Study of Central Excise and Service tax in TATA STEEL Ltd.

Jharia Division

Summer Training Report

Submitted in Partial Fulfillment of the requirements for the PG Diploma in Management

PGDM

Under Guidance of: C.A Pushkar Sharma

By: Mr. Ritesh Mishra Roll No. Pg/16/063 Submitted to: Mr. Amit Kishore Sinha

School of Management Sciences Varanasi

DECLARATION

I Ritesh Mishra declare that the Summer Training Project on Study of Central Excise and Service Tax in TATA STEEL Ltd. Jharia Division is the original work done by me. I have followed all the guidance and instruction issued by the institute time to time for the preparation of this project. The completion of all the information and data are accurate to the best of my knowledge.

Ritesh Mishra PG/16/063

ACKNOWLEDGEMENT
Here I take the opportunit y to express m y gratitude to all of them, who in some or the other way helped me to accomplish this Project. The project study cannot be completed without their guidance, assistance, inspiration and co -operation. For successfull y accomplishment of task apart from hard work the most important requisite is the right direction and guidance. And for a student these become the major part for the study. In Tata Steel Ltd. Jamadoba, Dhanbad, this right direction and guidance is provided by m y guide and all the executives of the branch, in form of necessary information and exhibits that give me a great help in completing my work. First of all I would like to thanks Tata Steel Ltd. for giving me such a great opportunit y of studyi ng such a vast topic as w e ll as challenging topic i.e. Study of Central Excise and Service Tax in TATA STEEL Jharia Division . A special thanks to CA Pushkar Sharma (Manager, Cental Accounts ) under whom I conducted this study, for his able guidance in getting m y project completed. And I also thanks to MR. C.H Diwakar (General Manager ), CA Shahzad Qaiser (Head Central Accounts ) CA Ashish Bansal ( Manager, Cental Accounts ),and employees who helped me to understand practicall y m y topic time to time in making project report. Only because of employees I learned so many things and with their supports I finished m y project successfull y. Lastl y I express m y gratitude to m y parents and who have been a moral support to throughout m y life. In addition I would li ke to thanks to the School of Management Sciences Varanasi to give me permission for training so that I will get practical knowledge in m y particular topic i.e. Study of Central Excise & Service Tax in Tata Steel

PREFACE

Management i.e. managing available resources to get the desired result in a proper way. Apart from theoretical studies we need to get a practical exposure of those theories by working as a part of organization during our summer training. Training is a period in which a student can apply his theoretical knowledge in practical field. Basically practical knowledge and theoretical knowledge have a very broad difference. So this training has high importance as to know how both the aspects are applied together. The study of management acquires most crucial position in the business administration. In order to be successful, it is necessary to give priority to the management in an organization. But it cant be denied that the study of management would be more educational, materialistic and even more interesting, if it is to be paired with the work in organization as an employee. The training session helps to get details about the working process in the organization. It has helped me to know about the organizational management and discipline, which has its own importance. The training is going to be a lifelong experience.

Management in India is heading towards a better profession as compared to other professions. The demand for professional managers is increasing day by day. To achieve profession competence; manager ought to be fully occupied with theory and practical exposure of management. A comprehensive understanding of the principle will increases their decisionmaking ability and sharpens their tools for this purpose. During the curriculum of management programmers a student has to attain a practical exposure of an organization on live project in addition to his/her theoretical studies. This report is about the practical training done at TATA STEEL Ltd. (Jharia division), Dhanbad during the curriculum of PGDM from SMS, Varanasi.

TABLE OF CONTENT
UNIT NO. 1 CHAPTER HEADING INTRODUCTION A. Industry Profile B. Company Profile 2 3 EXPERIENTIAL LEARNING INTRODUCTION A. Study of Central Excise and Service Tax B. Objective of the Study 4 CENTRAL EXCISE A. Act & Duty B. Tariff C. Rules D. Valuation 5 6 7 8 9 SERVICE TAX CENVAT CREDIT FINDINGS AND LIMITATION CONCLUSION AND SUGGESTION BIBLIOGRAPHY 32-38 39 39-40 40-47 48-54 55-65 66-67 68 69 29-31 31 PAGE NO.

1-6 7-25 26-28

INTRODUCTION

INDIAN COAL INDUSTRY History

The first coal mining operation commenced in 1774 in the Raniganj coalfield on the banks of River Damodar. The introduction of steam locomotives and WW-I stimulated demand for coal, and production peaked at 18 million tons (mts) during the 1920s. Till independence, the Indian coal industry witnessed sporadic phases of growth. Since the private sector followed unscientific methods, productivity was low. The Indian government took steps to correct this and improve the working conditions in the nations coal industry. National Coal Development Corporation (NCDC), comprising of railway owned collieries, was established. In the early 1970s, all privately owned coal producing companies were nationalized under the Coal Mines (Nationalisation) Act.

Size
The Indian coal industry is the worlds third largest in terms of production and fourth largest in terms of reserves. Around 70% of the total production is used for electricity generation and the remaining by the steel, cement and other heavy industries. Coal is also used as fuel for domestic purposes. As a result of exploration carried out up to the depth of 1200m by the Geological Survey of India, Central Mine Planning & Design Institute Limited and Mineral Exploration Corporation Limited etc, a cumulative total of 267.21 Billion tonnes of Geological Resources of Coal have so far been estimated in the country as on 1.4.2009.

Coal and Steel

Coal is used as a raw material for the production of steel. Coking coal requirement in steel production is expected to touch over 85.34 Million Metric Tons in 2011-12. High coking coal demand by the Indian steel industry and low reserve base has boosted the import of coking coals.

