Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com HRindiaonline.com
 
LOGIN
Forgot Password |  Register
Saturday , September 20, 2014 | Updated : Sep 20, 12:28 IST
Income Tax    Customs    Excise    Service Tax    FEMA    DGFT    SEZ    Misc    Pitara    Budget   
About Us Contact Us Advertise
Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com
NEWS FLASH
 
Real Estate Regulator: Govt is against over-regulation; Bill to be moved in Rajya Sabha soon, says Naidu (See 'Breaking News') I-T - Whether when addition made on account of Sec 10A benefits were deleted by Tribunal in case of earlier AYs, a notice for reassessment survives even if there is time left to file an appeal: HC (See '2014-TIOL-1622') Nov 7 to be National Cancer Awareness Day; 11 lakh new patients joining 30 lakh cancer family annually: Minister (See 'Mixed Buzz') ST - Bench had asked Revenue to verify as to whether surety bond has been executed as per SC order - in response, CCE, Pune III submitted letter wherein confirmation sought is not forthcoming but many other useless information is reproduced - Matter adjourned: CESTAT (See 'Breaking News') Railways adds 18 trains on Ahmedabad-Katra route for festive season (See 'Mixed Buzz') I-T - Whether as per Sec 36(1)(viia), deduction allowable is to be restricted to actual amount of Provision made in books of account for bad and doubtful debts: ITAT (See '2014-TIOL-663') Real Estate Regulator: Govt is against over-regulation; Bill to be moved in Rajya Sabha soon, says Naidu (See 'Breaking News') ST - Bench had asked Revenue to verify as to whether surety bond has been executed as per Apex Court order - in response, CCE, Pune III submitted letter wherein confirmation sought is not forthcoming but many other useless information is reproduced - Matter adjourned: CESTAT (See 'Breaking News') China slaps USD 490 mn fine on Glaxo for bribing docs to promote drugs PM nominates Adil Zainulbhai as New Chairman of Quality Council of India India proposes to establish SAARC Centre for Good Governance CENVAT credit availed on Input Services used in or in relation to manufacturing activity at Pune factory has no nexus with rendering of output service of Renting of Immovable property in Mumbai: CESTAT (See 'Breaking News') Goods for AEW&C System Programme of Defence Ministry exempted upto 5th October + Sample fabric import at Nil rate – total length increased to 1000 m in a FY; Rice bran exempted till 1st April, 2015 (See 'What's New) Anti-dumping duty imposed on import of Sulphur Black from PR China (See Notification 41 in 'What's New) CX - Rebate on goods exported to overseas subsidiary - Delhi HC holds Revenue cannot restrict rebate on value u/s 4 - Market Price under condition 'e' of Notifn No 19/2004 is export market price - Not Indian Market price - Allows rebate of Rs 23 Cr to Dr Reddy's Labs (See 'Breaking News') Increasing time limit for availing CENVAT credit from 6 months to 1 year? (See 'DDT' Column) Income tax - Whether HC has discretion not to exercise its judicial review powers in writ petition filed by assessee, when conduct of assessee himself is tainted and doubtful - YES: HC (See 'Breaking News') Board Circular 984 dated 16/09/2014 - Para-wise comments (See 'Guest' Column) ST - As provision of telecommunication service to international roamers would amount to export of service, refund is permissible in law - Revenue's appeal dismissed: CESTAT (See 'Breaking News') CBDT hounds Retired Commissioner (See 'DDT') India, China ink 12 pacts; to receive USD 20 bn Chinese capital in five years CBEC notifies Modinagar ICD (See NT 86) CBEC notifies Customs exchange rates effective from Sept 19 (See NT 87 in ‘What’s New’) CBDT extends Advance Tax date from Sept 15 to Dec 15 for J & K PM to launch 'Make in India' drive on Sept 25 Xi Jinping is in Delhi; India, China to take relationships to new high, says Chinese President Lucknow DRI seizes heroin worth Rs 1.2 Crore; One person coming from Manipur arrested Administrative Reforms - The weak belly of Modi Govt! (See 'The Cob(Web)' Column) CCR, 2004 - Rule 5 - Onsite services rendered abroad by foreign subsidiaries - CENVAT credit refund ineligible prior to 27/02/2010 as same does not constitute exports - amendment made on 27/02/2010 is not clarificatory: HC (See 'Breaking News') Sales Tax Incentive Scheme - Supreme Court Judgement - CBEC Instructions (See 'DDT' Column) Clearance to SEZ Developers - Amendment Retrospective (See 'DDT') Income tax - Whether character of any stock-in-trade acquired by partners of a firm changes into capital asset upon dissolution of firm, without presence of any agreement regarding such conversion - NO: HC(See 'Breaking News') CESTAT Slams Commissioner - Commissioner thinks CESTAT Order is a Fish Tank? (See 'DDT') DGFT notifies New SION rates for many food products (See PN in 'What's New')
 
Bookmark and Share
ADMISSIBILITY OF CENVAT OF CVD IF PAYMENT ADJUSTED THROUGH DEPB?

November 22, 2004

By S K Bhardwaj

TODAY, a major question troubling the trade and industry circles is that will the CENVAT credit of additional customs duty if paid on the inputs by way of debit entry in the DEPB be admissible?

Our Submission

The last sentence of para 4.3.5 of the EXIM Policy 2002-07 has been deleted by Notification No.28(RE 203/2002-07) dated 28.1.2004 para 11 issued by Central Government under section 5 of the Foreign Trade (Development and Regulation) Act, 1992. Before deletion the para read :-

“Normally, the exports made under the DEPB Scheme shall not be entitled for drawback. However, the additional customs duty/ excise duty paid in cash on inputs under DEPB shall be adjusted as CENVAT credit or duty Duty Drawback as per Rules framed by the Department of Revenue. In cases, where the additional customs duty is adjusted from DEPB, no benefit of CENVAT/Drawback shall be admissible.”

