30 June 2010

IndianCAs: New TDS rules at a glance [1 Attachment]

 
[Attachment(s) from Aditya Maheshwari included below]

Dear Sir,
Please find enclosed herewith the New TDS rules w. e. f. 01st July, 2010.
 
Kindly take note of the same.
 
Regards
CA Aditya Maheshwari

__._,_.___

Attachment(s) from Aditya Maheshwari

1 of 1 File(s)

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26 June 2010

Clean Energy Cess Rules, 2010

NOTIFICATION NO

06/2010-Clean Energy Cess, Dated : June 22, 2010

In exercise of the powers conferred by Section 84 of the Finance Act, 2010 (14 of 2010), the Central Government hereby makes the following rules, namely:-

Chapter 1

PRELIMINARY

1. Short title, extent and commencement .-

(1) These rules may be called the Clean Energy Cess Rules, 2010.2. They extend to the whole of India. . They shall come into force on the 1st day of July, 2010.

2. Definitions. - In these rules, unless the context otherwise requires, –

(a) "Act" means the Finance Act, 2010 (14 of 2010);

(b) "Board" means the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);

(c) "cess" means the Clean Energy Cess levied under section 83 of the Act;

(d) "Central Excise Officer" shall have the meaning assigned to it in the Central Excise Act, 1944(1 of 1944);

(e) "mine" shall have the meaning assigned to it under Mines Act,1952 (32 of 1952);

(f) "producer" means any person engaged in the production of specified goods and includes a owner or agent as defined under section 2 of the Mines Act, 1952 (32 of 1952);

(g) "removal" means despatch of specified goods from a mine and shall include despatch of such goods for captive consumption within that mine for any purpose other than for raising of such goods;

(h) "specified goods " means raw coal, raw lignite and raw peat.

Chapter 2

COLLECTION AND ASSESSMENT OF CESS

3. Registration.- Every producer who is liable to pay cess shall get registered immediately with the jurisdictional Central Excise Officer but not later than a period of thirty days from the date of commencement of these rules by making an application to the jurisdictional Central Excise Officer :

Provided that where a producer commences production of the specified goods at any time after the commencement of these rules, such producer shall obtain registration within thirty days from the commencement of such production ;

Provided further that where a producer has a centralized billing or accounting system in respect of such specified goods produced at different mines, he may, instead, opt for registering only the premises or office from where such centralized billing or accounting is done.

4. Cess payable on removal .- Every producer shall pay the cess leviable on the removal of the specified goods in the manner provided in rule 6.

5. Assessment of cess .- The producer shall himself assess the cess payable on the specified goods.

6. Manner of payment .- (1) Cess on the specified goods removed from the mine during a month shall be paid by the 5 th of the second month, following the month in which the removals were made:

Illustration .- Cess payable on specified goods removed from the factory for the month of July, 2010 shall be paid by the 5 th of September, 2010.

(2) A producer who has opted for centralized registration in respect of its mines located at different places under rule 3, shall discharge the cess liability in respect of the aggregate removal of specified goods from all such mines effected during a month by the stipulated period specified in sub-rule (1)

(3) Where a producer has paid to the credit of the Central Government any amount in excess of the amount required to be paid towards cess liability for a month, such producer may adjust such excess amount paid by him against the cess liability for the next month:

Provided that the adjustment of excess amount paid under sub-rule (2) shall be subject to the condition that such excess amount paid is on account of reasons not involving interpretation of law, taxability, or applicability of any exemption notification;

Provided further that the producer may, instead, file a refund claim for any excess amount of cess paid if such producer fails to adjust the excess amount against the cess liability for the next month.

(4) Where any producer fails to pay the cess by the due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government under section 11AB of the Central Excise, 1944 (1 of 1944) on the outstanding amount for the period starting from the first day after the due date till the date of the actual payment of the outstanding amount.

