Circular on ;OIDAR

Ministry of Finance11-November, 2016 21:01 IST

To provide a level playing field to Indian service providers, the exemption given to service providers located in foreign territory but providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, is being withdrawn with effect from 1st December, 2016

 With a view to provide a level playing field to Indian service providers providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, the exemption to such services provided in India by service providers located in foreign territory is being withdrawn with effect from 1^st December, 2016. Thus cross border business to consumer [B2C] OIDAR services provided by a foreign service provider to a person in India will become taxable from 1^st December, 2016 onwards.

The salient features of this levy are as under:

·         A simplified online mechanism of taking registration has been prescribed and registration will be deemed to be granted online on submission of registration application.

·         A simplified mechanism of online payment of taxes and online filing of returns is being prescribed.

            A detailed Circular No. 202/12/2016-Service Tax dated 09.11.2016 has been issued by CBEC, explaining the likely issues arising from the withdrawl of this exemption.

Useful links:

1)      http://www.cbec.gov.in/ServiceTax-Notifications

2)      http://www.cbec.gov.in/htdocs-servicetax/st-circulars/st-circulars-2016/st-circ-202-2016

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CBEC ON EPCG

CBEC Instructions for Rationalization of procedures reg. handling exporters obligations under EPCG authorizations

The CBEC has instructed to further rationalize the procedures reg. handling exporters obligations under EPCG authorizations to ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Also CBEC has reiterated to ensure credibility and transparency in the Bond cancellation process by making the process speedier and that the exporter should not be asked to routinely produce information that can be sourced from the Customs EDI system.

CBEC Instructions dt. 14 Oct. 2016 F.No.605/71/2015-DBK 

1. The undersigned is directed to say that as a part of further rationalizing procedures and avoiding duplication of work based on feedback on outcomes of applying extant procedures, taking into account the conditions prescribed in the Foreign Trade Policy and Customs notifications, the Board reviewed certain aspects of the directions given to field formations in Circular No. 5/2010-Cus, Instruction No. 609/119/2010-DBK dated 18.01.2011 and Circular No. 14/2015-Cus insofar as they relate to EPCG scheme. The details are given in succeeding paragraphs.

2. At present the correctness of the installation certificates issued by Chartered Engineers are to be verified on random basis in at least 5% cases through the Central Excise Division. The Board has decided that this verification be restricted to 5% cases.

3A. In the Circular of 2010 it was prescribed that first block EO (export obligation) should be verified in detail and if it has been found satisfactory then EODC issued at end of second block should be accepted without further verification. The Instruction of 2011 confirmed that this is to be implemented; however, for past cases where exporter had not come forward for first block verification but had submitted the EODC, the EODC may be accepted subject to random verification of at least 5% of EODCs issued in such past cases. It further directed that the Customs check, in detail, at least 5% EODCs. In this connection, it was noted that not meeting the block-wise EO attracts composition fees or payment of duty with interest and this find mention in HBP and is also referred in Customs notifications.

3B. On consultation, the DGFT has informed that the provisions of para 5.14 of HBP 2015-20 that provides

"5.14(c)HBP: Where EO of the first block is not fulfilled in terms of the above proportions, except in cases where the EO prescribed for first block is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount proportionate to unfulfilled portion of EO pertaining to the block, the Authorization holder shall, within 3 months from the expiry of the block, pay duties of customs (along with applicable interest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block",

and the similar provisions in previous FTP/HBP 2009-14 and 2004-09 are strictly followed by Regional Authorities before issuing EODC/redemption/closure letters; and also that cases of condoning / delay in fulfillment of block-wise EO are considered by Regional Authorities only when exporter has obtained relaxation in terms of DGFT's powers under the FTP. The DGFT has also advised its Regional Authorities to ensure that these provisions are strictly followed in respect of all unredeemed EPCG authorization issued during the FTP 2004-09, 2009-14 and 2015-20.

3C. In the light of this, Board has decided that Customs authorities need not replicate the verification of export obligation of the first block that is being conducted by Regional Authorities and that the EODCs received under EPCG Scheme in terms of FTP/HBP 2004-09, 2009-14 and 2015-20 be normally accepted without further verification, except in 5% cases where they be verified in detail before acceptance.

4. The foregoing aspects remain subject to detailed verification of EODC when there is such a need suggested by specific intelligence. Further, if Regional Authorities endorse verification of shipping bills/other documents on an EODC, such verification shall be carried out. Moreover, it remains mandatory to verify genuineness of non-EDI shipping bills/bills of export on which an EODC may be based.

5. The guidelines issued in the past on the subject shall be modified to the above extent. It should be noted that monitoring of progress of block-wise EO fulfillment is to continue and as clarified in Circular No. 14/2015-Cus the field formations can view the EPCG authorization-wise all India export details in EDI.

6. The Commissioners are also directed to ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Credibility and transparency may be brought into the Bond cancellation process which may be made speedier. The exporter should not be asked to routinely produce information that can be sourced from the Customs EDI system.

To view or download pdf copy of CBEC Instructions in this regard, please refer the link below:

CBEC Instructions dt. 14 Oct. 2016 Procedures reg. Exporters obligations under EPCG au

          

ST Arrest Guidelines

Revised Guidelines of CBEC for arrest in relation to Service Tax offences punishable under the Finance Act, 1994 and Central Excise Act, 1944

The CBEC has issued revised guidelines for arrest in relation to Service Tax offences punishable under the Finance Act, 1994 and Central Excise Act, 1944, while emphasizing careful examination of the legal and factual aspects  before proceeding with arrest, as under:

CBEC Circular No. 201/11/2016-Service Tax dt. 30 Sept. 2016 F.No. 137/47/2013-Service Tax

1. I am directed to draw your attention to the fact that the arrest provisions in Service Tax were introduced with effect from 10.05.2013 vide sub-sections (J) and (K) of section 103 of the Finance Act, 2013 which introduced sections 90 and 91 in the Finance Act, 1994 and also amended section 89 of the Finance Act 1994. Vide sections 155, 156 and 157 of the Finance Act 2016, with effect from 14.05.2016, sections 89, 90 and 91 of the Finance Act, 1994 have been amended. As a consequence of these amendments, the power of arrest in Service Tax is available only if a person collects any amount as service tax but fails to pay the amount so collected to the credit of the Central Government beyond the period of six months from the date on which such payment becomes due and the amount exceeds rupees two crore.

