credit Rules, 2004 and therefore, cenvat credit
availed by the assessee in relation to tool kit and
first aid kit is rightly admissible to them. [2012
(282) E.L.T. 533 (Tr. Del.)]
ä Cenvat credit on insurance of plant and
machinary, company's vehicles, finished
goods in stock: Main part of "Input Service"
definition in Rule 2(l) of Cenvat Credit Rules, 2004
cover all services having nexus with manufacture
whether directly or indirectly and services availed
in compliance with statutory provisions without
which manufacturing activity not allowed also
covered. Inclusive portion of the 'input service'
definition does not specifically cover insurance
of plant and machinery, company's vehicles,
finished goods in stock or transit, it does cover
'activities relating to business such as accounting,
auditing, financing' because of use of the words
"such as" the scope of "activities relating to
business" is very wide and the list of services
covered by this definition is not exhaustive.
Hence, services integrally connected, treatable
as 'activities relating to business' and therefore
covered by definition of 'input service. [2012(282)
E.L.T. 541 (Tri.Del.)]
ä Exemption from MRP based assessment to
packaged commodity: Rule 2(A) of Standards
of Weights and Measures (Packaged
Commodities) Rules, 1977 grants exemption from
applicability of chapter II of Rules ibid i.e.
exemption from MRP based assessment to
imported packaged commodity in cases of goods
sold to institutional consumers or industrial
consumers but burden to prove that the provisions
of Chapter -II ibid are not applicable to packaged
commodity imported by them lies on the
aseessee. In the present matter since the
assessee fulfills all the conditions to be covered
under exemption from MRP based assessment,
matter remanded back to original authority for
deciding afresh. [2012(282) E.L.T. 566
(Tri.Mum)].
ä Coal Exemption: if there is availment of cenvat
credit of duty on inputs under the provisions of
Cenvat Credit Rules, 2004 the exemption
provided under Notification No.1/2011-CE will not
be applicable, excise duty @ 5% would be liveable
on Coal. Excise duty limited to the extent of 1%
ad valorem plus cess, in the event only if credit of
duty on inputs has not been taken. [2012(283)
E.L.T. 330 (Gau. HC)]
ä Cenvat Credit utilized in the manufacture of
exempted goods liable to be reversed
immediately: Credit of duty utilized in the
manufacture of exempted goods is required to
be reversed without any reference of time-limit.
[2012(283)ELT 336 (Allah HC)]
ä Re-export of un-utilized goods imported under
exemption notification: Re-export under
Notification No.93/2004-Cus is permitted only
when the materials are found defective or unfit
for use. In this case assessee imported raw
material as per Notification No.93/2004-Cus which
can not be considered to be the goods of
assessee as the assessee was doing only job
work and ownership of the goods remains with
foreign company for whose benefit the job work
is undertaken. Importer would be entitled to claim
the benefit of exemption from payment of duty
only as per the terms of the Notification and not
otherwise. [2012(283)ELT 346 (Mad HC)]
ä Recovery Limitation:Secyion 11D of the Central
Excise Act, 1944 does not provide any rigid time
limit. In such cases, as so long as the recovery
proceedings are initiated within reasonable time,
the same cannot be struck down only as time
barred. The reasonable period of time is
essentially a question of fact and to be judged on
23
Bizsol UPDATE October - 2012
the basis of each individual case. [2012(283)ELT
359 (Guj. HC)]
ä Exemption cannot be denied due to clerical
mistake: Clerical mistake in mentioning wrong
Notification Number for availing area based
exemption, it is immaterial where even the
department was treating claim of exemption under
correct Notification. [2012 (283)ELT 390 (Tri-Del)]
ä Cenvat Credit on Canteen Service: To provide
canteen facility is the statutory liability under
Section 46 of Factories Act does not exist in case
where assessee does not have 250 or more
employees or workers during the material period
in view of this assessee is not entitled to take credit
of service tax paid. [2012(283)ELT 415 (Tri.
