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CENTRAL EXCISE
INTEREST:
1. Q. A person had to pay Excise duty of Rs. 3 Lakhs for a month. He paid 2.5 Lakhs on the 5th of the subsequent month. The payment of balance amount of Rs.50,000/- was delayed. Whether interest is to be paid for Rs. 3 Lakhs or for Rs.50,000/-? R. Interest is to be paid for Rs.50,000/-.
2. Q. Whether Interest is payable for differential duty paid consequent to revision of price made once in three months. R. Interest is payable if there is provision for price escalation in the Purchase Order/Contract.
MANUFACTURE AT SITE
1. Q. Blowers, Motor, Dust collector, Chimney and ducts manufactured through sub-contractors are brought to the site and assembled as ‘pollution control system’ embedded to the ground. Whether the activity of assembly attracts Excise Duty? R. The Section 37 B Order bearing No.58/1/2002 CX dated 15.01.2002 was explained. He was asked to see whether this activity was in conformity with the Section 37 B order to decide about Exciseability. They were advised to approach the Jurisdictional Central Excise authorities.
REFUND OF CREDIT
1. Q. The ratio of Export: Home Consumption is 50:50. How to liquidate the credit involved in export? R. Exports may be made under claim for Rebate or may seek refund of credit once in 3 months.
EXPORT 1. Q. Can I procure raw material duty free solely meant for manufacture and export? In such a case can I export on payment of duty? R. Yes. The benefit of notification no: 43/2001 issued under Rule 19 may be availed. No. In such a case the export is to be done under Bond procedure only.
2. Q. We manufacture Bolts and Fasteners; we intend to begin exports. We have to buy raw materials and Dies for exclusive use in the manufacture of Export-goods. What are the facilities and procedures available? R. Notification No.43/2001 issued under Rule 19 enables duty free procurement. This facility you can avail. The procedural requirements are (i) Registration with the Department (ii) Not for Nepal/Bhutan in case of receipts in Rupee (iii) Application to Divisional Officer (iv) Input-output ration. (v) ARE 2 Forms to be used.
3. Q. We are manufacturers of Foley Balloon Catheters. At times we export through Merchant Exporters. Can I claim Drawback? R. The Drawback is to be claimed by the Exporter only, i.e. the Merchant Exporter.
SALES RETURNS 1. Q. We supply parts on payment of duty to Tractor manufacturers. Tractor is exempted. At times parts supplied are rejected. What to do? R. On receipt credit can be taken under Rule 16 of Central Excise Rules. It is to be re-despatched within 90 days.
JOB WORK
1. Q. Whether finished goods can be dispatched directly from the Job worker’s end? R. YES. As per Rule 4 (6) of Cenvat Credit Rules it can be done after making an application to that effect and after obtaining permission from the Assistant Commissioner of Central Excise.
2. Q. The assessee are manufacturers of Control Panel and pay Excise duty. Whether it is permissible to do Job work for some other person. R. They can do job work.
EOU 1. Q. An EOU receives HR Coils. Can the Coils be sent to a Job worker for processes and return? R. Yes after obtaining the permission from the jurisdictional Assistant Commissioner of Central Excise.
2. Q. Whether raw material should necessarily be brought to the Unit’s bonded area before sending to the Job worker? R. Yes. Where the raw material is obtained without payment of duty.
3. Q. Whether EOUs can take credit of duty paid on goods and services? R. Yes. Credit can be taken and used for DTA clearances. If use of credit is not possible, refund of credit can be sought under Rule 5 of CENVAT Credit Rules.
GENERAL
1. Q. What are the requirements under Central Excise Law on maintenance of documents and registers by a manufacturer? R. You will have to maintain Daily Stock Account, Credit Registers, and Personal Ledger Account and remit duty in Bank under TR 6 Challans. Your private documents are accepted. Furnish list of your Private documents like Stores Ledger, Sales Ledger, General Ledger, Job Work Register etc., to Central Excise Authorities.