Steel Industry is the second largest user of Coal after the Electricity Industry. More than 600 million tons of Coal were used to produce more than 1 Billion Tons of Steel. Coal is an essential raw material along with iron in the production of steel which is one of the useful metal products used by man today. Coking Coal is a solid carbonaceous residue derived from low-ash, lowsulfur bituminous coal. Metallurgical coke is used as a fuel to smelt Iron in the Furnace. This Cast Iron which is produced is further refined to make Steel. Around 0.63 tonnes of coke produces 1 tone of Steel

Types of Coal
ANTHRACITE Anthracite is the highest rank coal and is characterized buy low volatile matter (always less than 10%) and high carbon content. It has a semi- metallic luster and is capable of burning without smoke. Semi- anthracite is coal midway between low volatile bituminous coal and anthracite. BITUMINOUS Bituminous coal is that coal which in rank is between sub-bituminous coal and semi- anthracite. Volatile matter on dry ash free basis range from between 10% and 14% to 40% and over. Usually divided into three sub groups- low volatile medium volatile and high volatile. SUB-BITUMINOUSCOAL Sub- bituminous coal is the next highest coal in rank after lignite. Typical bed moisture levels are 10-20%, and calorific value also enters in to the classification scheme. LIGNITE Lignite is a low rank coal containing high moisture. Generally a coal is considered to be a lignite if it contains greater than 20% bed moisture (classification schemes for lignite are generally based on calorific value). Other characteristics of lignite are low reflectance, high volatile matter as high oxygen and low carbon and low carbon level and often the presence of some woody structure. In general the term is synonymous with brown coal. PEAT Peat is the first stage in the conversion of vegetable matter to coal. Bed moistures are high, often greater than 75% and plant remains are clearly visible.

ASH The inorganic residue after the incineration of coal to constant weight under standard conditions. Is less than the mineral matter because of the chemical changes occurring during incineration, with most important differences being loss of water of hydration, loss of carbon dioxide, and loss of sulphurous gases from sulphides.

Top 5 States in Coal resources

1. Jharkhand- 76712million tones (mts) 2. Orissa- 65227mts 3. Chhattisgarh- 44483mts 4. West Bengal- 28327mts 5. Madhya Pradesh- 20981mts

Top 3 Coal Mining Companies in India

1. Coal India Limited. (CIL) 2. Neyveli Lignite Corporation 3. Singareni Collieries Company Limited (SCCL)

Others Coal Mining Companies in India

1. TATA STEEL 2. Bharat Coaking Coal limited 3. Central Mine Planning and Design Institute Limited 4. Eastern Coalfields Limited 5. Gujarat Mineral Development Corporation Limited 6. Mahanadi Coalfields Limited 7. North Eastern Coalfields 8. Northern Coalfields Limited 9. Western Coalfields Limited 10. South Eastern Coalfields Limited

A Review of Major Coal Mining Coampanies

Coal India Limited. (CIL) Chairman cum Managing Directors- Shri N C Jha Coal India Limited (CIL), a holding company, was set up on 1st November, 1975 to streamline the working of the coal industry in a manner conducive to more efficient administration and rapid stepping up of coal production. The company has under it seven producing subsidiaries and one planning and design subsidiary. The coal mines in the north eastern region are directly managed by the holding company. Dankuni Coal Complex, a coal carbonisation plant in West Bengal, is also directly under the holding company. Market Share Company is the largest coal producing company in the world, based on its raw coal production of 431.26 million tons in fiscal 2010.Company is also the largest coal reserve holder in the world, based on its reserve base as of April 1, 2010. Company had a total of 18,862.9 million tons of Total Reserves, and a total of 64,218.0 million tons of Total Resources, as on April 1, 2010. Size As of March 31, 2010, company operated 471 mines in 21 major coalfields across eight states in India, including 163 open cast mines, 273 underground mines and 35 mixed mines (which include both open cast and underground mines). Products Company produce non-coking coal and coking coal of various grades for diverse applications. Non-coking coal represents a substantial majority of raw coal production. Most of cos coal production is from open cast mines. Company continue to expand its raw coal production capacities. Current Projects As of March 31, 2010, 45 projects (comprising 22 capacity expansion projects for existing mines and 23 new mine projects) had received relevant investment approval (of its Board and the board of directors of relevant Subsidiary companies) and were in various stages of mine planning anddevelopment: (i) 25 projects, with an aggregate estimated capacity of 47.51 million tons per annum were at various stages of implementation and are expected to become operational by the end of fiscal 2012; and

(ii) 20 longer gestation projects,with an aggregate estimated capacity of 33.27 million tons per annum, are expected to become operational during the 12th Five Year Plan period (2013-2018).

Neyveli Lignite Corporation Chairman cum Managing Director- Shri A.R Ansari Neyveli Lignite Corporation Limited is a Government of India Undertaking established on 14th November, 1956 engaged in Mining Lignite and using the same for Power Generation. Neyveli Lignite Corporation Limited (NLC) is a public sector unit having operations at Neyveli in Tamil Nadu. The Government of Indias holding stands at 94%. Size The company has 4 mines with a combined capacity of 30.6 million tonnes of lignite per annum (MTPA), and 3 thermal power stations, with a combined generation capacity of 2,740 MW per annum. Products The main core activity of NLC is Lignite Excavation and power generation using lignite excavated. NLC is having three lignite mines named as Mine I, Mine II and Mine IA. Also raw lignite is being sold to small scale industries to use it as fuel in their production activities. NLC is generating power in its Thermal Power Station I, Thermal Power Station -II and in Thermal Power Station I Expansion. All the southern states are beneficiaries of this power generation project. Key Highlights The company is implementing a mine-cum-power project at Barsinger (Rajasthan) at an aggregate revised capital cost of Rs 18 bn. A joint venture between Mahanadi Coalfields Ltd, Hindalco and NLC, having an equity participation of 70:15:15, respectively, has been established for mining coal from Talabira II and III coal blocks. NCL also has proposed to enter into a JV with Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd for setting up a coal-based power plant of 2,000 MW capacity in Uttar Pradesh, at an estimated cost of Rs 100 bn. As part of a diversification programme, the company has decided to venture into the green energy business by setting up wind-based power project, with an initial capacity of 50 MW, in Tirunelveli district in Tamil Nadu.

SINGARENI COLLIERIES COMPANY LIMITED Chairman cum Managing Director- Shri S.Narsing Rao Singareni Collieries Company Limited (SCCL), incorporated as a public limited company in 1920, became a Government Company in 1956 when Government of Andhra Pradesh acquired major share holding. The share capital of the company is held by Government of Andhra Pradesh and Government of India in the ratio of 51:49 respectively.The loan capital is provided entirely by the Government of India. The assistance is governed by a Tripartite Agreement between Government of India, Government of Andhra Pradesh and Singareni Collieries Company Limited. The last such agreement for the period 1990-97 was signed in October, 1994 covering the period from 01.04.1990 to 31.03.1997. A tripartite agreement for 9th Five Year Plan period is in advanced stage of finalization. Size The Company manages the coal mining operations in Andhra Pradesh. The reserves stretch over 350 sq.kms of Pranahita-Godavari Valley of Andhra Pradesh with proven deposits of 8791 million tonnes as on April 2010. The mining activities are concentrated in four districts of Andhra Pradesh viz. Khammam, Adilabad, Karimnagar and Warangal. . It currently operates 14 open-pit and 36 underground mines in four districts, employing about 78,000 people. Market Share The authorised capital of SCCL as on 31.03.2001 was Rs.1800 crores and the paid-up capital on that date was Rs.1733 crores. The total turn-over of the company was Rs. 2743 crores in the year 2010-11.