Bang)]
ä Bogus Transaction Evidence: The Revenue has
not bothered to conduct inquiries either from the
assessee or from the transporters or the actual
manufacturer of the goods or from the recipient
of the goods. In the absence of any such
investigation, reliance on the sole statement of
one dealer which in any case does not apply to
the goods dealt with by the present assessee
cannot be appreciated. Penalty set aside. [2012-
TIOL-1267-CESTAT-DEL]
ä Suo Motu credit not allowed: Duty paid wrongly
and credit taken suo moto by the appellants -
Followed the Larger bench decision of BDH
Industries Ltd. (2008-TIOL-1211-CESTAT-MUM-
LB) - There is no provision in Central Excise Act
and Rules allowing suo motu taking of credit -
Appeal Dismissed [2012-TIOL-1297-CESTAT-
BANG]
ä Principles of natural justice: Adjudicating
authority called for a report from the jurisdictional
Superintendent after personal hearing and
recorded a finding against the assessee - Copy
of the said report was not supplied to the assessee
- There is gross violation of principles of natural
justice - Matter remanded with a direction to
supply copy of the said report to the appellants. -
Matter remanded [2012-TIOL-1329-CESTAT-
AHM]
ä Cenvat Credit on vehicle Insurance: Service
Tax paid on insurance in respect of vehicles
owned and used by the appellant is an Input
Service as defined in rule 2(l) of the CCR, 2004 -
Appeal allowed with consequential relief [2012-
TIOL-1322-CESTAT-MUM]
ä COD application dismissed: Negligence of the
employee of the applicant cannot be considered
as a sufficient cause for not filing the appeal within
the period of limitation - appellant although
receiving order in January 2010 failing to file
appeal within the period of limitation and shifting
blame on employee - [2012-TIOL-1193-CESTAT-
BANG]
CUSTOMSä Strictures against Department - Negligence of
Revenue Officers involved in case against State:
Such officers to be proceeded against with sternly
so that it may serve as a lesson to others.
Democratic Government does not mean lax
Government. Rules or procedure and / or
principals of Natural Justice are not meant to
enable guilty to defeat objects of Customs Act,
1962. In case involving fraudulent TRA obtained
for use of DEPB scrips for imports from a port
other than the port of exports, investigation
ordered by DG (Vigilance), CBEC so that
appropriate disciplinary action is taken against
officials of Customs House and DRI due to whose
involvement or negligence fraud was
perpetuated.[2012(282) E.L.T. 67(Tri. Chennai)]
ä Reimbursement by ECGC not be constituted
as export realization in foreign exchange -
Drawback benefit denied: Department does not
find reimbursement by ECGC (Export Credit
Guarantee Corporation) as equivalent to
realization of due sale proceeds in foreign
exchange and the same is clarified by CBEC
Circular No.7/2010-Cus dated 23.03.2010 as well
as RBI Master Circular No.6/2010-11 dated
01.07.2010 stipulates that claims settled by ECGC
should not be constituted as export realization in
foreign exchange therefore exporter not entitled
to any drawback benefit and demand confirmed.
[2012(282) E.L.T. 145 (GOI)]
ä Drawback fixation of brand rate: Application filed
for fixation of drawback under Rule 6(1)(a) (Brand
Rate) and under Rule 7(i) (Special Brand rate) of
24
Bizsol UPDATE October - 2012
Customs, Central Excise Duties and Service Tax
Drawback Rules, 1995 are treated as one and
the same as the information required to be
furnished for both are identical. Purpose of
drawback is to relieve the burden of taxes on the
export goods and to make our exports competitive
in the international market for achieving this object
department has to interpret and implement the
rules in a meaningful way so that the exporter
gets the maximum benefit eligible as prescribed
under the law. Adjudicating authority should have
considered the claim made by applicant under
Rule 7 ibid instead of Rule 6. Matter remanded
for a fresh consideration. [2012(282) E.L.T.
92(Tri. Mumbai)]
ä Drawback allowed: in respect of re-export of
defective goods & drawback claim, deficiency
memo raised asking to submit certificate of non-
availment of Cenvat credit and Bank Realization
and the same are submitted after lapse of 30 days
as stated in defect memo but there was nothing
on record that the same are submitted them after
30 days, in that view drawback claim allowed, the
departments plea that it was time barred was
rejected. [2012(282) E.L.T. 59 (Mad. HC)]
ä Duty free procurement for supply to SEZ: Duty
free goods procured by a DTA unit for
manufacture of finished goods and cleared to a
unit in SEZ without payment of duty in terms of
provisions of Rule 19(2) of Central Excise Rules,
2002 read with Notification No.43/2001-CE NT
dated 26.06.2001. Supply of goods to SEZ has
to be equated with exports as the same also
clarified in Board Circular No.29/2006-Cus dated
27.12.2006 the said benefit of non payment of
duty is available. [2012(282) E.L.T. 108 (Tri. Del.)]
