CBDT extends due date for filing return of income

CBDT extends due date for filing return of income from 31-07-16 to 05-08-16 in case of taxpayers who were liable to file ITR by such date.

Arm's Length Price-AY 2016-17

CBDT Notification on Determination of Arm's Length Price for AY 2016-17 u/s 92C (Transfer Pricing)

The CBDT has notified that where variation between ALP determined u/s 92C does not exceed 1% of the wholesale price (3% otherwise) of international or specified domestic transactions, then actual transaction price shall be taken as ALP for AY 2016-17, i.e. tolerance limits of price variation for transfer pricing purposes, as under:

CBDT Notification No. 57/2016 dt. 14 July 2016

In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961), read with proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm's length price determined under section 92C and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the later in respect of wholesale trading and three percent of the later in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm's length price for Assessment Year 2016-2017.

Explanation

For the purposes of this notification, "wholesale trading" means an international transaction or specified domestic transaction of trading in goods, which fulfills the following conditions, namely:-

(i) purchase cost of finished goods is eighty percent. or more of the total cost pertaining to such trading activities; and

(ii) average monthly closing inventory of such goods is ten percent. or less of sales pertaining to such trading activities.

IT NOTICES

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 21st

July, 2016.

Press Release

Sub : Income Tax Department to issue 7 lakh letters seeking Information in respect of

High Value Transactions

Under the Annual Information Returns (AIR), various types of high-value transactions

were being reported to the Income Tax Department. These include reporting of cash

deposits of Rs.10,00,000 or more in a saving bank account, sale/purchase of immovable

property valued at Rs. 30,00,000 or more, etc. Many of these transactions do not have

PAN linked to it. The Department has details of about 90 lakh such transactions for the

period 2009-10 to 2016-17. The Income Tax Department has with the help of in-house

computer techniques, grouped such non-PAN transactions and identified 7 lakh high-risk

clusters having around 14 lakh non-PAN transactions which are being scrutinized by the

Income Tax Department closely.

The Department will be issuing letters to the parties of these transactions requesting

them to provide their PAN number against these transactions. For the convenience of the

parties to whom these letters are addressed, a new functionality on e-filing portal has been

developed wherein they can own up transactions and provide structured response

electronically. The parties can log-in to their e-filing website and by quoting a Unique

Transaction Sequence Number provided in the letter sent to them, can link their transaction

with their PAN easily. They will also be able to give a response to this letter electronically

by choosing the option of either owning up the transaction or denying the transaction as

their own. The responses received from such parties online will be examined by the

Department. The Department will initiate further necessary action in those cases where no

replies are received.

The members of public who receive such letters are requested to kindly cooperate in

the matter. They may use the Departmental helpline to ask questions, as far as possible,

instead of making direct contact with any officials of the Income Tax Department. Members

of public are advised not to entertain any claims from unscrupulous elements who may offer

their help in complying with such communication by falsely representing themselves to be

the agents of Income Tax department in the matter.

(Meenakshi J Goswami)

Commissioner of Income Tax

(Media and Technical Policy)

Official Spokesperson, CBDT

Payment of Service Tax by Cheque

Clarification issued regarding payment of Service Tax through non electronic modes

by CA Bimal Jain

The CBEC vide Instruction F.No 137/08/2013-Service Tax dated July 22, 2016, issued direction that the discretion vested in the jurisdictional Deputy/Assistant Commissioner, to allow the assessee to deposit Service tax by any other mode, under rule 6(2) of the Service Tax Rules, 1994, should be exercised judiciously and rationally. The supervisory officers should, from time to time, check such exercises of discretion so that there are no unwarranted refusals.

Presently, every assessee is required to pay Service tax electronically through internet banking, however, the jurisdictional Deputy/Assistant Commissioner, may, for reasons to be recorded in writing, allow the assessee to deposit service tax by any other mode e.g cheque

Payment of Service Tax by Cheque

Clarification issued regarding payment of Service Tax through non electronic modes

by CA Bimal Jain

The CBEC vide Instruction F.No 137/08/2013-Service Tax dated July 22, 2016, issued direction that the discretion vested in the jurisdictional Deputy/Assistant Commissioner, to allow the assessee to deposit Service tax by any other mode, under rule 6(2) of the Service Tax Rules, 1994, should be exercised judiciously and rationally. The supervisory officers should, from time to time, check such exercises of discretion so that there are no unwarranted refusals.

Presently, every assessee is required to pay Service tax electronically through internet banking, however, the jurisdictional Deputy/Assistant Commissioner, may, for reasons to be recorded in writing, allow the assessee to deposit service tax by any other mode e.g cheque.

APPLICATION FOR EMPANELMENT OF CONCURRENT AUDITOR UCO Bank

Please apply for empanelment as Concurrent Auditor with UCO Bank. Last Date to Apply is 10-08-2016.

https://apps.ucoonline.in/conc_audit/home.jsp

Stipend exempt?

