India: Indirect Tax Newsletter - July 1, 2012

Last Updated: 26 November 2012

CUSTOMS & INTERNATIONAL TRADE

Customs

Notification No. 43/2012-Cus dated June 27, 2012

Mega/ Ultra mega power projects may furnish a fixed deposit receipt or bank guarantee in order to claim customs duty exemption under Notification No. 12/2012-Cus dated March 17, 2012.

Notification No. 53/2012-Cus(NT) dated June 21, 2012

The Deputy Commissioner of Customs and Central Excise is Proper Officer for recovery of duties in cases specified under Section 28AAA of the Customs Act, 1962 ("the Customs Act").

Bharti Airtel Ltd. Vs. CC [2012-TIOL-746-CESTAT]

Software preloaded on hard disk/flash drive at a factory in Sweden before dispatch to India. The Customs, Excise & Service Tax Appellate Tribunal ("the CESTAT") found that final cost of equipment included cost of programs in the form of software, which define and characterize hardware and elevate the same to the functional apparatus/equipment and there is no separate identity for software to be marketable as a separate commodity. Based on these facts the CESTAT held value of software is to be included for determining value of imported equipments.

CC Vs. Dhanalakshmi Paper Mills Ltd. [2012-TIOL-715-CESTAT]

Assessee was granted refund since their appeal in entirety had been allowed by the lower Appellate Authority. The department filed an appeal against refund order on the grounds that lower Appellate Authority only allowed appeal on valuation and did not consider classification of goods. The CESTAT held that if department was aggrieved, it was appropriate for it to file an appeal against the earlier order of the lower Appellate Authority which has not been done and appeal against order of refund not maintainable.

Intercontinental Cargo Services Vs. CC [2012-TIOL-731-CESTAT-DEL-LB]

The Larger Bench of the CESTAT held no appeal lies before it against order of the Commissioner of Customs in respect of rejection of an application for renewal of Customs House Agent ("the CHA") license under the Customs House Agent Licensing Regulations, 2004. If the CHA is aggrieved with such rejection of renewal, he can challenge the same before the Chief Commissioner of Customs & Excise.

Stonemann Royale Ltd. Vs. CC [2012 (280) ELT 407]

The CESTAT held customs cargo service provider can be directed not to charge rent or demurrage in respect of goods which are detrained, seized or confiscated by a proper officer in accordance with the Handling of Cargo in Customs Area Regulations, 2009.

Asia Pacific Commodities Ltd. Vs. Assistant Commissioner of Customs [2012 (280) ELT 481]

The CESTAT held since invoice value of imported goods was also FOB value of goods, duty paid under the Agricultural and Processed Food Products (Export Cess) Act, 1985 could not have been included in invoice value. Thus, there is no case for unjust enrichment.

FTP & Environment

Public Notice No. 06 (RE-2012)/ 2009-2014 dated June 20, 2012

The Director General of Foreign Trade ("the DGFT") notified the Handbook of Procedures- Volume I (Appendices and Aayat NiryatForms) which shall come into force on June20, 2012. Appendix 37A, 37C and 37D will bedeemed to have come into effect on 5thJune, 2012.

Public Notice No. 7(RE-2012)/2009-14 dated: June 26, 2012

Export of certain products through Land Custom Stations of North Eastern Region and Sikkim entitled for additional 1% Duty Credit Scrip.

Policy Circular No. 01(RE- 2012)/2009-14 dated June 18, 2012

Information and guidelines with respect to electronic Bank Realization Certificate ("e- BRC") system clarified for banks, exporters and RAs

CENTRAL EXCISE, SERVICE TAX, VAT & GSTCentral Excise

Notification No. 28/2012-CE dated June 27, 2012

Mega/ Ultra mega power projects may furnish a fixed deposit receipt or bank guarantee in order to claim central excise duty exemption under Notification No. 12/2012-CE dated March 17, 2012.

CCE Vs. Jacob Electronics Pvt. Ltd. [2012 (280) ELT 457]

The CESTAT held SSI exemption cannot be denied since audio cassette casing is not traded in the market under brand name 'Universal' and is further used in manufacture of pre-recorded audio cassettes. Therefore assessee is not engaged in manufacturing branded goods.

