India: Indirect Tax Newsletter April 1, 2013

Last Updated: 12 April 2013
Article by Amit Kapur


Notification No. 17/2013-Cus. dated March 26, 2013

Amends Notification No. 69/2011-Cus. dated July 29, 2011 to reduce basic customs duty on import of specified goods from Japan.

Notification No. 18/2013-Cus. dated March 26, 2013

Exemption to import of pulses from payment of custom duties extended upto April 1, 2014.


Ambuja Cements Ltd. Vs. CCE [2013-TIOL- 466-CESTAT-MUM]

The Tribunal observed that captive power plants and manufacturing units are treatable as integrated units. Therefore, assessee is prima-facie entitled to take Cenvat credit of duty paid on inputs/ capital goods and input services received in captive power plant for manufacture of electricity which is further used in the manufacture of cement which is cleared on payment of duty. Accordingly, pre-deposit of duty, interest and penalty is waived.

LSR Speciality Oils Pvt. Ltd. Vs. CCE [2013- TIOL-491-CESTAT-MUM]

The Tribunal held that as per explanation to Rule 2(k) of the Cenvat Credit Rules, 2004 ("the Credit Rules") storage tanks have been specified as capital goods and, therefore, inputs such as M.S. angle and H.R. Sheet which are used in manufacture of storage tank are also eligible for Cenvat credit.

Cenvat credit

Oil & Natural Gas Corporation Ltd. Vs. CCE [2013-VIL-26-BOM]

The High Court of Bombay held that expression "directly or indirectly" employed in definition of 'input service' with regard to use of input service in or in relation to manufacture of final products has a very wide import. Accordingly, Cenvat credit of input service used by ONGC Mumbai Offshore in manufacture of crude oil which is exempted goods would be available as crude oil is subjected to further process of manufacture at Uran plant of ONGC for production of dutiable final products. Production of these dutiable products is possible only on continuous supply of crude oil. However, as ONGC manufactures both dutiable and exempted goods, it would be required to comply with Rule 6 of the Credit Rules and would be entitled to take Cenvat credit only on that quantity of input service which is used in manufacture of dutiable products.

CCE Vs. Paras Motors Mfg. Co. [2013-TIOL- 525-CESTAT-AHM]

Relying on judgment of High Court of Ahmadabad in CCE Vs. Cadila Healthcare Ltd. [2013-TIOL-12-HC-AHM-ST] wherein it has been ruled that service of various agents cannot be stated to be a service used directly or indirectly in or in relation to manufacture of final products or clearance of final products from place of removal, the Tribunal held that Cenvat credit of service tax paid on commission paid to commission agents is not admissible.

CCE Vs. Gujarat Flurochemicals Ltd. [2013- TIOL-508-CESTAT-AHM]

The Tribunal held that assessee is eligible to avail Cenvat credit of service tax paid on services rendered by insurance company on group insurance taken by assessee for employees.

Service Tax

Ultratech Cement Ltd. Vs. CCE [2013-TIOL- 529-CESTAT-MUM]

The Tribunal held that work order given by assessee to transporters clearly indicates that it is for loading and transportation of clinkers and rate for transportation is far higher than that for loading. In transportation, loading and unloading is incidental and, therefore, predominant and essential nature of service is transportation and not 'Cargo Handling'. Therefore assessee should have discharged service tax liability on GTA service availed by it.


The Commissioner, Commercial Tax Vs. S/s U.P Petrochemicals Complex [2013-VIL-24- ALH]

The dispute before High Court of Allahabad was whether refund of amount which was not deposited by dealer himself but by his agent with return is permissible under Section 42(4) of the Uttar Pradesh Value Added Tax Act, 2008 ("the UP VAT Act"). High Court observed that for the purpose of Section 42(4) of the UP VAT Act payment of tax is relevant and not by whom it is actually paid or deposited. Accordingly, it has been held that if net tax has been deposited on behalf of industrial unit that has been granted exemption under the Utter Pradesh Trade Tax Act, 1948 or the Central Sales Tax Act, 1956, refund of the same is admissible.

Notification No. F.7(433)/Policy- II/VAT/2012/1349-1359 dated March 21, 2013

The Commissioner, Department of Trade & Taxes, Government of NCT of Delhi has notified that for dealers having Gross Turnover of more than or equal to Rs. 10 crores (except dealers dealing in tax free goods), Form T -2 shall come into force with effect from April 1, 2013.

Notification dated March 14, 2013, Commercial Taxes Department, Government of Bihar

The Commissioner, Commercial Taxes Department, Government of Bihar has notified that rate of Central Sales Tax shall be one percent on sale of such products made in the course of inter-State trade or commerce which are manufactured by micro, small and medium industries registered by the industries department.

GST to be introduced by 2014: Parthasarathi Shome

Parthasarathi Shome, Advisor to Union Finance Minister said that he was hopeful that GST would be introduced by 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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