2.0 Vide paragraph 2 of Board Circular F.No. 137/47/2013-Service Tax dated 17.09.2013 certain conditions precedent to carrying out arrests were indicated. These were:

2.1 Careful exercise of this power since arrest impinges on the personal liberty of an individual.

2.2 The reason to believe that a person has committed the specified offence which is rendering the person liable for arrest must be based on credible material which will stand judicial scrutiny.

2.3 The relevant factors before deciding to arrest a person must be, apart from fulfillment of the legal requirements, the need to ensure proper investigation and prevention of the possibility of tampering with evidence or intimidating or influencing witnesses.

3.0 In the context of the legislative amendments vide the Finance Act 2016 and the single offence for which the power of arrest exists, it is necessary to again emphasize and indicate the factors which must invariably be kept in mind before arresting a person:

4.0 Conditions precedent- Legal 

4.1. At the outset there must be clear and unambiguous notings in the file, bringing out how all the ingredients of the offence have been established. The notings must specifically refer to evidence relating to-

4.1.1 Amount collected as service tax: Collection of an amount as service tax should be clear and self-evident from the invoices, bills, contracts, etc. An amount should be clearly indicated as service tax. The copies of sample invoices /bills, contracts, etc. which cover the period being investigated should be in the file.

4.1.2 Amount should exceed Rs 2 crore.

4.1.3 Failure to pay the amount so collected to the credit of the Central Government:

The 8T3 return filed by the assessee for the relevant period, showing the self-assessed value of taxable services and service tax paid should be available in file. Where no such return has been filed, an observation to this effect should be made since this will make the departmental case stronger.

4.1.4 Such a failure should be beyond the period of six months from the date on which such payment becomes due: Fulfillment of the condition relating to the time period must be verified carefully, and a month wise abstract of the invoice numbers, due date of payment of service tax and date when the six month period was completed must be kept ready.

4.2 The suggestions in the preceding paragraph are intended at bringing uniformity in the approach to such matters and ensuring that evidence relating to the alleged offence is readily available for perusal by a judicial body, when necessitated.

5.0 Conditions precedent- factual 

5.1 Even if all the legal conditions precedent mentioned in paragraph 4.1 to 4.2 are fulfilled, that will not, ipso facto, mean that an arrest must be made. Once the legal ingredients of the offence are made out, the Commissioner must then determine if the answer to the following questions is in the affirmative

5.1.1 Is the alleged offender likely to hamper the course of further investigation by his unrestricted movement?

5.1.2 Is the alleged offender likely to tamper with evidence or intimidate or influence witnesses?

5.2 If the answer to both the questions is yes, then the decision to arrest can be made.

5.3 If the alleged offender is assisting in the investigation and has deposited at least half of the evaded tax, then the need to arrest may not arise.

6.0 The Guidelines issued vide Board Circular F.No. 137/47/2013-Service Tax dated 17.09.2013 may be referred to for the procedure for arrest, post-arrest formalities and the reporting system.

7.1. It has been decided to revise the monetary limits for arrests and prosecution in Central Excise to maintain uniformity of practice in Central Excise and Service Tax. It is directed that henceforth arrest and prosecution of a person in relation to offences specified under clause (a) to (d) of sub-section (1) of section 9 of the Central Excise Act, 1944 may be considered only in cases where evasion of Central Excise duty or misuse of CENVAT Credit is equal to or more than rupees two crore. Central Excise Circular No. 974/08/2013-CX dated 17.09.2013 and 1009/ 16/2015-CX dated 23.10.2015 stand amended accordingly. Circular No. 1010/ 17/2015-CX dated 23.10.2015 is rescinded in View of the revision of monetary limits prescribed by this circular. It is again reiterated that arrest and prosecution should not be resorted to in cases of technical nature i.e. where the additional demand of duty/tax is based totally on a difference of opinion regarding interpretation of law.

7.2 Transitional provisions as prescribed in para 11 of the Circular No. 1009/ 16/2015-CX dated 23.10.2015 shall apply mutatis-mutandis i.e. all cases where sanction for prosecution is examined and accorded after the issue of this circular, shall be dealt in accordance with the provisions of this circular, irrespective of the date of the offence. Cases where prosecution was sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the enhanced monetary limit and sanction withdrawn for cases where evasion of Central Excise duty or misuse of CENVAT Credit is below the revised monetary limit of rupees two crore.

8.0 It is emphasized once again that since an arrest impinges on the personal liberty of an individual, this power should be exercised with great responsibility and caution and only after a careful examination of the legal and factual aspects indicated in the preceding paragraphs.

CBEC Circular No. 201/11/2016-Service Tax dt. 30 Sept. 2016 | View

Centralized Registration under Central Excise

New functionality of Single/ Centralised Registration in Central Excise for Jewellery and other specified Manufacturers is now available in ACES

Assessees can now opt for centralized registration and capture additional premises through A1 form, as a new functionality is now available at ACES for single/centralised excise registration for certain specified manufacturers, including for new registration, amendments, etc.

A. New Registration as well as amendment of registration to capture additional premises for the first time in ACES

A new facility has been provided in Central Excise Registration form A1 for certain category of assessees to opt for Centralised registration/ Single registration and correspondingly, capture the list of premises covered under Centralised registration/Single registration.