COMPANY OVERVIEW
TATA STEEL LIMITED
HISTORY Tata Steel Limited, incorporated in 1907 by Shri Dorabji Tata, is India's largest private sector steel company belonging to the Tata Group. The company manufactures finished steel, both long and flat products like hot and cold rolled coils and sheets, galvanized sheets, tubes, wire rods, construction re-bars rings and bearings. The company markets its products in brands like "Tata Steelium, Tata Tiscon, Tata Pipes, etc. The company is among the lowest cost producers of steel in the world. Its main plant is located in Jamshedpur, having a manufacturing capacity of 5 MTPA (million tonne per annum) while its processing units, captive iron ore and coal mines are located in the states of Orissa, Jharkhand, Maharashtra, Gujarat and West Bengal. With its head office located in Mumbai, the company functions through a network consisting of trading arms and operation and projects sites spread across countries in the continents of Asia, Europe and America. Apart from Steel there are six Strategic Business Units or divisions for Bearings, Ferro Alloys and Minerals, Rings and Agrico, Tata Growth Shop, Tubes, and Wires. It operates in more than 20 countries and has a commercial presence in over 50. In the past few years, Tata Steel has invested in Corus (UK), Millennium Steel (renamed Tata Steel Thailand) and NatSteel Asia (Singapore). With these, the company has created a manufacturing and marketing network in Europe, South East Asia and the Pacific-rim countries. Tata Steel is among the lowest cost producers of steel in the world and one of the few select steel companies in the world that is EVA+ (Economic Value Added). Its captive raw material resources and the state-of-the-art 4.9 MTPA (million tonne per annum) plant at Jamshedpur, in Jharkhand State, India give it a competitive edge. With the acquisition of Corus, Tata steel has become the fifth largest steel maker in the world. Soon the Jamshedpur plant will expand its capacity from 4.9 MTPA to 7 MTPA by 2008. The Company plans to further enhance its capacity, manifold through organic growth and investments. Its associated / a subsidiary constitutes about 24 MTPA making its total capacity about 29 MTPA which is the fifth largest in the world. Out of this the steel

business comprising of Flat Products, Long Products, RM Division, CSI Division, and Shared Services constitutes 85% of its business. The rest comprising of Tubes, Bearings, Agrico Products constitutes the rest 15% business. Tata Steel was established by Indian businessman Jamshedji Nusserwanji Tata in 1907 (he died in 1904, before the project was completed). Tata Steel introduced an 8-hour work day as early as in 1912 when only a 12-hour work day was the legal requirement in Britain. It introduced leave-with-pay in 1920, a practice that became legally binding upon employers in India only in 1945. Similarly, Tata Steel started a Provident Fund for its employees as early as in 1920, which became a law for all employers under the Provident Fund Act only in 1952. Tata Steel's furnaces have never been disrupted on account of a labour strike and this is an enviable record. ACHIEVMENTS Tata Steel formerly known as TISCO (Tata Iron and Steel Company Limited) is the world's seventh largest steel company, with an annual crude steel capacity of 31 million tonnes. It is the largest private sector steel company in India in terms of domestic production. Ranked 258th on Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of companies. Tata Steel is also India's second-largest and second-most profitable company in private sector with consolidated revenues of 132,110 crore (US$ 29.99 billion) and net profit of over 12,350 crore (US$ 2.8 billion) during the year ended March 31, 2008. Tata steel in the 8th most valuable brand according to an annual survey conducted by Brand Finance and The Economic Times in 2010. Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions, the company has become a multinational with operations in various countries. The Jamshedpur plant contains the DCS supplied by Honeywell. The registered office of Tata Steel is in Mumbai. The company was also recognized as the world's best steel producer by World Steel Dynamics in 2005. Tata Steel annually produces 18 million tonnes of steel in India and 52.32 million tonnes overseas, making it the fifth largest steel producer in the world. It produced a record-breaking 10.32 million tonnes of salable steel in its Jamshedpur works in 2009-10. The company's gross revenue in that financial reporting year was 621261.65 crore and PAT was 20196.24 crore. Its PBT was

422212.15 crore in the same year. In the year 2000, the

company was recognised as the world's lowest-cost producer of steel.

BOARD OF DIRECTORS The operations and successes of the Tata Steel Group are taken care of by its capable management and Board of Directors. At the helm of affairs are the Companys Directors, whose profiles offer a brief introduction and help get acquainted with them

NAME Ratan Tata B Muthuraman H M Nerurkar Nusli N Wadia S M Palia Suresh Krishna Ishaat Hussain Jamshed J Irani Subodh Bhargava Jacobus Schraven Andrew Robb Kirby Adams

DESIGNATION Chairman, Non Independent & Non Executive Director Non Executive Vice Chairman Managing Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Executive Non Independent Director Non-Executive Non Independent Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Executive Non Independent Director

Mr. Ratan Tata Chairman

VISION & MISSION

The long journey of Tata Steel has seen the Company re-define its performance parameters in a number of ways to become the global steel industry benchmark for value creation and corporate citizenship. It ensures a total commitment to its ethical business practices and a people oriented vision.

VISION
We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship We make difference though: Our people, by fostering team work, nurturing talent, enhancing leadership capability and acting with pace, pride and passion. Our offer, by becoming the supplier of choice, delivering premium products and services, and creating value for our customers. Our innovative approach, by developing leading edge solutions in technology, processes and products. Our conduct, by providing a safe working place, respecting the environment, caring for our communities and demonstrating high ethical standards.

MISSION
Consistent with the vision and values of the founder Jamsedji Tata, Tata Steel strives to strengthen Indias industrial base through the effective utilization of staff and materials. The means envisaged to achieve this are high technology and productivity, consistent with modern management practices. Tata Steel recognizes that while honesty and integrity are the essential ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere free from fear, and thereby reaffirms its faith in democratic values.