(5) Where any producer defaults in payment beyond thirty days from the due date as specified in rule 6, such specified goods shall be deemed to have been cleared without payment of cess and the consequences and penalties under these rules and provisions of the Central Excise Act, 1944 (1 of 1944) as have been made applicable, shall follow in addition to payment of interest under sub-rule (4).

(6) The provisions of section 11 of the Central Excise Act , 1944 (1 of 1944) shall be applicable for recovery of the cess as assessed under rule 5 and the interest under sub-rule (4) in the same manner as they are applicable for recovery of any sums payable to the Central Government.

Explanation. - For the purposes of this rule, -

(i) Cess liability shall be deemed to be discharged only if the amount payable is credited to the account of the Central Government by the specified date;

(ii) Where the registered person deposits cess by cheque, the date of presentation of the cheque in the bank designated by the Board for this purpose shall be deemed to be the date on which the cess has been paid subject to realization of the cheque.

7. Maintenance of records.- (1) Every producer shall maintain accounts showing the quantity of specified goods actually removed during a month, particulars to whom these were removed, the amount of cess payable during a month and the total amount of cess paid:

Provided that where a producer has opted for centralized registration under rule 3, such producer shall maintain mine wise details mentioned in the sub-rule (1).

(2) The amount of cess payable on any removals shall be rounded off to the nearest rupee and the actual weight of a consignment shall be rounded off to the nearest tonne.

8. Access to registered premises or mine .- (1) An officer empowered by the Commissioner in this behalf shall have access to any mine or premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be considered necessary to safeguard the interest of revenue.

(2) Every producer shall furnish to the officer empowered under sub-rule (1) ,-

(i) all records prepared and maintained for accounting of transactions in regard to production, storage or removal of specified goods; and

(ii) financial records and statements including cost audit reports etc.

9. Goods to be removed under proper documents .- (1) No specified goods leviable to cess shall be removed from a mine except under cover of a document indicating the quantity of specified goods and the name and address of the consignee.

10. Cess shall be shown separately in the invoice or bill .- Cess shall be shown separately by the producer in the bill or invoice raised in respect of specified goods.

11. Filing of return .- Every producer shall submit to the Jurisdictional Central Excise Officer, a return in Form - I showing the quantities of specified goods removed during the month in respect of which the payment has been made, the amount paid under rule 6 and other particulars specified in that form enclosing the evidence of payment of cess not later than 10 th day of the month in which the payment has been made:

Provided that in the case of a producer who has obtained centralized registration under rule 3 , the return in Form- I shall contain mine-wise information.

12. General penalty.- Whoever contravenes any of the provisions of these rules shall be liable to pay a penalty which may extend to ten thousand rupees and confiscation of the goods in question in respect of which the contravention is made, if no penalty is provided elsewhere.

F. No. 354/72/2010-TRU

(K.S.V.V. Prasad)
Under Secretary to the Government of India

 
 


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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
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India
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24 June 2010

View TDS Credit with Free of cost

New facility added in "My Account" for registered E-filers to View the Tax Credit Statement (Form 26AS) to verify if the tax payments made by you or TDS deducted from salary or interest etc are correctly reported to the Department.
https://incometaxindiaefiling.gov.in/portal/index.jsp
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Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
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23 June 2010

Notifications issued bY CBEC on 22/06/2010

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

 

Government of India

Ministry of Finance

(Department of Revenue)

 

New Delhi, the 22nd June, 2010.

 

Notification No. 25 / 2010 - Central Excise (N.T.)

 

 

G.S.R.      (E). – In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely:-

 

1.         (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2010.

(2) They shall come into force on the date of their publication in the Official Gazette.

 

2.         In the CENVAT Credit Rules, 2004, in rule 2, in clause (a), after sub-clause (B), the following sub-clause shall be inserted, namely:-

 

  "(C)     dumpers or tippers, falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), registered in the name of provider of output service for providing taxable services as specified in sub-clauses (zzza) and (zzzy) of clause (105) of section 65 of the said Finance Act;" .