The following categories of assessees are covered under this implementation:

1) Jewellery

2) Mines

3) Aluminium Roofing Panels

4) Recorded Smart Cards

5) Single registration for CNG

6) Single registration for interlinked units

A new checkbox is provided for selection if the assessee intends to opt for Centralised registration/Single registration. If the option is checked, LOV listing all the above categories is enabled for selection. In case the assessee selects (1) or (2) above, the selection of business category should also correspond to Jewellery or Mines respectively.

In all other cases, the business category shall be Manufacturer. Once the assessee clicks on NEXT after filling up all the fields in the first screen, a new screen to capture list of all additional premises is opened up, if he opts for centralized registration/single registration. The additional premises can be captured online through SAVE and ADD NEW option. Alternatively, if the number of premises are very huge, the assessee can follow the procedure mentioned below:

a) Download the sample XLS file provided in the screen

b) Please read the instructions for filling up the excel worksheet in the README document provided along with the sample XLS file

c) Fill up the excel worksheet as per the instructions and upload the same using the option provided in the screen.

d) The list of premises uploaded will be displayed in the screen and the assessee can further add or delete any of the premises, already uploaded

e) Fill up the remaining particulars in the registration form and save the form

f) The confirmation screen will be opened displaying the A1 form along with the list of premises added/uploaded and the assessee can submit the application.

The above procedure can be adopted by first-time applicant as well as applicant already registered in the above business category, but without capture of additional premises.

The list of premises after generation of RC can be downloaded from the link provided in the VIEW RC screen.

B. Amendment of registration for the above categories, where additional premises have already been captured

For any assessee amending his registration for change of details of additional premises ( where additional premises have already been captured).

1) Click on Amend Registration button in the form.

2) There will be a link for "Download additional premises" which will list out the premises already added for the registration

3) The assessee can add or delete the details in the downloaded list and then upload the XLS again afresh.

4) Make any other changes, if necessary, and then SAVE and SUBMIT the form for approval of the Amendment by AC.

The revised list of premises can be downloaded from the link in the VIEW RC screen as soon as the amendment is approved by AC (if no PV is assigned) and as soon as PV report is approved by AC (if PV is assigned). In case of manufacturers of jewellery, there will not be any PV.

CBEC on Construction Site

CBEC Clarification on Scope of 'Construction Site' for availing Excise Exemption as appearing in Notification No. 12/2012-Central Excise, dated 17.03.2012

The CBEC has clarified the scope of word construction 'site' for availing of benefit of exemption applicable to goods manufactured at the site of construction for use in construction work at such site. The CBEC has advised to consider circumstances of each case instead of using restrictive approach for the purpose, specially for projects involving sites at long distances, as under:

CBEC Circular No. 1036/24/2016-CX dt. 6th July. 2016

1. Representations have been received from the trade regarding difficulties being faced in availing of benefit of exemption applicable to goods manufactured at the site of construction for use in construction work at such site vide S. No. 186 of Notification No. 12/2012-Central Excise, dated 17.03.2012, as amended. The issue is, how should the expression "site" used and defined in the aforesaid notification be interpreted, particularly for projects which run long distances, such as construction of road, laying of pipelines or laying of railway tracks etc.

2.1 The issue has been examined in the Board. The expression site has been defined in the notification (ibid) as "any premises made available for the manufacture of goods by way of a specific mention in the contract or agreement for such construction work, provided that the goods manufactured at such premises are solely used in the said construction work only".

2.2 It is clear from the definition that the expression "site" cannot be given a restrictive meaning while interpreting the same so long as the premises under consideration for availing benefit of exemption under S.No. 186 of Notification No. 12/2012-Central Excise, dated 17.03.2012 fulfils following conditions:-

i. The said premises are made available to the manufacturer of goods by way of a specific mention in the contract/agreement for such construction work.

ii. The goods under Chapter 68 (except 6804, 6805, 6811, 6812 and 6813), for which exemption is claimed are manufactured at the said premises; and

iii. Such goods manufactured at the said premises are exclusively used for the construction work, as per the relevant contract or agreement.

3. It appears that in some field formations, the distance at which goods manufactured at site is used in the project, has been considered as criteria for examining the eligibility of goods for exemption. This is an extraneous criteria not flowing from the language used in the notification, particularly when the expression "site" stands explained in the notification. As explained in para 2.2 above, the eligibility criteria must flow from the plain reading of the explanation of the expression "site" in the notification.

4. In view of the above, it is hereby directed that each case may be decided taking into consideration the facts of the individual case, examined in light of the clarification given above. Circular No. 456/22/99-CX, dated 18.05.1999 is hereby rescinded.

CBEC on Construction Site

CBEC Clarification on Scope of 'Construction Site' for availing Excise Exemption as appearing in Notification No. 12/2012-Central Excise, dated 17.03.2012

The CBEC has clarified the scope of word construction 'site' for availing of benefit of exemption applicable to goods manufactured at the site of construction for use in construction work at such site. The CBEC has advised to consider circumstances of each case instead of using restrictive approach for the purpose, specially for projects involving sites at long distances, as under:

CBEC Circular No. 1036/24/2016-CX dt. 6th July. 2016

1. Representations have been received from the trade regarding difficulties being faced in availing of benefit of exemption applicable to goods manufactured at the site of construction for use in construction work at such site vide S. No. 186 of Notification No. 12/2012-Central Excise, dated 17.03.2012, as amended. The issue is, how should the expression "site" used and defined in the aforesaid notification be interpreted, particularly for projects which run long distances, such as construction of road, laying of pipelines or laying of railway tracks etc.

2.1 The issue has been examined in the Board. The expression site has been defined in the notification (ibid) as "any premises made available for the manufacture of goods by way of a specific mention in the contract or agreement for such construction work, provided that the goods manufactured at such premises are solely used in the said construction work only".