ä Writ Jurisdiction exercisable despite
alternative remedy when other availing the
benefit denied to the petitioner: Once the matter
is pending before tribunal and Order passed by
the Commissioner(Appeals) was not set aside by
the tribunal, petitioner-importer was bound to pay
duty imposed to clear the goods. Only remedy
for them was to get final order in their favour from
Tribunal or higher authority. There was no
alternative remedy for release of goods and
obtaining stay of duty. Since in the present case
also issue involved of violation of Articles 14 and
19 of Constitution of India on allegation of unequal
treatment as the assessee was forced to pay CVD
whereas their competitors in the same field placed
in another state were not required to bear this
burden, Hon'ble High Court placed reliance on
the precedent decision of State High Court and
allowed release of goods on payment of 25% of
duty and execution of bond on the same
conditions during pendency of appeal before
tribunal. [2012(282) E.L.T.487 9 Guj.)]
ä Waiver of pre-deposit not grantable when
fraud, evasion of taxes, wilful mis-statement,
suppression involved: Merchant exporter
purchased the goods under drawback claim from
traders but he has not produced details of
supporting manufacturers regarding non
availment of cenvat credit within due course and
declarations of name of supporting manufacturer
which was filed belatedly, found to be false.
Hence, it was held that Drawback claim was
contrary to Rule 3 of Drawback Rules and excise
portion of drawback is also not available as the
assessee failed to produce evidence showing
non-availement of input/input service cenvat
credit.
If person prima-facie founds to have evaded taxes
by fraud, evasion of taxes, wilful mis-statement,
suppression, contravention of law with intent to
evade tax does not deserve dispensation from
pre-deposit. [2012 (282) E.LT. 577 (Tri.Del.)]
ä Customs Refund - Unjust Enrichment: The
appellants have submitted an affidavit that they
have not passed on the extra duty burden to
anyone and have also undertaken to compensate
the department in case it is found that any amount
is passed on - They have produced necessary
Chartered Accountant's Certificate and their
balance sheet also indicates the amount as
'Receivables' from the department - Appellant
entitled for refund. - Appeal allowed: [2012-TIOL-
1303-CESTAT-MAD]
ä Strictures against department: Departmental
officers are not doing their duty properly before
filing application for early hearing - they are
advised to check the records as the appeal has
already been disposed of by the Bench by way of
25
Bizsol UPDATE October - 2012
remand in the year 2004: [para 2]- Revenue
Application dismissed as infructuous [2012-TIOL-
625-CESTAT-MUM]
ä Refund - While filing Bill of Entry, appellant did
not mention the unconditional exemption available
under notification 21/2002 - Cus - even assessing
officer did not consider this fact - refund claim filed
rejected on the ground that appellant had not
challenged the assessment - it is the duty of the
Customs officer while assessing the bill of entry
to assess in accordance with law - failure to do
so can be termed as accidental slip or omission
which can be corrected in terms of Section 154
of the Customs Act, 1962 - in such an eventuality
assessment need not be challenged - one cannot
blindly apply the ratio of Priya Blue Industries ad
LB decision in Eurotex case - order set aside with
consequential relief: [2012-TIOL-1134-CESTAT-
MUM]
ä Customs Notifications 52/2000-Cus & 43/2002-
Cus - Conversion work done through a job-worker
would not, prima facie, constitute transfer of the
imported raw materials, because, firstly there is
no bar for the manufacturer-exporter to get the
imported raw materials converted through a job-
worker and thereafter sell the same and secondly,
the assessee had sold the goods after its
conversion and not before - CESTAT order
directing applicant to make a pre-deposit of Rs.1
Crore quashed - bench directed to hear appeal
on merits: [2012-TIOL-703-HC-MUM-CUS]
SERVICE TAXä Delhi HC on 27.07.2012 has stayed the collection
of differential demand of Service Tax of 2% on
service provided and invoices raised prior to
01.04.2012 for which payment is received by
service provider on or after 01.04.2012. The order
was passed on a petition filed by Delhi Chartered
Accountant's Society and final hearing in this
matter is pending.
ä Penalty under Section 76 and 78 not imposable-
SCN issued imposing penalty u/s. 76 & 78 of
Finance Act, 1994 after 3.5 years of
commencement of investigation. On pointing out
at the time of investigation Appellant paid the full
amount of service tax with interest without even
checking up whether they have received all the
bills or not from the service recipients. In absence
of any findings that service tax is collected from
all the customers and not paid to government.