2. Q. When am I required to take credit if I receive raw materials at 12 midnight? R. You can take credit the next day on resuming work.
3. Q. Can I remit Excise duty by cheque on the last day prescribed for remittance of duty? R. Yes. Cheque remitted on last day prescribed for remittance of duty is a valid payment.
SERVICE TAX
GOODS TRANSPORT AGENCY SERVICE
1. Q. We are a Pvt. Ltd., Co. Whether we are liable to have Registration and pay Service Tax on Goods Transport Agency Services (GTA) received? R. A Limited Co., availing the goods transports services and paying the freight charges is liable to pay Service Tax. (Notification No. 35/04 ST dated 03.12.04 refers)
2. Q. I am a consignor/consignee. On what value of the freight bill GTA Service Tax has to be paid? R. If the Transporter has not availed Cenvat Credit, Service Tax can be paid on 25% of the Value.
3. Q. From which date Service Tax on GTA is to be paid? What if there is a delay? R. GTA Service Tax is required to be paid w.e.f.1.1.2005. If there is delay beyond 30 days, interest at 13% Per Annum is to be paid.
4. Q. Assessee is registered under Companies Act and are paying Freight Charges for the receipt of Raw Materials, whether Tax is to paid. R. The Service Tax under GTA has to be paid from 01.01.2005 onwards.
5. Q. Whether Service Tax is to be paid on Carriage Inwards and Outwards. R. As the Company is paying the freight and as it is registered under the Factories Act, advised them to get themselves registered and pay service Tax on freight paid by them.
GENERAL PROCEDURE 1. Q. What is the procedure for payment of Service Tax and filing of returns? R. In case of partnership the Service Tax is to be paid on the value realized on or before 5th of the month following the quarter of the year. However, for the quarter ending March, the tax is to be paid by 31st March itself. The return is to be filed in form S.T. 3 once in 6 months before 25th of the month following the half year periods. ( April to September & October to March )
2. Q. What is the last date for payment of Service Tax? R. Service Tax is to be paid on or before 5th of the month following the month in which payment for services is received.
3. Q. Is there any format in which Application for Registration under Service Tax is to be made? R. Application for Registration under Service Tax is to be made under Form ST1.
4. Q. Can I raise a Bill for Cum-Tax value under Service Tax? R. Yes. But please indicate the quantum of Service Tax prominently in the Bill since under Section 12A of the Central Excise Act made applicable to Service Tax requires indication of Tax amount in an invoice/ Bill.
5. Q. What is the date by which a Partnership firm is required to remit Service Tax? R. A partnership firm is required to pay Service Tax on or before 5th of the month following the quarter.
6. Q. Can remittance of Service Tax be made in any branch of the authorized Banks? R. Yes.
7. Q. What does the six digit code indicated in the challan represents? R. The first two digits represent the Commissionerate, the next two digits the Division and the last two digits represent the Range Code.
8. Q. What is the procedure for registration for payment of Service Tax under Testing and Inspection service? R. Informed that they should file an application in form ST 1 and submit the Copy of PAN letter, Memorandum of Association, List of Directors, Power of Attorney for the authorized representative along with a write up of their Activity.
9. Q. Is fresh Registration required in case existing Partnership is dissolved and a new Private limited Company is floated? R. Yes. You have to furnish the details of the new Company floated with the Jurisdictional Range officer.
10. Q. What is the last date by which Service Tax is to be paid? R. The last date is 5th of the month following the month in which payment has been received.
EXEMPTION
1. Q. Whether there is any threshold exemption for Service Provider? R. Small Scale service Providers can avail the exemption under notification no: 6/2005 ST. As per the same if the payment received by them in the previous financial year is less than 4 lakh the exemption is available. He was asked to contact the jurisdictional Superintendent with his turnover details.