 

[F.No. 354/ 33/ 2009 – TRU/Pt.I]

 

 (K.S.V.V. Prasad) 

Under Secretary to the Government of India

 

 

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated the 10th September, 2004 vide Notification No. 23/2004-Central Excise (N.T.) dated the 10th September 2004, published vide G.S.R. 600(E), dated the 10th September, 2004 and last amended by Notification No. 21/2010-Central Excise (N.T.) dated 18th May 2010, published vide G.S.R. 416(E), dated the 18th May 2010.
 

Service Tax (Removal of Difficulty) Order, 2010

 

M.F.(D.R.) Order No. 1/2010, dated 22-6-2010

 

In exercise of the powers conferred by sub-section (1) of section 95 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, hereby makes the following Order, namely :-

 

1. (1) This Order may be called as the Service Tax (Removal of Difficulty) Order, 2010.

    (2) This Order shall come into force on the 1st day of July, 2010.

 

2. For the purposes of sub-clauses (zzq) and (zzzh) of clause (105) of section 65 of the Finance Act, the expression 'authority competent' includes, besides any Government authority,-

(i).architect registered with the Council of Architecture constituted under the Architects Act, 1972( 20 of 1972); or

(ii).chartered engineer registered with the Institution of Engineers (India); or

(iii).licensed surveyor of the respective local body of the city or town or village or development or planning authority;

 

who is authorised under any law for the time being in force, to issue a completion certificate in respect of residential or commercial or industrial complex,  as a precondition for its occupation.

[F. No. 334 / 3 /2010 -TRU]

 

New Service Tax Amendment notifications

Ø      Section 65(105)(zzzp) of the Finance Act, 1994 - Transport of goods by rail service - Exemption to transport of goods by rail - Amendment in Notification No. 7/2010-ST, dated 27-2-2010 - Notification No. 33/2010-Service Tax, dated 22-6-2010

Ø      Section 65(105)(zzzp) of the Finance Act, 1994 - Transport of goods by rail service - Exemption to specified goods - Amendment in Notification No. 8/2010-ST, dated 27-2-2010 - Notification No. 34/2010-Service Tax, dated 22-6-2010

Ø      Section 65(105)(zzzp) of the Finance Act, 1994 - Transport of goods by rail service - Exemption to specified services - Abatement for transport of goods by rail - Amendment in Notification No. 9/2010-ST, dated 27-2-2010 - Notification No. 35/2010-Service Tax, dated 22-6-


New Service Tax exemption notifications

Ø      Section 65(105)(zzzo) of the Finance Act, 1994 - Transport of passengers embarking in India for international journey by air services - Exemption to air transport of specified passengers - Notification No. 25/2010-Service Tax, dated 22-6-2010

Ø      Section 65(105)(zzzo) of the Finance Act, 1994 - Transport of passengers embarking in India for international journey by air services - Exemption to specified services - Notification No. 26/2010-Service Tax, dated 22-6-2010

Ø      Section 65(105)(zzzo) of the Finance Act, 1994 - Transport of passengers embarking in India for international journey by air services - Exemption to passengers embarking on a journey originating or terminating in specified airports - Notification No. 27/2010-Service Tax, dated 22-6-2010

Ø      Section 65(105)(zzzh) of the Finance Act, 1994 - Construction of complex service - Exemption to construction of complex service provided to specified mission/yojana - Notification No. 28/2010-Service Tax, dated 22-6-2010

Ø      Abatement provisions - Amendment in Notification No. 1/2006-ST, dated 1-3-2006 - Notification No. 29/2010-Service Tax, dated 22-6-2010

Ø      Section 65(105)(zzzn) of the Finance Act, 1994 - Sponsorship services - Exemption to tournaments or championships organized by specified sports bodies - Notification No. 30/2010-Service Tax, dated 22-6-2010

Ø      Port Services/Airport Services - Exemption to specified services provided within a port or an airport - Notification No. 31/2010-Service Tax, dated 22-6-2010

Ø      Business auxiliary services/Business support services - Exemption to licencee/franchisee or any other person authorized to distribute power under the Electricity Act, 2003 - Notification No. 32/2010-Service Tax, dated 22-6-2010

 

 

Date notified for enforcement of Finance Act, 2010

 

Notification No. 24/2010-Service Tax, dated 22-6-2010

 

 

In exercise of the powers conferred by clauses (A) and (B) of section 76 of the Finance Act, 2010 (14 of 2010), the Central Government hereby appoints the 1st day of July, 2010, as the date on which the provisions of the said Act shall come into force.

