Udyog Tax News Flash

December 2013

Customs: Import duty on natural rubber increased

The central government has amended notification 12/2012-Customs to increase the rate of basic customs duty on import of natural rubber, from 20% or Rs 20 per kg, whichever is lower to 20% or Rs 30 per kg, whichever is lower. The change has been effected by amendment in serial number 252, item (ii), of the original notification 12/2012-Customs, by notification 51/2013-Customs dated 20 December 2013. This can be seen at: http://cbec.gov.in/customs/cs-act/notifications/notfns-2013/cstarr2013/cs51-2013.htm. The hike in duty reportedly came after members of Parliament from Kerala met the Prime Minister and alerted him to the rising imports and falling prices of rubber in the country, which affects growers. A report can be perused at http://www.thehindubusinessline.com/markets/commodities/import-dutyon-natural-rubber-hiked/article5487373.ece.

Customs: Focus Market Scheme modified to exclude some categories

The central government has modified the Focus Market Scheme and Incremental Export Incentive Scheme to add certain categories of exports to the list that is ineligible for calculating export performance under them. These are exports that the government does not want to incentivize. The newly added excluded categories include meat, cotton, cotton yarn, and exports that are subject to export duty or minimum export price. The modification to the schemes by issue of notification 52/2013-Customs dated 26 December 2013, which amends notification 93/2009-Customs. It can be seen at http://cbec.gov.in/customs/cs-act/notifications/notfns-2013/cstarr2013/cs52-2013.htm.

Customs: Exemption for Kameng Hydro Electric Power Project

The central government has issued notification 53/3013-Customs dated 26 December 2013 to extend the exemption for project imports under serial number 507 of notification 12/2012-Customs to Kameng Hydro Electric Power Project, Arunachal Pradesh. This will enable duty-free import of

goods required for setting up the power project. The amending notification, which has inserted the Kameng project as serial number 112A in list 32A of the original notification, can be seen at http://cbec.gov.in/customs/cs-act/notifications/notfns-2013/cstarr2013/cs53-2013.htm.

Central Excise: exemption for supply against Focus Market scrip modified
Notification 30/2012-CE exempts excise duty on supplies made against a Focus Market Scheme duty credit scrip. The scrip is issued for exports made to specified markets, and the entitlement to the scrip is calculated in the manner specified in the notification. Now the central government has issued amending notification 31/2013-CE dated 26 December 2013 to modify the manner of calculation of export entitlement, by adding certain categories to the exports that are excluded for the purpose of this calculation. The categories to be excluded under the latest notification include meat and meat products, cotton and cotton yarn, exports that are subject to export duty, and exports that are subject to minimum export price. The notification 31/2013-CE can be downloaded from http://cbec.gov.in/excise/cx-act/notfns-2013/cx-tarr2013/ce31-2013.htm.

Central excise: Exemption for supplies to Kameng Hydro Electric Project

Machinery, apparatus and appliances, and specified equipment supplied the mega power projects listed in list 11 to the notification are exempted from excise duty under serial number 338 of notification 12/2012-CE. This exemption has been extended to the Kameng Hydro Electric Project, Arunachal Pradesh, by adding the said project to list 11. The modification has been carried out by notification 32/2013-CE dated 26 December 2013, which can be seen at http://cbec.gov.in/excise/cx-act/notfns-2013/cx-tarr2013/ce32-2013.htm.

Central excise: cutting of carpet rolls into smaller sizes is not manufacture
A reference was made to the Larger Bench of the CESTAT on the issue of whether manufacture takes place in the process of converting carpet rolls into car mats and floor mats by cutting into smaller pieces and stitching of edges with lining material. The CESTAT reviewed the case law on the

subject and came to the conclusion that the process does not result in the emergence of a distinct independent commodity and does not amount to manufacture. The case as reported in the website of the CESTAT can be downloaded from http://cestat.gov.in/, under Larger Bench Orders.

Service tax: Exemption for supply of service against Focus Market scrip modified
Notification 6/2013-ST exempts service tax on services provided against a Focus Market duty credit scrip. The manner of calculation of entitlement to such a scrip, which is based on export performance, has been modified in the notification by excluding exports of meat and meat products, cotton and cotton yarn, and items that are subject to export duty or fixation of minimum export value. The amending notification 17/2013-ST dated 26 December 2013 can be viewed at http://www.servicetax.gov.in/notifications/notfns-2013/st17-2013.htm.

Service tax: no exemption for cricket bodies: CESTAT

The taxable category of club or association in service tax excluded bodies of persons that are engaged in any activity with the objective of public service and are of charitable nature. Vidarbha Cricket Association claimed this exclusion by virtue of its status in income tax as a charitable organization. However the CESTAT observed that income tax operates in a different field, being a direct tax: an exemption from income tax would make more funds available for the activity. Service tax, on the other hand, is an indirect tax, and is collected from the consumers of the service provided by the body of persons. These, in the case of a cricket association, are people of status who are financially well off. Thus the cricket association is not providing public service or service of a charitable nature. The CESTAT held that Vidarbha Cricket Association was liable to pay service tax. A narration of this order dated 20 November 2013 passed in appeal number ST/136/2012 can be perused at http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail. php3&newsid=19380.

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Updated and written by Radha Arun [radha.arjuni@gmail.com], Consultant to Udyog Software (India) Ltd.
Udyog Software (India) Ltd. www.udyogsoftware.com Phone: 022-67993535 Email: ca-service@udyogsoftware.com | sales@udyogsoftware.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.