Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Publish Date: 05 Jun, 2007
Print   |    |  Comment

“AS IF MANUFACTURED” – SCOPE FOR CONTROVERSY

“AS IF MANUFACTURED” – SCOPE FOR CONTROVERSY
 
 
            The new CENVAT Rules, introduced from April 1, 2000, contain provision for clearance of inputs or capital goods as such on which credit is taken by the assessee. The explanation of to Rule 57AB(b) says that the inputs or capital goods should be cleared as if manufactured in factory of assessee. This provision has given rise to many controversies which may lead to litigation. Some of those points of disagreement between assessee and department are highlighted below: -
 
(a)       Paper Formalities: - This will again lead to voluminous paper formalities like filing declaration under Rule 173B, amendment in registration under Rule 174, change in option letter under Notification No. 9/2000, maintain separate daily stock register for this product etc. Any lapse on this count will lead to booking of offence cases against the parties.
 
(b)       Clearance From SSI Units: - The small scale units, clearing goods under exemption Notification No. 9/2000-CE, dated 28.02.2000 will take credit on inputs and clear the goods at concessional rate of duty under the Notification. They will take full credit on procurement from large scale manufacturer but pay lesser duty on as such clearances. This will result in accumulation of credit with them. The department will not accept this view in light of larger bench decision of CEGAT in the case of Collector of Central Excise Vs. American Auto Services [1996 (63) ECR 131(T)] and will ask them, to pay them the duty equal to credit taken by them.
 
(c)        Procurement From SSI Units: - The large scale manufacturer will take credit paid by SSI units but will have to pay duty at full rate of duty if the strict interpretation of aforesaid explanation is taken. But the assessee will take shelter of larger bench decision and department will take action against it. It will again lead to litigation.
 
(d)       Removal of Capital Goods: - The most difficult position is in respect of capital goods wherein the credit taken will be 50% of duty paid as per provisions of Rule 57AC(2)(a) and rest of Cenvat will be taken in subsequent year. But they have to pay duty at full rate if capital goods are cleared as such. Moreover, the credit will not be available in subsequent year because the capital good is not in existence and Rule 57AC(2)(b) prohibits the same. The manufacturer will again feel it convenient to pay duty equal to credit taken as per aforesaid larger bench decision of Hon’ble Tribunal. But it will not be acceptable to the department.
 
(e)       Aggregate Value of Clearance: - These clearances will be taken into consideration for computing aggregate value of clearance under Notification No. 9/2000-CE, dated 28.02.2000. The factories will contend that the department has already taken a stand vide Mumbai Commissionerate Circular No. 157/88, dated 18.11.1988 that these will not be taken into consideration. But department will not accept it saying that the provision prevailing at that time were different when circular was issued. The provision at that time demanded duty payment not less than the credit taken by manufacturer. This will again be a source of litigation.
 
(f)         Effect of Clearance to Inter-connected Undertakings: -  If these inputs or capital goods are cleared to inter-connected undertakings, relative, holding or subsidiary companies etc. then department will demand duty @ 115% of the cost of manufacture or production. This will be very difficult because the cost of manufacture will not be available with the manufacturer. The reason being he has procured the same from outside. Moreover, deeming provision of manufacture under Rule do not change the actual definition of manufacture under Central Excise Act. Also, section has overriding effect on Transaction Value under Section 4. But this will not be acceptable to the department. The outcome will be endless litigation.
       
            Therefore, the Board should reconsider this provision and restore the previous provision of reversal of credit on clearance on inputs and capital goods. This will be a step in the direction of object of reducing litigation expressed be the Finance Minister in his Budget speech.  
 
 
 --------------------------------------------------------------------------
 
 
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com