GOVERNMENT OF INDIA

                                                   MINISTRY OF FINANCE

                           OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE

                                      CHENNAI II COMMISSIONERATE

                           692,MHU COMPLEX, ANNASALAI, NANDANAM, CHENNAI-35

        The Regional Advisory Committee Meeting for Organized Sector/Small Scale Industries (SSI)/Service Tax Sector for the Block Year 2002-2003 for the quarter ending 30.09.2002 was held at 10.30 Hrs. on 20.09.2002 at the Conference Hall of this Commissionerate under the Chairmanship of Shri.M.V.S. Prasad, Commissioner of Central Excise.

          The following Members attended the meeting.

            The following officers of the Department also attended the meeting.

          Before taking up the agenda for discussion, the Chairman welcomed the Members.  After that the following points were taken up for discussion.

POINT NO.1

Sponsored By :- Hyundai Motor India Ltd

Currently Credit is available only on the documents as prescribed by the Cenvat Rule 7 and there is apprehension in some departmental Officers  whether credit is available on endorsed bills of entry.  Earlier Modvat provisions were clear on this aspect and Board Circular was also issued for the procedure. Clarification may be issued on the availability of Cenvat Credit on endorsed Bills of Entry

[At the time of RAC meeting, the member representing M/s. Hyundai Motor India Ltd. gave further details regarding the above point.

The Plant & Machinery, for their Expansion of their Projects by M/s. Hyundai, are imported by their contractor and on reaching the Indian Ports the Bills of entry are required to be endorsed in M/s. Hyundai's name for taking Cenvat Credit. The ownership of the imported goods remain with the contractor]

REPLY:

As the imported goods do not belong to M/s. Hyundai, no credit could be allowed on the basis of endorsed Bills of Entry

Endorsement on the Bills of Entry will be permitted for Cenvat purposes provided the recipient has purchased  (ownership changed) the goods from the importer after the goods reached the Indian Territory (Port premises)

Endorsement is not permitted wherever the project work is assigned to any importers who carry out work inside the premises of the manufacturer. (Where ownership is still with actual importer and not with the manufacturer)

POINT NO.2

Sponsored By :-Hyundai Motor India Ltd

Rule  4 (5) (b) of Cenvat credit rules 2002, allows sending Jigs, fixtures, moulds & dies to a job-worker for the Production of Goods on his behalf and according to his specifications.  This is the only condition required for availment of Cenvat Credit by a Manufacturer.  However, department field Officers stipulate the need to bring back the  goods within 180 Days and notices are being issued by the department.

REPLY:

As per Rule 4(5)(b) of Cenvat Credit Rules, 2002 there is  no  time limit for bringing back the above said Capital goods.  However, the matter will be referred to Board for confirming this, in view of certain doubts entertained by some officers.

POINT NO.3

 SPONSORED BY Hyundai Motor India Ltd

Permission has been granted by Commissioner (Commissionerate-II) for  granting taxi refund in advance for M/s.HMIL & HM. HMIL  availed this opportunity and refund is being given in advance from April-2001. 

HMIL gives refund to customer based on the following documents:-

a) Certificate stating that the car is registered as Taxi (issued by RTO) in Original.    

b) Attested copy of Form 23                                                                                                                    

HMIL checks the following additional documents:-

(a) Sales Invoice raised by dealer in the name of ultimate customer (attested copy)

(b) Copy of HMIL Invoice.

( c ) Copy of contract carriage permit for carrying passengers

Note: All documents are submitted with due attestation by Notary Public

However department rejects the claim on trivial grounds:- 

a) Clerical error in typing the name (like 'a' instead 'e')

b) changing the status Mr./Mrs. 

c) while typing the Vin / Engine No. which is alpha numeric, Interchange of 'O'

    for 0 (zero) in registration certificate

d) Not mentioning the alpha of Vin No. /Engine No. (ABCD) in Form 23/RTO      certificate.  However they are quoting numeric Correctly.

REPLY:

Whenever refund claims pertaining to Taxis are submitted to the Division in person by the Officers of the Factory, departmental officers are directed to make preliminary verification immediately. Any clerical/other errors noticed in the claim will be got rectified then and there itself without returning the claim.  No  show cause notice will be issued for such minor discrepancies. Specific instances may be brought to the notice of the HQrs Office.

POINT NO.4

SPONSORED BY M/S. HYUNDAI MOTOR INDIA LTD.

Taxi claim is sanctioned to customer based on documents Viz:-  RTO certificate confirming the car registration as Taxi within the Period of 3 months.

Department scrutinizes the given documents and issues sanction Order for releasing refund to customers.

This procedure is very cumbersome and involve lot of procedural delay and refund is given to manufacturers only after 90 days.

It is suggested that like Cenvat document for availing instant credit on the strength of supplier's document, taxi refund shall be allowed based on RTO Certificate.

Department may audit afterwards and shall issue notice wherever it is required.

