Taxindiaonline.com Taxindiaonline.com Taxindiainternational.com HRindiaonline.com
 
LOGIN
Forgot Password |  Register
Monday , April 21, 2014 | Updated : Apr 20, 18:58 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
 
Ahmedabad DRI seizes 46.3 kg gold smuggled through sea route in Kutch No fee is payable in filing appeals before CESTAT relating to refund of ST, CX & Customs - No error in order of Tribunal: High Court (See 'Breaking News') Polls or no polls: CBEC going ahead with recently-promoted ACs' posting order Bihar Finance Act - Exemption from payment of sales tax on purchase of inputs used for manufacturing goods: definition of Manufacture is wide enough to cover production or processing of raw materials: Supreme Court (See 'Breaking News') Chit Fund Scam: SFIO to submit final report against Sradha in June To qualify as Export Duty, it is not necessary that incidence of duty should always be passed on, so as to satisfy economists' principle of Tax - no merit in plea that FOB price be treated as cum-duty price and not transaction value: CESTAT (See 'Breaking News') CBI nabs Coalfields staffer accepting bribe (See 'Mixed Buzz') I-T - Whether in absence of any allegation against society showing that they were involved in any other activities than educational it can still be denied exemption u/s 10(23C)(iiiad): HC (See '2014-TIOL-523-HC') Relief for Amitabh Bachchan; Cus - in case neither goods are available nor they were released under any bond, although goods are liable for confiscation, Redemption Fine cannot be imposed: CESTAT (See 'Breaking News') Govt notifies Consolidated FDI Policy effective from April 17 (See 'What's New') UP Trade Tax - transformer purchased at concessional rate of tax falls under category of 'accessories and component parts' for use in manufacture of notified goods: Supreme Court (See 'Breaking News') Delhi Court threatens Kejriwal of coercive action if he fails to appear before it on May 21 in a defamation case filed by Sibal's son Amit Sibal Air Force Placement Cell joins hands with job portal to place retired airmen (See 'Mixed Buzz') I-T - Whether frequency of transactions in share dealing can be determinative factor for ascertaining the nature of capital gain: HC (See '2014-TIOL-518') As many as 86 Countries approve New OECD Guidelines on applying National VAT to cross-border transactions (See 'Breaking News') Cab Secretary invites top bureaucrats to evolve strategy to tackle US Pharma's IPR dispute Commerce Secretary to lead High-Level Delegation to India Show in HK (See 'Mixed Buzz') I-T - Whether onus is on assessee to produce sufficient records so as to show that there is no disproportionate allocation: HC (See '2014-TIOL-516') Employment issues will top agenda during OECD LEED Forum Meet (See 'Mixed Buzz')
 
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
  • Commr.(A) Order
  • Notifications
  • Circulars
  • SC Cases
  • HC Cases
  • Cestat Cases
  • Miscellaneous
  • Advance Ruling
  • FAQ
  • Finance Act, 1994
  • Commr. (A) Orders
  • 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