Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments
Publish Date: 17 May, 2010
Print   |    |  Comment

Non-Melting Controversy on Melting Scrap Part-II

 

Non- Melting Controversy on Melting Scrap- Part-II

 

Prepared By: -

CA. Pradeep Jain

Sukhvinder Kaur LLB[FYIC]

And CA. Ridhi Anchalia

 

Introduction: -

 

It is truly said that litigation never stops. Litigation and law are twins and will go along. It is immaterial how perfectly a provision is framed. We have already written an article on the controversy of melting scrap of stainless steel titled as “Non melting controversy on melting scrap”. It can be viewed on our website www.capradeepjain.com. There are certain latest developments on this issue which has prompted us to write this article. The first development is regarding latest Tribunal decision on this issue on which we have already prepared a case study no. PJ/CASE STUDY/2010-11/04 which can also be viewed on our website. The second development is reduction of BCD on scrap of stainless steel from 5% to 2.5% by Notification no. 54/2010-Cus, dated 29.04.2010 introduced while passing the Finance Bill. We will discuss the implications of these latest developments on this issue. But before proceeding further, let us bring the history of amendments of this issue to have a better understanding of the subject.

 

Brief history of amendments: -

 

Amendments relating to ‘Melting scrap of Iron or Steel’ & ‘Melting scrap of stainless steel’: -

 

In the year 2002, the entries relating to ‘Melting scrap of Iron or Steel’ and ‘Melting scrap of stainless steel’ in the Notification read as under:

 

 

S.

No.

 

Chapter Heading

No. or sub-

heading No.

Description of goods                                         Con‑

 

Standard Rate

Additional

Rate

Condition

no.

200

72.04

 

Melting of scrap of iron or steel (other than stainless steel or heat resisting steel), for use in, or supply to, a unit for the purpose of melting.

 

5.00%

-

20

202

7204.21

Scrap of stainless steel for the purpose of melting

5.00%

-

-

 

In the year of 2003, the rate of basic customs duty for melting scrap of iron or steel at serial number 200 was reduced to ‘Nil’ rate vide Notification No. 83/2004-Cus, dated 20.08.04. The entries read as under:

 

 

S.

No.

 

Chapter Heading

No. or sub-

heading No.

Description of goods                                        Con‑

 

Standard Rate

Additional

Rate

Condition

no.

200

72.04

 

Melting of scrap of iron or steel (other than stainless steel or heat resisting steel), for use in, or supply to, a unit for the purpose of melting.

 

NIL

-

20

202

7204.21

Scrap of stainless steel for the purpose of melting

5.00%

-

-

 

The next amendment to the entries relating to melting scrap of steel were brought in the year 2006 vide Notification No. 11/2006-Cus dated 01.03.2001. The entries read as under: -

 

 

S.

No.

 

Chapter Heading

No. or sub-

heading No.

Description of goods                                        Con‑

 

Standard Rate

Additional

Rate

Condition

no.

200

72.04

 

Melting scrap of iron or steel

 

5.00%

-

-

202

7204.21

Scrap of stainless steel for the purpose of melting

5.00%

-

-

 

Thus, in the year the rate of basic customs duty for melting scrap of iron and steel was restored to 5%. Another change effected in the year 2006 was that the specific exclusion of stainless steel from entry 200 was removed. This was done by removing the words “(other than stainless steel or heat resisting steel)” from the said entry. Till 2006, scrap of steel was expressly excluded from entry 200 of the said Notification.

 

The next amendment related to the said entries was effected in the year 2008. The entries read as under: -

 

 

S.

No.

 

Chapter Heading

No. or sub-

heading No.

Description of goods                                        Con‑

 

Standard Rate

Additional

Rate

Condition

no.

200

72.04

 

Melting scrap of iron or steel

 

NIL

-

-

202

7204.21

Scrap of stainless steel for the purpose of melting

5.00%

-

-

 

Thus, the rate of basic customs duty for the entry ‘Melting scrap of iron and steel’ at serial number 200 was reduced to ‘Nil’ rate. However, no change was introduced in the rate of duty for ‘scrap of stainless steel for melting’ at serial no. 202.

