FEBRUARY 05, 2016

By S Suryanarayana, Advocate

I. Central Excise, Service Tax & Customs

1. Simplification of Rule 6 of Cenvat Credit Rules: Over a period of time, Rule 6 of Cenvat Credit Rules, 2004 became lengthy and complex more specifically with the procedure prescribed under Sub - Rule 3A being cumbersome and resulting in confusion among the assessees and prone to more litigation.

To avoid the complexities involved and the cumbersome procedure for arriving at the amount of credit attributable to the common inputs used in the exempted goods and services based on a formulae, it is requested that the Government deletes the so called Sub-rule 3A of Rule 6 of Cenvat Credit Rules, 2004 and substitute with a simple rule prescribing that actual amount of Cenvat Credit attributable to the common inputs and input services actually used in the exempted goods and services should be reversed on a monthly basis with a condition to submit the workings with relevant documents as proof.

2. Request to Notify Medicaments containing alcohol under M&TP Act under MRP Valuation on par with Toilet preparations containing alcohol or Narcotic drug or narcotics which were earlier notified vide Notification No. 3/2003-M&TP Dated 01.03.2003 and also to extend the cenvat facility on par with Central excise:

So far only Toilet preparations containing alcohol were notified under MRP valuation (MRP- abatement) and not the other medicaments containing alcohol or narcotic drug or narcotic. Because of this, manufacturers are facing lot of litigation with the department and hence, request the Government to notify P or P Medicaments containing alcohol or narcotic drug or narcotic also under MRP valuation on par with toilet preparations to avoid litigation under M&TP Act. It is also requested to extend the facility of Cenvat credit similar to the facility given to P or P Medicaments under Central Excise.

3. Removal of Inverted Duty Structure on P or P Medicines under Chapter 30 Central Excise: Variation in the duty rates i.e., 12% on inputs and 6% on Finished Product resulting in accumulation of Cenvat Credit and exporters are compelled to pay duty and claim the same as rebate under Rule 18 of Central Excise Rules, 2002 which is time consuming and increases the transaction cost. Hence, it is requested to increase the Duty rate on P or P Medicines from 6% to 12%.

4. Section 5A of Central Excise Act, 1944 - Mandatory availment of Exemption -

Request for restoration of earlier provision of using the own volition:

(i) Earlier, the Assessee had the facility of using their own volition whether to avail exemption notification or to pay duty depending on the advantage and also the procedural requirements. In 2005 (from 13.5.2005) Section 5A of CE Act, was amended making it mandatory to avail the exemption notifications under Sub-Section 1A. This provision put the assessees in a bad position to follow all the procedural requirements which is cumbersome, time taking and painful which could have been avoided without availing the exemption had this change not been made. Hence, request the Government to amend the provisions of Section 5A of CE Act, 1944 for restoring the earlier provision of using the concept of "duty payment on own Volition"

(ii) Where manufacturer clears goods by paying duty though there is general exemption to clear at nil rate of duty and purchaser after paying the invoice value incl. Excise duty to supplier, avails Cenvat Credit / claims TED benefit, purchaser should not be deprived of such benefit subsequently

5. Request for relaxation of the condition for renewal of LUT every year by the assessee.

Government introduced execution of LUT in place of Bond for Export clearances by the manufacturer exporters. While introducing the above, a condition of renewal of such LUT once in 12 calendar months is prescribed. However, in respect of Bonds, this renewal condition was not there. Because of this renewal condition for LUT, the assesses are facing problems in getting renewal which involves lot of precious time and increase of transaction costs. Hence, it is requested to relax the condition of yearly RENEWAL with respect to LUT considering the hardship being faced by the Assessees.

6. Cenvat Credit facility on all the duties and taxes paid on inputs, input Services and Capital goods should be allowed seamlessly without any restriction.

7. Facility of Centralized registration under service tax- to be extended to Central Excise also:

New Centralized registration procedure under service tax is operational by amending rule 4(2) and 4(3) with effect from 2-11-2006. Accordingly, the centralized registration is granted by the Commissioner of Central Excise under whose jurisdiction the premises or offices, from where centralized billing or accounting is done, are located. It is requested to extend the similar trade friendly facility to central excise assesses also with a view to reduce transaction costs.