2. Q. Whether Services to SEZ is exempted? R. Services provided to SEZ units for consumption within the Zone is exempted vide Notification NO: 4/2004.
3. Q. Whether the exemption limit of 4 Lakhs is for taxable service turnover or for the entire turnover? R. Under Notification 6/2005 ST dated 01.03.2005, the taxable service of aggregate value upto 4 lakhs is exempted and for calculating the limit, the value of exempted services or non-taxable services need not be taken into account. But the value of taxable services provided from one or more premises of the same service provider has to be taken into account.
4. Q. Whether exemption is eligible for the 5 % CESS paid to the RBI. R. YES under Notification No.18/2002 dated 16.12.2002 exemption from Service Tax equivalent to the amount of CESS paid on Transfer of Technology under Section 3 of R & D CESS Act 1986 is available.
5. Q. Small Service Providers upto the value of Rs. 4 Lakhs per year are exempted from payment of Service Tax. But should they get themselves registered with the Department anyway. R. Small Service Providers are required to register themselves when the aggregate value reaches Rs.3 lakhs.
6. Q. What is the rate of Service Tax? R.10% on the value received plus 2% as Education Cess on the Tax amount.
7. Q. The assessee has collected Service Tax from April 2005 to September 2005, now he wants to avail the threshold exemption 6/2005 dated 01.03.2005 from April 2005, is it possible when he repays the amount collected as Service Tax to the clients for availing the exemption from April 2005. R. He has to remit the tax collected to the Department and avail the exemption from April 2006.
8. Q. Whether Exemption can be availed upto 4 lakhs and pay Service Tax after crossing 4 Lakhs. R. Yes. Registration is to be taken immediately after crossing 3 lakhs.
INTEREST 1.Q. Whether interest is payable for delay in payment of Service Tax? R. Interest @13% is liable to be paid.
JOB WORK AND SERVICE TAX
1. Q. Whether Job Work attracts Service Tax? R. Production or Processing of goods for or on behalf of the client attracts service Tax under Business auxiliary Service. However if the production activity or processing activity results in the emergence of fully finished item, then it will not attract Service Tax.
2.Q. Whether Heat Treatment/ Cutting/ Machining attract service Tax or not? R. Heat Treatment attracts Service Tax. The other two activities attract Central excise duty. Both are exempted if the Principal pays the Tax/Duty.
3.Q. Is Service Tax payable on job work done on customer’s goods which is not liable to excise duty? R. Yes. Service Tax is payable under Business Auxiliary Services.
SERVICES RENDERED IN IMPORT & EXPORT
1. Q. Whether IATA Agent is liable to pay Service Tax for the services rendered by them to customers with regard to Export/Import? R. They are liable to pay service Tax under Business Auxiliary Services (Commission Agency); for the commission received from the Airlines for canvassing of Cargo.
CUSTOM HOUSE AGENCY SERVICE 1. Q. The Company is doing C&F services to their Clients. But they are acting/using License of CHA. Who has to pay Service Tax? How to get registered? Where the jurisdictional office is is located? R. Register tge Company for C&F services with Chennai I Division.
REAPIR & MAINTENACE 1. Q. Company is providing Annual Maintenance Service. Whether any deduction from value can be arrived for payment of TAX? R. No deduction/abatement is permitted.
OTHER SERVICES
1. Q. Whether exemption is available to Yoga Training Centers? R. Fitness services are taxable. Exemption upto 4 Lakhs is available.
INPUT SERVICE DISTRIBUTOR 1. Q. Has Government notified any specific format in which an ‘Input Service Distributor’ is to apply for Registration? R. The ‘Input Service Distributor’ can make use of the ST 1 format available and he may indicate against the column ‘category’ as ‘Input Service Distributor’.
MAN POWER
1. Q. Whether deployment of manpower temporarily attracts Service Tax? R. Yes. From 16.6.05 providing manpower temporarily or otherwise attracts Service Tax under Manpower recruitment and Supply Agency.
