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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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Publish Date: 05 Jun, 2007
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CENVAT VIS-À-VIS EXPORT PROCEDURES

CENVAT VIS-À-VIS EXPORT PROCEDURES
 
There are three options available to an exporter under Central Excise law for saving the duty paid on inputs used in manufacture of final product. These three alternatives are: -
 
(i)         Bringing material at nil rate of duty under Rule 13 (1) (b) of Central Excise Rules for manufacture in bond of export goods;
 
(ii)               To take refund of duty paid on inputs under Rule 12 (1) (b) of Central Excise Rules used in manufacture of Export goods;
 
(iii)             To take Cenvat credit and take the refund of duty paid under Rule 57AC (7).
 
The other alternatives of saving input stage duty like Duty Drawback, DEEC (quantity based advanced license) and Duty Entitlement Pass Book (DEPB) Scheme are under the preview of Customs Authorities.  
 
            These all three alternatives from Excise department are equal but the exporters exporting their production opt for the first of these alternatives. The reason being the refund procedure is very cumbersome and obtaining the same from revenue department is more difficult. It leads to undue blockage of working capital from the time of payment of duty by supplier till the receipt of refund from the department.
 
            However, the Notification No. 26/99-CE (N.T.), dated 06/04/1999 created a disparity between the first two options and the third alternative. This was brought by the amendment in Rule 12 as well as Rule 13 of Central Excise Rules which excluded the amendment in definition of materials. As a result of it, you can not take benefit of material used as a fuel under the aforesaid Rule. Normally, HSD oil, furnace oil, LDO etc. are used as a fuel.
 
            There is ban on taking Cenvat credit on HSD oil for manufacture of final product as per Explanation to Rule 57 AA but the Cenvat credit is available on furnace oil, LDO etc. Even earlier it was available under erstwhile MODVAT Rules. As such, the manufacturer exporters using the LDO, furnace oil as a fuel are compelled to opt for third option of taking credit and then claiming refund under CENVAT Rules rather than simple and most beneficial provision of bringing inputs at nil rate of duty under Rule 13 (1) (b) of Central Excise Rules.
 
            The earlier definition of “material” under Rule 12 or Rule 13 permitted the bringing of HSD also. As such, the intention of government was to put a ban on the same. But it has mentioned the word “fuel” in its amendment notification. The same benefit is available to exporters from other route then it shall also be allowed. The exporter are compelled to block their money for a long period right from bringing the inputs after payment of duty, utilizing the same in manufacture of final export goods, exporting it, filing of proof of export and claiming of refund claim on quarterly basis. A considerable time is lost and the amount is paid to exporter after a long battle with the department. Therefore, it is suggested that the facility of Rule 12 and Rule 13 for LDO and Furnace Oil used as fuel should be restored. This will help the exporter to devote their time and energy to constructive work.  

 

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