 

[F. No. B-1/24 /2010 -TRU]

 


--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh

India
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21 June 2010

VAT on petroleum Products- Presss note

Monday, June 21, 2010
  Ministry of Petroleum & Natural Gas  
 
SHRI DEORA CALLS UPON STATE GOVERNMENTS TO BRING DOWN HIGH RATES OF VAT ON PETROL DIESEL ; REPLACE AD-VALOREM LEVIES BY SPECIFIC ONES
HIGH VAT RATES BY SOME STATES ON PDS KEROSENE NEEDS REVIEW IN VIEW OF LIGHTING AND COOKING USAGE BY THE COMMON MAN

 
  17:31 IST  
 
 

 

 

 

            Shri Murli Deora Deora, Minister of Petroleum and natural gas has called upon the State Governments to reduce and rationalize Sales Tax / VAT on Petrol and Diesel. In  a letter to   the CMs of various State Governments he said that  a rise in the international oil prices exerts an upward pressure on domestic prices of petroleum products.  "Ad valorem rates of VAT imposed by the State Governments further aggravates the impact of international oil prices on the consumer," Shri Deora added.   

 

            The Minister underscored the commitment of the Central Government  to ensuring supply of essential fuels to the common man at affordable rates. "To achieve this objective, the Central Government has provided financial assistance of Rs.26,000 crore to the public sector OMCs, while the upstream oil PSUs have contributed Rs.14,430 crore towards under-recoveries of Oil Marketing Companies (OMCs) during 2009-10.," Shri Deora said.

 

            Enclosing a statement of VAT rates in different States, the Minister  pointed out that the VAT rates are very high in most of the States, and need to be reduced. In some of the States, the VAT on Petrol and Diesel is as high as 33% and 24.7% respectively.  Further, he said, in the current taxation structure, VAT is levied by the State Governments on an ad valorem basis, i.e., as a percentage of the price of the product. This means that when oil prices are high, the taxation on the products is higher, rendering the product even more expensive. At a time of rising prices, ad valorem taxes have a cascading impact on the retail price of petroleum products. "To address this issue, the ad valorem component of the VAT can be converted into a specific component, at the current levels," Shri Deora suggested.

 

            The Minister  informed that the Central Government has already done away with the ad valorem component of Excise Duty on Petrol and Diesel, and the Excise Duty has been made specific. It is desirable that the State Governments also undertake similar tax rationalization on Petrol and Diesel. "Also, some of the States are levying high VAT rates on a product like PDS Kerosene, which needs to be looked into in view of its usage in lighting and cooking purposes by the common man," he emphasised

 

            Urging an early action on the part of State Governments, Shri Deora asked the CMs to have this subject reviewed at your level at an early date so that the much-needed tax reform can be implemented. Levying specific VAT rates instead of at ad valorem rates will help cushion the effect of rise in international oil prices. "While I appreciate your need for revenue mobilization, the current high levels of local taxes on petroleum products are clearly unsustainable, if we are to protect the interests of the consumers, particularly the vulnerable sections of society," the Minister stressed.

