INDIRECT
TAX UPDATE - DECEMBER-2003
Madhukar
N Hiregange
FCA,ISA
SERVICE TAX
1. Exemption for receipts
in Convertible Foreign Exchange restored: The exemption
for taxable services which are received in CFE is available
subject to the condition that the proceeds are not to
be repatriated from or sent outside India. {Notification
21/2003- S.T. dt 20.11.2003}
2. Service Tax Registration
Number: To be mentioned in bill / invoice of service provider.
{DG of Service tax Letter no. V/DGST/30-Misc 29/2001/3674
dt. 18.9.2003} Comment: This would also facilitate
the availment of service tax credit for the service receiver.
3. Commission for Marketing
of Units of Mutual funds: This is covered under the business
auxiliary service and the exemption for commission on
sale and purchase is not available. Such commission liable
for Service tax. {CBEC Circular no. 66/15/2003 dt 5.11.2003}
4. Monies received in
Advance for the year for service made liable wef 1.7.2003:
The proportionate amount representing the service subsequent
to 1st July would be liable. {CBEC Circular
no.65/14/2003 dt 5.11.2003} Comments: This circular
explains that the earlier circular which provided that
for continuing services the service contracts entered
earlier to 1..7.2003 would not be liable is only limited
to the services of repairs & maintenance and not to
others. This reasoning appears to be hollow and
is sure to cause difficulty to the service providers.
CENTRAL EXCISE
5. Cutting and Polishing
of Marble Blocks: The Supreme Court relying on another
judgement in the case of Rajasthan State Electricity Board
Vs Associates observed that in the cutting and polishing
stones into slabs is not a process of manufacture as no
new and distinct commercial commodity came into existence.
{Aman Marble Industries Vs CCE 2003 (157) ELT 393 (SC)}
Comments: This decision would probably apply even to
the granite industry where similar operations take place.
6. Adjudication after
a lapse of 9 years of Show Cause Notice: As long as it
applies only to demand and not to interest or penalty
the same maybe adjudicated. {CCE Vs Bhagsons Paint Industry
(I) 2003 (158) ELT 129 (SC)} Comments: This judgement
would provide a handle for the filed and forgotten cases,
which were not adjudicated due to negligence by the Departmental
Officers.
7. Rebate Claim beyond
time limit: Law of limitation only procedural and not
substantive law. The right to claim the rebate would not
be effected. Amendment to procedural law even if it does
not have retrospective effect expressly, it may have retroactive
effect. {Uttam Steel Ltd. Vs UOI 2003 (158) ELT 274 (Bom)}
8. Difference between private records & statutory
records: As the difference was reconciled the charge of
clandestine removal cannot stand. {CCE Vs Gain Castingd
Ltd. 2003 (158) ELT 153(P&H)}
9. Cenvat credit on Inputs
Written off: The cenvat credit on inputs written off which
have not been used in the manufacture is not admissible.
{RPG Cables Ltd. Vs CCE 2003(157) ELT 273- T}. Comments:
If the same is available in stock, the same may not be
reversible, as it has not been removed.
10. Clubbing of Clearances
of Companies Not permissible: Based on Circular no.5 issued
under F NO. 21/31/56-CX MI dt 10.8.56 which sets out that
limited companies whether public or private are different
from shareholders. {LD Industries Vs CCE 2003(157) ELT
459-T}
11. Brand Name Restriction/
SSI Exemption: Goods manufactured (clutch Plates &
Pressure Plates) by Appellants being different from that
of the goods manufactured (cotter pins and pinions) by
Brand name owner though with the same brand name"
Sirocco" are Eligible for the exemption. {Sirocco
Pressings P Ltd. Vs CCE 2003 (157) ELT 425 (T)}
12. Cenvat credit availment
for exempted goods: The cenvat credit is not available
for inputs used exclusively for manufacture of exempted
goods where the manufacturer is clearing exempted goods
also. (2003(157) ELT T54} Comments: This decision would
defeat the very purpose of the option provided which sets
out that those assessees who cannot maintain separation
in use can opt to reverse 8% on the sale price exclusive
of sales tax.
13. Excisability of waste
yarn: Manufacturer of cotton yarn, man made and embroidered
fabrics in course of manufacture soft waste arising. Sold
without duty. Not an excisable goods under Chapter 55
and therefore not liable to duty. {CCE Vs Standard Industries
Ltd. 2003(157) ELT 555 (T)}
14. Textiles- Job Worker
Liability: The circular clarifies that the job worker
as in other cases would be liable and not the Trader as
set out in Rule 12B in case of Non-Returnable DC compliance.
The value for the job worker would be the cost of goods
involved + the conversion charges. Therefore for value
of clearances of Rs 30 lakhs the materials costs would
be reckoned. {CBEC Circular No.759/75/ 2003 _CX dt. 30.10.2003}
Comments: This circular is entirely against
the earlier circular issued on 25.3.2003 and against the
understanding of Rule 12B. This would have a wide ranging
effect to the detriment of the job workers who may be
working on the assumption that for Textiles the trader
would be responsible.
CUSTOMS
Duty Drawback for Ready made Garments Sector: The manufacturer-
exporter shall be paid drawback merely on the basis of
self declaration as to the Not having availed of cenvat
facility. {MFDR Circular no96/2003- cus dt 14.11.2003.}
