Latest on CENTRAL EXCISE November 2014 ISSUE

November 2014
Circulars / Instructions
The place of removal needs to be ascertained in term of provisions
of Central Excise Act, 1944 read with provisions of the Sale of
Goods Act, 1930. Payment of transport, inclusion of transport
charges in value, payment of insurance or who bears the risk are
not the relevant considerations to ascertain the place of
removal, the place where sale has taken place or when the
property in goods passes from the seller to the buyer is the
relevant consideration to determine the place of removal.
[Circular No. 988/12/2014-CX dt.20.10.2014]
CENVAT Credit of Service Tax paid on
outward transport - Delivery of goods at
buyer's premises - Credit is not
admissible of freight charges as they
are not integral part of price of goods.
MODVAT or CENVAT credit taken on
Directorate of Revenue Intelligence
(DRI) valid.
Refund of unutilized credit is only
permissible in case of export of goods
and not for any other reason - Refund in
cases of closure of factory is not
provided under the statute.
valuing them at lower rate for purpose
of stock valuation is not equivalent to
writing off value of inputs in books of
account - no cause for reversal of
Short supply of goods - As the appellant
failed to supply the specified quantity
during a specified period, therefore, the
payments were deducted by the
customer - whatever amount they have
received less from the buyer, they are
entitled to take refund of the duty
component involved in the deducted
[2014 (10) TMI 378 - CESTAT MUMBAI]
at Bhuj Taluka in Kutch District in the state of Gujarat.
[Circular No.987/11/2014-CX dt.15.10.2014]
Central Excise is empowered to conduct audit based on the
statutory backing under Rule 22 of CER, 2002 which flows from
clause (x) of section 37(2) and the general rule making powers
under section 37(1) of the Central Excise Act, 1944.
[Circular No. 986/ 10/ 2014-CX dt.09.10.2014]
Issues and Views
XYZ (Manufacturer) had stock transferred the excisable goods to
its excise registered depot. Now from depot it will be delivered to a
customer in Nepal. If the depot issues an excise invoice in the
name of the customer in Nepal, can the Nepal customer get the
excise duty benefit?
Now the manufacturer is allowed to clear the goods without
payment of duty under UT-1 or on payment of duty under claim for
rebate to Nepal. Therefore, there is no question of getting any
excise duty benefit by the customer in Nepal.
XYZ is generating and supplying electricity to PQR Company. In
their invoice, they are neither charging excise duty nor service tax.
Is it correct?
Electricity is goods and hence its supply or trading cannot be
subject to service tax. There is no excise duty on electricity though
it is goods.
XYZ is selling the goods below the cost of production. Rule 6 of the
valuation rules has been amended w.e.f.11.07.2014 to take care of
such situation. However, legally can the department demand duty
for the period prior to 11.07.2014 based on Fiat judgment?
Even prior to 11-7-2014, Fiat judgment had no universal
applicability. Even earlier CBE&C had clarified that Fiat judgment
applies only if there are circumstances similar to Fiat case
otherwise even earlier, cost of production was not relevant unless
there is some other indirect consideration.
“Death, taxes and childbirth! There's never any convenient time for any of them.”
November 2014
Flash News on Service Tax
Levy of service tax on activities involved in relation to inward
remittances from abroad to beneficiaries in India through
[Circular No.180/06/2014 – ST dt.14.10.2014]
Issues and Views
ST - On reimbursements of Courier, fax
and electricity charges, service tax is
payable along with interest as these
charges have been incurred as part of
C&F agency function.
ST - Microsoft case - Service provided
to Principal situated in Singapore to
market products in India is an Export of
Service and not liable to Service Tax.
ST - Delay in payment of tax - Merely,
because CENVAT credit is available in
books of accounts, it does not mean
that tax has been paid - demand of
interest upheld - Revenue appeal
Cross utilisation of credit for the
payment of service tax whereas availed
in relation to manufacturing activity not
[2014 (10) TMI 206 - CESTAT MUMBAI]
Dismantling/handling and transportation
machinery - Services covered by
definition of ‘Input Service’ under Rule
2(l) of CENVAT Credit Rules, 2004 as
activity in relation to manufacture.
