India: Indirect Tax Newsletter - July 15, 2012

Last Updated: 22 November 2012

CUSTOMS & INTERNATIONAL TRADE

Customs

The Central Board of Excise and Customs ("the CBEC") Circular No. 17/2012-Cus dated July 5, 2012

It has been clarified that since EDI system of message exchange is still not in place, verification of genuineness of duty credit scrips shall continue to be carried out prior to registration of scrips despite deletion of such requirement vide Annual Supplement 2012-13 dated June 5, 2012 from Foreign Trade Policy.

The CBEC Circular No. 18/2012-Cus dated July 5, 2012

It has been clarified that ambulance, sewage disposal truck, refuse disposal vehicle that are pre-designed structurally and pre-fitted with relevant devices and cannot be put to generalised use may be imported under Served From India Scheme subject to compliance with specified conditions.

Al Saif International Vs. UoI [2012 (281) ELT 72]

Non-Speaking order was electronically communicated to the assessee in September, 2008 and reasoned order was passed in February, 2009 by the adjudicating authority. The Calcutta High Court held that limitation for filing an appeal/ review lies from date of communication of first order of September, 2008.

Bharat Forge Ltd. Vs. CC [2012-TIOL-795]

The Customs, Excise & Service Tax Appellate Tribunal ("the CESTAT") held that interpretation of a schedule has to be in terms of the language used therein and not on the basis of interpretation recorded in the Ministry files on assessee's representation.

Chaudhary Industries Vs. UoI [2012 (281) ELT 216]

Ship was confiscated by customs and thereafter sold in auction to a ship breaker. The Gujarat High Court held that vessel was sold as property of the Central Government within territory of India and not as imported goods. Therefore, no liability to pay customs duty by purchaser ship breaker arose in the case.

FTP & Environment

Directorate General of Foreign Trade ("the DGFT") Public Notice No. 08(RE- 2012)/2009-14 dated July 6, 2012

Existing system of physical Bank Realisation Certificate ("BRC") issuance permitted to continue till August 16, 2012. Banks must, however, transition to the e-BRC system by August 16, 2012.

CENTRAL EXCISE, SERVICE TAX, VAT & GST

Central Excise

Notification No. 29/2012-CE dated July 9, 2012

Goods cleared against Focus Product Scheme duty credit scrip shall be exempt from duties of excise subject to certain conditions.

Notification No. 30/2012-CE dated July 9, 2012

Goods cleared against the Focus Market Scheme duty credit scrip exempt from duties of excise subject to compliance with specified conditions.

Notification No. 31/2012-CE dated July 9, 2012

Specified capital goods cleared against agriinfrastructure incentive scrip under the Vishesh Krishi and Gram Udyog Yojana Scheme ("the VKGUY") Scheme exempt from duties of excise subject to compliance with specified conditions.

Notification No. 32/2012-CE dated July 9, 2012

Goods cleared against the VKGUY Scheme duty credit scrip exempt from duties of excise subject to compliance with specified conditions.

Notification No. 33/2012-CE dated July 9, 2012

Capital goods cleared against the Status Holder Incentive Scheme duty credit scrip exempt from duties of excise subject to compliance with specified conditions.

Aryan Ispat & Power Ltd. Vs. UoI [2012 (281) ELT 15]

The Central Government inserted Rule 12CC in the Central Excise Rules, 2002 and Rule 12AA in the Cenvat Credit Rules, 2004 providing for some deterrent action/ withdrawal of certain facility. The Orissa High Court quashed these two rules since the Central Excise Act, 1944 did not vest rule making power on these aspects in the Central Government in 2009 when these two rules were framed.

CCE Vs. Dhiren Gandhi [2012 (281) ELT 64]

The Karnataka High Court held that there are no provisions in law to recover duty from legal heirs of an individual assessee unless they take over and continue to carry on the very same business of deceased. The High Court further held that legal heirs are not entitled to use unutilised Cenvat credit after surrender of central excise registration in case of death of proprietor of a proprietary firm.

International Tobacco Co. Ltd. Vs. CCE [2012 (281) ELT 294]

The CESTAT held that the assessee cannot be denied benefit of non-payment of central excise duty on cigarettes destroyed during moisture test in internal laboratory on the ground that no records of such destroyed quantity were maintained in the laboratory.

Service Tax

Notification No. 43/2012-ST dated July 2, 2012

Transportation by Indian Railways of passengers in first class or air conditioned coach and, transport of goods are exempted from service tax till September 30, 2012.

The CBEC Circular No. 163/ 14/2012–ST dated July 10, 2012

It has been clarified that remittances from abroad are not liable to service tax even when conversion charges are levied by foreign/ Indian bank.

Cenvat Credit

Pepsico India Holding P Ltd Vs. CCE [2012- TIOL-787]

The CESTAT held that there is no requirement that invoice number should be printed on invoice. The only requirement is that invoice should be serially numbered.

Therefore, denial of Cenvat credit on the ground that invoice number was handwritten or rubber stamped is not proper.

CCE Vs. Geltec Ltd. [2012 (281) ELT 170]

The Karnataka High Court held that where dutiable waste is not removed from the factory 'as such' but destroyed within the factory premises, Cenvat credit need not be reversed.

VAT

Notification No.KA.NI.-2-564/XI-9(l)/08- U.P.Act.-5-2008-Order-(78)-2012 dated June 30, 2012

The Government of Uttar Pradesh enhanced rate of VAT on cigarettes and pan masala to 50% ad valorem.

GST

The Government forms seven member panel to frame model GST legislation [The Indian Express, July 3, 2012]

The Ministry of Finance has formed a committee of seven members under the chairmanship of Mr. Yogendra Garg, Commissioner Export, Mumbai to frame a model legislation of GST for the Central Government. The model legislation may later be used for framing the State GST legislation as well.

State wants PM to resolve CST compensation issue [Business Standard July 13, 2012]

In his letter dated July 4, 2012 to the Prime Minister, Mr. Sushil Modi, Chairman of the Empowered Committee of State Finance Ministers has said that a unilateral decision by the Centre on CST compensation without consulting the State Governments could adversely affect process of tax reforms in the country, including introduction of GST.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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