No duty is leviable on quantity of Burning loss as the same does not exist physically nor capable of being cleared from the warehouse, rather the same is consumed in the course of manufacturing of final products Maharashtra Seamless Ltd. Vs. Commissioner of Central Excise, Raigad [2015-TIOL-16-CESTAT-MUM] Maharashtra Seamless Ltd. (the Appellant) imported round Billets […]
No Custom duty leviable on quantity of Burning loss
No duty is leviable on quantity of Burning loss as the same does not exist physically nor capable of being cleared from the warehouse, rather the same is consumed in the course of manufacturing of final products
Maharashtra Seamless Ltd. Vs. Commissioner of Central Excise, Raigad [2015-TIOL-16-CESTAT-MUM]
Maharashtra Seamless Ltd. (the Appellant) imported round Billets without payment of Customs duty for the manufacture of seamless tubes and pipes in the private bonded warehouse under the Customs license issued under Section 65 of the Customs Act, 1962 (the Customs Act) and in terms of Notification No. 20/99–Customs dated February 28, 1999. During course of manufacture, there was generation of steel waste and scrap, which was recoverable and also 2-3% burning loss.
Recoverable waste and scrap was sold on payment of Customs duty in terms of Section 65(2) of the Customs Act while no Customs duty was paid in respect of quantity of burning loss. Hence, the Department issued Show Cause Notice and sought to recover Customs duty on the quantum of burning loss contending that in terms of Section 65(2)(b) of the Customs Act, the quantity of waste and scrap also included the short quantity said to be burning loss.
The Adjudicating Authority confirmed the duty demand along with interest and imposed penalty. Being aggrieved, the Appellant preferred an appeal before the Commissioner (Appeals), who upheld the orders of Adjudicating Authority. Aggrieved by the orders of the Commissioner (Appeals), the Appellant preferred an appeal before the Hon'ble CESTAT, Mumbai.
The Hon'ble CESTAT, Mumbai relying upon the decision in case of Paras Fab International Vs. Commissioner of C. Ex. Kandla [2010-TIOL-963-CESTAT-DEL-LB] held as under:
- Section 65(2)(b) of Customs Act applies only to such waste and scrap which resulted from manufacturing operations and are cleared from the warehouse for home consumption. In the present case, the burning loss does not exist physically, therefore it is neither capable of being cleared from the warehouse nor factually cleared from the warehouse. Hence does not fall under Section 65(2)(b) of Customs Act;
- Explicit provision for levy of Customs duty on the waste and scrap, which is physically available and cleared from the warehouse, is provided but no such explicit provision exists in case of the burning loss. Meaning thereby, quantity of imported material consumed in the final products includes burning loss also as it has same nature as the raw material which gets consumed in the manufacturing of final products.
Therefore, the Hon'ble Tribunal allowed the appeal in favour of the Appellant and held that the no Customs duty is leviable on quantity of burning loss as it is neither cleared out of the custom bonded warehouse for home consumption nor otherwise disposed of, but factually it got consumed in the manufacturing.
When there is no provision for filing a Second Application, the question of limitation does not arise. Further, the time limit under Section 27(1) of the Customs Act is for the First Application and the appeal is a continuation of the original proceedings and therefore there can be no limitation in respect of the proceedings pursuing the refund claim.
Limitation period if application filed after a long time for persuasion of sanctioned refund claim
No question of limitation arise when application filed after a long time for persuasion of sanctioned refund claim
Commissioner of Customs Vs. SPIC Ltd. [2014 (12) TMI 1121 – Madras High Court]
In the instant case, SPIC Ltd. (the Assessee) filed two refund applications dated October 26, 1990 and April 2, 1991 (First Application) seeking refund of excess duty paid which were dismissed by the Original Authority. Being aggrieved, the Assessee preferred an appeals before the Commissioner (Appeals), which were allowed in favour of the Assessee, sanctioning the refunds vide Orders dated June 14, 1993 and October 30, 1996.