----

 

 

VAT rates in major States

RCJ/Deora-to-CMs-VAT

           



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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
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20 June 2010

Analysis on Revised DTC by BMR

ANALYSIS ON REVISED DIRECT TAXES CODE BY BMR ADVISORS - SEE ATTACHMENT

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Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
           +91 - 0 9440278412
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           vmvsr@yahoo.co.uk
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16 June 2010

MCA Review on CLS Scheme

Tuesday, June 15, 2010
Ministry of Corporate Affairs

SECRETARY MCA REVIEWS PROGRESS OF COMPANY LAW SETTLEMENT SCHEME AND EASY EXIT SCHEME

EXHORTS ROCS AND RDS TO ENSURE ZERO HARASSMENT TO
STAKEHOLDERS

16:36 IST
To review the two schemes namely, Company Law Settlement Scheme 2010 and Easy Exit Scheme 2010, introduced by the Ministry of Corporate Affairs (MCA) on 30.5.2010, the Secretary, MCA, Shri R. Bandyopadhyay held a videoconference with all Registrars of Companies (RoCs) in 20 offices all over India and Regional Directors (RDs), yesterday i.e., on 14th June, 2010.

The Secretary enquired about the initial response of corporates and professionals to the abovementioned schemes and also the efforts put in by ROCs to popularize the schemes in order to make them successful. ROCs reported that they are taking out print ads in English and vernacular media and are also addressing seminars and conferences in association with professional institutes. Simultaneously, they are also issuing Show Cause Notices to defaulters so that these defaulting companies can be identified/sensitized.

Shri Bandyopadhyay emphasized that ROCs should keep in mind, at all times, the objective of introducing these schemes, that "Every Company should be accounted for". The Secretary also desired that in this age of e-governance, public interaction of MCA officials should be limited and efforts must be made by ROCs/RDs to ensure zero harassment to stakeholders.

BY

15 June 2010

12 June 2010

APPEAL - CA Benevolent Fund

THE CHARTERED ACCOUNTANTS' BENEVOLENT FUND

C/O THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

ICAI BHAWAN, I.P. MARG, P.O. BOX NO 7100, NEW DELHI – 110 002.

APPEAL

 

The Chartered Accountants' Benevolent Fund (CABF) was established in December, 1962 with object of providing financial assistance for maintenance, and other similar purposes to needy persons being members of our Institute, their wives, widows, children and dependent relatives. The income from the Fund is utilized in giving financial assistance to members and their families in distress. The resources of the Fund need to be augmented.

A small contribution with a big heart from each member would facilitate grant of financial assistance to the needy and suffering members/dependents of members of the profession. It is, therefore, necessary that all members of the Institute enroll themselves as Life Members of CABF so as to enhance the corpus of the Fund, for rendering financial help to more beneficiaries and mitigate their hardship.

Your subscription to the Life Membership of the Fund and voluntary contribution to the Fund will certainly strengthen the noble cause to provide much needed assistance to the beneficiaries of the Fund. Your contribution is also eligible for exemption under section 80G of the I.T.Act, 1961.

Please remit voluntary contribution in the form of local cheque /DD in favour of 'CABF' and send it to Head Office at Delhi or in favour of 'Secretary, ICAI' payable at decentralized office at Mumbai. The contributors donating Rs.25,000/- shall be recognized by Publication of Photograph in Newsletter and by publishing the names of those contributing Rs.5,000/- or more in the WIRC Newsletter.

 

Let's be a part of this Noble Mission of extending helping hand to our brethren in need.

 

Dear Sir,

                I hereby apply for admission as a Subscriber Member of The Chartered Accountants' Benevolent Fund. I am remitting herewith Rs. 2,500/- towards my subscription as Life Member / I am already a member of CABF  and would like to voluntarily contribute Rs. _________ towards the corpus of the CABF *. I have read out the Rules & Regulations of the fund and I agree to abide by them, and also by the Rules that may be made thereafter. I give below the necessary particulars.

 

1.                     Full Name :

2.                     Membership No. :

3.                     Date of Enrolment :

4.                     Whether Fellow or Associate :

5.                     Address for communication :

6.                     Name of dependents and relationship :

S. NO.

NAME

AGE

RELATIONSHIP

1.

 

 

 

2.

 

 

 

3.

 

 

 

4.