Therefore government itself has taken a view that
procedural lapses leading to evasion of service
tax should be treated leniently. It is the fit case
for invocation of provisions of section 73(3) of
Finance Act, 1994, penalty set aside.
[2012(27)STR 290(Tri.-Ahmd.)]
ä Penalty waived though delay in payment of
Service Tax and not filing of ST-3 returns on time-
Appellant are small businessman and not in a
position to appoint Chartered Accountant and
other staff to look after the day to day work of
Service Tax and due to this the payment was
made late. Though appellant paid service tax late
and filed the Service Tax returns late but he has
paid the service tax and filed the returns on his
own penalty under section 76 & 77 of Finance
Act, 1994 not imposable. [2012(27)STR 265 (Tri.-
Mumbai.)]
ä Composite Contract - Issue of 4 separate invoices
does not make as 4 separate contracts- Main
object of agreement was to provide all of service
required for erection, installation and
commissioning of Wind Farm Projects / Wind
Turbine Generators (WTG). Material provided by
assessee in relation to electrical work were
incidental thereto. Electrical Installation was part
of WTG as without that evacuation of electricity
from WTG to State Electricity grid was not
possible. Further establishment of Wind Farm
Project became complete only after
commissioning of WTGs. In that view by showing
four separate invoices for (i) construction of civil
foundation etc. (ii) supply and installation of
transmission line from windmill to grid
interconnection, (iii) erection and installation of
windmill and (iv) final testing and commissioning
of wind mills, it cannot be said that assessee has
executed four separate and distinct contracts with
its customers. Confirmation of demand is upheld
under Erection, Commissioning or Installation
service. [2012(27)STR 242 (Tri.-Mumbai.)]
ä CMC charges to be included in assessable
value of taxable service provided by CHA-
26
Bizsol UPDATE October - 2012
CMC charges which are levied by computer
centre for filing of bill of entry and shipping bills
electronically to be included in the assessable
value of taxable service provided by CHA.
[2012(27)STR 285(Tri.-Chennai.)]
ä Service Tax Credit on air travel allowed- Credit
of service tax paid on air travel denied on the
ground of having no relation with manufacture but
Chartered Accountant certificate indicates that
these expenses are revenue expenditure relating
to final product and included in assessable value
and this issue is already covered in Tribunal
decision in case of Dr. Reddy Lab. Ltd.
[2012(27)STR 285(Tri.-Chennai.)]
ä Service Tax Credit on Insurance for
Workmen's Compensation allowed- Cenvat
Credit in respect of service tax paid on workmen's
insurance compensation on the amount of
insurance paid admissible as the Insurance
premium relatable to business activity and
obligatory under law. [2012(27)STR 270 (Tri.-
Ahmd.)]
ä Cenvat Credit on services rendered on repair
and maintenance of windmills for generation
of electricity- Electricity so generated in the
factory to manufacture final product, services
rendered to up keep windmill to generate
electricity in nexus with manufacturing of final
product hence service covered rightly under
definition of input service. [2012(27)STR 320(Tri.-
Mumbai.)]
ä Interest not demandable if not calculated by
adjudication authorities in OIO / thereafter: If
adjudicating authority did not calculated interest
in Order-In Original or thereafter in such case it is
too much to expect assessee to pay it along with
duty amount in such circumstances no interest is
chargeable. [2012(27)STR 314(Tri.-Mumbai.)]
ä No liability of Interest: Cenvat Credit availed on
inputs used in exempted products and if the same
is reversed without utilization, there is no liability
for interest as interest is compensatory in
character imposed on assessee withholding tax
as and when due. [2012(27)STR 337(Kar HC)]
ä Cenvat Credit of Service Tax paid for Rent-a-
Cab Service is allowed: Transportation service
provided in the factory of assessee to their staff
for pick up and drop from their residence to the
factory and vice versa, is an input service used in
or in relation to manufacture, whether directly or
infdirectly of the final products within the meaning
of comprehension of Rule 2 (l) of Cenvat Credit
Rules, 2004 therefore service tax so paid for
receiving the transportation services eligible for
availment and utilization.[2012(27)STR 338(Kar
HC)]
ä Advertising services credit available: payment
of service tax on hotel rent for chief executive of
business and client meeting the issue directly
relatable to assessee's business therefore credit
admissible. [2012(27)STR 344 (Tri.-Ahmd.)]
