INDIRECT TAX UPDATE
V. Raghuraman |
C.R. Raghavendra |
FCA, ACS, LLB, Grad.CWA, Advocate |
B.Com, ACA, Chartered Accountant |
FOR THE MONTH OF DECEMBER 2005:
A. Central Excise:
I. Circulars, Public notices & Trade notices
a) Coal ash (cinder) not excisable commodity
As per Circular No. 386/19/98 CX., dated 7.4.98 it was clarified that Coal ash (cinder) is an excisable commodity and were classifiable under Heading No. 2621.00 and is chargeable to appropriate rate of duty. This Circular was challenged in the Gujarat High Court wherein the said Circular was set aside and on an appeal to the Supreme Court by the Department, it was dismissed and the Board has accepted the judgment of Supreme Court dated 29.10.2003 in Ahemdabad Electricity Co Ltd & others 2003 (158) ELT 3 (SC). In view of the Apex Court decision, the said Circular is withdrawn and Board accepts the Supreme Court's decision that Coal ash (cinder) is not an excisable commodity.
Notes: This circular is issued to educate departmental officials who may have not read the Supreme Court judgement.
[Source: C.B.E. & C. Circular No.822/19/2005-CX., dated 18-11-2005]
II. Notifications:
a) Cement and Steel used in construction houses in Tsunami affected areas Exemptions Amendments to Notification No. 32/2005-C.E.
Goods procured and utilized in construction of houses in Tsunami affected areas by the Construction agency shall file claim for refund of the said duties paid on the said goods to the jurisdictional excise officer, on quarterly basis, within sixty days which may be extended by the said officer by another sixty days. Such Agency shall submit completion certificate from the District Collector along with consolidated consumption certificate duly certified by Chartered Engineer and countersigned by District Collector. After verifying all the documents, the jurisdictional officer after satisfying himself, sanction the refund claim, at the rate of 6% of the cost of construction of such houses, as the case may be, subject to a maximum of Rs. 9000 per house constructed.
[Source: Notification No. 35/2005-C.E., dated 29.11.2005]
B. CUSTOMS I. Circulars and Public Notices
a) Accredited Clients Programme (ACP):
New concept of Accredited Clients Programme has been introduced where there will be a special class of clients accredited with the department who will be assured facilitation and clearance on self-assessment basis. To be accredited client, one has to fulfill certain eligibility conditions one of which is that there should have been no Show Cause Notice against the client, should have imported goods valued at Rs.10.00 Crores in the previous financial and a host of other conditions.
[Source: M.F. (D.R.) Circular No. 42/2005-Cus., dated 24-11-2005]
b) Import Manifest Amendment thereto Adjudication only of cases involving fraudulent intention or substantial revenue implication
Board Circular 13/2005-Cus., dated 11-3-2005 has been amended to the extent that where there are major amendments involving fraudulent intention or substantial revenue implication arising from the amendments, should be permitted by the proper officer according to the merits of the case.
[Source: M.F. (D.R.) Circular No. 44/2005-Cus., dated 24-11-2005]
b) Transhipment of import/export cargo Bank guarantee waiver
The Board has decided to waive the requirement of execution of bank guarantee for the purpose of transshipment for all carriers of containerized cargo, who are handling more than 1000 TEUs as import containers in a financial year. This waiver shall apply to ICDs/CFSs/ also and for carriage in all modes of transshipment, irrespective of their move by road, coastal shipping or rail.
[Source: M.F.(D.R.) Circular No. 45/2005-Cus., dated 24-11-2005]
c) Bond before Customs Implementation of bond module for re-crediting
The Inter Ministerial Group headed by the Revenue Secretary had recommended that if the same person is required to file different bonds with a single Customs Authority, then one bond should incorporate all the requirements and the bond module of the EDI should be used. The Board advises the field to take note and held in creating an electronic environment for monitoring with the bonds.