Thereafter, at the behest of the Department, the Assessee again filed two separate refund applications both dated August 14, 2000 (Second Application) which were rejected by the Original Authority stating that Second Application have been filed belatedly. On appeals being filed before the Commissioner (Appeals), the Commissioner (Appeals) confirmed the rejection of the refund claim filed.
Thereafter, the Hon'ble Tribunal decided the matter in favour of the Assessee, against which the Revenue preferred an appeal before the Hon'ble High Court of Madras on the ground that the Order of the Tribunal allowing the refund claim of the Assessee after the expiry of seven years is contrary to the time limit fixed by Section 27(1) of the Customs Act, 1962 (the Customs Act).
The Hon'ble High Court of Madras relying upon the decision of the Apex Court in the case of Mafatlal Industries Ltd. Vs. Union of India [1997 (89) E.L.T. 247 (S.C.)] held that when there is no provision for filing a Second Application, the question of limitation does not arise. Further, the time limit under Section 27(1) of the Customs Act is for the First Application and the appeal is a continuation of the original proceedings and therefore there can be no limitation in respect of the proceedings pursuing the refund claim. Accordingly, the Order of the Hon'ble Tribunal was upheld and the matter was decided in favour of the Assessee.
Amendment in Companies (Cost Records and Audit) Rules, 2014 The Ministry of Corporate Affairs vide Notification F. No. 1/40/2013-CL-V dated December 31, 2014 has made amendment in the Companies (Cost Records And Audit) Rules, 2014 through Companies (Cost Records and Audit) Amendment Rules, 2014 (the New Cost Audit Rules).
Salient features of New Companies (Cost Records and Audit) Rules, 2014
Amendment in Companies (Cost Records and Audit) Rules, 2014
The Ministry of Corporate Affairs vide Notification F. No. 1/40/2013-CL-V dated December 31, 2014 has made amendment in the Companies (Cost Records And Audit) Rules, 2014 through Companies (Cost Records and Audit) Amendment Rules, 2014 (the New Cost Audit Rules).
Some salient features of the New Cost Audit Rules are as follows:
- The Companies are required to maintain Cost Records if turnover exceeds Rs. 35 crores or more during immediately preceding Financial Year in respect of the products and services specified;
- The New Cost Audit Rules has categorised the Entities into Regulated Sector and Unregulated Sectors;
- The Entities falling under the Regulated sectors having overall annual turnover of Rs. 50 crores or more and the aggregate turnover of the individual products or services of Rs. 25 crores or more have to get their Cost Records Audited;
- Six sectors are brought under the Regulated category namely Telecommunication services; Power generation, Transmission, Distribution and Supply; Petroleum products; Drugs and Pharmaceuticals; Fertilisers; Sugar and Industrial alcohol;
- The Entities falling under the Unregulated category viz. Business of plastics and polymers, glass, electrical, textiles, milk powder businesses, etc., having annual turnover of Rs. 100 crores or more and the aggregate turnover of the individual products or services of Rs. 35 crores or more have to get their Cost Records Audited;
- Exemptions are provided to Companies whose revenue from exports, in foreign exchange, exceeds 75% of total revenue and Companies operating from Special Economic Zones.
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Salient features of New Companies (Cost Records and Audi... Amendment in Companies (Cost Records and Audit) Rules, 2014 The Ministry of Corporate Affairs vide Notification F. No. 1/40/2013-CL-V dated Decemb... | |||||||
Goods and Service tax which is going to be introduced in India is a Tax to be collected by states and centre both on a single transaction so if X of Mumbai sells Goods to Y of Mumbai then both SGST and CGST will be applicable on this transaction
SGST & CGST – Can both be levied on same Transaction?