ä Abatement not deniable for mentioning different
description of services in ST-3 return and payment
challan therefore denial to claim classification
under either heads due to mistake in assessment
is unfair, demand not sustainable. [2012(27)STR
364 (Tri.-Ahmd.)]
ä Excess payment of service tax be adjusted
against subsequent service tax liability: On
facts there is no dispute that there is excess
payment of service tax by assessee which was
due to their impression that they had a centralized
registration, but atually no centralized registration
therefore adjustment of excess tax paid cannot
be denied and the excess payment should be
adjusted against subsequent service tax liabilities.
[2012(27)STR 372 (Tri.-Ahmd.)]
ä When there are different views regarding
taxability of services penalty not imposable:
On the basis of favorable judg ements assessee
not paying tax under the bonafide belief and
whereas afterwards the judgements are gone
against on this basis assessee could have
entertained bona fide belief that their services
were not liable to tax during relevant period
therefore penalty not imposable. [2012(27)STR
375 (Tri.-Ahmd.)]
ä Strictures against Department: Supplementary
appeal to Appellate Tribunal filed after mone than
5 months though there is specific direction from
Tribunal to file it within 3 months. Revenue treated
the direction of Tribunal in cavalier manner and
27
Bizsol UPDATE October - 2012
showed their lackadaisical approach it is nothing
but the Callous approach of the department.
[2012(27)STR 436 (Tri.-Bang.)]
ä Cash refund of unutilized Cenvat Credit
permissible: pre-deposit amount deposited
through cenvat credit amount and appellant not
in a position to utilize the credit on account of
opting out from Modat scheme on 09.07.2004.
Refund of pre-deposit in cash allowed.
[2012(27)STR 447(Tri.-Mum.)]
ä Cenvat/Modvat on Outdoor Catering Service:
Maintaining of canteen for workers being
requirement under applicable provisions of the
Factories Act, 1948, same has to be held as
activity related to manufacturing business. Cenvat
credit allowed as the service is rightly covered by
the definition of 'Input Service'. [2012(27)STR
440(Tri.-Del.)]
ä Exemption for Training and Coaching to the
persons who have educated at least up to 12th
standard: It is clarified that Training and Coaching
in the fields of 1) Business 2) Fashion Technology
3) Advertisement and Graphic Design 4) Media
5) Hospitality and 6) Hospital Administration are
vocational trainings entitled to benefit of
exemption under Notification No.09/2003-ST and
Notification No.24/2004-ST. Revenues plea that
only trainings in areas like welding, carpentry etc.
where level of education requires is low, qualifies
vocational training is rejected. [2012(27)STR
377(Tri.-Del.)]
ä Revenue Neutrality: 100% EOU import the
services from foreign based commission agent,
service tax was payable as deemed service
provider. Assessee is eligible to Service Tax
Credit if tax paid as services clearly are input
service, also as wll as assessee is eligible to
Refund under Rule 5 of Cenvat Credit Rules
20004. Therefore there is a claim for revenue
neutrality and absence of intention to evade tax,
no penalty is imposable. [2012(27)STR 342 (Tri.-
Bang.)]
ä Permission to use trade mark covered by
definition of 'Intellectual Property Right and
'Intellectual Property Services': appellant M/s.
Hero Honda Motors Ltd entered in to an
agreement with M/s. Bharat Petroleum Corpn Ltd,
M/s.TIDE Water Oil Co. Ltd and M/s. Savita
Chemicals Ltd. In terms of said agreement BPCL,
Tide Water and Savita chemicals were permitted
to use the brand name of 'Hero Honda' and 'Hero
Honda 40T' on the containers of the products
manufactured by them for the purpose of
marketing and promoting their said products. In
terms of said agreement the appellants were
receiving royalty as per terms and conditions of
the said agreements. Department raised the
demand of service tax against appellant to treat
the royalty received for Intellectual Property
Services. And it is held that Permission to use
trade mark covered by definition of 'Intellectual
Property Right and 'Intellectual Property Services.
[2012(27)STR 409 (Tri.- Del.)]