[Source: M.F.(D.R.) Circular No. 47/2005-Cus., dated 24-11-2005]
d) Service providers in Port handling sector, appointed as custodians, eligible for 25% bank guarantee for import under EPCG Scheme
Circular No. 58/2004-Cus., dated 21-10-2004 has been modified to the effect that service providers in the port handling sector who are appointed as Custodians by the jurisdictional Customs/Central Excise authorities shall be eligible for 25% Bank Guarantee for importing capital goods under EPCG Scheme. The service providers in the port handling sector shall be eligible for 25% Bank Guarantee for importing capital goods under EPCG Scheme.
[Source: M.F.(D.R.) Circular No. 49/2005-Cus., dated 29-11-2005]
e) Cargo Disposal of unclaimed / uncleared cargo Procedure -
• Board has issued a fresh set of instructions for speedy disposal of unclaimed / uncleared cargo remaining unclaimed / uncleared for more than one year
• Custodian shall furnish list of items for disposal wherein notice shall be given to the consignee that if the goods are not cleared within 15 days they be sold by the custodian
• Custodian shall wait for the report of the Customs for any investigation, adjudication, court proceedings, if no intimation is received from the Customs within 15 days, the custodian shall go ahead with the disposal of the goods
• Custodian shall be responsible for the disposal and who shall fix a reserve price arrived at by a panel of Government approved valuers
• 10% of the consignment shall be for sample inventory check by the Customs
• Disposal of the goods shall be made by public auction/E-auction/ tender
• Guidelines issued by Central Vigilance Commission should also be kept in view
• Bidding shall be on cum-duty price
• Auction shall be in the presence of an officer in charge not below the rank of Superintendent
• Custodian shall file consolidated Bill of Entry, buyer wise, for assessment
• Sale proceeds shall be shared as per provisions of Section 150 of the Customs Act, 1962
[Source: MF.(DR) Circular No.50/2005-Cus., dated 01.12.2005]
f) EOU/EHTP/STPs Registration for duty free import Procedure
EOU/EHTP/STP units are required to register with the Customs at the port of import repeatedly when imports are made through different ports causing delay in clearance. Board has come out with simplified procedure for easy clearance. They can apply for registration with any port of import and the registration will be granted within five days. There is no need to get EOU/EHTP/STP units registered subsequently in any other port of import for clearance of goods duty free. This certificate can be used for clearance from any port and the Customs authorities will check authenticity of the registration from the issuing Customs station.
[Source: M.F. (D.R.) Circular No. 51/2005-Cus., dated 9-12-2005]
Important Cases:
1. CCE v. Universal Luggage Mfg. Co. Ltd.-2005 (190) ELT 3 (S.C.)- Significant sales made to unrelated persons at same price at which goods are sold to related person, it was held that no special consideration was shown to related person and that price to unrelated buyers could form the basis of valuation.
2. Gujarat Mineral Development Corpn. Ltd. v. CCE - 2005 (190) ELT 5 (S.C.)- Designing and Engineering charges going into erection/commission/supervision of machinery are not includible in valuation for customs purpose as these are post importation activities.
3. CCE v. S.Kumars Ltd. - 2005 (190) ELT 145 (S.C.) Deemed price principle of `Ujagar Prints case 1989 (39) ELT 493' does not applies to related processors. It is also inapplicable when processor is not a mere processor but also a merchant-manufacturer who purchases/manufactures raw material, processes it and sells it himself in wholesale market. In such a situation, profit is not of a processor but of a merchant-manufacturer and trader.
4. Control Touch Electronics P Ltd vs CCE 2005 (190) ELT 155 (S.C.)Circular of Board giving interpretation contrary to judgement of Supreme Court issue as to whether such circulars prevail over judgements of Supreme court matter is referred to Constitution Bench of Supreme court vide 2005 (188) ELT 3 (SC).
5. Indorama Systhetics (I) Ltd. v. CCE-2005 (190) ELT 193 (Tri.)Change in ownership of factory does not amount to `removal of goods'. Stock lying in the factory transferred without any physical removal of goods from the factory. Removal of goods, in the absence of any physical shifting of goods, not to be construed from mere change in ownership and possession.