If the Stipend granted is for furthering education or gaining knowledge , same can be claimed exempt u/s 10[16] of the I T act . In this regard the decision of the KarnatakaHigh Courtin A. Ratnakarv. Addl. CIT [1981] 128 ITR527can be applied.This was also followedby Tribunal in case of Income-tax Officer v. Dr. G.N. Ramachandran[1 ITD902]

CBDT Notification on Determination of Arm’s Length Price

CBDT Notification on Determination of Arm’s Length Price for AY 2016-17 u/s 92C (Transfer Pricing)

The CBDT has notified that where variation between ALP determined u/s 92C does not exceed 1% of the wholesale price (3% otherwise) of international or specified domestic transactions, then actual transaction price shall be taken as ALP for AY 2016-17, i.e. tolerance limits of price variation for transfer pricing purposes, as under:

CBDT Notification No. 57/2016 dt. 14 July 2016

In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961), read with proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm’s length price determined under section 92C and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the later in respect of wholesale trading and three percent of the later in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for Assessment Year 2016-2017.

Explanation :

For the purposes of this notification, “wholesale trading” means an international transaction or specified domestic transaction of trading in goods, which fulfills the following conditions, namely:-

(i) purchase cost of finished goods is eighty percent. or more of the total cost pertaining to such trading activities; and

(ii) average monthly closing inventory of such goods is ten percent. or less of sales pertaining to such trading activities.

NCLT clarifies on functioning of Single Bench & Division Bench

NCLT clarifies on functioning of Single Bench & Division Bench

NCLT clarifies that the NCLT, Division Bench is *entitled to function as a Bench and exercise powers of the Tribunals, irrespective of any class of cases* (except those specified by an Order of President); States that the Single Judicial Member posted at various benches of Tribunal are also authorized, in addition, to the Division Bench to function as Bench and exercise *powers of NCLT* in following cases:

(i) _All *cases* that have been *transferred from CLB,*_

(ii) _All *new petitions* where company involved has *paid-up share capital of Rs. 50 lacs or less where Division Bench is available.* Clarifies that, where the Division Bench is not available, the pecuniary limit of Rs. 50 lacs shall not apply,_

(iii) _Any *other matter which the President may authorize* by passing a specific/general order:_ NCLT

SIT report on Black Money: 6 things you should know about it

SIT report on Black Money: 6 things you should know about it

The Special Investigation Team (SIT), headed by Justice MB Shah (retired), submitted its fifth report to Supreme Court on methods to curb black money in the economy.

The SIT has made the following recommendations in the Fifth Report

1 
Complete ban should be imposed on cash transactions above Rs 3,00,000. There should be specific provision in the Act that transactions in cash above threshold limit shall be deemed as illegal, invalid and punishable under the law.
2
If there is cash withdrawal of more than Rs.3,00,000 from any bank, then bank should consider it as a suspicious activity and should report it to Financial Intelligence Unit ('FIU')and the concerned Income–tax Department.
3
Maximum limit on cash holdings may be fixed between Rs.10 to 15 lacs. In any case, if any person or industry requires to hold more cash, it may obtain necessary permission from the Commissioner of Income–tax of the area.
4
In addition, starting from the next year, all banks including co–operative banks be directed to notify any income or withdrawals of more than Rs.3,00,000 to the Directorate General of Income-tax (Investigation) Authorities of the State and to the FIU.
5
Appropriate steps may be taken for amending the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, by incorporating the provision that undisclosed foreign income and assets would vest in the Union of India. Once it is held that under the law, property vests in Union of India, the person who is holding the said property outside the country shall have to prove that it was acquired legally and/or held after obtaining necessary permission from the RBI.
6
Before investing any amount or purchasing any property outside the country, the assessee must inform the concerned jurisdictional Commissioner of Income Tax Department of the State.

Unable to register your DSC on MCA portal

In case you are unable to register your DSC on MCA portal because your name in the PAN card is not as per the ICAI records, you may send fill up the form in the given link :-  
http://online.icai.org/app_forms/panupdate/index.html

And kindly attach a scanned copy of your PAN card along with copy of any of the documents in which your name is as in your PAN card

Passport
Aadhar Card
Driving License
Bank passbook with a photo affixed and duly signed by the bank
Voters' Identity card

This will enable us to carry out the necessary alignment to ICAI records to share the same to MCA for their further actions.

Independent Regulator for ICAI

Govt. ready to appoint independent regulators for ICAI, ICSI and MCI

July 16, 2016

In order to improve standards of professions, the Central Government has planned to appoint regulators for the Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India, Medical Council of India (MCI) and other professional bodies. Key points of this development are as follows:

  1. The Ministry of Commerce is working on this proposal with objective that having independent regulators, like SEBI, CCI, etc., for professional bodies would help to make India globallya potential services hub in the upcoming years.