VALUES
Trusteeship Integrit y Respect for the individual Credibilit y Excellence

PRODUCTS:
Raw Materials: With a century of experience in sourcing raw material through scientific research & development and sustainable mining, Tata Steels three main areas of raw material operations are iron-ore, chromites and coal. The Companys long-term strategy has been designed to have greater control over raw material resources and achieve its security across global operations. A pioneer in prospecting, discovering and mining iron ore, coal and other minerals, Tata Steel has nearly a century of experience in scientific and sustainable mining; mine planning, development and research. Company-owned and operated mines and collieries have since its inception, met most of the raw material needs of the Companys Steel Works. The Raw Materials Division of Tata Steel raises over 14 million tonnes of ores from its captive collieries, iron ore mines and quarries spread over the states of Jharkhand and Orissa. The Companys Raw Materials operations in India are mainly spread in three broad areas iron-ore, chromite and coal. The chromite and manganese mines and their operations have been amalgamated under the Ferro Alloys & Minerals Division that acts as a separate profit centre. Iron-ore and coal being the two key raw materials for steel making, efficient and scientific mining operations give the Company a competitive edge in steel production. IRON ORE AND COAL Ever since the discovery of the mineral in 1903, Iron ore mining has become an integral part of steel making at Tata Steel. The iron ore units are located in Noamundi, Joda and Katamati in the states of Jharkhand and Orissa. Tata Steel Limited also has manganese mines and dolomite quarries in Orissa, located around 150 kms from Jamshedpur, home to the Steel Company's manufacturing facility. The Steel Company's iron ore units produce various grades of high quality iron ore including rich blue dust ore. Operations at the mines, including services are managed by Integrated Management Systems.

FERRO ALLOYS AND MINERALS Tata Steels Ferro Alloys & Minerals Division (FAMD) is the m arket leader of chrome in India and is among the top six chrome alloy producers in the world, with operations spanning two continents. It is also the leading manganese alloy producer in India and is a leading supplier of dolomite and pyroxenite. FAMD has leveraged the core strengths of Tata Steel to grow successfully into a strategic business unit and separate profit centre within the Company. AGRICULTURAL IMPLEMENTS Tata Steel manufactures superior quality agricultural implements through its Agrico Division from Tata High Carbon Steel, after using a single piece by forging. The high quality of the products makes them the First choice in agricultural equipment procurement both in the public and private sectors alike. TATA AGRICO: Superior quality agricultural implements are manufactured at Tata Agrico, a division of Tata Steel that happens to be the pioneer in this segment in the country. The product range includes Hoes, Sickles, Crowbars, Shovels, Pick Axes, Hammers, TP Series Hoes (Powrah), Garden Tools and Files. These implements cater to the needs of the Agricultural sector, Horticulture Industry, Maintenance of Roads, Dams, Railway- Tracks, Collieries etc. in India and abroad. The product offerings have been recently enhanced with the launch of three new products (axe, rotavator blade, chaff cutter) and 21 variants in the existing product category. FLAT PRODUCTS Galvanised corrugated sheets under brand name Tata Shaktee has been consistently delivering on its promises of longevity and strength. Tata Steelium, another product of the Flat Products Division happens to be the world's first branded Cold Rolled Steel and has a strong presence in the retail segment through exclusive shops called Steelium zones. World class steel products are manufactured at the Flat Products Division of Tata Steel under three basic categories - Hot Rolled Products, Cold Rolled Products and Galvanised products. With commanding brands like Tata Shaktee and Tata Steelium under its umbrella, the Company is continuously surging ahead in its commitment to re-define the future of Indian Steel. Integrated supply chain starting with self-sufficiency in raw materials procurement, futuristic technology, continuous pursuit for innovation and improvement and an exhaustive pool of highly skilled manpower are some of the factors that have resulted in impressive performance records for this group. LONG PRODUCTS

Thermo Mechanically Treated (TMT) rebars from the Long Products Division are produced under the brand name Tiscon and are the first of its kind to have been introduced in India. Tiscon has been the first rebar in the country to be awarded the Super brand status in the construction rebars category. The Long Products Division of Tata Steel operates as a separate profit centre and was the first to introduce the Thermo Mechanically Treated (TMT) rebar under the brand name Tata Tiscon in the country.

BEARINGS
A wide variety of bearings and auto assemblies are manufactured by Tata Steel at its Bearings Division, with a production capacity of 30 million bearing numbers per annum. Tata Bearings and auto components happen to be the preferred choice of key players in the targeted industry segment. WIRES Steel wires under the brand name Tata Wiron comprise 30% market share of the organised wire market in India. A wide range of wires manufactured by Tata Steels Wire Division cater to the needs of the various industry segments such as automobile, infrastructure, power and general engineering. TUBES Pipes manufactured by the Companys strategic business unit Tata Tubes, is the most prominent brand in the industry today which is retailed through a wide distribution network. A deeply thought out branding exercise was undertaken in order to unleash the power of the Tata Pipes' brand in the welded steel category. PLANTS AND EQUIPMENT Multidisciplinary engineering approach for design, manufacture and supply of high precision equipment is offered to various industry sectors by Tata Steels Growth Shop division. Services include erection and commissioning of all types of equipment in plants and industrial buildings in addition to a wide variety of jobs in machining and assembly. RAW MATERIAL TECHNOLOGY USE OF IRON ORE FINES Instead of using only lumps of iron ore, Tata Steel has adopted a combination of techniques for mining, beneficiation, sintering and pelletisation of ore, resulting in reduction in the generation of fines in the mines and increase in usage of the fines in Iron making...

IRON MAKING TECHNOLOGY IMPROVING BLAST FURNACE PRODUCTIVITY Reduction in the consumption of iron ore, coal and fluxes and the energy required for reducing each tonne of hot metal is at the core of technological research in iron making. To improve the productivity in the Blast Furnace process to over 3t /day/ m3 of furnace... STEEL MAKING TECHNOLOGY ELECTRIC ARC FURNACE (EAF) The capital costs involved in EAF is lower as compared to BOF (Basic Oxygen Furnace). Modern EAF has features such as high transformer capacity, Oxygen lances, Oxy fuel burners, coal injection system, bottom purge holes, water cooled boxes above the slag line, water cooled roof, EBT (eccentric bottom tap hole), Charge hoppers with vibrators etc. to improve productivity... STEEL MAKING PROCESS Tata Steel has over the years, undertaken extensive research in making the process of steelmaking more energy efficient, economically viable and environmentally sustainable. Given is a virtual representation of the steps involved in the Companys steelmaking process.