2.2 It is clear from the definition that the expression "site" cannot be given a restrictive meaning while interpreting the same so long as the premises under consideration for availing benefit of exemption under S.No. 186 of Notification No. 12/2012-Central Excise, dated 17.03.2012 fulfils following conditions:-

i. The said premises are made available to the manufacturer of goods by way of a specific mention in the contract/agreement for such construction work.

ii. The goods under Chapter 68 (except 6804, 6805, 6811, 6812 and 6813), for which exemption is claimed are manufactured at the said premises; and

iii. Such goods manufactured at the said premises are exclusively used for the construction work, as per the relevant contract or agreement.

3. It appears that in some field formations, the distance at which goods manufactured at site is used in the project, has been considered as criteria for examining the eligibility of goods for exemption. This is an extraneous criteria not flowing from the language used in the notification, particularly when the expression "site" stands explained in the notification. As explained in para 2.2 above, the eligibility criteria must flow from the plain reading of the explanation of the expression "site" in the notification.

4. In view of the above, it is hereby directed that each case may be decided taking into consideration the facts of the individual case, examined in light of the clarification given above. Circular No. 456/22/99-CX, dated 18.05.1999 is hereby rescinded.

CBEC Clarification on Recovery of Demands

CBEC Clarification reg. Recovery of Confirmed Demands during the pendency of Stay Application

To bring uniformity in practice and to ensure that the assessee gets adequate opportunity to appeal before recovery proceedings are started in recovery of confirmed demands of indirect taxes, the CBEC has issued Clarification Circular No. 1035/23/2016-CX dt. 4th July, 2016, on the following lines:

In cases where stay application is pending before Commissioner (Appeals) or CESTAT for periods prior to 06.08.2014, no recovery shall be made during the pendency of the stay application. It may be noted that the law on the issue was amended on 06.08.2014, where after filing of appeal requires payment of 7.5 or 10 per cent of tax demand, depending on stage of appeal, obviating the need for appellate authority to hear any stay application.

However in the cases where demand is confirmed by Hon'ble CESTAT or Hon'ble High Court recovery proceeding may be initiated after a period of sixty days from the date of the order provided that no stay is in operation.

CBEC Circular No. 1035/23/2016-CX dt. 4th July, 2016

1. Kind attention is invited to Board Circular No. 967/1/2013-CX dated 01.01.2013 on the issue of recovery of confirmed demands during the pendency of stay application filed by the assessee. Since then important changes in Law have been made and important judgments have come on the subject. Accordingly, it has been decided to review the Circular.

Part I: When stay application is pending before Commissioner (Appeals) or CESTAT :

2. The circular dated 01.01,20.13 was examined by Hon'ble High Courts in situations where stay applications was pending before Commissioner (Appeals) or CESTAT. In this regard some of the important judgments are L&T vs. UOI (2013-TIOL-99-HC-CX) and Karnavati Club ltd. Vs. UOI (SCA No 2422/2013), wherein the Courts held that recovery could be made only in cases where delay in deciding the stay could be attributed to the conduct of the assessee. No appeal was filed against these judgments of the Hon'ble High Courts by the Department and thus these judgments attained finality.

3.1 However Hon'ble High Court of Punjab and Haryana judgment in case of M/s PML industries Ltd. Vs Commissioner of Central Excise (2013-TIOL-201-HC-P&H-CX) pronounced that during the pendency of stay, irrespective of the conduct of the assessee, no recovery could be made. In para 46, Hon'ble Court observed that:

"…we are of the opinion that right of consideration in appeal on an application for waiver of pre-deposit is a right conferred by the Statute and such right cannot be defeated on the basis of Circular…"

3,2 SLP filed by the Department [SLP (Civil) 765/2014] against the judgment of Hon'ble High Court of Punjab and Haryana, has been dismissed by the Hon'ble Supreme Court, thus upholding the decision of the Hon'ble High Court, The relevant observation of the Hon'ble Supreme Court while dismissing the SLP, is reproduced below:-

"In view of the judgment and order passed by this Court in Commissioner of Customs & Central Excise, Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd [2005 (180) ELT 434 (SC)/2005-TIOL-42-SC-CX) we find no reason to interfere with the impugned order passed by the High Court. The special leave petitions are dismissed."

4.1 In light of the above judgments, the Circular No. 967/1/2013-CX dt. 01.01.2013 is hereby rescinded and following fresh instructions are given on the subject. It is also clarified that seven circulars which had been rescinded vide Circular No, 967/1/2013-CX dated 01.01.2013 shall continue to remain rescinded.

4.2 In cases where stay application is pending before Commissioner (Appeals) or CESTAT for periods prior to 06.08.2014, no recovery shall be made during the pendency of the stay application.

4.3 For subsequent period i.e. from 06.08.2014 onwards, instructions contained in Circular No. 984/08/2014-CX dated 16.09.2014 shall continue to be followed. Section 129E of the Customs Act, 1962 and Section 35F of the Central Excise Act, 1944, as made applicable to Service Tax vide Section 83 of the Finance Act, 1994, was amended vide Finance Act, 2014 with effect from 06.08.2014.

Part II: When demand is confirmed by Hon'ble CESTAT or Hon'ble High Court & stay is pending before Hon'ble High Court or Hon'ble Supreme Court:

5.1 Attention is invited Sl. No. 11 of the Circular No. 967/1 /2013-CX dated 01.01.2013 providing that when a demand is confirmed by a Hon'ble CESTAT or a Hon'ble High Court, recovery may be initiated immediately on the issue of order by the Hon'ble Tribunal or the High Court, if no stay is in operation. Hon'ble High Court of Gujarat in case of Karnavati Club Ltd. (SCA No. 2422/2013) examined the entire Circular dated 01.01.2013 and in relation to Sl. No 11, in para 29 of the judgment, upheld the direction contained in the circular, without any modification.