 

 

 

 

Life Membership Fee Rs. 2,500/-/ Voluntarily Contribution Rs. __________                            SIGNATURE OF MEMBER

DECLARATION

I hereby declare that the amount of Rs.2,500/- as life membership fee contributed by me / I am already a member of CABF and would like to voluntarily contribute Rs. ________ and same * shall form part of the corpus of the CABF. The amount is being paid through Local Cheque / Demand Draft No. ………………………….

Dated ……………………………….of …………………………..

 

Place ……………………………                                                                                                             Yours faithfully,

 

Date……………………………..                                                                                                             Signature ……………………….

 

CABF Life Membership No…………….(To be filled by officials)                                                                 Name …………………………...

 

Signature of official             S.O./E.O./A.S.       Head of Region                                                      M. No……………………………..

                                                                                                                                                                     PAN……………………………

* Strike out whichever is not applicable.

 

 

Cenvat credit on building material: - Tax Expert or Jyotishi

 

Prepared By: -

CA Pradeep Jain ,

Sukhvinder Kaur, LLB [FYIC]

CA Ridhi Anchalia

 

 

Introduction: -

This is most interesting remark we got on our article "Amendment on Cenvat on building material: Far from solutions" after the pronouncement of Larger Bench decision in case of Vandana Global Limited [2010-TIOL-624-CESTAT-DEL-LB]. In the aforesaid piece prepared by me along with Sukhvinder Kaur and Neetu Sukhwani, we have opined that after the amendment in the definition of "inputs", the earlier cases will be decided in favour of manufacturers as the amendment is prospective and not retrospective. But our conclusion was wrong and Larger bench of Delhi Tribunal has given the decision in favour of Revenue. Then comes this interesting Comment. Comments from Readers of our website are always source of our inspiration. This remark has also prompted us to write this second piece on this subject in light of the latest larger bench decision.

 

Dispute involved: -

Always litigation arises when there are two ways of seeing the same thing. To this dispute also, the assessee and the revenue were walking on the two shores of the sea that never meet. To have a clear idea on the issue, we are discussing the issue in depth.

Before the recent amendment in Explanation 2 of the Rule 2 (k) the assessee was claiming credit on Cement and steel items as inputs used in the manufacture of capital goods. To this the argument by the assessee was that the said items were being used indirectly in relation to the manufacture of finished goods and whatever is used in the manufacture of final product will be available for Cenvat credit.

But the Revenue had its own contentions. According to them cement and steel are construction material and not inputs as they were not parts or components or accessories of capital goods.

So the revenue and the assessee both had their own contentions that is both were thinking of the cement and steel but an assessee will always look on that side of the coin that will allow him to avail Cenvat credit and according to the inbuilt nature of the department it will always see to that side of the coin disallowing the Cenvat credit to the assessee. The amendments in between always act as an antidote to the flames.

 

Legal Provisions: -

The Explanation 2 to Rule 2 (k) before the amendment read as under: -

Explanation 2 - Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer;

Thus the word used in the definition was "goods" used in the manufacture of capital goods. The word GOODS in the definition made the definition inclusive that is the word GOODS had a wide connotation and could include anything including cement and steel items used for constructing the structure or for foundation on which capital goods would be affixed or mounted. This interpretation was given by assessee to take the advantage of the language used in the law. Accordingly, the assessee were claiming cenvat credit on the cement, steel sheets, angles, channels etc as they were used for making capital goods and were indirectly related to the manufacture of the final products. The revenue rejected to accept the inclusive nature of the definition and so it came up with show cause notices issued to the assessee denying the benefit of cenvat credit on the said goods.

There were number of judicial pronouncements on this issue. Some were in favour of manufacturers while others favoured the Revenue. We have already written on the same in earlier article and hence the matter was referred to larger bench.

