India: Indirect Tax Newsletter - October 15, 2012

Last Updated: 7 December 2012

CUSTOMS & INTERNATIONAL TRADE

Customs

Notification No. 92/2012-Cus. (NT), dated October 4, 2012

The Central Government notified All Industry Rates of Duty Drawback 2012-13, which has come into force from October 10, 2012.

FTP & Environment

CC Vs. Govindam [2012-TIOL-822-HC-MADCUS]

The High Court of Madras, observing that as per the United Nations Environmental Programme vis-à-vis Basel Convention, the lifetime of an original tyre casing must not exceed seven years, ordered sending back imported Pneumatic tyres more than 6 years old to the countries of origin on the ground that these old tyres will shortly become a hazardous waste in India.

CENTRAL EXCISE, SERVICE TAX, VAT & GST

Central Excise

Notification No. 37/2012-CE, dated October 11, 2012

Exempts DVD-ROMs containing books of an educational nature, journal, periodicals (magazines) or newspaper from payment of excise duty.

Salora International Ltd. Vs. CCE [2012- TIOL-67-CX]

Assessee manufactured various components of television sets at its factory, used the same to assemble in the same factory into television receiver sets for the purpose of testing. The television set so assembled were then dis-assembled and transported to various satellite units of assessee, where again reassembled into television receiver set. The issue before the Supreme Court was whether such components, which are manufactured at and transported from factory of assessee are liable to be assessed as television receivers or as parts there. The Supreme Court held that when parts of television are transported from factory of assessee, they are already identified as distinct units. The consequence of this is that goods assembled at the satellite units would be identifiably same as those assembled together by the assessee in its factory for the purpose of testing, as all such parts are already numbered and matched. This element of identifiability shall take the goods manufactured by the assessee away from being classified as parts, and they will be classified as television receivers.

Industrial Development Bank of India Ltd. Vs. The Deputy Commissioner [2012-TIOL- 803-HC-AP-CX]

The question before the High Court of Andhra Pradesh was whether excise duty and custom duty due to the Government have precedence over secured creditors like banks and other financial institutions. The High Court held that in the absence of any provision under the Central Excise Act, 1944 ("the Excise Act") and the Customs Act, 1962 creating first charge in the matter of recovery of excise and customs duty dues, the department cannot claim precedence over secured creditors like banks and other financial institutions.

Swastik Sanitary Wares Ltd. Vs. Union of India [2012-TIOL-757-HC-AHM-CX]

The assessee, who had cleared goods on payment of duty, paid the same duty again by debiting PLA due to clerical error. Refund claim for excess duty payment was rejected by the department on the grounds of limitation under Section11B of the Excise Act. The High Court of Gujarat held that when assessee paid duty initially it discharged its excise duty liability on such clearances. If by mistake or a pure clerical error or an oversight, the assessee deposited duty again, such deposit cannot take the character of duty. Therefore, it cannot be seen as a duty deposited or paid. Accordingly, claim of assessee seeking re-payment of such amount cannot be seen as a refund claim made under section 11B of the Act.

Cenvat Credit

Pearl Engineering Co. Vs. CCE [2012 (284) ELT 161 (Del.)]

The High Court of Delhi allowed Cenvat credit of CNC wire cut machine as 'capital goods' used in manufacture of intermediary products namely, dies and tools which were further used for manufacture of final products namely laminates and observed that intention of legislature is to give liberal and expansive meaning to the term 'capital goods' and not to give a restrictive and strict meaning to the said term.

Service Tax

Notification No. 47/2012-ST dated September 28, 2012

Amended Rule 7 of the Service Tax Rules, 1994 to provide that ST-3 return for the half year ended in September, 2012 would cover only data for the period April 1, 2012 to June 30, 2012.

Order No: 3/2012 dated October 15, 2012

The Central Board of Excise & Customs has extended date of submission of return for the period April 1, 2012 to June 30, 2012 from October 25, 2012 to November 25, 2012

VAT/ GST

ABB Ltd. Vs. Commissioner, Delhi Value Added Tax [2012-VIL-83-DEL]

The High Court of Delhi held that in order to determine whether sale was in the course of import, the Court has to see whether movement of goods was integrally connected with contract for their supply. Questions such as passing of title, or whether end user has privity of contract with supplier or where consideration flows from are not determinative or decisive of the issue.

Notification No. F. 7(453)/Policy/VAT/ 2012/712-722 dated October 1, 2012

The Commissioner, Value Added Tax, Delhi has directed that no security would be required to be furnished by such dealers, who apply for registration with the department upto December 31, 2012 from the date of issue of this notification.

Notification No. (GHN-23) VAT-2012-S.5 (2) (36)-TH dated October 3, 2012

The Government of Gujarat has reduced rate of VAT on Stainless Steel flats and sheets to 1%.

Notification No. 6529 dated October 3, 2012

The Commissioner, Commercial Taxes, Bihar, Patna has ordered that those dealers who have made an annual tax payment of above fifty thousand rupees during financial year 2011-12, will file returns along with receipt of payment of tax, interest and penalty compulsorily by electronic means through departmental website.

Circular No. 19 of 2012-13 F.7/(477)/ Policy/VAT/2012/742-47 dated October 8, 2012

The Commissioner, Value Added Tax, Delhi has directed that the Department of Trade & Taxes shall henceforth issue Central Declaration Forms or Certificates to the dealers only on every Wednesday and Friday. The Central Declaration Forms or Certificates shall not be issued on Mondays henceforth.

Need to revisit GST provisions [Business Standard October 13, 2012]

Mr. Pasthasarathi Shome, Director and Chief Executive, Indian Council for Research on International Economic Relations, said there was a need to look again at provisions of proposed GST. He said that construction of GST is not happening the way it should have. We should have a GST that makes sense and where goods and services are treated equally.

Finance Minister to meet GST panel on November 8, 2012 [the Indian Express October 13, 2012]

The Finance Minister will meet members of the Empowered Committee of State Finance Ministers on GST on November 8, 2012 to discuss way forward on proposed GST and discuss issues relating to compensation to States for phasing out the Central Sales Tax (CST).

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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