TATA STEEL INTERNATIONAL GLOBAL POSITIONING

Tata Steel International Global Positioning pioneers and develops new opportunities for Tata Steel Group. Global Positioning is a genuinely global business. It has major hubs in London, Chicago and Hong Kong and is directly represented in all major steel consuming and producing regions. Global Positioning is committed to building close relationships with customers and suppliers and is able to offer one of the most comprehensive ranges of commodity steel products. Whether in large or small quantities, Tata Steel International Global Positioning aims to supply everything the customer needs. Tata Steel International Global Positioning brings a variety of support services to the product package with teams providing specialist logistics, financial and technical services. The Tata Steel Groups growth and globalisation strategy is driven by its business expansion while maintaining profitability and mitigating risks. The Tata Steel Group over the years has focused on enhancing raw material security and announced major joint ventures in various parts of the globe.

AUSTRALIA Bowen Basin Project Location: Bowen Basin in Central Queensland. Capacity: Mining capacity of 58 million tonnes of raw coal for 14 years. Press Releases Tata Steel's investment for the expansion of production at Carborough downs coal mine in Australia. Tata Steel acquires stake in Australian coal mines. CANADA Iron ore project Location: Northern Quebec, Labrador and Newfoundland provinces. Capacity: The DSO resource is estimated to be approximately 100 million tonnes. The LabMag deposit consists of 3.5 billion tonnes of proven and potential mineral reserves. These reserves are contained in the 4.6 billion tonnes of measured and indicated resources and 1.2 billion tonnes of inferred resources. Project Update: Tata Steel, along with NML is trying to work out an economically viable solution to advance the project. The feasibility study for the DSO project is progressing and production is expected to commence in 2011. IVORY COAST Nimba Iron ore Project Location: Nimba Iron ore deposits in Ivory Coast.. Capacity: To be assessed. Project Update: The project is in its initial phase that involves exploration and detailed feasibility assessments followed by construction of the mine and beneficiation facilities. Press Releases: Tata Steels joint venture in Ivory Coast for Mount Nimba Iron Ore. MOZAMBIQUE Key coal exploration tenements Location : Key coal exploration tenements (the Benga and Tete licences) held by Riversdale in Mozambique. Capacity: Potential to extract 720 million tonnes by open-cut methods from a major coal resource in the Benga Licence.

Press Releases Tata Steel Signs MoU with Riversdale Mining Limited. Tata Steel signs JV with Riversdale Mining for Mozambique Coal Project THE NETHERLANDS Operations: The I Jmuiden Steelworks is Corus largest and most cost-efficient steel making facility, with a production capacity of 7.6mtpa. Projects: A number of capital expenditure schemes are in progress at IJmuiden. Among them is a 20m pilot plant that is being jointly funded with ULCOS, the European Commission and the Dutch government. The 60,000tpa pilot plant is intended to prove the commercial and technical viability of a new iron making process called Hisarna. If successful, the project will considerably reduce the carbon dioxide emissions of the existing integrated steelmaking process. Hisarna would also be more energy efficient than existing technology and use cheaper and more abundant raw materials. OMAN Limestone Project Location: Uyun region in the Salalah province. Capacity: To be assessed. Updates: Exploration and feasibility studies are in progress. Press Releases: Tata Steels joint venture in the Sultanate of Oman For Uyun limestone. SINGAPORE Tata NYK Shipping Pte Ltd. Tata NYK Shipping Pte Limited is a Singapore based 50:50 joint venture between Tata Steel and Nippon Yusen Kabushiki Kaisha (NYK line), a Japanese shipping major. SOUTH AFRICA Tata Steel (KZN) (PTY) Ltd. TSKZN is a South Africa based subsidiary of Tata Steel, in the business of producing Ferro Chrome and Charge Chrome. Location: Richards Bay (in uMhlathuze Municipality) Capacity: 1,51,000 tonnes per annum.

Press Release Tata Steel steps into South Africa. Nine ex-cadets of TFA to represent India in South Africa.

THAILAND Tata Steel Groups equity in Tata Steel Thailand is 67.1%. Headquartered in Bangkok, its three main subsidiaries are SISCO, NTS and SCSC. In the year 2008, Tata Steel Thailand registered sales of 1.4 million tonnes. The Companys predominant market is in Thailand and its market share in 2008 was 31% in the long products business. The Company also has been improving continuously in the past few years with its various initiatives focused on reducing cost, improving productivity and quality. Production during FY 09 was at 1.07 million tonnes while sales at 1.1 million tonnes. Tata Steel Thailand is committed to moving forward in the journey for excellence and social accountability. The Company continuously improves its business processes and systems in accordance with its commitment to environmental responsibilities. UNITED KINGDOM

Corus
Corus, the European arm of the Tata Steel Group, is headquartered in London in the United Kingdom. Corus crude steel capacity in the UK is in the region of 13mtpa. Operations: Corus produces carbon steel by the basic oxygen steel making method at three integrated steelworks in the UK at Port Talbot, Scunthorpe and Teesside (currently mothballed), and special and alloy steels through the electric arc furnace method in Rotherham. In addition, there are a number of downstream rolling, coating and processing facilities. Performance: Liquid steel production in 2008-09 at 16 million tonnes was 20% lower than that of 2007-08. Turnover for the period was Rs.1,09,570 crore (US$ 21,539m). Projects: A number of capital expenditure schemes are in progress in the UK. Among them is the 60m BOS gas recovery plant at Port Talbot, which is expected to significantly reduce natural gas and electricity purchases and materially reduce carbon dioxide emissions at the site through the utilisation of gas generated inside the Basic Oxygen Steel plant. VIETNAM

Ha Tinh Project Location : Ha Tinh province. Capacity: A proposed steel complex with an estimated capacity of 4.5 million tonnes per year. VNSteel Press Releases JV between Tata Steel, Vietnam Steel Corporation and Vietnam Cement Industries. Vietnam Steel Corporation and Tata Steel sign an MoU.