5.2 As a measure of liberalization and to ensure uniformity of practice, it is hereby directed that, recovery proceeding in relation to an order of Hon'ble High Court or Tribunal confirming demand of duty, may be initiated only after a period of sixty days from the date of Order of the Hon'ble Tribunal or Hon'ble High Court, as the case may be, where no stay has been granted by Hon'ble High Court or Hon'ble Supreme Court against the order of Hon'ble Tribunal or Hon'ble High Court, respectively.

IDRS

Analysis of Indirect Tax Dispute Resolution Scheme, 2016 (IDRS)

 Indirect Tax Dispute Resolution Scheme, 2016 (IDRS) has been introduced by Finance Act, 2016, vide Chapter XI.  The salient features of the scheme are as follows:

1.         Applicability:

 It shall be applicable to the declarations made up to the 31st day of December, 2016.

 2.         Who can Apply:

Any person whose appeal is pending before Commissioner (Appeals) can opt for this scheme except the following cases, when:

(a)     the impugned order is in respect of search and seizure proceeding; or

(b)     prosecution for any offence punishable under the Act has been instituted before the 1st day of June, 2016; or

(c)     the impugned order is in respect  of narcotic drugs or other prohibited goods; or

(d)     impugned order is in respect of any offence punishable under the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985 or the Prevention of Corruption  Act, 1988; or

(e)     any detention order has been passed under the Conservation of Foreign Exchange and Prevention of Smuggling Act, 1974.

3.         Process of Declaration and getting relieving order:

A person has to follow the following process to benefit from the scheme:

Declare

(1)         Any person opts for the scheme shall apply in Form 1 (in duplicate) in respect of the amount payable under the Scheme on or before 31st December 2016.

Acknowledgement of declaration

(2)         The designated authority shall acknowledge the declaration in Form 2 within seven days of the receipt of declaration.

(3)         Copy of the declaration (Form 1) and the acknowledgement issued by the designated authority (Form 2) shall be furnished within fifteen days of the receipt of acknowledgement by the declarant to the concerned Commissioner (Appeals) before whom the appeal in respect of which the declaration has been made is pending.  No form been prescribed and thus, the filing can be done under a simple letter.

(4)         On the receipt of the declaration and acknowledgement, Commissioner (Appeals) shall not proceed with the appeal in respect of which the declaration has been made for a period of sixty days from the date of receipt of information (Form 1 and Form 2).

Pay Taxes

(5)         The declarant shall pay tax due alongwith the interest thereon at the rate as provided in the Act and penalty equivalent to twenty-five per cent. of the penalty imposed in the impugned order, within fifteen days of the receipt of Form 2.

Intimate about payment

(6)         Declarant should intimate the designated authority in Form 3 within seven days of making such payment giving the details of payment made along with the proof thereof.

Order of discharge

(7)         The designated authority shall, within fifteen days of receipt of the information about the deposit made as submitted in Form 3, issue the order of discharge of dues in respect of the declaration made in Form 4.

Intimate Commissioner (Appeals)

(8)         The declarant shall intimate the concerned Commissioner (Appeals) along with the copy of the order of discharge of dues issued by the designated authority before the expiry of the period of sixty days from his first intimation to Commissioner (Appeals). Since no form has been prescribed, such intimation made be made in form of simple letter.

(9)         On the receipt of the information along with the copy of the order of discharge of dues issued by the designated authority, Commissioner (Appeals) shall remove the appeal from the list of pending appeals with him and intimate the declarant within seven days of the receipt of information.

4.         Immunity from other proceedings under Act.

Upon the passing of an order in Form 4, the appeal pending before the Commissioner (Appeals) shall stand disposed of and the declarant shall get immunity from all proceedings under the Act, in respect of the indirect tax dispute for which the declaration has been made under this Scheme.  Thereafter, no matter relating to the impugned order shall be reopened thereafter in any proceedings under the Act before any authority or court.

5.         Consequences of order made under scheme.

Any amount paid in pursuance of a declaration shall not be refunded.   Also, order of relief in Form 4 shall not be deemed to be an order on merits and has no binding effect in future before any authorities.

6.         Frequently asked Questions

Q1.      Do I have to make seeprate declarations for each appeal or can I file one declaration against all pending appeals.

You have to file separate declarations for every appeal.

Q2.      I have three appeals pending before Commissioner (Appels).  I want to make declaration only for one while the other two I want to contest.  Can I do so?

Yes. Since the declaration is separate for each appeal, when made for one of the appeals would not have any impact on any other pending appeal.

Q3.      Can I opt for the scheme for part of demand against which appeal has been filed i.e. out of three issued pending in an appeal, can I opt for one issue under this scheme and contest the balance two issues?

No. Since the declaration is single for each appeal, there is no provision of opting for part of demand pending in a single appeal.

Q4.      Who can sign the declaration?

The declaration shall be verified in the manner indicated therein and shall be signed by the person making such declaration or by any person competent to act on his behalf.

Q5.      Can I pay demand under this scheme from Cenvat credit?

There is no restriction in such payment as per the scheme provided.  However, interest and penalty cannot be paid by Cenvat credit.  However, as per intimation Form 3, there is no column for such adjustment and thus, the intent of the drafters might be payment in cash only.

Q6.      Will an order of relief in Form 4 shall mean that I have got the order in appeal in my favour?

The scheme is only a dispute resolution scheme and in no manner provides any order on merit.  It simply relieves an assessee from a pending appeal and all proceedings, but such order cannot be used in merit in any future matter of same or some other assessee.

Q7.      Till when should I pay interest under the scheme?

Interest is to be computed and paid upto the date when tax is paid by the assessee under the scheme.

Q8.      I have already deposited 7.5% as stay requirement against such appeal.  Can I take the amount in computing my discharge or should I apply for refund of such amount?

Amount deposited in pending proceedings in the view of the author should be considered as payment under the present scheme.

Q9.      I have deposited tax and interest but failed to pay penalty within 15 days.  Can I still get immunity under the scheme?

No, if the penalty is not paid within he specified time, no relief under the scheme shall be given to the declarant.

