CENVAT CREDIT

1

SERVICE TAX
2
Basic Features

• Statutory provisions.

• Levy on service provider
• - Exceptions.

• Levy on realisation.

3
Classification of Service

• Specific description than general description.

• Essential character.

• Which occurs first in the definition.

4
Valuation

• Gross amount.

• Cum - tax.

• Abatements.

• Notification 12/2003.

5
Valuation

• Services rendered free.

• Consideration in kind.

• Reimbursement of expenses.
• Upto 18.04.2006 No liability.
• Judgements and circulars.
• From 19.04.2006 Concept of pure
  agent.
• Malabar Management Services VS CCE
• 2008(9) STR 483

6
Proceedings in Service Tax

• Issue of show cause notice.

• Adjudication.

• Appellate remedies.
• Commissioner (Appeals)
• CESTAT
• High Court / Supreme Court

7
Procedures in Service Tax

• Registration Centralised Registration.

• Issue of invoice.

• Maintenance of records.

8
Procedures in Service Tax.

• Payment of service tax.
• - Due date.
• - Advance payment.
• - e payment.
• - Self adjustment if service not
  rendered.
• - Provisional payment.
• - Self adjustment of excess payments.

• Filing of return ST 3.
• - Due date / Half yearly.
• - Revised return.
• - Fine for delayed return.

9
Penalties in Service Tax.

• Sec. 76 Delayed payment of S.Tax.

• Sec. 77 General Penalty.

• Sec. 78 Suppression, etc.

• Sec. 80 Power of waiver.

• Rule 7 C Fine for delayed return.

10
Certain important services.
11
Business Auxiliary Service.

• Promotional activities.

• Customer care services.

• Procurement of goods or services.

• Production or processing.

• Provision of service on behalf of client.

• Manufacture excluded.

• Notification 8/2005.

12
Commercial / Industrial construction Service.

• Exclusion for roads, airports, railways
• transport terminals, bridges, tunnels,
• dams and ports.

• 67 Abatement.

13
Construction of Residential Complex Service.

• More than 12 units..

• Personal use - exempted.

14
Consulting Engineering Service.

• Foreign Technological transfers.
• Novinon Ltd. VS CCE 2006 (3) STR 397

• To cover software too.

Customs House Agents Service.
15
Erection, Commissioning and Installation Service.
Franchise Service.
16
Intellectual Property Service.
Management Consultant Service.
Manpower recruitment / Supply agencies.
17
Goods Transport Agency Service.

• Reverse Charge.

• Abatement.

• Exemption.

• Payment mode.

• No SSI exemption.

18
Renting of immovable property.
Support Services for business.
19
Works Contract Service.

• Re-classification.

• Composition Scheme.

• Vice of Notification 1/2006.

• Diebold Systems (P) Ltd Vs CCE
• 2008 (9) STR 546.
• Air Liquide Engg. India (P) Ltd. Vs CCE
• 2008 (9) STR 486.

20
Sale Vs Service.
S.No Citation Decision
1 BSNL Vs UOI 2006 (2) STR 161 SC It has been held that the sale value of goods shall not be subjected to the levy of service tax.
2 Idea Mobile Communications Limited VS CCE 206 (4) STR 132 Tri Bang Levy of sales tax and service tax are constitutionally mutually exclusive.
3 BPL Mobile Communications Limited VS CCE 2007 (7) STR 440 Sale of SIM cards is sale and sales tax is paid. Hence service tax is not payable.
4 Imagic Creative (P) Limited Vs CCE 2008 (9) STR 337 SC Service tax and VAT are mutually exclusive.
5 Thermax Limited Vs CCE 2007 (8) STR 487 Service tax not leviable when sales tax is paid.
21
Small Scale exemption.

• Threshold limit.

• Conditions.

22
Commercial Concern VsAny person.
23
Export of Service and Import of Service.
24
CENTRAL EXCISE byg.
natarajanadvocate cost accountant
CENTRAL EXCISE AND CENVAT
25
MANUFACTURE

• Section 2 (f)
• Deemed manufacture.
• Third schedule.

