News Flash Indirect Tax

Udyog Software (India) Ltd.

22/12/2014

This document contains a brief summary of the latest updates related to Indirect Taxes

GST: Constitution amendment bill introduced in Lok Sabha

The 122nd Constitution Amendment Bill was introduced in the Lok Sabha on 19 December 2014. This proposes
amendments in the Constitution to enable the introduction of the new Goods and Services Tax (GST). Therein,
GST is defined as any tax on supply of goods or services or both except supply of alcoholic liquor for human
consumption. GST comes in two forms, CGST (levied by the union government) and STGST (levied by the state
government). Inter-state transactions are proposed to be levied by the union government to IGST (inter-state
GST), which is calculated by adding CGST and STGST; the tax is to be shared between the states and the
union. An additional 1% is also proposed on inter-state transactions, which will be entirely passed on to the
originating state. The government press release summarising the provisions of the bill can be perused at
http://finmin.nic.in/press_room/2014/FM_GST_amendbill_LokSabha.pdf.
Customs: Tariff values notified
The CBEC has issued notification 114/2014-Customs (NT) dated 15 December 2014 under section 14 of the
Customs Act 1962 to notify fresh tariff values of specified commodities. Under this notification the values of
the palm oils and oleins have been further decreased; the value of crude soyabean oil has been raised; brass
scrap and poppy seeds remain unchanged; and the value of areca nuts has been reduced. The value of gold
and silver have both been increased: gold in respect of which the benefit of entries 321 and 323 of
notification 12/2012-Customs is availed is now valued for customs purposes at USD 396 per 10 grams (as
compared to the earlier value of USD 388 per 10 grams); and silver in respect of which the benefit of entries
322 and 324 of notification 12/2012-Customs is availed is now valued at USD 561 per kilogram (as compared to
the earlier notified value of USD 540 per kilogram). The notification 114/2014-Customs (NT) can be perused at
http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cs-nt2014/csnt114-2014.htm.
Customs: Customs exchange values revised
The CBEC issued notification 115/2014-Customs dated 15 December 2014, which can be seen at
http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cs-nt2014/csnt115-2014.htm to change the
exchange value of the Japanese Yen for customs purposes with effect from 18 December 2014. The notified
value was Rs 55.20 and Rs 53.90 respectively for imported and export goods respectively.
Again the CBEC issued notification 116/2014-Customs dated 18 December 2014, in which the value of 100
Japanese Yen was changed to Rs 54.05 for imported goods and Rs 52.80 for export goods. Among the other
currencies, it is seen that the US dollar exchanges for Rs 63.85 for imported goods and Rs 62.80 for export
goods; the pound sterling exchanges for Rs 99.90 for imported goods and Rs 97.65 for export goods; and the
Euro exchanges for Rs 79.15 for imported goods and Rs 77.25 for export goods. These rates are effective from
19 December 2014 under notification http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/csnt2014/csnt116-2014.pdf.
Customs: Deemed drawback procedure modified
Deemed drawback of excise duty paid on supplies that qualify as deemed export is available from the DGFT
subject to certain procedures, including excise certification of the receipt of goods. The CBEC had issued
circular number 15/2008-Customs dated 26 September 2008 requiring that the recipient unit must inform the
Superintendent of Central Excise, who will verify the goods and certify their receipt on the invoice or list of
invoices, not later than 21 days from the date of their receipt / intimation of receipt. The CBEC has now
issued a further circular requiring that the receiving unit must obtain the dated signature of the
Superintendent on the invoice / list of invoices. Further in cases of goods received under ARE-3 for
rewarehousing, as per procedure under CBEC circular 19/2007-Customs, where the Superintendent does not
have to physically verify the goods, he must provide an attested photocopy of the ARE-3. The circular
17/2014-Customs dated 18 December 2014 can be perused at http://cbec.gov.in/customs/cs-circulars/cscirc14/circ17-2014cs.htm. (It is in the form of guidelines for the recipient unit, and does not clarify who is
accountable in case the Superintendent is unable to comply with the request for certification / attested
copies.)
Customs: Rewarehousing procedure modified for deemed exports
The CBEC has issued circular number 16/2014-Customs dated 18 December 2014, to stipulate that the
jurisdictional central excise Superintendent must take two photocopies of the ARE-3 under which goods are
received for rewarehousing, and give one copy to the unit for use in applying for deemed export benefits.