Goods & Service Tax (GST) – One Question A Day by CA Sudhir Halakhandi – PART 2
Q.2:- There will be two Taxes under proposed Goods and Service tax in India, First State Goods and Service Tax (SGST) and Second one is CGST and as I understand If X of Mumbai sells Goods to Y of Mumbai (or any other city of Maharashtra) will have to pay State Goods and Service Tax (SGST) and if X of Mumbai sells Goods to Y of Jaipur (or any other city outside Maharashtra) will Pay Central Goods and Service Tax (CGST). Am I right Sir? If not then please explain the proposed system with the help of suitable example.
CA SUDHIR HALAKHANDI
Goods and Service tax which is going to be introduced in India is a Tax to be collected by states and centre both on a single transaction so if X of Mumbai sells Goods to Y of Mumbai then both SGST and CGST will be applicable on this transactionTry to understand this with the help of an Example:-
If X of Mumbai sells Goods to Y of Mumbai for Rs. 10 Lakhs and suppose the rate of Tax under SGST is 12% and CGST is 14% then X will collect and deposit Rs. 1.20 as SGST and Rs.1.40 Lakhs as CGST from Y.
Now take this sale to second stage of sales:-
If Y of Mumbai sells the same Goods to Z of Mumbai for Rs. 10.50 Lakhs then he will collect a sum of Rs. 1.26 Lakhs as SGST and Rs. 1.47 as the CGST. Now he will deposit Rs. 6000.00 as SGST (Rs. 1.26 collected from Z – Rs.1.20 input credit from his purchases from X) and Rs. 7000.00 as CGST (Rs.1.47 Collected from Z – Rs. 1.40 Lakhs input credit from his purchases from X).
Now you can cross check the total tax collected by State is Rs. 1.26 Lakhs i.e. 12% of Rs. 10.50 Lakhs and by centre is Rs. 1.47 Lakhs i.e. 14% of Rs. 10.50 Lakhs. Rs. 10.50 is the cost to the consumer and he has paid Rs.1.26 Lakhs as SGST and Rs. 1.47 as CGST which was collected and deposited by X and Y at different stage of sales. It is also clear from this example that the input credit of SGST can be taken against the SGST and input credit of CGST can be taken against the CGST.
This Example is sufficient to show that how both the Centre and State will collect tax on a same transaction of Sale but this is given here for very basic knowledge of GST and we will take it to more complicated transactions in coming days to understand the proposed Goods and service tax in a better way.
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This order may be called the Companies (Auditor's Report) Order, 2003. (2) It shall apply to every company including a foreign company as defined in section 591 of the Act, except the following :- (i) a Banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);
Companies (Auditor's Report) Order, 2003
PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART II, SECTION 3 – SUB – SECTION (i)
MINISTRY OF FINANCE
(DEPARTMENT OF COMPANY AFFAIRS)
(DEPARTMENT OF COMPANY AFFAIRS)
New Delhi, the 12th June, 2003
G.S.R. 480(E).- In exercise of the powers conferred by sub-section (4A) of Section 227 of the Companies Act, 1956 (1 of 1956), read with the Notification of the Government of India in the Department of Company Affairs, number G.S.R. 443(E), dated 18th October, 1972, as amended from time to time and in supersession of order number G.S.R. 909(E), dated 7th September, 1988, published in the Gazette of India, part II, section 3, sub section (i), except as respects things done or omitted to be done before the supersession, and after consultation with the Institute of Chartered Accountants of India [constituted under the Chartered Accountants Act, 1949 (38 of 1949)], in regard to class of companies to which this order applies and other ancillary matters, the Central Government hereby makes the following Order, namely:-
1. Short title, application and commencement. – (1) This order may be called the Companies (Auditor's Report) Order, 2003.
(2) It shall apply to every company including a foreign company as defined in section 591 of the Act, except the following :-
(i) a Banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);
(ii) an insurance company as defined in clause (21) of section 2 of the Act;
(iii) a company licensed to operate under section 25 of the Act; and
(iv) a private limited company with a paid up capital and reserves not more than fifty lakh rupees and has not accepted any public deposit and does not have loan outstanding ten lakh rupees or more from any bank or financial institution and does not have a turnover exceeding five crore rupees.
