TIOL-DDT 2843
11 05 2016
Wednesday

REPRESENTATIONS have been received from the members of the trade involved in manufacture of brass products, regarding applicability of provisions relating to clearance of segregated foreign materials as "inputs as such" from imported honey grade brass scrap. The imported scrap mainly contains brass metal but it also contains impurities like iron, steel, rubber, plastic, dust etc. which is integrally attached to the main material/ brass scrap. Before feeding resultant brass scrap in the furnace during the manufacturing process, the foreign materials (impurities) attached to the honey grade brass scrap is segregated manually and then such sorted material is issued for further process like breaking, cutting etc. wherein big pieces of scrap are converted into small pieces so that the same can be fed into the furnace. Ultimately the brass scrap is fed into furnace where brass melts but materials like steel, iron etc. do not as they have higher melting point. Molten brass is poured for manufacturing whereas foundry waste of iron, steel, slag is cleared and sold separately. Such foundry waste is quite clearly process waste.

However, there is another category of waste viz. foreign materials segregated initially and not fed in furnace.

The issue is when such segregated foreign material is cleared by the brass manufacturers, can it be treated as clearance of "inputs as such" and accordingly are the manufacturers required to pay an amount equal to the credit availed in respect of such inputs in terms of Rule 3(5) of CENVAT Credit Rules, 2004?

Board clarifies that the clearance of segregated foreign materials namely iron, steel, rubber, plastic, dust etc. from honey grade brass scrap before feeding in the furnace cannot be treated as removal of "inputs as such" as envisaged under Rule 3 (5) of CENVAT Credit Rules, 2004. The segregated foreign material in such situation, shall be cleared on payment of Central Excise duty on transaction value as per its appropriate classification and rate of duty determined on merits.

Can the Board advise the assessees and officers on the appropriate classification of foreign material viz. "dust etc." so that the assessee can clear the same on payment of duty, if any?

CBEC Circular No. 1029/17/2016-CX., Dated: May 10, 2016

FTP - Clarification regarding classification of export item 'Silico Manganese'

DGFT clarifies that "Silico Manganese" and "Ferro-Silico-Manganese" having ITC(HS) Code 72023000 are one and the same item and is eligible for benefits under Sl. No.249 of Appendix 37 D.

DGFT Trade Notice No.5/2016., Dated: May 10, 2016

Payment of interest in respect of delayed settlement of Duty Drawback payments -No provision in ICES?

AS per Section 75A(1) of the Customs Act, where any drawback payable to a claimant under section 74 or section 75 is not paid within a period of one month from the date of filing a claim for payment of such drawback, there shall be paid to that claimant in addition to the amount of drawback, interest at the rate fixed under section 27A from the date after the expiry of the said period of one month till the date of payment of such drawback.

Officers of the CBEC are generally averse to giving refunds, let alone interest. Interest is sacrilege. It seems in many Custom Houses, no interest is paid on delayed drawback.

This issue was raised in the Open House Meeting held by Mumbai Customs on 21.9.2015, where it was submitted that exporters are entitled to get their legitimate claim and that the Department should suo moto initiate necessary steps in paying interest if there is delay in processing drawback.

The Chief Commissioners informed the house that the issue of payment of interest in respect of delayed settlement of drawback be taken up with DG/Systems and initiate necessary steps to institutionalize the procedure.

The same issue was raised by the same Member in the Open House Meeting held by the same Mumbai Customs on 21.4.2016 and this time he submitted that the interest payment for delayed payment of drawback is not dependent upon the EDI system and the same can be made manually; therefore, the plea that the matter is taken up with the Systems Directorate does not absolve the officials from the interest payment liability in any case.

The Chief Commissioners informed that at present there is no provision in ICES 1.5system for payment of interest for delay in processing drawback claims. The issue is pending with DG(Systems).

Is this what you call, ‘ease of doing business'? Do you deny interest because your system does not know how to calculate it?

Forwarding of application of IRS (C&CE) officers for deputation - Board Instructions

BOARD has observed that applications of IRS (C&CE) officers, who were/are not eligible to be considered for the applied post, are being forwarded to the Board by the concerned Commissionerate/Directorate.

Board requests the Chief Commissioners that all the applications submitted for deputation may be examined/scrutinized by the concerned Commissionerate / Directorate in the first instance and applications of the officers meeting the eligibility criteria for the post applied be forwarded to the Board.

CBEC F.No. A. 35017/36/2016 - Ad.II., Dated May 09 2016

Board is looking for a DS/Director

ONE post of DS/Director (CX-I) in the Central Board of Excise & Customs under the Revenue Headquarters is proposed to be filled up from amongst the eligible officers of IRS (C&CE) cadre. The IRS (C&CE) officer in the grade of Joint/ Additional Commissioner of Customs & Central Excise are eligible for the post of DS/Director.

Board wants the applications of the willing and eligible officers along with their bio-data latest by 23.05.2016.

There are not many takers for jobs in the Board. Government should seriously think of several incentives to attract the talented capable officers to work in the Board.

CBEC F.No. A-35017/26/2014-AD.II., Dated: May 06, 2016

Service Tax - Construction Company partnering with education society to provide secondary education - service provided by applicant (a person) to 'partnering person' (another person) for consideration will be service - AAR

TWO persons entered into a partnering agreement to run a school. One partner would be responsible for the entire infrastructural requirement of the educational institution while the other would be responsible for the entire academic aspect and related requirements of the educational institution. The agreement is for a term of thirty years and it has been agreed between the Parties that any revenue generated from the project, during the term, will be shared by the parties in the ratio agreed in the Agreement.

One of the partners approached the Authority for Advance Ruling seeking a ruling whether the partners are liable to pay Service Tax on the revenue share.

The AAR last week ruled that the applicant and the partner are separate persons and service provided by the applicant (a person) to “partnering person” (another person) for consideration will be a service.

For more details, please see Breaking News.

Until Tomorrow with more DDT

Have a nice day.

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