ä ST Refund as per Notfn. 17/2009-ST - Supplier
discharging service tax liability on 'documentation
charges' under the category of 'Clearing &
Forwarding Agency service' - officers in-charge
of appellant's factory (recipient of service) have
no jurisdiction to deny the refund claim on the
ground that the 'documentation charges' are not
covered under "C&F Agency service". Appeal
allowed with consequential relief. [2012-TIOL-
1264-CESTAT-MUM]
ä Principles of Natural Justice - SCN alleges that
the appellant was rendering BAS to Royal
Challengers by sporting the Logo/Mark/Sign
which, according to the Department, were in the
nature of advertising the products of the
commercial establishments - It is evident from the
records of the case, the contentions raised by the
assessee were not heeded by the adjudicating
authority, which chose to rely on Wikipedia and
other materials - It appears, Wikipedia was
elaborately referred to in the impugned order
without putting the assessee on notice, which, by
all means, amounts to violation of natural justice
- The case of department was mainly based on
the MOUs executed by Royal Challengers with
the owners of logo/mark/sign which were
displayed by the cricketer on his uniform during
the course of the tournaments, but no copy of
any such MOU was supplied to the assessee, nor
even mentioned in the list of relied-upon
28
Bizsol UPDATE October - 2012
documents attached to the SCNs - This is yet
another instance of denial of natural justice -
Matter remanded for de novo adjudication [2012-
TIOL-1132-CESTAT-BANG]
EOUä When goods on which credit was taken is
removed as such, the credit is required to be
reversed: Appellant is having two units (one DTA
Unit and one 100% EOU Unit) - DTA unit imported
capital goods by availing the benefits of
Notification No.25/2002-Customs dated 1.3.2002
and removed such goods to EOU unit without
reversing the credit taken and without invoice -
Plea of Revenue neutrality - substantial provision
in Rule 3(5) of CENVAT Credit Rules is clear that
when goods on which credit was taken is removed
as such, the credit is required to be reversed -
The reference to mode of clearance using a
document referred to in Rule 9 is procedural in
nature - the DTA unit having taken the credit on
the capital goods, are required to reverse the
credit in terms of Rule 3(5) of CENVAT Credit
Rules - Ordered for reversal of CENVAT credit of
Rs.28,96,982/- which is equal to CENVAT Credit
taken. Pre-deposit Ordered: [2012-TIOL-1261-
CESTAT-BANG]
ä Clearance by 100% EOU of goods into DTA -
Provisions of notfn. 23/2003-CE are applicable
and not that of 30/2004-CE since the notification
issued u/s 5A(1) of the CEA, 1944 does not
specifically provide for applicability to EOU - not
a fit case for waiver - Pre-deposit ordered: [2012-
TIOL-1171-CESTAT-MUM]
INCOME TAXä Accounting of Excise Duty payable - Excise
duty payable on goods manufactured is neither
an expense nor is a constitutient of stock. The
Excise Duty can be accounted for in the books of
accounts at the time of clearance of goods from
the factory. Further, non provision of liabilities in
respect of finished product lying in stock at the
close of the year will have no impact on the profit
of the year. [2012-TIOL-88-SC-IT]
ä Various disallowance by the Revenue -
Entertainment expenditure incurred on employees
of the assessee while they were entertaining
assessee's customers cannot be disallowed u/s
37. When cost of machinery acquired from outside
India is enhanced on account of foreign exchange
rate fluctuation, depreciation can be charged on
such enhanced costs, irrespective of date of
payment of such purchase price. Payments made
to State Electricity Board for laying of electricity
transmission lines, which did not become the
property of the assessee, does not have enduring
benefits to the assessee and is not allowable as
revenue expenditure. When the method of
valuation of the stock has been uniformly
accepted for the past Ays, the same cannot be
upset for a particular year, when such method
did not conceal any income. Expenditure incurred
by a subsidiary on brand building and dealer
royalty cannot be partially dis-allowed, merely
because a part of the expenditure inured for the
benefit of the parent company. [2012-TIOL-787-
HC-DEL-IT]
ä Disallowance of expenditure - The R & D
expenses incurred by the Head Office can be
allocated among the four manufacturing units
even when such research has no connection with
the business of the said units, nor any benefit is
received by them from the said research. [2012-
TIOL-784-HC-MUM-IT]
ä When to impose Penalty - Penalty u/s 271D
cannot be imposed if there were two possible
views and that too one directly in favour of the
assessee. [2012-TIOL-786-HC-DEL-IT]
ä Deductions u/s 80HHC - While computing the
profits for the purpose of deduction u/s. 80HHC,
interest income earned by the assessee is
required to be excluded. [2012-TIOL-785-HC-
MUM-IT]
ä HC Ruling-for the purpose of Section 10A of the
Income Tax Act, 1961 the losses suffered in the
Non-EPZ Unit need not be set off from the profit/
income of the EPZ Unit. For computing deduction
under Section 10A of the Income Tax Act, 1961
in respect of EPZ Unit, the brought forward losses
of the Non-EPZ Unit should not be deducted or
reduced- AIT-2012-257-HC
29
Bizsol UPDATE October - 2012
• New procedure for Single / Centralized
Registration under Rule 4 of Service Tax Rules,
1994 has been devised - Trade Notice No. 16/
ST/2012 dated 18.06.2012 ST Commissionerate
Delhi. [2012 (27) STR (C189)]
• Legal Metrology (Pachaged Commodities) Rules,
2011- Second Amendment of 2012 issued [2012
(282) ELT(N10)]
• More than 260 officers working with two crucial
boards of the Department of Revanue, CBDT &
C.B.E. & C., faced raids and investigation in
curruption by the CBI in the last three years for
their alleged involvement in corruption.