(3) It shall come into force on the 1st day of July, 2003.
2. Definitions. – In this Order, unless the context otherwise requires,-
(a) "Act" means the Companies Act, 1956 (1 of 1956);
(b) "chit fund company", "nidhi company" or "mutual benefit company" means a company engaged in the business of managing, conducting or supervising as a foreman or agent of any transaction or arrangement by which it enters into an agreement with a number of subscribers that every one of them shall subscribe to a certain sum of instalments for a definite period and that each subscriber, in his turn, as determined by lot or by auction or by tender or in such other manner as may be provided for in the agreement, shall be entitled to a prize amount, and includes companies whose principal business is accepting fixed deposits from, and lending money to, members;
(c) "finance company" means a company engaged in the business of financing, whether by making loans or advances or otherwise, of any industry, commerce or agriculture and includes any company engaged in the business of hire-purchase, lease financing and financing of housing;
(d) "investment company" means a company engaged in the business of acquisition and holding of, or dealing in, shares, stocks, bonds, debentures, debenture stocks, including securities issued by the Central or any State Government or by any local authority, or in other marketable securities of a like nature;
(e) "manufacturing company" means a company engaged in any manufacturing process as defined in the Factories Act, 1948 (63 of 1948);
(f) "mining company" means a company owning a mine, and includes a company which carries on the business of a mine either as a lessee or occupier thereof;
(g) "processing company" means a company engaged in the business of processing materials with a view to their use, a sale, delivery or disposal;
(h) "service company" means a company engaged in the business of supplying, providing, maintaining and operating any services, facilities, conveniences, bureaux and the like for the benefit of others;
(i) "trading company" means a company engaged in the business of buying and selling goods.
3. Auditor's report to contain matters specified in paragraphs 4 and 5. – Every report made by the auditor under section 227 of Act, on the accounts of every company examined by him to which this Order applies for every financial year ending on any day on or after the commencement of this Order, shall contain the matters specified in paragraphs 4 and 5.
4. Matters to be included in the auditor's report. – The auditor's report on the account of a company to which this Order applies shall include a statement on the following matters, namely :-
(i) (a) whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;
(b) whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;
(c) if a substantial part of fixed assets have been disposed off during the year, whether it has affected the going concern;
(ii) (a) whether physical verification of inventory has been conducted at reasonable intervals by the management;
(b) are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported;
(c) whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account;
(iii) (a) has the company either granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and amount involved in the transactions.
(b) whether the rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, are prima facie prejudicial to the interest of the company;
(c) whether payment of the principal amount and interest are also regular;
(d) if overdue amount is more than one lakh, whether reasonable steps have been taken by the company for recovery/payment of the principal and interest;
(iv) is there an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. Whether there is a continuing failure to correct major weaknesses in internal control;
(v) (a) whether transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered;
(b) whether each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time;
(This information is required only in case of transactions exceeding the value of five lakh rupees in respect of any party and in any one financial year).
(vi) in case the company has accepted deposits from the public, whether the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under, where applicable, have been complied with. If not, the nature of contraventions should be stated; If an order has been passed by Company Law Board whether the same has been complied with or not?
(vii) in the case of listed companies and/or other companies having a paid-up capital and reserves exceeding Rs.50 lakhs as at the commencement of the financial year concerned, or having an average annual turnover exceeding five crore rupees for a period of three consecutive financial years immediately preceding the financial year concerned, whether the company has an internal audit system commensurate with its size and nature of its business;
(viii) where maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, whether such accounts and records have been made and maintained;
(ix) (a) is the company regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.
(b) in case dues of sales tax/income tax/custom tax/wealth tax/excise duty/cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending may please be mentioned.
(A mere representation to the Department shall not constitute the dispute).
(x) whether in case of a company which has been registered for a period not less than five years, its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the financial year immediately preceding such financial year also;
(xi) whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported;
(xii) whether adequate documents and records are maintained in cases where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities; If not, the deficiencies to be pointed out.