Other taxes like Income Tax, Sales Tax, allows assessee's to make all adjustments / deductions prior to departmental verification and assessee file return.  Department verifies and directs the assessee to produce evidence for clarification.

Hence department shall assess the situation on refund procedure and amend the procedure accordingly in order to refine the cumbersome procedure involved in sanctioning the refund.

REPLY :

The request of the assessee can not be acceded to as it is not covered by the existing provisions of refund in the Central Excise Act/Rules.

POINT NO.5

SPONSORED BY M/S. HYUNDAI MOTORS INDIA LTD.

Rule - 16 provides to bring back duty paid goods to factory for being re-made, refined, re-conditioned or for any other reasons.

Rule 16 requires to : 

Make entries of such return and avail Cenvat Credit on the Strength of documents given by him.      

If the goods so returned are subjected for certain process which do not amount to manufacture, the manufacturer shall pay an amount equal to the Cenvat Credit taken.             

In case the returned goods require process which do Amount to Manufacture, the manufacturer shall pay duty at the rate applicable on the date of removal.  In the event of any difficulty, the Commissioner has the power to resolve the problem.  But in practice Chennai II Commissionerate have re-introduced the D3 procedure and instructed the assessees to follow the procedure.

REPLY:

Trade Notice No.15/2002 issued by the Commissioner is not for the cases that are covered under Rule 16(1) and (2) of the Central Excise Rules and this procedure is to facilitate the assessees in situations not covered by the above rules to bring back Goods to the factory for repair, rectification etc. and removal of the same from the manufacturers premises.  Therefore the procedure prescribed in such cases to safeguard the revenue interest cannot be dispensed with.

POINT NO: 6

SPONSORED BY TAMIL NADU PLASTICS MANUFACTURERS ASSN:

POINTS RAISED : Liability of duty on job-work - conversion of  HDPE / PP Granules into fabric at the Job-workers' side  - under Cenvat Credit Rules 4(5).

Many of our members are manufacturers of HDPE/PP Plastic Fabrics and sacks availing CENVAT Credit on the inputs, namely Plastic granules.                                                                    

They also send the granules to the job-worker after availing Cenvat Credit for conversion into fabrics and the job-worker after conversion return to the supplier where all the movements are regulated by Rule 4(5) of Cenvat Credit Rules-2002. [Previously Under rule 57F(4) procedure.]

Therefore, we are of the considered view that our members who are at present undertaking job work are not required to discharge any duty on any product that emerges at the site of job-worker.

Recently, a doubt has arisen whether duty has to be paid by the Job worker on the strips of plastics manufactured to weave fabric at the site of the job-worker, because at the job-workers' site the granules are converted into strips and then strips are woven into fabrics.     In this connection they rely on the Board's Circular No.306/22/97 dt. 20-3-97 which mentions that the duty liability is to be discharged by the manufacturers and not by the job-worker. 

Kindly clarify whether duty has to be paid on Strips of Plastics / Fabrics manufactured at the job-workers premises operating Under Rule 4(5) of Cenvat Credit Rules.

REPLY:

The Association has already made a representation on this issue to the Chief Commissioner. On receipt of the clarification from the Chief Commissioner's Office the same will be intimated to the Trade/Assn.

POINT NO.7 [SERVICE TAX]

SPONSORED BY CHENNAI CUSTOMS HOUSE AGENTS ASSN.:

As per earlier CBE&C Circular No.B-43/01/97-TRU dated 6-6-97, it was clarified that CHAs are liable to collect and pay 5% Service Tax on Service Charges only.  Cranage, Forklift Charges, Loading / Unloading charges etc. are in the nature of reimbursable amount from the Importer/Exporter.  Subsequently certain new categories of Services were brought under Service Tax net like CFOs/ICDs/Warehouses, who also provide Security, Loading/Unloading Services etc. doubts have arisen in the minds of our members Whether:   

1) We will have to collect and pay Service Tax on Loading/Unloading Charges?    

2) Whether we will have to obtain another registration for the same.

REPLY

1)       YES -  They have to pay Service Tax on loading / unloading Charges

as "Cargo Handling Service" provider in the case the Service is performed outside the Port and as " Port Service"  if the service is performed inside the Port.

2)       If they are already registered with Service Tax and if the entire amount is billed from the Customers (including the above-mentioned charges), there is no need for separate registration.  However they have to pay service tax on the entire amount.  If they are not registered earlier, they have to obtain another Registration depending upon the Category of Service either as ' Cargo Handling Service or Port Service”

The meeting ended with a Vote of thanks to the Chair

  (G.V. KRISHNA RAO)

JOINT COMMISSIONER ( (TECH)

To

The members of Regional Advisory Committee of Organised Sector/SSI Sector/

Service Tax sector

Copy submitted to:

The Chief Commissioner of Central Excise, Chennai-34

The Secretary, Central Board or Excise & Customs, New Delhi.

All Central Excise Commissionerate.

As per mailing list.(Department only)/Computer Section