CLEANING SERVICES
Q. From what date Cleaning Services attract Service Tax? R. Cleaning Services attract Service Tax w.e.f.16.6.2005.
CONSTRUCTION SERVICES
1. Q. Is Service Tax attracted in respect of a flat containing more than 12 Apartments, construction of which was completed on 10.6.2005? R. No Service tax is payable on work completed prior to 16.6.2005.
ROYALTY
1. Q. Whether the service tax has to be paid on the Royalty paid to the foreign collaborator? R. YES. Service tax has to be paid on the Royalty amount paid to the foreign company by the Indian Company.
TOUR OPERATOR
1. Q. What is the rate of Tax Cab/Tour operator Service during April 2003 to March 2004? R. During the relevant period (April 2003 to March 2004) a Tour operator or a Rent Cab operator has to pay Tax on the gross amount received @ 8 %.
CREDIT SCHEME:
1. Q. Whether Cenvat credit can be availed on the Service Tax paid on Royalty? Q. Whether Credit can be taken on Service Tax paid on Mobile phones? R. Yes. But only if the Mobile is in the name of the Organisation and is used for business purposes.
2. Q. Whether Credit can be taken on the freight charges paid? R. Yes. Credit can be taken on the freight charges paid for receipt of inputs into the factory. R. YES. With effect from 10.09.2004.
3. Q. Query regarding availment of Credit by Service Provider on Capital Goods and Inputs.
R.Credit can be taken on capital goods if they are not exclusively used for providing exempted service. As far as inputs are concerned, if they are providing Taxable/Non-taxable exempted service then utilization restricted to 20 % of the Tax payable on the Output service provided.
Credit can be availed on Inward Freight Charges. Taxes to be paid by the Consignor or Consignee who is liable to pay Freight Charges as per Rule 2 d in respect of categories mentioned therein.
CONSULTANCY SERVICES.
1. Q. Whether Service Tax has to be paid in respect of the Consultation Charges received for the Technical Assistant for getting ISO Certificate.
R.Exemption allowed upto Rs. 4 lakhs advised to apply for Registration Certificate and when he crosses Rs. 3 Lakhs and to pay the tax after crossing the exemption limit of Rs. 4 lakhs.
2.Q. Whether Service Tax is to be paid in respect of Orders being canvassed by the Agent who is residing in a Foreign Country R.The Service Tax has to be paid on the Commission paid to the agents with immediate effect.
PORT SERVICES:
1. Q. Needed clarification on Port Service whether the services rendered inside the Port like stewarding, transporting and storing of goods comes under Port Service, if so under what classification.
R.The services mentioned come under Port services.
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QUESTIONS ANSWERED IN HELP CENTRE AT HOSUR.
Q. We manufacture Foam mattresses and clear on payment of duty. We indicate the invoice numbers used in a month in our monthly E.R. 1 return. At times, we remove non – excisable products like building scrap etc., under invoice. Should we maintain only one set of invoice or more than one set? R. It is enough if one set of invoice is maintained. However, if you wish more than one you will have to take the permission of the jurisdictional Officer.
Q. We are manufacturers of Copper insulators/Conductors. We also undertake Job work for others. Should we maintain one set of invoice for our own account and another set for job work? R. It is enough if one set of invoice is maintained. However, if you wish more than one you will have to take the permission of the Jurisdictional Officer.
Q. We manufacture of Textile machinery. We have wholesale Distributors. 12 % Commission is paid for Orders procured by the Distributors for supply to EOUs. Supply to EOUs are against C.T. 3 and duty free. Should the value of Commission be included in the Transaction Value of supplies made to EOU. R. YES. Generally the Commission is paid from the Sale Proceeds and thus would naturally form part of the Price / Transaction Value.