[2014 (33) S.T.R. 71 (Tri. - Del.)]
XYZ is an automobile dealer and provide infrastructure facilities
to general insurance companies and collect insurance premium
at their place on behalf of the insurance companies. In return,
the Insurance companies pay them the Infrastructure Expenses.
Is XYZ liable to pay service tax on it and if yes under which
accounting code?
Yes, XYZ is liable to pay service tax on it under the category of
‘Business Support Service’.
In case software imported by way of E-delivery /direct
download, is service tax payable on it?
It will not fall under Rule 9 of Place of Provision of Service
Rules since it is not online data access service. Therefore by
default it will fall under Rule 3 and service tax will be payable
on it as Import of Service.
XYZ Ltd. Had given a contract for Gas Changing in Air
compressor to an Individual for a composite value of
Rs.11000/- & No separate value in respect of gas & refilling
charges is available then, How company should discharge its
liability under RCM?
XYZ to pay service tax under partial reverse charge
mechanism under the category of Works Contract Service. The
value to be considered for the same will be 70% of the total
value and on that Service Tax @ 12.36%. Once service tax
amount is arrived, 50% of the same to be paid by XYZ.
XYZ is a CA Firm providing accounting services to a Limited
company situated at London. The service is provided from
India. The service is performed by employee of CA firm in
India. 1) Whether it is export of service and exempted from
service tax?
It is export of service as per Rule 3 of Place of Provision of
Service Rules and therefore no service tax.
“Death, taxes and childbirth! There's never any convenient time for any of them.”
November 2014
Amendments under Customs / FTP
Clarification regarding testing of samples
[Circular No. 10/2014 Cus. dt.17.10.2014]
Issues on Baggage
Question: An Indian Resident visiting Germany brought
following goods while returning to India. (a) Personal effects
like Cloths etc. Valued at Rs.25000/-. (b) Two Liter of Liquor of
Rs.1600/-. (c) New Camera of Rs.39800/-. What is the Customs
duty payable?
Undervaluation - Import of aluminium
scrap through various ports. Evidence
produced by Department to show
enhancement of transaction value not
sustainable - Printout generated from
computer seized not admissible for nonfulfilment of statutory conditions of
Section 138C of Customs Act, 1962.
[2014 (299) E.L.T. 83 (Tri. - Mumbai)]
Refund claim - Unjust enrichment
applicable to refund of Customs duty
paid on capital goods - Hence, importer
has to produce documents to discharge
onus of proof that duty burden has not
been passed on - Section 27 of Customs
Act, 1962.
[2014 (299) E.L.T. 153 (Mad.)]
Answer: (a) There is no duty on personal effects. (b) Liquor up
to 2 Liter of Rs.1600/- can be accommodated in General Free
Allowance. (c) The total General Free Allowance [GFA] is
Rs.25000/-. Total dutiable goods imported are Rs.41400/[Rs.39800/- + Rs.1600/-]. After deducting GFA of Rs.25000/-,
passenger has to pay duty on Rs.16400/- [Rs.41400/- minus
Rs.25000/-] (d) The duty payable is 35% plus Education Cess @
2% and SHEC @ 1% of duty. (e) Hence, duty payable is Rs.5740/-,
Education Cess of Rs.114.80 and SHEC Rs.57.40.
Issues and Views
Whether a copy of the statement recorded by the concern
officer of the customs under section 108 of the customs act
1962 be obtained from the department?
If department issues SCN on basis of that statement, the
department is bound to give it, otherwise no.
Office: 503, Shree Sadan, Ghantali Devi Mandir Road, Ghantali,
Thane - West (400602). Cell: 9869004521. Phone: 25437981
Correspondence: 103, Aishwarya Laxmi, Maharshi Karve Road,
Opp. Namdeo Wadi Hall, Naupada, Thane-West (400602)
Email: [email protected]
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