India: Indirect Tax Newsletter - December 1, 2012

Last Updated: 20 December 2012

CUSTOMS & INTERNATIONAL TRADE

Customs

Notification No. 59/2012- Cus., dated November 21, 2012

Amends Notification No. 12/2012-Cus. dated March 17, 2012 to impose customs duty on skimmed milk powder.

Notification No. 58/2012- Cus. dated November 19, 2012

Amends Notification No. 39/96- Cus. dated July 23, 1996 to grant exemption, subject to conditions specified therein, to machinery, equipment, instruments, components, spares, jigs and fixtures, dies, tools, accessories, computer software, raw materials and consumables required for the purpose of Air-to-Air Missile System (Project ASTRA) of the Ministry of Defence from customs duty.

The Central Board of Excise & Customs ("the CBEC") Circular No. 450/95/2012- Cus. IV dated November 20, 2012 ("Circular dated November 20, 2012")

The CBEC vide Circular dated November 20, 2012 clarified that where goods cannot be cleared within a reasonable time, importers can exercise option to de-stuff goods from foreign containers and keep the same in CFS/ ICD including in empty domestic containers therein, under Customs supervision, for subsequent clearance as per law.

Kemtech International Pvt. Vs. Commissioner of Customs (I&G) [2012-TIOL- 113-SC-CUS]

The Supreme Court held that while examining case for the purpose of quantification of short levy, the Adjudicating Authority shall supply to assessee all documents on which department proposes to place reliance.

CENTRAL EXCISE, SERVICE TAX, VAT & GST Central Excise

CCE Vs. Diwan Saheb Fashions Pvt. Ltd. [2012-TIOL-942-HC-DEL-CX]

The dispute before the High Court of Delhi was whether assessee liable to pay excise duty on respect of garments stitched by them from fabrics either brought by customers themselves or bought by customers from assessee for stitching purpose. The High Court upheld decision wherein the Tribunal relying on Rule 4(1) and Rule 4(3) of the Central Excise Rules, 2002 held that responsibility to pay duty on textile articles got manufactured on job-work basis is put on the person who gets goods manufactured on job-work basis. He has to discharge such liability "as if he is the manufacturer". This rule does not say anywhere that person supplying the raw material would be the manufacturer. The rule only says that such person has to discharge duty liability which in normal course is done by manufacturer. Thus, the High Court held that assessee was not liable to pay excise duty. The same shall be determined as if customers were manufacturers and that they may be eligible for Small Scale Industry exemption.

Cenvat credit

Dalmia Cement Vs. CCE [2012-TIOL-1744- CESTAT-MAD]

The Tribunal held that Cenvat credit on 'structural steel' and 'cement' used for construction of foundation and supporting structure was not admissible in view of the decision of the Larger Bench of the Tribunal in the case of Vandana Global Ltd. Vs Commissioner of Central Excise, Raipur [2010-TIOL-624-CESTAT-DEL-LB)] and the Hon'ble Supreme Court in the case of Saraswati Sugar Mills Vs Commissioner of Central Excise, Delhi [2011-TIOL-73-SC-CX]

Service Tax

CCE Vs. Deloitte Tax Service India Pvt. Ltd. [2012-TIOL-954-HC-AP-ST]

The High Court of Andhra Pradesh held that back office services like preparation of federal tax returns, co-sourcing services, analyzing client data and calculating estimates of tax amount do not come under the ambit of 'information technology service' even though said services are performed by using computer programmes. Further, the High Court also observed that if a decision of Tribunal is approved by the Supreme Court by a non-speaking order, it does not mean that the reasoning in the order of Tribunal is also approved by the Supreme Court.

The CBEC Circular No. 165/16/2012-ST, dated, November 20, 2012 ("the Circular")

The CBEC vide the Circular has restored service specific accounting codes for payment of service tax and registration under the negative list of services regime for the purpose of statistical analysis. Accordingly, a list of 120 descriptions of services for the purpose of registration and accounting codes corresponding to each description of service for payment of tax has been provided in Annexure to the Circular. The first 119 services are inspired by services taxable under positive list of services in existence till June 30, 2012 and the 120th service code deals with all other services.

Commissioner of Service Tax Vs. Hero Honda Motors Ltd. [2012-VIL-100-DEL-ST]

The High Court of Delhi held that the assessee is entitled to benefit of claiming payment of service tax on GTA services through adjustment of Cenvat credit.

VAT / GST

Flemingo Duty Free Shop Pvt. Ltd. Vs. Deputy Commercial Tax Officer [2012-VIL- 98-MAD]

The High Court of Tamil Nadu held that when there is a valid e-transit pass issued by competent authority and if it is caused to be delivered within the prescribed period, then VAT authority is bound to consider the same and release goods. Further, the High Court also observed that e-transit pass can be delivered for claiming release of goods which have been detained.

ACC Limited Vs. State of Himachal Pradesh [2012-VIL-99-HP]

The High Court of Himachal Pradesh held that the State has jurisdiction to lay down condition which entails that incentive of sales tax exemption to the second unit of the same entity would be available only if the production of first unit does not fall below the previous year.

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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