Q. We purchase Quenching Oil for our Effluent Treatment Plant. Credit is availed on that Oil. After usage, waste oil arises which is sold out. Whether Excise duty is payable on the Waste Oil. R. NO. The Case Law Commissioner Vs. Ashok Leyland Ltd., - 2003 (151)ELT 438 ( Tri. – Chennai ) refers.
Q. Credit availed Capital Goods are sold as Scrap. What is to be done? R. Please pay duty on the Transaction Value at which the Scrapped Capital Goods is sold.
Q. In our Factory, during the manufacture Scrap arises. We haven’t stored them separately. It is mixed along with other scrap like worn out building materials, fencing etc., what to do? R. Estimate the scrap that has arisen because of manufacturing activity with sound technical methods and pay duty on that quantity. If your estimation is scientific, generally the Department will accept the quantification.
Q. Certain quantity of packing material is damaged while put into use, and certain other quantity is damaged while storage. What is the treatment under the Law. R. No credit expunction is necessary wherever the packing material is damaged after it is put into use. However, credit is to be expunged, wherever it is lost by mere storage.
Q. We are an EOU and certain Chemicals are imported in Barrels. After the chemicals are emptied the Barrel is sold. Is there any duty liability? R. YES. Re-usable containers are to be cleared on payment of duty. Notification No. 53/97 – Customs refers. (Check )
Q. I am running a Small Scale Industry. My Turnover is 85 lakh. In future I will be receiving scrap of iron from some small manufacturers for conversion in to Castings. My conversion cost will be Rs25,000 per Mt and the material cost is Rs.15,000 per Mt. I should pay duty on what value? R. It is 40,000
Q. I use my factory only for one shift. Can I lease it out for other Shifts and claim independent SSI exemption. R. NO. All clearances from a factory by one or more manufacturers is aggregated for SSI exemption purposes.
Q. Medicines are valued under Section 4A. How to value the Physician Sample? Example: Sale Pack is Tablets in 10s Strip and the Sample pack given free of cost is 2s. The MRP of sale pack is Rs.10. R. Physician Sample does not bear MRP. Therefore, it is to be valued based on the Transaction Value of Sale Pack. In the example given, the Sample Pack is different from the Sale Pack. So, proportionate value is to be adopted. In the given example, if the transaction value of 10s pack is Rs.6.50 then, the Physician samples value is Rs.1.30 ( Rupees 6.50 divided by 10 and multiplied by 2 ). The applicable Law is Rule 4 of the Valuation Rules read with Rule 11.
Q. We are manufacturing a paste which is mentioned in the pharmacopoeia; it is sold only against prescription by a dentist and is not available across the shelf, whether it is to be classified as a cosmetic? R. NO.
Q. We manufacture medicines and do R & D activity also. Whether the Chemicals used for R & D is eligible for Cenvat Credit? R. NO.
Q. We have 3 branches (Factories). There is supply of goods on payment of duty between the 3 factories. Sometimes, the Goods are rejected and returned. What is the document on which Rule 16 credit can be taken. R. Ideally the sender should prepare a document showing the exact reason for rejection, identification of the product, value and duty; based on that the credit under Rule 16 can be taken. Q. Whenever rejected materials are received, we file D.3 intimation. What is the time up to which we are required to wait for the Officer to verify the rejected receipts. R. Reasonable Time. You need not wait as a routine.
Q. 100 Kg of material were cleared on payment of duty. It was rejected and returned. I could salvage 90 Kgs and re-dispatch. Whether at the time of re-dispatch, I should expunge duty for 90 Kgs or the entire credit taken on 100 Kgs is to be expunged. R. The entire credit is to be expunged.
Q. Can I receive rejected materials inside the factory without taking credit under Rule 16. R. NO. As a Rule no duty paid goods is to be received in a factory. The only route available is Rule 16. Therefore, you cannot receive rejected materials without taking recourse to Rue 16.
Q. Certain goods are valued under Rule 18 Cost Construction method. Should I include Administrative Cost also? R. You will have to arrive the value based on CAS 4 method.
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