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Tax Amicus: May 2015

The new Foreign Trade Policy (FTP) has introduced a specific provision in Para 3.15 clarifying that exporters shall be entitled for duty drawback of the basic customs duty apart from the Cenvat credit or duty drawback of additional duties of customs debited in the scrip. In view of this provision it is now clear that goods imported using the scrip are not considered as exempted. This issue has been taken up for discussion in the article by the author covered in this issue.

This issue provides a brief note on receipt of President’s assent to Finance Bill, 2015 and Finance Act, 2015 coming into force from 14 May, 2015 and the major changes in Central Excise, Customs and Service Tax.

Notification & Circular section under Customs portion covers amendments made in the Notification No. 12/2012-Cus., providing for exemption to various products from BCD or CVD and reduction of export duty on specified iron ore and concentrates. SEZ units are temporarily allowed to remove goods in Domestic Tariff Area (DTA) for repair, testing or such other purposes on self attestation basis, CBEC has set up Customs Clearance Facilitation Committee (CCFC) at every major Customs seaport and airport to ensure speedier Customs clearance. These and similar changes/measures have been reported in this issue of Tax Amicus. Under Ratio Decidendi this issue covers summary of Supreme Court order holding that there would be no automatic duty liability if option to pay fine in lieu of confiscation is not exercised and that for Customs Valuation purpose there should be uniform addition of 1% of FOB value of the imported goods when actual landing charges are not ascertainable.

Central Excise part of this Amicus covers Notification & Circulars including CBEC circular clarifying that Cenvat credit availability when goods are delivered directly to buyers by dealers, CBEC has clarified that clearance of goods to an SEZ from the DTA will continue to be treated as export and therefore shall be entitled to rebate under Rule 18 of Central Excise Rule, 2002. Ratio Decidendi under central excise portion covers summary of various orders passed by Supreme Court including orders holding that sterilization of syringes and needles does not amount to manufacture and raw rice when mixed with dehydrated vegetables and spices would not make it into a product and such process will not be categorized as manufacture.

Ratio Decidendi under Service Tax portion of this newsletter includes High Court decision on whether the assessee is required to make mandatory pre-deposit when appeal has been filed after 2014 amendment but dispute arose before such amendment, CESTAT order holding that the amount collected towards reimbursement of postal charges incurred by the service provider shall not be liable to Service Tax, charges paid during importation for sale on principal to principal basis would not constitute Business Auxiliary Service (BAS) and filing of refund claim with Service Tax authorities located in the place of manufacture as against where registered office is located.

Statute & Notification section under VAT portion covers amendment made in notification relating to batteries and mobiles and amendments made under the Kerala Value Added Tax Act, 2003 by ‘The Kerala Finance Bill, 2015’ with respect to “multi-level marketing”. Ratio Decidendi in this portion includes Supreme Court order on categorizing supply and installation of water chilling plant under fabrication and installation of plant and machinery and not under “Installation of air conditioning and AC coolers” , This issue also covers Bombay High Court order holding that carrying on the business of hiring cranes did not qualify to be a “dealer” under the “Maharashtra Sales Tax on the Transfer of Right to Use Any Goods for Any Purpose Act, 1985” and hence not liable to pay tax.

May, 2015/Issue-47 May, 2015/Issue-47
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