Q9.      My declcaration has been rejected for non payment.  Can I adjust the amount paid towards demand upheld by Commissioner (Appeals)?

Yes, any deposit under the scheme when rejected should be considered for demand upheld by Commissioner (Appeal).

 (Courtesy: Gaurav Gupta)

Unique Warehouse Code

Customs

 Allotment of Unique Warehouse Code for Customs Bonded Warehouses

The Central Board of Excise and Customs ("the CBEC") vide Circular No. 19 /2016 –Customs dated May 20, 2016 has informed that in terms of changes made in Finance Act, 2016 in regard to shifting towards a record based control with respect to Bonded Warehouses, it is proposed that each Warehouse be allotted a Unique Warehouse Code so that importers can at the into-bond bill of entry stage declare the Warehouse in which goods shall be deposited.

In this respect a module has been developed in ICES to capture details of Customs Bonded Warehouses licensed in each Commissionerate and to generate a Warehouse Code in the system.

Further, any formation of Central Excise having control over a Customs Bonded Warehouse but not connected on ICES are directed to forward the list of Warehouses licensed by them to the Principal Commissioner/ Commissioner of Customs having jurisdiction over the nearest EDI enabled Customs station latest by June 1, 2016.

Also, the CBEC has requested the Commissioners at EDI locations to complete the said exercise by 6th June, 2016 and confirm the same and it is proposed to publish the said code  generated on the ICEGATE website for the information of trade from June 10, 2016 to June 15, 2016.

From June 20, 2016, declaring the warehousing code in the Bill of Entry would become mandatory for filing Into-Bond and Ex-Bond Bill of Entry and Ex-Bond Bill of Entries with invalid Warehousing Code will be rejected.

CBSE taxpayers day

CBEC vide Letter F. No. DGST/19/2015 dated 12.04.2016 to ICAI has informed that every Wednesday would be taxpayers day wherein heads of all offices in the field will meet the taxpayers/ other stakeholders from 9 AM to 1 PM without any prior appointment in order to address their grievances relating to Central Excise, Service Tax, Customs etc. This step is undertaken by the government in order to live up to its idea of responsive governance and trade facilitation which would ensure ease of doing business for the taxpayers/ other stakeholders.

Service tax date extension

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
SERVICE TAX WING
NEW DELHI

ORDER NO

1/2016-Service Tax, Dated: April 25, 2016

In exercise of the powers conferred by sub-rule (4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the Form ST-3 for the period from 1st October 2015 to 31st March 2016, from 25th April 2016 to 29th April 2016.

The circumstances of a special nature, which have given rise to this extension of time, are as follows:

"Difficulties have been faced by assessees in accessing the ACES application on 25th April 2016"

F.No.137/99/2011-Service Tax

(Rajeev Yadav)
Director (Service Tax)
Central Board of Excise and Customs

Extension of Time Limit-ED-Jewellery

Extension of time limit for taking Central Excise registration by an establishment of Jeweller and payment of Excise Duty by Assessee Jeweller.

The Ministry of Finance vide Circular No. 1026/14/2016-CX dated April 23, 2016 has further extended the time limit for taking Central Excise registration of an establishment by jewellers up to July 1, 2016 which was earlier 60 days from March 1, 2016. Also, Assessee jeweller may pay Excise Duty of March, 2016 to May, 2016 with Excise duty of June, 2016.

Excise duty on Jewellery industry

Institute of Chartered accountant has published a book on excise duty on Jewellery industry. Which answers 105 questions on excise law. It also includes format of records and documents to be maintained. It can be downloaded from following link
http://icai.ind.in/newsletter/lt.php?c=627&m=364&nl=1707&s=2029b9226f3ef6655f1f5e7d142f39fb&lid=27685&l=-http--ucanapply.s3.amazonaws.com/icai/download/CELP_Jewellery%20sector_final_29.3.pdf

Rebate/refund of SB Cess on exports & services used in SEZ; Cenvat credit cannot be used for SB Cess & others

Dear Professional Colleague,

Rebate/refund of SB Cess on exports & services used in SEZ; Cenvat credit cannot be used for SB Cess & others

The Central Government ("CG") has issued various Notifications under the Service tax and the Central Excise for extending the benefit of refund/rebate to the Swachh Bharat Cess ("SB Cess") component and the input services used beyond factory for export. Further, the Cenvat Credit Rules, 2004 ("the Credit Rules") has been amended to allow Cenvat credit on commission agent's services and to make explicit that Cenvat credit shall not be used for payment of SB Cess.

Gist of all the Notifications is discussed hereunder for easy digest:

Rebate of Service tax on services used beyond the factory or any other place/premises of production/manufacture of goods, for their export

The CG vide Notification No. 01/2016-Service Tax dated February 3, 2016 ("Notification No. 1") has amended Notification No. 41/2012-Service Tax dated June 29, 2012 (Rebate of Service tax paid on the taxable services which are received by an exporter of goods and used for export of goods) ["Notification No. 41"] to include the taxable services that have been used beyond factory or any other place or premises of production or manufacture of the goods, for their export, in the case of excisable goods, under the definition of 'specified services'. Further, clause (B) of Notification No. 41 prescribing definition of 'place of removal' as the one defined under Section 4(3)(c) of the Central Excise Act, 1944, has also been deleted.