26
VALUATION
Section 4 Transaction Value
27
SECTION 4 Valuation Rules

• Rule 4 - Comparable goods.
• Rule 5 - Freight and Insurance.
• Rule 6 - Additional consideration.
• Rule 7 - Depot clearance.
• Rule 8 - Captive consumption.
• Rule 9 - Related person.
• Rule 10 - Interconnected undertaking.
• Rule 10A Jobwork.
• Rule 11 - Best judgement

28
SECTION 4 A

• Weights and Measures.
• OE Exemption.
• Different MRP.

29
EXPORTS

• Exports without payment of duty.
• Exports under claim for rebate.
• Protection of Cenvat Credit.

30
APPELLATE / OTHER REMEDIES

• Commissioner (Appeals).

• CESTAT.

• Settlement Commission.

• Pre deposit.

31
PENAL MEASURES

• Various penalties.

• Provisional attachment of property.

• Prosecution.

32
Basic Features

• Concept of Cenvat credit.

• Landmarks 1986, 1994 2004.

• Cenvat Credit Rules, 2004.

33
Applicability

• Manufacturers.

• Service providers.

34
Certain terms.

• Input.

• Capital goods.

• Input Services.

• Input Service Distributor.

• First / Second stage dealer.

35
Cenvatable duties / taxes

• Basic Excise Duty.

• CVD.

• NCCD.

• Education CESS.

• Addl. Duty of Customs Sec. 3(5).

• Service Tax and CESS thereon.

36
Utilisation and Restrictions on utilisation

• Payment of Excise duty.

• Payment of Service tax.

• Other payments.

• Cross utilisation.

37
Other conditions.

• Capital goods 50 restriction.

• No to having the cake and eating it too
• - Depreciation / Cenvat Credit.

• Removal of inputs / capital goods
• - the story as such.

38
Other conditions.

• Removal for job work.

• Write off.

• Service Tax Credit - Pay and use.

• Documents for availing credit.

39
Rule 6 Algebra.

• Position upto 31.03.2008.

• Position from 01.04.2008.

40
Rule 6.

• Protection to certain clearances.

• Protected Services.

• Chandrapur Magnet Wires (P) Ltd Vs CCE.
• 1996 (81) ELT 3 SC
• - Recent developments.

41
Certain common disputes

• Credit for mobile phone.
• India Rayon Industries Ltd. Vs CCE
• 2006 (4) STR 79.

• Credit for outdoor catering.
• Victor Gaskets India Ltd Vs CCE
• 2008 TIOL 409.

42
Certain common disputes

• Credit for outward transportation.

- Gujarat Ambuja Cements Ltd. Vs CCE.
2007 (6) STR 249. - India Cements Limited Vs
CCE 2007 (8) STR 43. - Master Circular
and recent amendments.
43
CUSTOMS
44
Role of customs

• Collection of import export duties
• enforcement of customs act
• enforcing prohibitions/restrictions
• prevention of smuggling

45

• Imports
• IGM (by shipping lines)
• cargo declaration
• Bill of Entry
• assessment
• duty Payment

46

• Exports
• Shipping bill, Invoice, ARE
• assessment
• duty Payment (if any)
• EGM (by shipping lines)

47

• Customs Valuation Rules, 2007
• The Customs Valuation (Determination of Value of
  Imported Goods) Rules, 2007 - Notfn. No.
  94/2007-Cus(NT) dated 13-9-07
• The Customs Valuation (Determination of Value
  of Exported Goods) Rules, 2007 - Notfn.
  No. 95/2007-Cus(NT) dated 13-9-07

48

• Value of imported goods
• transaction value Section 14 (1) of CA, 1962
• deductive value Rule 7
• computed value Rule 8
• residual method Rule 9
• similar goods / identical goods
• related person
• provisionally assessed value is not transaction
  value.

49

• Value of exported goods
• transaction value Section 14 (1) of CA, 1962
• computed value Rule 5
• residual method Rule 6

50

• refunds
• claim to be filed within six months.
• one year for some persons.
• no time limit for duty / interest paid under
  protest
• unjust enrichment

51

• re-import of exported goods
• indigenously manufactured
• cancellation of export order
• return from overseas exhibition
• completion of overseas contract
• imported
• sent abroad for repairs
• for special processes
• UNLESS a specific exemption is issued, import
  duties are leviable Section 12 of CA, 1962.