As per para 3(1) of Circular No. 586/23/2001-CX, Dated. 12-90-2001 where two premises of the same factory segregated by public road, canal, railway line, single registration may be given, and certain guidelines have been incorporated in the CE Manual as to how to determine that two premises are parts of the same factory vide Chapter 2, Part-I, Sub-para 2.2. The provisions are restrictive and discretionary. It is requested that the Board should allow single license to the premises of same factory if it is in the same range and same Commissionerate.

8. Inclusion of Loan Licence /Job-work location in the definition of UNIT given under Explanation-I to Rule 7 of Cenvat Credit Rules, 2004: In the absence of non-inclusion of Loan Licence/Job-work locations in the definition, many of the assessees registered as ISD, unable to distribute the said credit to the LL/Job-work Locations and compelled to forgo the amount of ST paid. Hence, it is requested to include the Loan Licence/Job-work premises in the definition of UNIT.

9. Time limit for availment of CENVAT credit on inputs and input services: The time limit for availing Cenvat Credit within 1 year period from the date of invoice is causing hardship.  Since payment of respective excise duty/taxes has been made by the manufacturer supplier, there should not be any imposition of time limit for taking credit.  This will not affect in any way to the exchequer, therefore, the restriction should be removed.

10. Implementation of online sanction of Rebate claims for the terminal excise duty paid on export consignments: CBE & C earlier in the year 2001 proposed that similar to Duty Drawback, Export rebates will also sanctioned online at the time of export as the EDI system for generation of Shipping Bills are made online. However, it was stated that this implementation would be from a date notified. Even after completion of 15 years, the date of online implementation is not yet notified. Request for an early implementation of the proposal which will certainly minimize the procedural/documentation requirements and also reduce the transaction cost including time.

11. Variable rates of interest on delayed payment

a. Notification No. 12/2014-ST prescribes variable rates of interest for the delayed payments of service tax, ranging from 18% to 30% p.a. depending on the period of delay. This is effective from 1st October, 2014. This interest is penal in nature.

b. A difference may be required to be made between an admitted liability which has not paid, and cases involving differences in interpretation of law, valuation or applicability of any exemption notification. The higher interest rates may be made applicable only to delayed payments of admitted liability. The rates of interest would require revision accordingly.

12. Request for withdrawal of Payment of service Tax under partial reverse charge.

13. Request for recommendation to make use of eBRC facility implemented by DGFT for monitoring Realization of Export proceeds for Duty Draw Back Scheme by customs also: This will be of great help to the exporters who are presently compelled to submit the hard copy of BRC within 6 months from Date of sanction of Duty Drawback to the Customs Authorities and saving precious time and energy.

Further, the Authorized Dealer Banks expressing difficulty in arranging the physical BRCs in view of the mandatory requirement of uploading the details of export proceeds realization in the DGFT eBRC Module by them on the ground of duplication of work. In this context, it is worth mention that some State Governments entered MOUs with DGFT for using the details from their eBRC Module for VAT and other purposes.

14. Request for reduction of service Tax from 14.5% to 12.5% at par with Central Excise duty rate:

15. Request for immediate inclusion of a provision in the Cenvat Credit Rules, 2004 for utilizing the accumulated balances of Edu. Cess and Secondary and Higher Edu. cess for payment of Excise duty/Service Tax on final products and taxable services.

16. Request to provide the facility of seamless cenvat credit of all inputs and input services used by the assesses without restriction by way of removing the exclusions in the Cenvat credit Rules, 2004. This will help in reduction of litigation.

17. Request for extension of transfer facility of Cenvat credit availed on inputs and input services at par with SAD to the other units of same manufacturer wherever required under Cenvat Credit Rules, 2004. This will be of great help to the assessees having multiple units carrying huge cenvat balances in some units and paying the duty in cash from other units where cenvat balances are less in order to effectively utilize the Cenvat credit balances lying idle.