Increase in the rate of refund commensurate to the increased Service tax rate

The CG vide Notification No. 1 has further amended Notification No. 41 to increase the rate of refund commensurate to the increased Service tax rate in the following manner:

"(b) in the Schedule of rates, in column (4),-

(i) for the  figures 0.04, wherever they occur, the figures 0.05 shall be substituted;

(ii) for the  figures 0.06, wherever they occur, the figures 0.07"shall be substituted;

(iii) for the  figures 0.08, wherever they occur, the figures"0.09"shall be substituted;

(iv) for the  figures 0.12, wherever they occur, the figures 0.14"shall be substituted;

(v) for the figures 0.18, wherever they occur, the figures 0.21"shall be substituted; and

 (vi) for the  figures 0.20, wherever they occur, the figures"0.23"shall be substituted"

To view full Notification No. 1, please click on the link below:

http://www.cbec.gov.in/htdocs-servicetax/st-notifications/st-notifications-2016/st01-2016

Refund of SB Cess paid on specified services used in Special Economic Zone ("SEZ")

The CG vide Notification No. 02/2016-Service Tax dated February 2, 2016 ("Notification No. 2") has amended Notification No. 12/2013-Service Tax dated July 1, 2013 (Exemption on services received by units located in a SEZ or Developer of SEZ and used for the authorised operation) to enable the SEZ Unit or the Developer for refund of the SB Cess paid on the specified services on which ab-initio exemption is admissible but not claimed.

Further, the refund of amount distributed to the SEZ Unit or the Developer in the manner as prescribed in Rule 7 of the Credit Rules, will be determined by multiplying total Service tax distributed to the SEZ Unit or the Developer in the manner as prescribed in Rule 7 of the Credit Rules by effective rate SB Cess and dividing the product by rate of Service tax specified in Section 66B of the Finance Act, 1994.

To view full Notification No. 2, please click on the link below:

http://www.cbec.gov.in/htdocs-servicetax/st-notifications/st-notifications-2016/st02-2016

Rebate of SB Cess paid on all the input services used in providing services exported

The CG vide Notification No. 03/2016-Service Tax dated February 3, 2016 ("Notification No. 3") has amended Notification No. 39/2012-Service Tax dated June 20, 2012 (Rebate of the duty paid on excisable inputs or Service tax and cess paid on all input services used in providing service exported) to insert SB Cess under the definition of 'service tax and cess', to enable the provider of services to claim rebate of SB Cess paid on all the input services used in providing services exported in terms of Rule 6A of the Service Tax Rules, 1994.

To view full Notification No. 3 please click on the link below:

http://www.cbec.gov.in/htdocs-servicetax/st-notifications/st-notifications-2016/st03-2016

Cenvat credit shall not be used for payment of SB Cess

The CG vide Notification 02/2016-CE(NT) dated February 3, 2016 ("Excise Notification No. 2"), has amended Rule 3(4) of the Credit Rules, to insert a proviso providing that Cenvat credit shall not be used for payment of SB Cess.

It may also be noted here that the Central Board of Excise and Customs in their Frequently Asked Questions released on November 14, 2015 on SB Cess, had specifically provided that because SB Cess is not integrated in the Cenvat credit chain, its credit is not admissible:

"Q.14 Whether Cenvat Credit of the SBC is available?

Ans. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax"

Cenvat credit admissible on services of sales commission agent

The CG vide Excise Notification No. 2 has further amended the definition of 'input services' under Rule 2(l) of the Credit Rules, to allow Cenvat credit of Service tax paid on sale of dutiable goods on commission basis, by inserting following explanation after sub-clause (C):

"Explanation.-For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis."

It may not be out of place here to mention that in view of the conflicting judgments, eligibility to avail Cenvat credit of the services rendered by a commission agent has been a subjective issue. The Hon'ble High Court of Gujarat in the case of Commissioner of C. Ex., Ahmedabad-II Vs. Cadila Healthcare Ltd. [2013 (30) S.T.R. 3 (Guj.)], has disallowed Cenvat credit on commission agent's services whereas, the Hon'ble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Ludhiana Vs. Ambika Overseas [2012 (25) S.T.R. 348) had allowed the Cenvat credit. Thus, with the insertion of stated explanation, it may be contended by the assessees that because the same is clarificatory which was being disputed on the basis of divergent judgments, therefore, it would have retrospective effect.

To view full Excise Notification No. 2 please click on the link below:

http://www.cbec.gov.in/htdocs-cbec/excise/cx-act/notifications/notfns-2016/cx-nt2016/ cent 02-2016

Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards,

Bimal Jain

CBEC prescribes procedure for e-payment of refund/rebate

CBEC noticed that most of the field formations follow manual handing over/dispatch of cheques for payment of refund/rebate. The procedure entails paper work, manual deployment by the claimants and delay in payment of refund. In order to speed up the transfer of refund/rebate claim directly to beneficiary's account, CBEC prescribes procedure for e-payment of refund/rebate claims through authorized banks.   Now Commissioners will provide refund/rebate to assessees through RTGS/NEFT facility after obtaining concurrence from authorized banks. The claimants have to provide one time authorization (duly certified by beneficiary bank in a prescribed format) while filing refund/rebate claim for the first time. In such authorization, all details related to assessee and its bank account required to be furnished.   The refund sanctioning authority will forward details of sanctioned orders and list of beneficiaries along with bank details to authorized bank at periodic intervals and the bank would credit refund amounts in respective accounts. A Unique Transaction Reference (UTR) will be generated for each transfer of fund and it will be bank's acknowledgment evidencing transfer of fund.

Amendment to Customs Duty Free Allowance

Notification No.76/2015

CBEC has made Custom Duty Free Allowance to Rs.45,000/- for passengers of Indian origin and foreigners of over 10 year of age residing in India. 

Duty free limit of Indian Currency that can be brought in India has been increased from Rs.10,000 to Rs.25,000 in FORM 1

ST Clarification on Section 73,76 & 78

F.No.137/46/2015-Service Tax

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE & CUSTOMS
SERVICE TAX WING
NEW DELHI

Dated: August 18, 2015

To

All Principal Chief Commissioners of Central Excise
All Chief Commissioners of Central Excise/ Service Tax
Principal Directors General of Goods & Services Tax/ Systems/Central Excise Intelligence
Director General of Audit
All Principal Commissioners of Central Excise/Service Tax
All Commissioners of Central Excise/Service Tax
All Principal Commissioners/Commissioners LTU
Joint Secretary TRU-1/TRU-II/Review
Commissioner Central Excise/ Service Tax/Legal/PAC

Subject: Clarification regarding the provisions of Section 73, 76 and 78 of the Finance Act, 1994 and Section 11AC of the Central Excise Act, 1944 after amendments made vide Finance Act. 2015

Consequent to the amendments made to section 73, 76 and 78 of the Finance Act, 1994 and section 11AC of the Central Excise Act, 1944, vide Finance Act, 2015 with effect from 14.05.2015, field formations have sought certain clarifications with regard to detections made during audit, investigation or scrutiny. Keeping in mind the need to reduce litigation as well as paperwork and compliance formalities. I am directed to convey the following clarifications.