JHARIA DIVISION
The Coal Mines Regulation 1957 provides a comprehensive frame work for the operation of our underground coal mines. The operations are governed by the Mines act, Factorys act, IBR, Central & State Pollution Control Board provisions. The division has a track record of proactively fulfilling the provisions of the statutes. Underground coal mining is difficult & arduous operation and it requires stringent safety norms. The division complies with the safety norms laid by the Director General of Mines Safety (DGMS).To ensure compliance & adherence to the safety norms, the division has an Internal Safety Organization (ISO), which directly reports to the divisional head. The division has an Occupational Health Specialist to monitor & prevent occupation health hazards. The division adheres to financial discipline as prescribed under various acts, such as Income tax, Sales tax etc. The internal Audit department of Jamshedpur supervises the compliances. The division also keep regular track of testing of equipments for Weights & Measurement and Pollution Control. KEY CUSTOMER GROUP / MARKET SEGMENTS
Key service requirements Timeliness & Consistency

Product type

Customer groups

Key product requirements Ash, Moisture, Standard

Internal (Jsr. Works) Clean coal

Deviation of ash & Cost of the product

External (PSU Steel Plants)

Ash, Moisture, Standard Deviation of ash & Cost of the product

Timeliness & Consistency

COMPETITIVE POSITION
After nationalization of the coalmines in 1971, most of the coalmines in the Jharia coalfields were put under Bharat Coking Coal Limited (BCCL), a subsidiary of Coal India Limited. Indian Iron & Steel Company (IISCO) also operates two collieries for its captive consumption. The nearby steel plants of SAIL & IISCO have the top charge batteries for coke making where the requirement of prime coking coal is mostly met by BCCL and part by imports. BCCL has around 450 mines in the Jharia Coalfields, producing about 30 MTPA of raw coal. Out of which 10MT from Underground and balance 20mt from opencast mines. The cost of production in open cast mines is lower than the underground. Jharia division of Tata Steel operates five U/G coalmines with combined annualised raw coal production of 1.36MT. The requirement of prime coking coal at Steel Works, Jamshedpur reduced considerably with introduction of Stamp charge batteries. The division proactively acted and established a market for the PSU Steel Plants of SAIL/ IISCO. The cost competitiveness, product quality consistency & timeliness provided an edge to the division in respect to BCCL and as a result it now sells 55% of its total clean coal production to PSUs against 3% in 99-2K. The division has continuously increased its productivity and consistently reduced the cost to remain competitive whereas globally & locally, the underground mining are becoming economically unviable for many of the established players in this field. There is no immediate plan of these PSUs for conversion to Stamp charge .There exists a gap between requirement & availability of coking coal in the country which is getting widened with Rs-$ parity and thus providing opportunity to the division to increase its market share. Moreover the division is always alive to its competitive strength through various cost effective & efficiency improvement initiatives along with maintaining the its competitive advantage of product quality & timeliness in its delivery. Amendment in the Coal Mines Nationalization Act is expected in the near future. The company is already exploring the possibility / viability of acquiring new coal leases for future growth.

FACTOR FOR SUCCESS

The manpower productivity, cost effectiveness, safety standards, consistency in quality of the product & timeliness in delivery are some of the key parameters that determine the success of

any U/G coal mines and the division has always maintained an edge compared to PSU mines in these areas. It is also reflected in the recent requirements indicated by the PSU steel plants for Jharia coal.

STRATEGIC CHALLENGES
The strategic challenges are reflected in strategic objectives of the divisional scorecard. Some of these challenges are: To maintain safety standards specially with increasing depth and Sustainable growth of manpower productivity of this manpower intensive existing underground mining operations, to contain the escalating predominantly wage cost which alone amounts to almost 60 % of the cost of production by rightsizing and rationalization of workforce through training, multiskilling etc. Some of the other operational challenges before the division are: Suitable roof supports & other safety protections at a depth of 400/500 meters, Availability of sand for stowing (filling the void created by extracting the coal) for the surface protection against subsidence, developing the workforce to suit the needs of increased level of mechanization, contain the power cost etc Unlike in other countries, most of our properties are lying in thick seams at greater depth. The extraction/Yield of thick coal seams at greater depths in India is conventionally very low. Therefore, better extraction of coal from thick seam and developing a suitable method of working with best suited strata control techniques are today key technological challenges before the division besides consolidating & expanding the success of mechanization to other working areas depending upon the geo-mining conditions. The division has therefore proactively acted in all these key areas and initiated actions to meet those challenges like Roof Bolting Technique as major strata control method, plan to increase share of mechanised production from today's 30% etc. Due to the change in the coke making technology at Jamshedpur works, the producer of the division will have to be sold in the open market where cost, quality, consistency & timeliness will be key factors. The Division has the system of performance improvement through the process of Scorecard and AQUIP. The strategic Objectives of the division are derived from the vision and strategic goal of the company. The Strategic goals are translated into actionable

KPMs, which form the matrix in the Divisional Scorecard and are deployed at the unit level through AQUIPs. Simultaneously, all activities are directed towards the thrust areas cost, customer, change & knowledge. The QMS ensures systematic evaluation & improvement of the key process and performance measures throughout the division. The division has also initiated TOP and completed 3 Waves covering all the operating units in which nearly 2000 ideas were generated-out of which 218 ideas were evaluated with a total saving potential of Rs. 28 crores As a part of systematic programme to improve upon the Quality, Quantity, Cost & Change, the division in the year 2001-02, completed 203 CIPs projects with a saving of Rs. 938 lakh. The organizational learning and sharing process is achieved through cross-functional team, Knowledge Management System, dialogues, quality circle activities, internet etc.

ORGANIZATIONAL CHART

GENERAL MANAGER

MEDICAL SERVICE

P& S

ACCOUNTS ITS

GEOLOGICAL IMP TECHNICAL G.Ms SURVEY GROUP GROUP OFFICE

JAMADOBA GROUP

SIJUA GROUP

HR/IR

ADMINISTRATI ON HEAD ADMINISTRA TION

PLANNING ENGINEERING SERVICES CHIEF OF PLANNI NG PROJEC T IMPLE. ENVIRO MENT CHIEF OF ENGINEERING SERVICES

CHEIF

CHIEF OF CHIEF OF JAMADOBA SIJUA GROUP GROUP

CHIEF OF HR/IR

DEPT. HEAD

JAMADOB A COLLIERY

BHELATA ND A COLLIERY SIJUA COLLIERY

HR/IR

TSRDS

WORKSHOP SERVICE

DIGWADI H COLLERY 6 & 7 PIT COLIIERY

TRAI NING

GH/DB

POWER ENGINEERI NG EIT

BCPP

SECURITY

PLANNI NG&SU RVEY SAFETY & ENVIRO MENT

JCPP

GROUP OFFICE

POLICIES

GROUP OFFICE

TOWN MAINTANE NCE DEPARTME NT

HUMAN RESOURCE POLICY Tata steel is an equal opportunity employer. Tata steel recognizes that its people are the primari source of its competitiveness

It will pursue management practices designed to enrich the quality of life of its employees, develop their potential and maximize their productivity. It will aim at ensuring transparency,fairness and equity in all its dealing with its employees. Tata steel shall strive continuously to foster a climate of opennes, mutual trust and teamwork. In the process Tata steel shall strive to be the employer of choice by attracting the best available talent and ensuring a cosmopolitan workforce.

