Amount retained under Sales Tax Incentive Scheme would be part of Assessable Value
The Central Board of Excise and Customs has issued an instruction F. No. 6/8/2014- CX.1 dated September 17, 2014 in terms of the judgment of the Apex Court in case of Super Synotex India Ltd. [2014-TIOL-19-SCCX] on the issue of abatement of Sales Tax under an abatement scheme where the Assesse has been allowed to retain 75% of the Sales Tax collected from the buyer and was required to deposit only the remaining 25% with the State Government.
The Apex Court has held that the Assessable Value of the excisable goods would include the Sales Tax amount retained by the Assessee under Sales Tax Incentive Scheme.
Our Comments: It is going to be tough task to calculate excise duty and sales tax in the instant case as Sales tax is calculated normally on the value plus excise duty.
Now, the assessee need to add up sales tax to the value to calculate the excise duty, which will go up and when excise duty goes up, Sales Tax goes up, part of which should again be added to the value, then the value goes up, excise duty goes up and sales tax goes up…… – and so, it will go perennially.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)
A policy can't be held as 'Keyman Insurance Policy' unless it is a pure life insurance policy on life of employee
IT : Where assessee purchased Insurance Policies, in view of fact that only a fraction of total premium was meant for risk premium and balance was for deployment of purchase of units i.e. investment in units, policies in question could not be regarded as 'Keyman Insurance Policies'
Payments made to foreign agents for mobilising sales outside India are outside the ambit of 'FTS'
IT/ILT: Where assessee made payment of selling commission to its agent located abroad for mobilising its sales in foreign countries, since said services were not in nature of managerial services, payment in question was not taxable in India as 'fee for technical services' under section 9(1)(vii)(b)
Tribunal was justified in deciding all aspects of case when SC directed it to hear matter afresh: HC
IT : Where in course of appellate proceedings, Supreme Court remanded matter back with a direction to Tribunal to hear matter afresh, in such a case, Tribunal did not commit any error in deciding all aspects of matter which were subject matter of appeal
Duty paid by one unit should be allowed as Cenvat credit to the another unit
Commissioner of Central Excise, Pune-II Vs. Mishal Zinc Industries Pvt. Ltd. and Indo Deutsh Metallo Chemique Ltd. [2014-TIOL1 725-CESTAT-MUM]
The Respondents are manufacturer of White Zinc Oxide and having two units (a) Mishal Zinc Industries Pvt. Ltd (the Unit 1) and (b) Indo Deutsch Metallo Chimique Ltd (the Unit 2) [the Respondents]. Till August 1998, the Unit 2 used to do certain processes and cleared the goods to the Unit 1 on payment of Central Excise duty. The Unit 1 took the CENVAT credit of duty paid and carried out further processes and cleared the same on payment of duty.
The Department vide letter dated July 20, 1998 pointed out to the Respondents that two units cannot be treated as separate identities for the purpose of Central Excise Law as well as the Cost Accountant's reports. Therefore, the transactions between two units are to be considered as two wings of the same factory. On the basis of this letter, the Respondents claimed the benefit of Notification No. 67/95 dated March 16, 1995 (the Notification) for clearances between two units and cleared the goods without payment of duty.
The Department issued show cause notice (the SCN) on the premise that Respondents are registered as two separate legal entities with Companies Act, Income Tax Department, Sales Tax and Factories Act and alleged that the Respondents were not eligible to get benefit of the Notification. Hence, Duty was demanded on clearances between two units along with interest and penalty on.
The Adjudicating Authority (the AA) held that the Unit 1 and the Unit 2 were two separate units and were not entitled to avail the benefit of Notification and confirmed the demand of duty along with interest but dropped the penalties. It was further held that, duty paid by one unit on clearance of goods to another unit; it is available as Cenvat Credit to the other unit.
The said order was challenged by the Department before the Commissioner (Appeals) on the premise that the AA has no power to hold that on payment of duty by one unit to the other unit, it is available as Cenvat credit to other unit since it was not alleged in the SCN.
The Commissioner (Appeals) confirmed the order of the AA.
Being aggrieved, the Department preferred an appeal to the Hon'ble CESTAT of Mumbai and argued that the lower authorities had gone beyond the allegation levied in the SCN and therefore the order is required to be set aside.
The Hon'ble CESTAT observed that the Respondents have replied to the SCN and prayed if it is held that they are treated as two separate units and are denied the benefit of Notification, in that case, if duty is paid by one unit, then the same should be allowed as CENVAT Credit to the another unit.
The Hon'ble CESTAT held that there is no infirmity in Order in Original passed by the AA.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)
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