Taxindiaonline.com
Taxindiaonline.com Taxindiaonline.com TIOL Tube Taxindiainternational.com
 
LOGIN
Forgot Password |  Register
Friday , July 31, 2015 | Updated : Jul 31, 16:36 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
 
Imbroglio continues in RS; No business transacted ST - Appellant collects toll & deposits same with NHAI and either retains part of sum which was collected as toll or gets fixed amount by NHAI - collection of toll is not to be considered as BAS provided to NHAI: CESTAT (See 'Breaking News') ST - Commission for promoting of auto loans - Appellant admitted that in case of HDFC Bank they had raised debit notes for ST but bank did not pay - This is no excuse for not paying tax - extended time period is invokable: CESTAT (See 'Breaking News') CBDT Notifies new ITR Forms (See 'DDT' Column) Exemption certificate can be signed by CEO of PSU - Notfn. 39/96-Cus amended (See 'What's New') Exemption to Anti-Tuberculosis Drugs, Diagnostics & Equipments extended till 01.04.2016 (See 'What's New') I-T - Whether if assessee was originally claiming Sec 10B benefits, it can claim Sec 10A benefits once it acquires a running business having entitlement for claiming deduction u/s 10A - YES: ITAT (See 'Breaking News') Is there rampant misuse of Notification Nos 49 & 50/2003-CX? (See 'Guest' Column) CENVAT Credit on M.S.Plates, M.S.Angles, M.S.Channels and H.R. Plates used for construction of plant - High Court sets aside order of Tribunal denying credit prior to 07.07.2009 (See 'Breaking News') Reduction of CENVAT credit on Intangible Services + Consultant pocketing Service Tax and giving forged challans to assessee (See 'DDT') Whether when the assessee has accepted assessment order, correctness of which can also be agitated before revisional authority, cannot directly challenge consequential recovery notice before HC - YES: HC (See '2015-TIOL-1730-HC') Tribunal to correct its approach so as to ensure such lapses do not recur (See 'DDT') I-T- Whether profit on cancellation of forward marketing contract is to be treated as export turnover within the meaning of Section 80HHC - YES: HC (See '2015-TIOL-1733-HC') World's population - India projected to surpass China in 7 years; Nigeria to surpass USA for third place (See 'Mixed Buzz') CBDT notifies New Forms - ITR-3, ITR-4, ITR-5, ITR-6 & ITR -7 Indians dying due to antibiotic resistance - Govt admits it does not collect data (See 'Mixed Buzz') CBEC grants back-dated NFSG benefits to 62 officers (See 'Promotion' in Pitara) Centre trying hard for a reasonable GST rate: Revenue Secretary Bharat Ratna Dr Kalam laid to rest in Rameswaram CX - Iron and steel obtained by breaking up of ships - two different notifications for two similar assessees not correct: Supreme Court (See 'Breaking News') Terrific 'Run' of P-Note bumps into SIT wall! (See 'The Cob (Web)' Column) CX - whether an assessment proceeding can continue against legal representatives / estate of a sole proprietor/manufacturer after he is dead - No: Supreme Court (See 'Breaking News') Excise Duty beyond Death (See 'DDT' Column) I-T - Whether when assessee pays interest on interest, deduction for such sum is not allowable as per provisions of Sec 36(1)(iii) - YES: HC (See 'Breaking News') European Commission Modernises Customs Procedures (See 'DDT') Imbroglio continues in RS; No business transacted ST - Appellant collects toll & deposits same with NHAI and either retains part of sum which was collected as toll or gets fixed amount by NHAI - collection of toll is not to be considered as BAS provided to NHAI: CESTAT (See 'Breaking News') ST - Commission for promoting of auto loans - Appellant admitted that in case of HDFC Bank they had raised debit notes for ST but bank did not pay - This is no excuse for not paying tax - extended time period is invokable: CESTAT (See 'Breaking News') CBDT Notifies new ITR Forms (See 'DDT' Column) Exemption certificate can be signed by CEO of PSU - Notfn. 39/96-Cus amended (See 'What's New') Exemption to Anti-Tuberculosis Drugs, Diagnostics & Equipments extended till 01.04.2016 (See 'What's New') I-T - Whether if assessee was originally claiming Sec 10B benefits, it can claim Sec 10A benefits once it acquires a running business having entitlement for claiming deduction u/s 10A - YES: ITAT (See 'Breaking News') Is there rampant misuse of Notification Nos 49 & 50/2003-CX? (See 'Guest' Column) CENVAT Credit on M.S.Plates, M.S.Angles, M.S.Channels and H.R. Plates used for construction of plant - High Court sets aside order of Tribunal denying credit prior to 07.07.2009 (See 'Breaking News') Reduction of CENVAT credit on Intangible Services + Consultant pocketing Service Tax and giving forged challans to assessee (See 'DDT') Whether when the assessee has accepted assessment order, correctness of which can also be agitated before revisional authority, cannot directly challenge consequential recovery notice before HC - YES: HC (See '2015-TIOL-1730-HC') Tribunal to correct its approach so as to ensure such lapses do not recur (See 'DDT') I-T- Whether profit on cancellation of forward marketing contract is to be treated as export turnover within the meaning of Section 80HHC - YES: HC (See '2015-TIOL-1733-HC') World's population - India projected to surpass China in 7 years; Nigeria to surpass USA for third place (See 'Mixed Buzz') CBDT notifies New Forms - ITR-3, ITR-4, ITR-5, ITR-6 & ITR -7 Indians dying due to antibiotic resistance - Govt admits it does not collect data (See 'Mixed Buzz') CBEC grants back-dated NFSG benefits to 62 officers (See 'Promotion' in Pitara) Centre trying hard for a reasonable GST rate: Revenue Secretary Bharat Ratna Dr Kalam laid to rest in Rameswaram CX - Iron and steel obtained by breaking up of ships - two different notifications for two similar assessees not correct: Supreme Court (See 'Breaking News') Terrific 'Run' of P-Note bumps into SIT wall! (See 'The Cob (Web)' Column) CX - whether an assessment proceeding can continue against legal representatives / estate of a sole proprietor/manufacturer after he is dead - No: Supreme Court (See 'Breaking News') Excise Duty beyond Death (See 'DDT' Column) I-T - Whether when assessee pays interest on interest, deduction for such sum is not allowable as per provisions of Sec 36(1)(iii) - YES: HC (See 'Breaking News') European Commission Modernises Customs Procedures (See 'DDT')
 
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
   
 
 
 
Download TIOL App
TIOL SEARCH
 
DPPR
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
  • MISC Circulars
  • 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
  • PMLA Notifications
  • Depository Scheme
  • Press Note
  • 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
  • Union Budgets
  • Economic Surveys
  • Budget Speeches
  • Finance Acts
  • Finance Bill
  • TRU - D. O. Letter
  • A Taxindiaonline Website. Copyright © 2015 Taxindiaonline.com Pvt.Ltd. All rights reserved. | Powered by 4th Dimension