Udyog Tax News Flash

January 2014

Customs: DGFT and Enforcement Directorate will share data

The DGFT and the Enforcement Directorate (which deals with FEMA violations and money laundering) have signed a memorandum of understanding by which they will share data pertaining to bank realization of export proceeds. This is reported in a press release, which can be seen at http://pib.nic.in/newsite/PrintRelease.aspx?relid=102370.

Customs: P&H High Court on quantum of redemption fine

The Punjab and Haryana High Court reduced the quantum of redemption fine offered on a confiscated consignment, observing that the function of the fine is to wipe out the profit margin and that the CESTAT ought to have considered the amount of demurrage and detention charges incurred and also the litigation costs, while deciding on the quantum of fine. The judgment can be perused on the website of the Punjab and Haryana High Court, at http://lobis.nic.in/phhc/showfile.php?sno=0.

Customs: embryo

classification

of

human

There was a doubt as to whether frozen human embryo is classifiable in 3001, which covers glands and other organs for organo-therapeutic uses, or 0511, which covers animal products not elsewhere specified. Upon reference to the Indian Council of Medical Research, it was learnt that human embryo is categorized with animal embryos. Accordingly the CBEC has issued circular number 1/2014-Customs dated 9 January 2014, to instruct its field formations that frozen human embryos are classifiable in 05119999; and that the import is restricted and requires a no-objection certificate from the Indian Council of Medical Research. The circular can be seen at http://cbec.gov.in/customs/cs-circulars/cs-circ14/circ01-2014-cs.htm.

Customs: classification of transmission shafts/power take-off shafts

The matter of classification of the abovesaid items used in agricultural machinery was discussed at the recent conference of Chief Commissioners, and their decision has been issued as a circular by the CBEC. It was decided that the said transmission shafts/power take-off shafts cannot be classified as parts of general use and that they are correctly classifiable under heading 8483. The circular 2/2014-Customs dated 9 January 2014 can be perused at http://cbec.gov.in/customs/cs-circulars/cs-circ14/circ02-2014-cs.htm.

Customs: anti-dumping duty on CFLs from China extended

Anti-dumping duty had been levied under notification 55/2009-Customs dated 26 May 2009 on compact fluorescent lamps from China. Antidumping duty has a maximum validity of five years unless extended. The Director General, Anti-Dumping, undertook a sunset review under section 9A(5) of the Customs Tariff Act 1975 and recommended extension of the duty. Accordingly, the central government has issued notification 2/2014Customs (ADD) dated 3 January 2014, extending the duty up to 20 November 2014. The said notification can be downloaded from http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/csadd2014/csadd01-02-2014.pdf.

Customs: anti-dumping: modification in nylon tyre cord fabric notification

The central government has issued notification 1/2014-Customs (ADD) dated 3 January 2014, to modify the name of one of the exporters named in notification 121/2009-Customs, which levies anti-dumping duty on nylon tyre cord fabric from Belarus. In terms of this, Grodno Khimvo lokno is now to be read as JSC Grodno Azot. The notification can be seen at http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/csadd2014/csadd01-02-2014.pdf.

Central excise: CBEC clarifies on exemption for second substantial expansion of industry
In the context of exemption notifications for units that undertake substantial expansion (both location-specific and others), the CBEC has clarified that those that availed the benefit of earlier notifications 56 or

57/2002-CE will be eligible to avail the benefit of the later notification 1/2010-CE if they undertook a further substantial expansion. The CBEC circular 977/01/2014 dated 3 January 2014 can be seen at http://cbec.gov.in/excise/cx-circulars/cx-circ14/977-2014cx.htm.

Central excise: no education cess on other cesses: CBEC

The doubt had been cleared earlier vide CBEC Circular 345/2/2004-TRU(Pt) dated 10 August 2004, but seems to have raised its head again, as to whether the education cesses, which are levied as a percentage of excise duties, are leviable on other cesses that are collected as if they were excise duties. The CBEC has again clarified, vide Circular no. 978/2/2014 dated 7 January 2014, that cesses that are levied under other enactments, like tea cess under the Tea Act 1953 and sugar cess under the Sugar Cess Act 1982, are only collected by the Department of Revenue and do not qualify as duties that are both levied and collected by the Department of Revenue. Therefore the education cess and secondary and higher education cess are not to be collected on these other cesses. The CBEC circular 978/2/2014 dated 7 January can be perused at http://cbec.gov.in/excise/cx-circulars/cx-circ14/978-2014cx.htm.

Service tax: service recipient bound to reimburse service tax to service provider: HC
The petitioner, Bhagwati Security Services, did not pay service tax on services provided to BSNL. His service agreement also did not contain any provision for service tax. Subsequently the department demanded service tax and he paid it; but when he sought reimbursement from the client, the client refused, citing lack of any such clause in the agreement. The Allahabad High Court held that the tax is upon the person to whom service is provided, and the service provider is only a collecting agency. It directed BSNL to reimburse the service tax to the service provider. The judgment can be downloaded from: elegalix.allahabadhighcourt.in/elegalix/WebShowJudgment.do

Tax Reforms deliberations

Commission

begins

The central government had in October 2013 announced that it had set up a Tax Administration Reforms Commission: http://finmin.nic.in/press_room/2013/TARC21102013.pdf. The Commission will hold its first public consultation in Mumbai on 22 January 2014 and will thereafter move to Bangalore for consultations there. See http://finmin.nic.in/the_ministry/dept_revenue/stakeholdmeeting_tarc.as p.

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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.