Apr 06, 2013

Tax Update
Vol.3, Issue 6, March 2013 HSA(IDT)3(2013)6
CONTENTS
CASES
Excise
 Assembly of good fixed with nuts and bolts-amounts to manufacture of an
excisable good
 Input services used in relation to inputs-cenvat credit allowed
Others
CONTRIBUTORS
Akkriti Bhatt
Ankita Bhasin
Chinmay Agarwal
Dilip Kataria
Mannat Waraich
Suresh Uniyal
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Abhishek Dutta
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Nand Kishore
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Rashmi Chaudhury
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MODE OF
CITATION: HSA(IDT)3(20
13)6
 HC may frame substantial questions of law during hearing
NOTIFICATIONS & CIRCULARS
Customs
 Import of goods from Japan - Customs duty rates amended
 No refund of TED where TED exemption available
VAT/Sales Tax
 Amendment to schedule IV of the APVAT Act
 Change in rates under WBVAT Act with effect from April 1, 2013
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CASES
Excise
Assembly of good fixed with nuts and bolts-amounts to manufacture of an
excisable good
In the present case, the Revenue sought to levy excise duty on the assembling of
telephone exchange equipment carried out by the Taxpayer. The key issues
considered by the Tribunal are as follows:
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RECOGNITIONS
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& 2010 Editions
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


Whether the process of assembly of different parts of the equipment
amounted to manufacture of an excisable good as per section 2(f) of the
Excise Act
Whether the test of marketability of the good was satisfied
Whether the Excise Valuation Rules were attracted as the goods had not been
removed from the place of manufacture
The Tribunal ruled on the aforementioned issues as follows:

The Tribunal followed the judgment of the SC in the case of CCE,
Ahmadabad v. Solid and Correct Engineering Works, 2010-TIOL-25-SC-CX
and held that if the goods are attached or affixed to earth by way of nuts and
bolts to provide a wobble free operation to the machine, such attachment
cannot be considered as a permanent attachment. Accordingly, the equipment
was held to be an “excisable good” and not an immovable property

The Tribunal followed the judgment of the SC in the case of Medley
Pharmaceuticals v. CC and Cus., Daman, 2011-TIOL-09-SC-CX and held
that the test of marketability was satisfied when the commercial identity of
the article was known in the market for being bought and sold. Further, it was
irrelevant whether the good was generally not being bought or sold. As the
equipment was known in the market, the good would be considered as being
marketable

The Tribunal followed the decision of the SC in the recent case of CCE v.
Fiat India Ltd. 2012-TIOL-58-SC-CX wherein it was held that the duty is
payable on the goods even when the goods are used within the factory for
captive consumption. Accordingly, the Tribunal held that even though the
equipment was not removed from the place of manufacture, the Excise
Valuation Rules were attracted and excise duty was liable to be paid
Bharat Sanchar Nigam Limited v. Commissioner of Central Excise, Kolkata, 2013TIOL-474-CESTAT-Kolkata
Input services used in relation to inputs-cenvat credit allowed
The Taxpayer was engaged in the manufacture of excisable goods and had installed
storage tanks for storing ammonia at its premises. The Taxpayer was availing cenvat
credit of the input services which were used in relation to the storage tanks. The
Revenue sought to deny the cenvat credit availed on the basis that the storage tanks
were located outside the factory of production. Further, the Tribunal had held that the
input services provided in relation to inputs were limited to the specified categories as
provided in the inclusive part of the definition of input services under Rule 2(l) of
CCR.
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The HC held that the definition of input services as provided under Rule 2(l) of the
CCR covers any service used by the manufacturer directly or indirectly, in or in
relation to the manufacture of final products and includes the two specified categories
of services in relation to inputs. The HC held that the input services provided in
relation to inputs cannot be restricted to the two specified categories as provided
under Rule 2(l) of the CCR. Further, Rule 3(1) of the CCR allows a manufacturer of
final products to take credit of any input service received in the factory of
manufacture of the final product. Accordingly, the HC gave a broad and
comprehensive meaning to the definition of input services and held that the Taxpayer
was allowed to avail cenvat credit of the input services.
Deepak Fertilizers and Petrochemical Corporation Ltd. v. CCE, Belapur, 2013-TIOL212-HC-Mum-CX
Others
HC may frame substantial questions of law during hearing
SC has held that HC has the power to frame substantial question of law (other than the
questions on which appeal that have been admitted) at the time of hearing of the
appeal under Section 260A(4) of the IT Act. The power is available subject to the HC
recording reasons for entertaining such questions.
The Commissioner of Income Tax-II, Ahmadabad v. Mastek ltd, 2013-TIOL-20-SC-ITLB
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NOTIFICATIONS AND CIRCULARS
Customs
Import of goods from Japan - Customs duty rates amended
The rate of customs duty has been amended in respect of import of goods from Japan
specified under Notification No. 69/2011-Cus, dated July 29, 2011.
Notification No. 17/2013-Customs, dated March 26, 2013
No refund of TED where TED exemption available
It has been clarified that where ab-initio exemption of TED is available under the FTP
in case of deemed exports, the refund of TED should not be provided by the RAs or
offices of Development Commissioners of SEZ.
Policy Circular No. 16/(RE-2012)/2009-2014, dated February 15, 2013
VAT/Sales Tax
Amendment to schedule IV of the APVAT Act
Under schedule IV of the APVAT Act, goods liable to 5 percent VAT, in entry 101
„Piped Natural Gas‟ is inserted.
Notification No.G.O.Ms.No.146, dated March 20, 2013
Change in rates under WBVAT Act with effect from April 1, 2013
The following changes in rates under WBVAT would come into effect from April 1,
2013:
Names of items/schemes
Rate applicable from April 1, 2013
Items covered under schedule C
Residuary items i.e., items not
covered in any of the schedules
Composition for works
contractors under section 18
Composition scheme for
resellers
5 percent
14.5 percent
3 percent
(i)
0.25 percent for dealers paying tax
on turnover of sales or
(ii) Rs 7000/- for the year 2013-14 if
turnover of the sales for 2012-13 is
within Rs 30 lakhs. However, if the
turnover exceeds Rs 30 lakhs but is
less than Rs 50 lakhs, then Rs 12000
to be paid as tax
With respect to tax to be deducted at source by the contractee, the following change of
rates is effective from April 1, 2013:
Status of a contractor
Rate applicable from April 1, 2013
(percent)
When contractor is a registered
dealer
When contractor is an
unregistered dealer
Notification Nos. 364, 365, 369 F.T, dated March 28, 2013
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GLOSSARY OF TERMS
APVAT Act
CCR
DTAA
Excise Act
Excise Valuation Rules
FTP
FTS
HC
IT
RAs
SC
SEZ
TDS
TED
WBVAT Act
Andhra Pradesh Value Added Tax Act, 2005
Cenvat Credit Rules, 2004
Double Taxation Avoidance Agreement
Central Excise Act, 1944
Central Excise Valuation (Determination of price of
Excisable Goods) Rules, 2000
Foreign Trade Policy 2009-14
Fee for Technical Services
High Court
Income Tax
Regional Authorities
Supreme Court
Special Economic Zone
Tax deduction at source
Terminal Excise Duty
West Bengal Value Added Tax Act, 2003
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