News Flash Indirect Tax

Udyog Software (India) Ltd.

29/12/2014

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

Customs: CBEC modifies instructions on Accredited Clients Program

Under the Accredited Clients Program (ACP) of the CBEC, consignments of certain categories of high-volume
importers were accorded a higher degree of facilitation in customs clearance. However, under the program,
the benefits were withdrawn if the entity was served with a show cause notice alleging evasion of customs or
excise duties or service tax.
The CBEC has reviewed this aspect of the ACP and decided
that show cause notices involving customs / excise duty upto Rs 50 lakhs or service tax upto Rs 25 lakhs would
be ignored for this purpose; and
(i) that show cause notices involving customs / excise duty upto Rs 50 lakhs or service tax upto Rs 25
lakhs would be ignored for this purpose; and
(ii) that the facilities under ACP will be restored after three months if the demanded amount is paid with
interest and 25% penalty within thirty days of the show cause notice or an application in the
matter is admitted by the Settlement Commission; and will be restored after six months if the
demanded amount is paid up with interest.
(The circular does not say whether three months or six months, as the case may be, is to be counted from the
date of withdrawal of facilities or the date of payment.) The circular 18/2014-Customs dated 22 December
2014 can be perused at http://cbec.gov.in/customs/cs-circulars/cs-circ14/circ18-2014cs.htm.
Customs: Duties on oils hiked
The central government has hiked customs duty on specified crude and refined oils, by amending entries 51,
55, 56, 57, 58, 59, 62, 63, 65, 66, 69, 71 of notification 12/2012-Customs dated 17.3.2012. The amending
notification 34/2014-Customs dated 24 December 2014 can be seen at http://cbec.gov.in/customs/csact/notifications/notfns-2014/cs-tarr2014/cs34-2014.pdf.
Customs: Anti-dumping duty: Central government can extend period of investigation retroactively: HC
In the case of Hyundai Motors, the DG (Anti Dumping) began investigation, which was to be completed in three
months, and sought and was given an extension to complete it. He then sought a further extension, which was
given retroactively after the lapse of the period previously permitted. This retroactive extension was
challenged in the High Court but upheld by the said court in order dated 12 December 2014 in WP 11683,
11684, 14567 and 11468 of 2014. The judgment can be accessed from
http://judis.nic.in/judis_chennai/chejudis.aspx, by entering the case number and year. The judgment is also
notable for its other observations on anti-dumping law.
Central excise: Cases admitted for settlement to be transferred to call book: CBEC
Central excise field formations maintain a call book to which cases that cannot be adjudicated are to be
transferred. The CBEC has clarified that cases that are admitted by the Settlement Commission may be
transferred to this call book, and will be taken out of the call book when the case is either settled or sent
back for adjudication. The CBEC further stipulates that if there are multiple noticees, only the cases of those
who have applied to the Settlement Commission and whose cases have been admitted for settlement are to be
transferred to the call book. (This seems to mean that the show cause notice will be adjudicated in respect of
the other noticees. However there is case law to the contrary.) The circular number 992/16/2014-CX dated 26
December 2014 can be viewed at http://cbec.gov.in/excise/cx-circulars/cx-circ14/992-2014cx.htm.
Central excise: CBEC cannot legislate in the guise of a 37B circular: HC
The CBEC circular 145/56/95-CX dated 31 August 1995, instructing field formations that coconut oil in 200 ml
packs was to be classified and assessed as a cosmetic preparation of chapter 33 of the central excise tariff
schedule was questioned by VVD & Sons Private Limited in the Madras High Court. The court agreed with the
petitioner that the CBEC had exceeded its jurisdiction and usurped the quasi-judicial powers of the assessing
officers to determine in each case whether the product came within the parameters of the heading. The court
further observed that coconut oil in 200 ml pack did not bear any indication that it was for cosmetic use; it
agreed that packs of this size would normally be bought by poor people for domestic or personal use; and that
it was discriminatory that the same oil in larger packs was classified in chapter 15, the oil in smaller packs
was sought to be taxed at higher rates. The court also agreed with the petitioner that the oil could be used
both as hair oil and as cooking oil, and that the use more favourable to the assessee is to be adopted for
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classification. The court found that in instructing the field formations to collect tax on the smaller pack under
chapter 33, the CBEC was indirectly legislating tax in the guise of an administrative circular. Accordingly the
circular was struck down and consequential relief afforded to the appellants. This WP no. 10790 of 2009 can
be accessed from the case number search of the Madras High Court portal at
http://judis.nic.in/judis_chennai/casenoseq.aspx.
Central excise & service tax: Heavy pendency of new registrations in ACES
Registration in central excise and service tax is done online, through the ACES portal at aces.gov.in. However,
in the confusion of cadre restructuring and consequent re-alignment of field formations, applications for
registration are being kept pending. As pointed out by the CBEC to its field formations, this impacts revenue,
as the new applicants will not be able to pay their excise duty / service tax. The pendency figure was 1600 in
excise and 19000 in service tax earlier this month. The CBEC letter on this issue to its field formations can be
perused at http://cbec.gov.in/deptt_offcr/cadre-restruct/pendency-regn-aces.pdf.

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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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