 

Amendment in Explanation 2: -

 

While the matter was referred to larger bench, the department had a different prospect in mind. These decisions were acting as a sword on the intentions of the department. So the department came forward with a new amendment in the Explanation 2 of the Rule 2 (k) of the Cenvat Credit Rules, 2004 to specifically exclude cement, angles, channels, CTD bar or TMT bars and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. This was done by Budget 2009 introduced July 7, 2009. The said Explanation is reproduced hereunder for ready reference: -

 

Explanation 2 - Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated Bar (TMT) and othet items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods.;

 

So now what? A new amendment always opens the doors for a new dispute. Same happened with this amendment also. The department now forgot to explain whether the Explanation 2 would be applicable retrospectively or prospectively. So as always happens with the incompleteness in the formation of law a new issue for the applicability of the effect of amendment took birth. Every set of incompleteness in law will be judged by any person according to his benefits. Same happened here also the assessee was of the view that the amended Explanation 2 will have prospective effect and Revenue contended that the said Explanation 2 has made clear things which were already there. Therefore credit would not be admissible even before 2009.The assessee now contended that this amendment only proves that before this amendment credit was available on the angles, channels, joints, cement and steel sheets used the errection, construction or mounting of the capital goods. So a small mistake in the formation of the legal provision leads with a beneficial interpretation for the assessee. Even we were of the same opinion and wrote on the same lines in our aforesaid article. But the outcome of the verdict was known to anybody.

 

Latest Judgment of Larger Bench: -

 

The decision of the Larger Bench of the Tribunal in the case of Vandana Global Ltd & Ors v/s CCE, Raipur [2010-TIOL-624-CESTAT-DEL-LB] answered the referred question in favour of Revenue. The Larger Bench gave the findings that intention behind the amendment of Explanation 2 to Rule 2 (k) in 2009 was merely clarificatory in nature. It clarified as to what will be covered under the expression "input" used in the Cenvat Credit Rules, 2004. There was no scope that the said amendment was made to change the scope of the Rules or to introduce any new provision. Reliance was placed on the decision given in the case of J. K. Synthetics Ltd v/s CCE, Jaipur [1996 (88) ELT 785].

 

Further it was held that the clarificatory amendment made to Explanation2 to Rule 2 (k) in 2009 has retrospective application. It was held that the Explanation Memorandum to the Parliament alongwith the amending notification and the contemporaneous exposition of amendment given to the Department and public clearly showed that the said goods were never intended to be included by the rule making authority under the expression `input'  eligible for cenvat credit.

 

The Larger Bench further held that the phrases `capital assets' and `capital goods' cannot be held to be synonymous. The phrase `capital assets' had wider meaning and would include capital goods and other assets such as immovable property in the form of building etc. Thus, the foundations and supporting structures embedded to earth may be categorized as capital assets but would not qualify to be capital goods in terms of the definition contained in the Cenvat Credit Rules. It was held that foundations and supporting structures were neither machinery items, nor components, spares nor accessories of machineries, nor have they been listed for special inclusion in the definition. They were held not to be part of accessory of the machinery. They were also held to not intermediate goods arising in the process of manufacture of final product.

So in the above decision it was held that cement and steel items could not be considered as inputs and therefore credit would not be available on the same.

Also, this decision made the Division Bench in the case of Bhushan Steel and Strips Ltd v/s Commissioner [2007-TIOL-2306-CESTAT-MUM] to be not correct view in law.

So the Larger Bench of the Tribunal has delivered the judgment on interpretation of the legal provisions. But now what about the assessee? The said judgment has shattered all the expectations of the assessee of availment of credit at least before the amendment in the definition. The above decision made it clear that it is the assessee who is at the disadvantageous place and has to bear the loss of sitting in this place.

 

Before Departing:-

But this controversy doesn't end here. There are Higher Forums wherein this judgment will be challenged and until the Apex Court gives any verdict in this regard, the issue is still in swing. The assessee should not loose hope because there are still miles to go before they sleep. So, let us wait for another round of litigation and matter will not end before Apex court. If the matter is settled by the Apex court in favour of manufacturers then we can see one retrospective amendment by Government. So, the future is uncertain for poor assessee.

But we once again should not form any opinion as our reader has clearly and truly said that we are tax experts and not Jyotishi. So, we should refrain from commenting on future course of action. But then what should we write? Only history and no comments. This is a vital question and we think only our readers can guide us in this regard.

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