  2. At present, ICAI, ICSI and MCI have their own councils of elected or nominated members, which regulate their respective professions. ICAI Council has 40 members, ICSI has 15 and MCI has 100-odd members.

  3. From the point of view of number of membership, ICAI is considered as second-largest professional accounting and finance body worldwide.

  4. But after appointment of regulators all the professional bodies, including ICAI, ICSI and MCI, would cease to regulate theirrespective professions. However, power to manage internal professional matters will continue to vest in them.

  5. The Govt. has taken such step after unravelling of various cases like Kingfisher, Sahara, Saradha and Satyam.

  6. On the one hand, it will help these professional bodies to improve the standards in their respective professions and to remove any conflict of interest in their respective roles, on the other hand it will also help in taking quick action against the members of their own professional fraternity on any complaint.

Source: http://www.financialexpress.com/

IDS in instalments

CBDT Press Release dated 14-7-2016 on IDS
 
The Income Declaration Scheme 2016 - Relaxation of time schedule for making payments under the Scheme
 
During the course of meetings and seminars held in different parts of the country, various stakeholders have expressed concern that the time period available under the Scheme up to 30th November, 2016 for making payment of tax, surcharge and penalty is very short, especially where funds in liquid form are not readily available with the declarants. It has also been mentioned that for making payment by 30.11.2016, the declarants may have to opt for distress sale of the assets.
 
Taking into consideration the practical difficulties of the stakeholders, the Government has decided to revise the time schedule for making payments under the Scheme as under:
 
(i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016;
(ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31.3.2017; and
(iii) the balance amount to be paid on or before 30.9.2017.
 
A Notification to this effect shall be issued shortly.

Income Tax manual /Compulsory scrutiny criteria F.Y. 2016-2017

Instruction No. 4/2016
Government of India
Ministry of Finance
Department of Revenue (CBDT)
North-Block, New Delhi

Date: 13th of July, 2016

To

All Pr. Chief-Commissioners of Income-tax/Chief-Commissioners of Income-tax

All Pr. Directors-General of Income-tax/Directors-General of Income-tax

Sir/Madam

Subject: Compulsory manual selection of cases for scrutiny during the Financial Year 2016-2017- regd:-

1. In supersession of earlier Instructions on the above subject, the Board hereby lays down the following procedure and criteria for manual selection of returns/cases for compulsory scrutiny during the financial-year 2016-2017:-

(i) Cases involving addition on a substantial and recurring question of law or fact in earlier assessment year(s), in excess of Rs. 25 lakhs in metro charges at Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, while for other charges, quantum of such addition should exceed Rs. 10 lakhs (for transfer pricing cases, quantum of such addition should exceed Rs. 10 crore) and where:

a. such an addition in assessment has become final as no further appeal was/has been filed; or

b. such an addition has been confirmed at any stage of appellate process in favour of revenue and assessee has not filed further appeal; or

c. such an addition has been confirmed at 1st appeal stage in favour of revenue or subsequently and further appeal of assessee is pending before any Authority in the appellate process.

(ii) All assessments pertaining to Survey under section 133A of the Act excluding those cases where books of accounts, documents etc. were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned income of preceding assessment year. However, where assessee retracts the disclosure made during the Survey, such cases will not be covered by this exclusion.

(iii) Assessments in search and seizure cases to be made under section(s) 158B, 158BC, 158BD, 153A & 153C read with section 143(3) of the Act and also for the returns filed for the assessment year relevant to the previous year in which authorization for search and seizure was executed u/s 132 or 132A of the Act.

(iv) Return filed in response to notice under section 148 of the Act.

(v) Cases where registration u/s 12AA of the IT Act has not been granted or has been cancelled by the CIT/DIT concerned, yet the assessee has been found to be claiming tax-exemption under section 11 of the Act. However, where such orders of the CIT/DIT have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.

(vi) Cases of entities, being ‘scientific research association’ or ‘university, college or other institution’, having approval under section(s) 35(1)(ii)/35(1)(iii) of the Act.

(vii) Cases in respect of which specific and verifiable information pointing out tax-evasion is given by any Government Department/Authority. However, before selecting a case for scrutiny under this criterion, Assessing Officer shall be required to take prior administrative approval from the concerned jurisdictional Pr. CIT/Pr.DIT/CIT.

2. Computer Aided Scrutiny Selection (CASS): Cases are also being selected under CASS-2016 on the basis of broad based selection filters. List of such cases has been/is being separately intimated by the Pr.DGIT(Systems) to the jurisdictional authorities concerned.