On being removed last sentence from above para, prima facie it appears that CENVAT credit is now admissible in case of the payment of CVD through debit in DEPB. The new para reads:-

“Normally, the exports made under the DEPB Scheme shall not be entitled for drawback. However, the additional customs duty/ excise duty paid in cash or through debit under DEPB shall be adjusted as CENVAT credit or duty Duty Drawback as per Rules framed by the Department of Revenue ”

But it is not true when it is analysed in the proper perspective.

CENVAT credit on the inputs or capital goods is governed by the CENVAT credit Rules, 2002 (now 2004) and not by the Export-Import Policy (Now Foreign Trade Policy) provisions. Rule 3 of the CENVAT Credit Rules, provides for the availability of CENVAT Credit on inputs or capital goods received in the factory if specified duties therein paid on any inputs or capital goods.

Vide Rule 3 of the CENVAT credit rules , Additional Customs Duty (CVD) leviable under 3 of the Customs Tariff act, paid on the inputs or capital goods is available as CENVAT credit.

Whether the “adjustment of additional customs duty by way of debit in the DEPB” can be considered as ‘ additional customs duty paid’?

Debit of customs duties involved on the goods imported in the DEPB is governed by exemption Notification No. 45/2002-Cus dated 22.04.2002 as amended. This provides that the goods imported under the DEPB Scheme are exempt from the whole of the duty of customs, additional duty of customs and special additional duty of customs, subject to fulfillment of the various conditions mentioned therein. One of the conditions is that the importer shall produce the DEPB before the proper officer for making the debit entry therein at the time of importation. By condition no. (v) of the notification, an option has been given to the importer to forego exemption in respect of the additional customs duty and pay the same in cash.

As per Notification No. 45/2002 if the additional customs duty is got adjusted in the DEPB, then it will amount to availment of the ‘exemption’ from customs duty. On the contrary, if the additional customs duty is paid in cash, then it will be deemed ‘non availment of exemption’ from additional customs duty.

The adjustment of additional customs duties in DEPB in terms of notification No.45/2002 shall amount to ‘availment of exemption’ and not the ‘payment of duty’, so the CENVAT Credit thereof shall not be admissible under Rule 3 of the Cenvat Credit Rules, 2004. The expression ‘duty paid’ has to be read in contrast to the expression ‘exemption availed’. Availment of exemption can’t be consanguineous to payment.

Regarding the deletion of last sentences from para 4.3.5 of the EXIM Policy, it does not necessarily follow that credit of additional duty paid/adjusted through DEPB will be admissible unless and until, a corresponding amendment is made in the Cenvat Credit Rules, 2004 as well and/ or 45/2002-Customs Notificaton. This is because credit has not been allowed for any exemption enjoyed under Customs Law.

The above is a classic case where Ministry of Commerce has set the intention to give importers Cenvat facility of DEPB debit of CVD but Ministry of Finance has not followed it up with their own amendment of Customs and Central Excise Rules. This is one among many instances of dichotomy in decisions of two Govt organs.

(The author is working with L G Electronics India Pvt Ltd )


POST YOUR COMMENTS
   
 
 
TIOL SEARCH
 
TIOL Mobile App
TIOL Subscriptions
 All-In-One Package
 Indirect Tax Package
 Income Tax Package
<< More Packages>>
 
   
             
Income Tax Customs Excise Service Tax FEMA DGFT SEZ Misc Pitara Budget
  • Notifications
  • Circulars
  • SC Cases
  • HC Cases
  • ITAT Cases
  • Instructions
  • Advance Ruling
  • Settlement
  • Other Case
  • Directorate of Income Tax (Systems)
  • Tariff Notfn
  • Non Tariff Notfn
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Settlement
  • Advance Ruling
  • Safeguard Duty Notfn
  • Anti-dumping Notfn
  • Drawback Cases
  • Tariff Notfn
  • Non Tariff Notfn
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Settlement
  • Advance Ruling
  • Excise Amendment
  • Clean Energy Cess Notfn
  • MISC Circulars
  • 37B Order
  • Commr.(A) Order
  • CESTAT
  • Notifications
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Miscellaneous
  • Advance Ruling
  • FAQ
  • Finance Act, 1994
  • Commr. (A) Orders
  • 37B Order
  • Removal of Difficulty
  • VCES
  • Accounting Head
  • Exchange Manual
  • Fema Notifications
  • SC Cases
  • HC Cases
  • RBI Notifications
  • Act
  • Rules
  • Regulations
  • Master Circulars
  • RBI Circulars
  • Notifications
  • Circulars
  • Public Notices
  • Trade Notice
  • FTDR Amendment 2010
  • MISC
  • State Acts
  • Notifications
  • Instructions
  • Act 2005
  • Rules 2006
  • DGEP
  • State Policy
  • SC Cases
  • HC Cases
  • VAT Cases
  • Deputation Posts
  • Service News
  • The Insider
  • Transfer
  • Promotion
  • Recruitment Rules
  • Transfer Policy
  • Training Circulars
  • Service Cases
  • MISC
  • Pay Commission
  • Cadre Review
  • Budget Circular 2013-14
  • Union Budgets
  • Economic Surveys
  • Budget Speeches
  • Finance Acts
  • Finance Bill
  • TRU - D. O. Letter
  • A Taxindiaonline Website. Copyright © 2014 Taxindiaonline.com Pvt.Ltd. All rights reserved. | Powered by 4th Dimension