(xiii) whether the provisions of any special statute applicable to chit fund have been duly complied with? In respect of nidhi/ mutual benefit fund/societies;
(a) whether the net-owned funds to deposit liability ratio is more than 1:20 as on the date of balance sheet;
(b) whether the company has complied with the prudential norms on income recognition and provisioning against sub-standard/default/loss assets;
(c) whether the company has adequate procedures for appraisal of credit proposals/requests, assessment of credit needs and repayment capacity of the borrowers;
(d) whether the repayment schedule of various loans granted by the nidhi is based on the repayment capacity of the borrower and would be conducive to recovery of the loan amount;
(xiv) if the company is dealing or trading in shares, securities, debentures and other investments, whether proper records have been maintained of the transactions and contracts and whether timely entries have been made therein; also whether the shares, securities, debentures and other securities have been held by the company, in its own name except to the extent of the exemption, if any, granted under section 49 of the Act;
(xv) whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company;
(xvi) whether term loans were applied for the purpose for which the loans were obtained;
(xvii) whether the funds raised on short-term basis have been used for long term investment and vice versa; If yes, the nature and amount is to be indicated;
(xviii) whether the company has made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act and if so whether the price at which shares have been issued is prejudicial to the interest of the company;
(xix) whether securities have been created in respect of debentures issued?
(xx) whether the management has disclosed on the end use of money raised by public issues and the same has been verified;
(xxi) whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated.
- Reasons to be stated for unfavourable or qualified answers. – Where, in the auditor's report, the answer to any of the questions referred to in paragraph 4 is unfavourable or qualified, the auditor's report shall also state the reasons for such unfavourable or qualified answer, as the case may be. Where the auditor is unable to express any opinion in answer to a particular question, his report shall indicate such fact together with the reasons why it is not possible for him to give an answer to such question.
(File No. 2/ 28 /2002-CL.V)
Rajiv Mehrishi
JOINT SECRETARY
JOINT SECRETARY
RBI/2014-15/73 DBR.No.CID.BC.57/20.16.003/2014-15 July 1, 2014 (Updated up to January 07, 2015) i) All Scheduled Commercial Banks (excluding RRBs and LABs) and ii) All India Notified Financial Institutions Dear Sir / Madam Master Circular on Wilful Defaulters RBI has been receiving references from banks and other agencies seeking clarification as well as posing certain issues concerning […
Master Circular on Wilful Defaulters -Updated till 07.01.2015
RBI/2014-15/73
DBR.No.CID.BC.57/20.16.003/2014-15
DBR.No.CID.BC.57/20.16.003/2014-15
July 1, 2014
(Updated up to January 07, 2015)
(Updated up to January 07, 2015)
i) All Scheduled Commercial Banks (excluding RRBs and LABs) and
ii) All India Notified Financial Institutions
ii) All India Notified Financial Institutions
Dear Sir / Madam
Master Circular on Wilful Defaulters
RBI has been receiving references from banks and other agencies seeking clarification as well as posing certain issues concerning the various guidelines contained in the current Master Circular on Wilful Defaulters. These references have been examined and the Master Circular has been modified accordingly. A copy of the same is attached.
2. While quite a few of the modifications in the guidelines are definitional and clarificatory in nature, certain substantive changes have been made to bring in greater transparency and accountability in the due process required to be adopted for identification of Wilful Defaulters (paragraph 2.5(d) and 3). Further, in view of the limited role of non-promoter/non-whole time directors (Nominee and Independent directors) in the management of a company's debt contracts, their names shall now be excluded from the list of Wilful Defaulters, except in the rarest circumstances which also have been specified at paragraph 3 of the Master Circular.
- The modifications to the Master Circular have been furnished separately in the Annex.
Yours faithfully,
(Sudarshan Sen)
Chief General Manager-in-Charge
Chief General Manager-in-Charge
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