QUALITY POLICIES Consistent with the group purpose, Tata steel constantly strive to improve the quality of life of the communities it serves through excellence in all facets of its activities. We are committed to create value for all our customers and key stakeholders by continually standardizing, improving and involving all our employees. This policy shall from the basis of establishing and reviewing the Business Objective and Strategies and shall be communicated across the organization. The police will be reviewed to align with business direction and to comply with all the requirements of TQM Principles.

CORPORATE SOCIAL RESPONSIBILITY & ACCOUNTABILITY POLICY Tata Steel believes that the primary purpose of a business is to improve the quality of life of people. Tata Steel shall volunteer its resource, to the extent it can reasonably afford, to sustain and improve healthy and prosperous environment and to improve the quality of life of the employees and the communities it serves. Tata Steel shall conduct its business ever mindful of its social accountability, respecting applicable laws and with regard for human dignity. Tata Steel shall positively impact and influence its partners in fostering a sense of social commitment for their stakeholders.

ENVIRONMENTAL POLICY Tata Steels environmental responsibilities are driven by our commitment to preserve the environment and are integral to the way do business.

1.

Tata Steel are committed to deal proactively with climate change issue by efficient use of natural resources and energy; reducing and preventing pollution; promoting waste avoidance and recycling measures; and product stewardship.

Tata Steel shall identify access and manage our environmental impact. Tata Steel shall regularly monitor, review and report publicly our environmental performance. Tata Steel shall develop & rehabilitate abandoned sites through a forestation and landscaping and shall protect and preserve the biodiversity in the area of our operations. Tata Steel shall enhance awareness, skill and competence of our employee and contractors so as to enable them to demonstrate their involvement, responsibility and accountability for sound environmental performance. 2. Tata Steel are committed to continual improvement in our environmental performance. Tata Steel shall set objective targets, develop implement and maintain management standards and systems, and go beyond compliance of the relevant industry standards, legal and other requirements. 3. Tata Steel will truly succeed when we sustain our environmental achievement and are valued by the communities in which we work.

SAFETY PRINCIPLES & OCCUPATIONAL HEALTH POLICY Tata steels safety and occupational health responsibilities are driven by our commitment to ensure zero harm to people we work with and society at large and are integral to the why we do business. Safety Principles Safety is a line management responsibility. All injuries can be prevented. Felt concern and care for the employee on 24 hours safety shall be demonstrated by leaders. Employee shall be trained to work safety. Working safety shall be condition of employment. Every job shall be assessed for the risk involved and shall be carried out as per authorized procedures/checklist/necessary work permit and using necessary work permit and using necessary personal protective equipment.

Tata Steel is committed to continual improvement in our S & OH performance. Tata Steel shall set objective-targets, implement and maintain management standards and systems, and go beyond compliance of the relevant industry standards, legal and other requirements.

RESEARCH POLICY Tata steel believes that research provides the foundation for sustained, long term, stakeholder delight. Tata steel shall nurture and encourage innovative research in a creative ambience to ensure that the competitive advantages in its overall business is retained and surpassed. Towards this goal, the company commits itself to providing all necessary resources and facilities for use by motivated researchers of the highest calibre. Research in Tata Steel shall be aligned to the technological initiatives necessary to evolve and fulfil the overall business objective of the company.

EXPERIENTIAL LEARNINGS
DEPARTMENT:
The Department where I worked in is Central Accounts. Every organization must have an Accounts department because it is a back bone of any organization. To get control over various cost related activities, taxations, and proper utilization of funds and various other financing activities there must be a Accounts department. There are various departments which handle the work necessary for quick and affective completion of any task. The figure shown below depicts the Central Accounts department which consists of the Head Accounts which is managed by : Manager Cost Senior Manager

 Manager Payroll

HEAD ACCOUNTS

Sr. MANAGER

MANAGER (COST MANAGEMENT)

MANAGER (PAYROLL and SETTLEMENT)

TEAM OF SUPERVISORS

There is a team of supervisors (12 members) who assists the Managers in the day to day working.

JOB DESCRIPTION
JOB IDENTIFICATION: JOB TITLE: TRAINEE LOCATION: TATA STEEL JHARIA DIVISION DEPARTMENT: CENTRAL ACCOUNTS UNIT: PRODUCTION JOB SUMMARY: Study of Central Excise and Service Tax Calculation of royalty (2010-11) Monthly calculation of Excise duty on coal Presentation given on Central Excise and Service Tax

MY EXPERIENCE IN TATA STEEL JHARIA DIVISION:

These two months in TATA STEEL Jharia Division, Dhanbad are unforgettable for me. The experience, which I gained during these days, was tremendous. I have made good relation with so many people in the Central Accounts Department, where I did my project and also in other departments too. I found everybody within the company very nice, helpful and co-operative. The experience I have gained from my project will be very helpful to enrich and nourish my career in the near future. Here I got a great opportunity to work in a practical environment. I also got opportunity to visit Coal mines and see how the works is carried on under the mines.

MY LEARNINGS FROM THE PROJECT

. Some of the things which I learnt from my Summer Training are as follows: what is CETA, Cenvat Credit, Vat How the goods is valued in Excise, What is the valuation rules & procedure for calculating the cost , What is the rules & procedure of payment the Central Excise duty. What if duty cannot be levied within the given period of time. Study of Service Tax by GTA under Reverse charged method Types of taxable service under Service Tax Input services used at TATA STEEL Jharia Devision Output services provided at TATA STEEL Jharia Devision To file monthly return through ER1 form Lastly I concentrate on the Excise Audit & Powers of Excise Officer so that one can know the broader aspect of this term.