 

Dispute Involved: -

 

The entries relating to scrap of steel and stainless steel in the year 2008 were to the effect that rate of duty for steel was reduced to ‘Nil’ rate. Thus, the problem started with this difference of duty. The importer pleaded that the scrap of steel covers the stainless steel also and there are two exemptions available to him. When two exemption notifications are available then the option lies with the assessee to choose any of them. But the department pleaded that firstly “steel” does not cover the “stainless steel”. Secondly, when there is specific exemption for stainless steel scrap then the assessee can not opt for the general exemption.

 

Judgment passed by the Tribunal: -

 

So here came the Hip Hip Hurrah for the assessee as the Hon’ble Tribunal accepted the contention of the assessee that steel covers stainless steel. Although there is difference in their composition but the base metal is steel in both goods. It was held that stainless steel is only a form of steel.

 

It was also held by the Highest tribunal in matters of Custom and Central Excise that deletion of words “Other than stainless steel scrap” from the entry at serial no.200 clearly includes the stainless steel scrap in this entry.

 

It was further held that the appellant (assessee) could claim exemption under the entry 200 or 202 in view of the judgments delivered in the cases of Share Medicine Vs. UOI [2007 (209) ELT 321 (SC)], CCE Vs. Indian Petrochemicals [1997  (92) ELT 13 (SC)], HCL Vs. CCE [2001 (130) ELT 405 (SC)], Coca Cola India Pvt. Ltd. v/s CCE, Pune–III [2009 (242) ELT 168 (Bom.)] and IOCL v/s CCE [1991 (53) ELT 347 (Tri)].

 

Thus, the assessee was allowed to avail the benefit of exemption which is more beneficial to the assessee. As already stated we have prepared the case study on the same case wherein complete details of the case is available. {See PJ/CASE STUDY/2010-11/04 in Case Study section}

 

New Development: -

 

We have already narrated above that litigation never stops. The amendments and litigations are twin brothers. This has happened here also. Again came a new amendment in the Notification for the same entries.

 

Now, the Board has brought an amendment in the entry at serial number 202 relating to “scrap of stainless steel for melting purposes”. The duty at serial number 202 was reduced from 5% to 2.5%. We have reported on the same in our weekly updates available on our website. The entry read as under: -

 

 

S.

No.

 

Chapter Heading

No. or sub-

heading No.

Description of goods                                        Con‑

 

Standard Rate

Additional

Rate

Condition

no.

202

7204.21

Scrap of stainless steel for the purpose of melting

2.5%

-

-

 

The amendment has been introduced vide Notification No. 54/2010-Cus, dated 29.04.2010. Even it was said by the department that it has been done on the representation of the associations.

 

Outcome of Amendment: -

 

We have to see what will be the outcome of this amendment. The future will reveal about the same. We are tax experts and not Jyotishi. However, we try to analysis the situation of this amendment on the basis of our knowledge and belief. The department will contend that the intention of the Government is clear that there should be separate levy for stainless steel scrap. And the assessee will contend that the law is not based on intentions. If the intention of the Government was to have separate entry for stainless steel scrap then they should have not deleted the words “other than stainless steel scrap” from the entry 200. This deletion has underlined the intention of the Government in that year only.

 

But one thing is granted that the litigation will not end here. Let us wait and see the future.

 

Before parting: -

 

The only possible solution to end this litigation that can be taken by the Government in a view with cognizance of the judgment passed by the Hon’ble Tribunal in the case of M/s Mangalam Alloys is to prudently delete the entry at serial number 202 from the Notification No. 21/2002-Cus. Only then the controversy will come to complete rest. Else the helpless assessee will have to face the burden of the amendments made by the government. So what about such litigations that are just created by the government because of their carelessness while drafting the notifications? What about such situations that are faced by the assessee? These are some of the questions that remain unanswered.

 

*************

Post a Comment
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