52

• re-export of imported goods
• 98 of Customs duties drawback
• within 2 years from the date of import

53
Export promotion schemes
54

• duty drawback
• all india industry rate
• brand rate
• simplified scheme

55

• Advance licence
• actual user condition
• physical exports
• intermediate supplies
• deemed exports
• invalidation
• export obligation

56

• Other export promotion schemes
• DFRC
• DEPB
• EPCG

57

• export oriented units
• customs bonded ware house
• duty free imports
• B-17 bond
• procurement of indigenous goods CT-3 procedure
• DTA sale - valuation section 3 of CA, 1962.

58

• export oriented units
• sale of surplus / un-utilised goods
• clearance under ARO/inland letter/DFRC
• sub-contracting
• inter-unit transfer
• de-bonding

59

SPECIAL ECONOMIC ZONES
60
Basic Features

• duty free imports
• indigenous procurement
• sub-contracting
• DTA clearances
• Exports

61
duty free imports of goods and services

• exempt from customs duties customs act.
• exempt from service tax finance act, 04
• securities transaction tax finance act, 04
• exempt from most cesses.

62
Indigenous procurement

• exempt from excise duty (from 11-5-2004),
• service tax and most Cesses.
• DTA suppliers benefit export entitlements
• Cenvat credit on materials used in goods
• supplied to SEZ units. (Rule 6(6) of CCR)

63
Sub-contracting Rules 41 to 44 of SEZ rules

• can under take job-work of DTA units (for
  exports only)
• trading units not allowed
• SEZ developer/Co-developer/contractor may
  subcontract a process into DTA
• permission of DC/AC Customs required.

64
DTA Clearance Section 30 of SEZ Act.

• to be cleared on payment of customs duties as if
  imported.
• valuation as per CV(DoPoI)R,88
• quantity or value - no limit on sale

65
exports

• direct exports
• through third parties

66
39/2001-CE dated 31-7-2001
Exemption to excisable goods manufactured in
Kutchh (Gujarat)
67

• applicable to new industrial units
• commercial production before 31-12-2005
• not applicable to SSI units
• exceptions

68

• pay excise duty through cenvat credit account
• after exhausting cenvat account, pay through PLA
  (cash)
• take re-credit of PLA amount on 15th of next
  month.

69
1st amendment 42/2001-CE dated 21-9-2001
Original value of plant machinery to be as
certified by CA (under head fixed assets)
70
2nd amendment - 5/2003-CE dated 13-2-2003
refund shall not exceed the amount of duty paid
LESS the amount of cenvat credit availed of, used
in relation to the manufacture of goods.
71
3rd amendment - 16/2003-CE dated 1-3-2003
refund shall not exceed the amount of duty paid
LESS the amount of cenvat credit availed of, used
in relation to the manufacture of goods.
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72
4th amendment - 65/2003-CE dated 6-8-2003
para 1A (i) to (iii), para 2A (a) to g,
inserted
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73
5th amendment - 16/2008-CE dated 27-3-2008
new words replaces old words to the duty
payable on the value addition undertaken in the
manufacture of the said goods by the said unit.
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74
rebate of excise duty on exports

•  
• 682/73/2002-CX dated 19-12-2002 refund of duty
  paid in cash.
• 842/19/2006-CX dated 8-12-2006 contents of
  circular dated 19-12-2002 applies to kutchh also.
•  
• 209/11/2005-CX-6 dated 8-12-2006 rebate on
  goods manufactured in kutchh.

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75
rebate of excise duty on export

• 209/11/2005-CX-6 dated 3-4-2007 clarification
  to boards instruction dated 8-12-2006
• 37/2007-CE(NT) dated 17-9-2007 bans rebate on
  export for units availing benefits of 39/2001.
•  
• 209/11/2005-CX-6 dated 13-10-2007
  boardclarifies export after 17-9-2007 may be
  done only under bond.

76
rebate of excise duty on export

• Rule 18 of CER, 2001 amended - Rebate allowed
  from 1-7-2001 to 28-2-2002 Fifth schedule of
  Finance Bill enacted on 10-5-2008
• Rule 18 of CER, 2002 amended - Rebate allowed
  from 1-3-2002 upto 7-12-2006 Sixth schedule of
  Finance Bill enacted on 10-5-2008

77
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