• Fiat India loses Rs.432 crores excise case.
• It is clarified that in case of finished goods cleared
in DTA as stock transfer, if exempts from payment
of Sales Tax / VAT the additional duty of customs
shall be leviable at the prescribed rate.
• Apex Court asks Bharti Airtel to deposit Rs. 215
Crores in Customs Case
• An amount of Rs.86,000 Crores indirect tax
revenue of CBEC has been locked up in litigation.
• Customs Official gets 3 months jail: The Patna
High Court on 06.09.2012 ordered three months
simple imprisonment to the Assistant
Commissioner, Customs (Prevention Division),
Forbesganj, Shiv Shankar for Contempt of Court
and slapped a fine of Rs.2000 on him for non
complying with the court order for releasing a truck
laden with betel nuts.
• CBI starts probe against Mr. Anup Kumar
Srivastava, the Central Excise Commissioner
Delhi-I for allegedly taking bribe for shielding two
businessman in a tax evasion case.
• Standing orders issued for Verification
mechanism and monitoring of export obligation
under duty exemption / reward scheme.
• A former Assistant Commissioner of Customs Mr.
Kulwaran Singh was sentenced to 3 years in jail
by Delhi Court for possessing disproportionate
assets whereas his wife and six accomplices were
sentenced with varying jail terms.
• Delhi HC on 27.07.2012 has stayed the collection
of differential demand of Service Tax of 2% on
service provided and invoices raised prior to
01.04.2012 for which payment is recived by
service provider on or after 01.04.2012. The order
was passed on a petition filed by Delhi Chartered
Accountant's Society and final hearing in this
matter is pending
• CDR CESTAT B. S. Vasudev to be Chief
Commissioner of Customs Mumbai.
• Jeetendra Chaturvedi to be Director-General of
Central Excise Intelligence.
• Punjab Government hikes VAT rate by 0.5 per
cent w.e.f. 3rd September-VAT Rate on Schedule
B goods is 5.5 per cent, on Schedule C-1 goods
4.5 per cent, on Schedule D goods 20.5 per
cent,On Schedule F goods 13 per cent, Rates on
Schedule E goods also changed, No VAT on
Sugar
• Justice Kapadia recommends name of Justice
Altamas Kabir as next Chief Justice of Supreme
Court
• Paras Kuhad & Rakesh Khanna appointed as
Additional Solicitor General in SC
• Hosewives to get salary from their husbands for
household work according to proposed law
• Tenure of CESTAT President fixed to 5 year &
Retirement Age hiked to 68 years.
• CESTAT Members to be appointed for 5 years
only which can be extended for another 5 years-
Maximum tenure of Member fixed to 10 years or
65 years of age whichever is earlier.
• Maximum permissible limit of ECB hiked to 75
per cent of the average foreign exchange earnings
realized during the immediate past 3 financial
years or 50 per cent of the highest foreign
30
Bizsol UPDATE October - 2012
exchange earnings realized in any of the
immediate past 3 financial years, whichever is
higher;
• In case of SPVs, which have completed at least
one year of existence from the date of
incorporation and do not have sufficient track
record/past performance for 3 financial years, the
maximum permissible ECB that can be availed
of limited to 50 per cent of the annual export
earnings realized during the past financial year.
• The maximum ECB that can be availed by an
individual company or group, as a whole restricted
to USD 3 billion-RBI Circular No.26
• Income Tax Officer of Kakinada P Venkateswara
Rao booked by CBI for demanding bribe of Rs 65
Lakh-Bribe conduit & Uncle of ITO arrested while
taking bribe.