3. As a taxpayer friendly measure, to reduce the departmental interface with the assessee and reduce the compliance burden of tax payers in scrutiny assessment proceedings, the scheme of Assessment through e-mail is being extended to all scrutiny cases including the cases selected under above parameters in seven cities of Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. However, assessees in these seven cities can exercise the option of not being scrutinized under the e-mail based paperless assessment proceedings after informing the Assessing Officer concerned in writing in the beginning or subsequently during the course of assessment proceedings. Further, in cases which require submission of voluminous documents and it is not practicable to submit the scanned copies thereof through e-mail, in such instances; the Assessing Officer may decide to receive such documents in physical form after recording reasons for the same.

4. It is reiterated that the targets for completion of scrutiny assessments and strategy of framing quality assessments as contained in Central Action Plan document for Financial-Year 2016-2017 have to be complied with and it must be ensured that all scrutiny assessment orders including the cases selected under the manual criterion are completed through the AST system software only. It should be the endeavour of the Assessing Officers and his supervisory authorities to ensure that scrutiny assessment cases are disposed in a well planned manner without dragging the assessment proceedings till the last date of limitation. Further, Pr. CCsIT/CCIT(Central)/Pr. CCIT(International tax)/CCIT(Exemption)/DsGIT should evolve a suitable monitoring mechanism in their respective charges in order to ensure quality of assessments being framed during the financial year. In this regard, by 31st January, 2017, such authorities shall send a report to the respective Zonal Member with a copy to Member (IT) containing details of at least 25 quality assessment orders from their respective charges. It may further be the endeavour that cases selected for publication in ‘Let us Share’ are picked up only from the quality assessments as reported.

5. These instructions may be brought to the notice of all concerned for necessary compliance.

6. Hindi version to follow.

(Rohit Garg)

Deputy-Secretary to the Government of India

CBDT: Debunks 31% IDS tax rate theory, fourth set of FAQs to follow

Jul 14,2016
CBDT sets at rest controversy over 31% effective tax rate under IDS; Addressing queries received from stakeholders on whether the payment under IDS can be made out of undisclosed income without including the same in the income declared, thereby whittling down the effective tax rate to 31%, CBDT clarifies that the scheme in "no way intends to modify or alter the rate of tax."

http://www.taxsutra.com/news/15904/CBDT%3A_Debunks_31%25_IDS_tax_rate_theory%2C_fourth_set_of_FAQs_to_follow

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.

Assessee cannot be asked to reverse input tax credit due to non-payment of taxes by the selling dealers

PATH BREAKING JUDGEMENT

Assessee cannot be asked to reverse input tax credit due to non-payment of taxes by the selling dealers

Sri Lakshmi Textiles Vs. the Commissioner of Commercial Taxes and Others [2016 (1) TMI 329 – MADRAS HIGH COURT]

Facts:

Sri Lakshmi Textiles(“the Petitioner”) is a partnership firm engaged in the business of inner garments and textiles registered under Tamil Nadu Value Added Tax Act, 2006 (“TN Vat Act”). The Petitioner was regularly filing the VAT return and paying the VAT liability after adjusting the corresponding input tax credit. For the Assessment Year 2013-2014, the Petitioner had reported total turnover and taxable turnover of Rs. 2,02,88,151/- and Rs. 15,98,693/- respectively in his return.

The Department alleged that because some of the selling dealer of the Petitioner had not paid the tax, the Petitioner is required to reverse the corresponding input tax credit and further sought to levy penalty under Section 27(3) of the TN VAT Act on the Petitioner.

Held:

The Hon’ble High Court of Madras relied upon the decision in the case of Sri Vinayaga Agencies Vs. the Assistant Commissioner (Ct), Chennai and another [(2013) 60 VST 283 (Mad)] and held that when the fact of Petitioner paying the taxes to his supplier is not under dispute, the Petitioner cannot be compelled to reverse the input tax Credit due to non-payment of VAT liability by the selling dealership

Feasibility of having a new financial year

Government of India
Ministry of Finance

*Government today constituted a Committee headed by Dr. Shankar Acharya (former Chief Economic Adviser) to examine the desirability and feasibility of having ‘a new financial year’*; The Committee to submit its Report by 31st December, 2016. 

                    The Government of India today constituted a Committee to examine the desirability and feasibility of having ‘a new financial year’. The Committee headed by Dr. Shankar Acharya (former Chief Economic Adviser) has Shri K.M. Chandrasekhar (former Cabinet Secretary), Shri P.V. Rajaraman (former Finance Secretary, Tamil Nadu) and Dr. Rajiv Kumar (Senior Fellow, Centre for Policy Research) as other Members. The Committee will examine the merits and demerits of various dates for the commencement of the financial year including the existing date (April to March), taking into account the various relevant factors.

                                        The details on the Composition and the Terms of Reference of the Committee are uploaded on the website of Ministry of Finance (www.finmin.nic.in). The Committee has been given time till 31st December, 2016 to submit its Report.

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.