Service Tax

Notification No. 25/2012-ST dated June 20, 2012

The mega exemption list, of services specifically exempted from service tax renotified in terms of Chapter V of the Finance Act,1994 ("the Finance Act").

Notification No. 26/2012-ST dated June 20, 2012

The Central Government notified percentage of abatement for specified services.

Notification No. 28/2012-ST dated June 20, 2012

The Place of Provision of Services Rules, 2012 been notified to come into effect from July 1, 2012.

Notification No. 29/2012-ST dated June 20, 2012

The Central Government exempted service of renting of an immovable property, from service tax in excess of service tax calculated on a value equivalent to gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies.

Notification No. 30/2012-ST dated June 20, 2012

The Central Government notified percentage of service tax payable on specified services by service recipient and service provider.

Notification No. 36/2012-ST dated June 20, 2012

The Central Government notified amendments to the Service Tax Rules, 2004 ("the Service Tax Rules"), which includes new definition of "person liable to pay service tax" and insertion of Rule 6A which deals with export of services.

Notification No. 39/2012-ST dated June 20, 2012

The Central Government granted rebate of whole of duty paid on excisable inputs or service tax and cess paid on all input services used export of service in terms of Rule 6A of the Service Tax Rules.

Housing & Development Corporation Limited Vs. CST, Ahmedabad [2012 (26) STR 531]

The CESTAT held charges collected for restructuring of loans and prepayment of loans is a way of value addition and can be considered as cost incurred by borrower and therefore liable for service tax.

B.D. Somani Institute of Art & Fashion Technology Vs. CST [2012-TIOL-690-CESTAT]

The CESTAT held since assessee has provided only vocational courses not recognised by any law for the time being in force, exemption from service tax not available to under Notification No. 24/2004-ST dated September 10, 2004.

Cenvat Credit

Notification No.28/2012-CE(NT) dated June 20, 2012

The Cenvat Credit Rules, 2004 ("the Credit Rules") amended to provide interalia forrefund of Cenvat credit to service providersproviding services taxed on reverse chargebasis.

Notification No. 27/2012-CE(NT) dated June 18, 2012

The Central Board of Excise and Customs ("the CBEC") notified procedure, safeguards, conditions and limitations subject to which refund of CENVAT credit shall be allowed.

Surya Colour Products P. Ltd. Vs. CCE [2012 (280) ELT 455]

The CESTAT held Cenvat credit on capital goods, which were transferred to depots and branches and not used in the factory of production, was permissible under Rule 4(5)(a) of the Credit Rules, which allows Cenvat credit even if goods are sent to job worker for any other purpose.

JNM fibres Pvt. Ltd. Vs. CCE [2012 (280) ELT 458]

The CESTAT held that assessee has correctly paid excise duty on used capital goods on the basis of transaction value. The department's demand for reversal of Cenvat credit equal to the amount which had been taken at the time of receipt of such capital goods in the factory was found to be untenable.

Muscat Polymers Pvt. Ltd. Vs. CCE [2011 (09) LCX 0163]

The CESTAT held Cenvat credit of service tax paid on mobile phone services availed correctly even though mobile phone bills are in company's name c/o the employee. The CESTAT further held requirement that company has to show that all calls made were relating to business would result in voluminous work for both sides, which would be unproductive.

VAT / GST

Centre likely to pay states 50% for CST phase-out [The Indian Express, June 28, 2012]

The states have been demanding Rs 19,000 crore compensation for the year 2010-11 and the Centre has paid only Rs. 6,000 crore. In the Budget 2012-13, the Central Government has made a provision of Rs. 300 crore for payment towards CST compensation. Earlier, Mr. Mukherjee the then Finance Minister said the Centre cannot go on providing compensation endlessly but later agreed to pay 50 per cent of the compensation for phasing out CST.

Montek Singh Ahluwalia reaches out to Sushil Modi on GST rollout [The Times of India, June 29, 2012]

Mr. Montek Singh Ahluwalia, the Deputy Chairperson of Planning Commission conveyed to Mr. Sushil Modi, Chairman of the Empowered Committee of State Finance Ministers on GST ("the Committee") that the Government is ready to reach out to BJP on long-pending major tax reform and expressed keenness to move on GST.

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