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CBEC circular 19/2007-Customs stands modified to this extent. The latest circular can be perused at
http://cbec.gov.in/customs/cs-circulars/cs-circ14/circ16-2014cs.htm
Customs: Bank guarantee waiver norms eased
A circular issued in 2004 had laid down norms for waiver of bank guarantee for availing various schemes under
the Foreign Trade Policy. One of these was that the entity / person should not have been penalised under the
Customs Act, Central Excise Act, Foreign Exchange Management Act, or Foreign Trade (Development &
Regulation) Act. In a step to ease this prohibition, the CBEC has revised the norms, and permitted waiver of
this clause, provided the Commissioner is satisfied that there is no risk to revenue in not taking the bank
guarantee. This relaxation is communicated through CBEC Circular 15/2014-Customs dated 18 December 2014,
which can be seen at http://cbec.gov.in/customs/cs-circulars/cs-circ14/circ15-2014cs.htm.
Central excise & customs: CESTAT appeal forms revised to include new Commissionerate codes
With the formation of new Commissionerates following cadre restructuring in the department, the CESTAT
appeal forms with their prefigured Commissionerate codes in the alphanumeric system needed revision. New
forms are being issued to include codes for these new formations. In the new forms, the number of boxes for
the order number portion of the alpha-numeric code is being increased from three to four, to accommodate
cases where the serial number of the Commissioners order crosses 999 and goes into four digits.
Central excise: Dross & skimmings not excisable: HC
The Bombay High Court has struck down a controversial order of the CESTAT Larger Bench in the case of
Hindalco Limited and held that are not excisable goods. The order was passed in Writ Petition number 9262 of
2014 filed by Hindalco Limited.
Central excise: Agent for selling to a single customer is not input service: CESTAT
In the case of Nutrine Confectionary Limited, who had appointed an agent for sale of goods to the defence
canteen stores, the CESTAT held that the services of such an agent for a single customer are not sales
promotion and cannot be considered as Cenvatable as input service. This ruling of CESTAT, Bangalore
(single member) in appeal number ST/106/2008 can be accessed through case number search of the CESTAT
website at http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Qry.asp by entering the case
information given above.
Central excise: Goods for J&K relief exempted
The central government has issued notification number 25/2014-CE dated 11 December 2014 to exempt excise
duty on goods donated or purchased out of cash donations for the purpose of relief or rehabilitation of people
affected by floods in Jammu and Kashmir. Conditions to ensure the end use are specified. The notification will
be valid till 31 March 2015. See http://cbec.gov.in/excise/cx-act/notfns-2014/cx-tarr2014/ce25-2014.htm.
Central excise: CESTAT (LB) interprets deemed credit under 14/2002-CE
Notification 14/2002-CE allowed deemed credit on textile yarn and fabrics used as inputs, deeming them to be
duty-paid without requiring production of documents. The department denied deemed credit on certain inputs
that were wholly exempted from excise duty, on the ground no excise duty had actually been paid on these.
The Larger Bench of the CESTAT, sitting at Ahmedabad, answering a reference on this issue, emphasised the
need for harmonious interpretation of all the provisions of a notification, and the need to avoid interpretation
that will lead to chaos and absurdity. It noted that the notification lacked the clause that was found in earlier
similar notifications, that credit on inputs that were clearly recognisable as non-duty-paid was not allowed.
It pointed out that without such a clause, the intention was clearly to provide credit on all textile yarns and
fabrics used as inputs. Accordingly the Supreme Court ruling in the case of Dhiren Chemicals was
distinguished, and the credit was pronounced to be available. This order can be perused by selecting case
number search at http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Qry.asp and entering
Ahmedabad for bench, excise for case type, 618 for case number, and 2009 for year in the form that
appears

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WTO: Trade policy review of India in June 2015

WTO officials visited New Delhi last month in connection with the upcoming Trade Policy Review on India in
June 2015. This was confirmed by the government in its press release:
http://pib.nic.in/newsite/PrintRelease.aspx?relid=113274.

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Content provided by:

Radha Arun
Consultants to Udyog Software (India) Ltd.
radha.arjuni@gmail.com
Please connect with us at:
Web: www.udyogsoftware.com
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+91 (0) 40 6603 6561
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