• VAT Officer GK Raval arrested by ACB at
Gandhigram Railway Station in Gujarat while
taking bribe of Rs 45 Lakh from owner of Techno
Industries Ltd for settling notice of Labour VAT
dues.
• Ex-MD & COO of Reebok arrested for fraud.
• Jayant Misra appointed as Development
Commissioner of Noida SEZ
• President of CESTAT Justice Ajit Bharihoke tipped
to join National Consumer Forum.
• Najib Shah takes over as Director-General of
Revenue Intelligence
• RS Sidhu joins as Member of Settlement
Commission(Customs & Excise) in Delhi
• RK Jain elected as President of CESTAT Bar
Association- RKJ got 160 votes while rival Piyush
Kumar got 125 votes. Kamaljeet Singh elected
as Secretary-Singh got 146 votes against 136
votes of Somesh Arora. Rajesh Kumar elected
as Treasurer. RK Jain's Team captures 10 out of
13 seats in Executive Committee.
i i i
31
Bizsol UPDATE October - 2012
Office Order No. 151/2012 Dt. 29th August 2012
Consequent upon the appointment of Ms. Shobha L.Chary as Member of CBEC, the Competent Authority has
re-allocated the work amongst the Members in the Central Board of Excise & Customs (CBEC) as under, until
further orders:
A. Charges of Members:
Sr No. Name Charge
1. Ms. Sheila Sangwan Member (Budget) & Service Tax (additional charge)
2. Shri M. S. Badhan Member (Customs)
3. Ms J. M. Shanti Sundharam Member (Central Excise and omputerization)
4. Ms Sandhya Baliga Member (Legal & Judicial)
5. Ms Shobha L. Chary Member (Personnel & Vigilance)
B. The administrative control and supervision of Members over the charge of Chief Commissioners of
Customs & Central Excise and Directorates will be as under:-
Sr.No. Name Zones/ DGs to be supervised
1. Ms. Sheila Sangwan Chief Commissioner, CX, Mumbai-I
Chief Commissioner, CX, Mumbai-II
Chief Commissioner, Customs, Mumbai-I
Chief Commissioner, Customs, Mumbai-II
Chief Commissioner, Customs (P), Mumbai-III
Chief Commissioner, Customs & CX, Pune.
Director General (Service Tax)
2. Shri M. S. Badhan Chief Commissioner, CX, Delhi.
Chief Commissioner, Customs, Delhi.
Chief Commissioner, Customs (Prev.), Delhi.
Chief Commissioner, Customs & CX, Meerut.
Chief Commissioner, CX, Lucknow.
DG, DRI/DG (Export Promotion)/DG (Valuation)/DG
(Safeguards)/Directorate of Logistics/CRCL.
Additional Charge-
Chief Commissioner, CX, Bhubaneswar.
Chief Commissioner, CX, Kolkata.
Chief Commissioner, Customs, Kolkata.
Chief Commissioner, CX, Ranchi (HQ. at Patna).
Chief Commissioner, Customs (P), Patna.
Chief Commissioner, CX, Shillong.
3. Ms J. M. Shanti Sundharam Chief Commissioner, CX, Bangalore
Chief Commissioner, Customs, Bangalore
Chief Commissioner, CX, Chennai
32
Bizsol UPDATE October - 2012
Chief Commissioner, Customs, Chennai
Chief Commissioner, Customs (Prev.), Chennai
Chief Commissioner, CX, Cochin
Chief Commissioner, CX, Coimbatore
Chief Commissioner, CX, Mysore.
DGCEI/DGICCE/DG(Audit)/ CC(TAR)
DG (Systems)
4. Ms Sandhya Baliga Chief Commissioner, CX, Customs and ST, Hyderabad
Chief Commissioner, CX, Customs, Visakhapatnam
Chief Commissioner, CX and Customs, Bhopal
Chief Commissioner, CX, Customs and Nagpur.
CDR/Directorate of Legal Affairs
Work relating to Settlement Commission, CESTAT and
Authority for Advance Rulings.
5. Ms Shobha L. Chary Chief Commissioner, CX, Ahmedabad
Chief Commissioner, Customs, Ahmedabad
Chief Commissioner, CX, Vadodara
Chief Commissioner, CX, Jaipur
Chief Commissioner, CX, Chandigarh.
DG (Vigilance)/DG(NACEN)/DG(HRD)
The charge of GST and DPPR will be looked after by Chairperson (E&C).