2.0 Issuance of a Show Cause Notice (SCN)

Doubt: Does a SCN have to be issued in a case involving the extended period of limitation, where the assessee pays the tax/duty, interest and 15% penalty as prescribed?

2.1 In a case involving the extended period of limitation, if an assessee pays the service tax/central excise duty, interest and penalty equal to 15% of the tax/duty and makes a request in writing that a written SCN may not be issued to them, then in such cases the SCN can be oral and the representation (if he desires) against it also oral. In other words, an assessee can request for an informed waiver of a written SCN. The Supreme Court in the case of Commissioner of Customs, Mumbai versus Virgo Steels reported in 2002(141) E.L.T 598 (S. C.) has held that:

"14. From the ratio laid down by the Privy Council and followed by this Court in the above cited judgments, it is clear that even though a provision of law is mandatory in its operation if such provision is one which deals with the individual rights of person concerned and is for his benefit, the said person can always waive such a right.

15. Bearing in mind the above decided principle in law, if we consider the mandatory requirement of issuance of notice under Section 28 of the Act, it will be seen that that requirement is provided by the Statute solely for the benefit of the individual concerned, therefore, he can waive that right. In other words, this Section casts a duty on the Officer to issue notice to the person concerned of the proposed action to be taken. This is not in the nature of a public notice nor any person other than the person against whom the proceedings are initiated has any right for such a notice. Thus, the right of notice being personal to the person concerned the same can be waived by that person.

16. If the above position in law is correct, which we think it is. M/s Virgo Steels, having specifically waived its right for a notice, cannot now be permitted to turn around and contend that the proceedings initiated against them are void for want of notice under Section 28 of the Act, so as to frustrate the statutory duty of the Revenue to demand and collect customs duty which M/s Virgo Steels had intentionally evaded."

Although this decision is in relation to section 28 of the Customs Act, 1962. the principles laid down are equally applicable to SCNs issued under other statutes. Hence, an assessee can waive the requirement of a written SCN.

2.2 Further, section 124 of the Customs Act, 1962 provides, inter alia, that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing, an opportunity of making a representation in writing and a reasonable opportunity of being heard. The section also provides that the notice and the representation may, at the request of the person concerned, be oral. This provision has been made applicable to the Central Excise Act, 1944 vide notification number 68/63-Central Excise dated 04,05.1963 issued under section 12 of the Central Excise Act. 1944. The said section of the Central Excise Act is also applicable to service tax vide section 83 of the Finance Act, 1994.

2.3 If the grounds on which the department feels that there has been short/non-payment of tax/duty are intimated to the assessee orally with its quantification and the assessee indicates in writing that he has been informed about such grounds and he accepts the grounds and the quantification and is waiving the requirement of a written SCN, then a written SCN need not be issued.

2.4 Further, clause (i) of the second proviso to section 78 of the Finance Act, 1994 and clause (d) of sub-section (1) of section 11AC of the Central Excise Act. 1944 refer to a thirty day period, from the date of service of the notice, within which the assessee may make the payment of tax/duty, interest and reduced penalty of 15%. In case the assessee makes a written request for waiver of a written SCN, the thirty day period can be computed from the date of receipt of such a letter by the department.

2.5 There is no bar on an assessee making the payment of tax/duty, interest and reduced penalty of 15% even before the date of receipt of such a letter by the department. Such an assessee cannot be placed on a worse footing than one who pays tax/duty, interest and reduced penalty of 15% within 30 days of the receipt of the SCN/receipt of letter by the department.

3.0 Conclusion of proceedings

Doubt: Who is competent to order conclusion of proceedings if the conditions meriting conclusion of proceedings are fulfilled?

3.1 Conclusion of proceedings may be approved by an officer equal in rank to the officer who is competent to adjudicate such cases. The cases can be closed by officers of DGCEI/Executive Commissionerate/Audit Commissionerate, as the case may be. If multiple issues involving different monetary values arise from the same proceedings, then the sum total involved in all the issues arising from the same proceedings should be considered for conclusion of proceedings. The conclusion of proceedings should invariably be intimated to the assessee in writing. There is no need to issue an adjudication order. Further, there is no need to undertake review of such conclusion of proceedings.

3.2 It is further clarified that as per section 73(3) of the Finance Act, 1994, in cases not involving fraud, suppression of facts, etc, if the assessee pays the tax and interest thereon, on the basis of his own ascertainment or that ascertained by the department, no penalty is payable and no show cause notice shall be served under sub-section (1) of section 73 in respect of the amount so paid. Further, as per provisions of clause (i) of proviso to section 76, in such cases not involving fraud, suppression of facts, etc, if the tax and interest thereon is paid within 30 days of the issuance of SCN, no penalty shall be payable and the proceedings shall be deemed to be concluded. These two provisions have to be read harmoniously to conclude that in cases not involving fraud, suppression of facts, etc, if the assessee pays the tax along with interest, either within 30 days of issuance of SCN or before the issuance of SCN, then in such cases proceedings shall be deemed to be concluded. Legal provisions for similar closure in central excise are present in clause (a) of sub-section (1) of section 11 AC of the Central Excise Act, 1944.

(Himani Bhayana)
Under Secretary (Service Tax)