India: Indirect Tax Newsletter January 16, 2013

Last Updated: 5 March 2013
Article by Amit Kapur

CUSTOMS & INTERNATIONAL TRADE

Customs

Circular No. 4/2013- Cus. dated January 15, 2013

The Central Board of Excise & Customs ("the CBEC") allowed passengers importing firearm as baggage on transfer of residence to dispose the same after ten years of import to persons legally entitled to possess firearm.

Circular No. 2/2013 – Cus. dated January 1, 2013

Allows replacement of Fixed Deposit Receipts (FDRs) furnished in respect of provisional mega and ultra-mega power projects in terms of Notification No. 12/2012-Cus. dated March 17, 3, 2012 and Notification No. 12/2012-CE, dated March 17, 2012 with Bank Guarantees from a scheduled bank.

Notification No.3/2013 –Cus. (NT) dated January 15, 2013

Amends Notification No.36/2001-Cus. (NT), dated August 3, 2001 to hike tariff value of gold, silver & RBD Palmolein.

Honesty Subscription Agency Vs. Commissioner of Customs [2013-TIOL-18- CESTAT-MUM]

The Tribunal held that textile color designing/ matching books even if having fabrics sample pasted therein apart from matter printed on every page are classifiable as printed books and eligible for exemption under Notification No. 21/2002-Cus dated March 01, 2002.

CENTRAL EXCISE, SERVICE TAX, VAT & GST

Central Excise

CCE Vs. Australian Foods India (P) Ltd. [2013-TIOL-03-SC-CX]

The Supreme Court held that once it is established that a specified goods is a branded goods, whether it is sold without any trade name on it or by another manufacturer, it does not cease to be a branded goods of first manufacturer. Such goods would not be eligible for exemption from excise duty available to small scale units under Notification No. 1/93-C.E., dated February 28, 1993.

Siddharth Optical Disc Pvt. Ltd. & Others Vs. UOI & Another [2013-TIOL-37-HC-DELCX]

The High Court of Delhi quashed show cause notice and adjudication order passed on mere assumption on part of revenue that petitioner is manufacturing blank CDs & DVDs at intermediate stage although such blank CDs & DVDs has not been manufactured at any stage and integrated process produced prerecorded CDs and DVDs. The High Court also observed that as assessee got two officers of revenue arrested on charges of bribery, it is a fit case for exercise of jurisdiction under Article 226 of the Constitution despite the fact that petitioner has an alternative remedy of filing appeal. The existence of an alternative remedy is not always a sufficient reason for refusing a party quick relief by way of a writ petition.

Amit Spinning Industries Ltd. Vs. CCE, Kolhapur [2013-TIOL-89-CESTAT-MUM]

The Tribunal held that imported paraffin wax used for smooth process of manufacture of cotton yarn cannot be said to be a raw material for manufacture of cotton yarn. Accordingly, benefit of Notification No. 8/97- CE dated March 1, 1997 available if goods were manufactured from raw material produced or manufactured wholly in India.

Cenvat credit

CCE Vs. Cadilaa Healthcare Ltd. [2013- TIOL-12-HC-AHM-ST]

The High Court of Gujarat held that sales commission agent's service is not an 'input service' in terms of Rule 2 (l) of the Cenvat Credit Rules, 2004 as it is not used directly or indirectly in or in relation to the manufacture of final products or clearance of final products from the place of removal and is also not analogous to the activities mentioned in the inclusive clause of definition of 'input service' under the Credit Rules. The High Court also observed that commission agent is directly concerned with sales rather than sales promotion, consequently, Cenvat credit would not be admissible.

Service Tax

CCE Vs. Usha Breco Ltd. [2013-TIOL-20-HCUKHAND- ST]

The High Court of Uttarakhand held that by providing facility of transportation from Mansa Devi to Chandi Devi and vice versa, assessee did not carry out tour operation. It facilitated journey of its clients from one place to the other as is being done by passenger transporters while carrying out their transportation business.

VAT / GST

Shanti Kiran India Pvt. Ltd. Vs. Commissioner of Trade & Taxes [2013-VIL- 04-DEL]

The High Court of Delhi held that in the absence of any mechanism enabling a purchasing dealer to verify if selling dealer deposited tax with the Government and in the absence of notification whereby purchasing dealer can ascertain that a selling dealer's registration is cancelled, benefit of input tax credit under Section 9(1) of the Delhi Value Added Tax Act, 2004 cannot be denied.

Siemens Limited Vs. Commercial Tax Inspector [2013-VIL-02-KER]

The High Court of Kerala in proceedings pertaining to detention of goods under Section 47 of the Kerala Value Added Tax Act, 2003 ("the Kerala VAT Act") held that where penalty is imposed on a dealer but security in the form of bank guarantee is furnished, then there must be a waiting period of 30 days for enforcing of bank guarantee.

Excise duty, service tax may go up [Source: The Hindustan Times, January 13, 2013] Government is looking at an increase in excise duty on most goods and service tax by two percentage points to 14%. The proposal will earn the exchequer INR 30,000 – 40,000 crore to fund welfare schemes to spin jobs and generate income.

Andhra Pradesh seeks GST regime from April 1, 2013 [Source: The Hindu, January 17, 2013]

The Finance Minister of Government of State of Andhra Pradesh has sought introduction of GST regime from April 1, 2013 to reverse present deceleration of economic growth. Budget will outline amendments to Constitution on GST [Source: Daily News & Analysis, January 16, 2013]

Finance minister, Mr. P Chidambaram said he would outline amendments to the Constitution on GST in his Budget speech if there is consensus among states on the issue.

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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