INTRODUCTION
Government needs funds for various purposes like maintenance of law & other order, defense, social/ health services etc. Government obtains funds from various sources, out of which one main source is Taxation. Taxes are conventionally broadly classified as Direct Taxes & Indirect taxes. Direct taxes are those, which the taxpayer pays directly from his Income/Wealth/Estate etc. Indirect taxes that the taxpayer pays indirectly while purchasing goods & commodities, paying for the services etc. In case of indirect taxes one person pays them but he recovers the same from another person. Thus the person who actually bears the tax burden (the ultimate consumer) pays it indirectly through some other person, who practically, merely acts as collecting agent. Broadly speaking, direct taxes are those, which paid after the income reaches in the hands of tax payer. Important Direct taxes are Income Tax, Gift Tax & Wealth Tax. Import Indirect taxes are Central Excise (Duty on manufacture), Customs (Duty on Imports & Exports), Central Sales Tax (CST) & Service Tax. As tax payers does not feel a direct pinch while paying indirect taxes, resistance to indirect taxes is much less compared to resistance of direct taxes. Manufacturers/ Dealer psychology also favors indirect taxes because they feel that they only collect the tax & not pay the tax. Indirect taxes are easier to collect & tax evasion is comparatively less in Indirect taxes. The manufacturer/ trader who collects the taxes in his invoice and pays it to the govt., has a psychological feeling that he is only collecting the taxes and is not paying out of his own pocket (though this feeling may not be always correct). It has been observed that top management takes very keen interest in direct tax matters, while matters relating to Indirect taxes are usually handled by lower management, though revenue implications are much higher in Indirect Taxes. Great care is taken in making any payment and sanctioning any expenditure, while decision in respect of debits & Credits in Cenvat Credit Account.

It was a great pleasure for me that I was assigned the most relevant title, as regards Summer Training project, i.e., Study of Application of Central Excise & other Taxes & Documentation at Tata Steel . In this Project we are going to deal three t ype of Taxes i.e., Central Excise , service Tax, Value Added Tax, all these are Indirect Taxes. Tata Steel is the world's 6th largest steel company. It operates in 24 countries and commercial presence in over 50 countries. Tata steel formerly known as TISCO (Tata iron and steel company limited) is a steel company based in Jamshedpur, India. Tata steel is Asias first and Indias integrated private sector steel company. The registered office of Tata steel is in Mumbai.

Central Excise Central excise is a tax on act of manufacture or production while sales tax is an act on Sales and for custom duty it is tax on import of goods within the customs. Central Excise duty is an indirect tax charged on Excisable goods that are manufactured or Produced within the territorial boundary of India, except 1) That good which are produced in Special Economic Zone. 2) Which are exempted in the tariff 3) Goods which are manufactured for Export. Goods are Dutiable only if they are Movable, Marketable, find Place in Tariff, & manufactured in territorial boundaries. Central Excise Act 1944 is followed for levy of duty. & the duty is calculated by the Central Excise tariff Act 1985. Central Excise rules are extend to all over India.

Service Tax It is a tax imposed on the services provided within the territorial boundary of India. ExceptJammu and Kashmir and outside India. Service Tax does not have its own Act; it is managed by Finance Act 1994. Service tax was imposed for first time on 3 services w.e.f. 1-7-1994 and now it is 119 services including the two new services introduced in budget 2011-12. VAT Value Added Tax (VAT) is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. It is a consumption tax because it is borne ultimately by the final consumer.

In other words, it is a multi-stage tax, lavied only on value added at each stage in the chain of production of goods and services with the provision of a set-off for the tax paid at earlier stages in the chain. The objective is to avoid 'cascading', which can have a snowballing effect on prices. It is assumed that due to cross-checking in a multi-staged tax, tax evasion will be checked, resulting in higher revenues to the government.

OBJECTIVE The objectives of the study as regards the summer training project are as follows:

To know the Central Excise, Service tax & VAT To Study all related aspects & the law relating to Central Excise. To analyze the difference between central excise tax and sales tax. Why Excise duty is known as Central Excise Duty as others known as simply the service tax, VAT etc. To know CENVAT credit facility. What is the Impact of implementation of Central Excise on Coal from 24/3/2011. What Services are provided by the Company? To gain the deep knowledge about the different Taxes. To know the chargeability of Taxes, Exemptions, Extent. To study the basics of the Indian Steel Industry. To study the basics of the Indian Coal industry. To know the Products those are manufactured in the Company. Goods produced are for Captive Consumption or it is sold in market. What are the methods of Valuation of manufactured Goods under CETA. To Study the Input Goods on which Central Excise & VAT are charged & Input Services on which Service Tax is charged. To study the Taxes paid by the company in different months. To know the documentation process & methods. To know How to fill the Returns for different Taxes. What will be case if there any failure of paying the duty in due time.

CENTRAL EXCISE
Excise is specified as Central Excise
The excise is charged by both the central & State Government. Central Excise includes the duty of excise on Tobacco & other goods manufactured in India. Except Alcoholic liquors for human consumption, Opium, Narcotics. But it includes Medical & toilet preparation containing Alcohol, Opium or Narcotics. Power to impose Excise on Alcoholic liquors for human consumption, Opium, Narcotics is granted to State Government.

Central Excise Act, 1944 (CEA)- This is the basic Act providing for charging of duty,
valuation, powers of officers, provisions of arrests, penalty etc. It has been amended from time to time. The name of Act was Central Excise & Salt Act, 1944. The word Salt was dropped in 1996. Basis Conditions of Excise Liability Section3 of Central Excise Act (often called the Charging Section) states that there shall be levied and collected in such manner as may be prescribed duties on all excisable goods (excluding goods produced or manufactured in Special Economic Zones), which are produced or manufactured in India. The power to levy Central Excise duty is derived from the constitution. There are four basic conditions for levy of Central Excise duty. 1. The duty is on Goods. 2. The goods must be excisable. 3. The goods must be manufactured or produced. 4. Such manufacture or production must be in India. Unless all of these conditions are satisfied, Central Excise Duty cannot be levied. Goods manufactured in SEZ are Excluded Excisable Goods- As per section 3(1) of CE Act goods manufactured or produced in SEZ are excisable goods, but no duty is chargeable. They are termed as excluded excisable goods. Goods under particular chapter head & subhead to prescribe duty to be charged on that particular product.

Goods
The word goods has not been defined under the Central Excise Act. Article 366 (12) of the Constitution defines goods as goods includes all materials, commodities and articles. As per

judicial interpretation, for purpose of levy of Excise Duty, an article must satisfy these requirements to be goods i.e. Goods must be movable Goods must be Marketable. Goods must be in the tarrif.

What are Goods Some examples will clarify the legal position Gases, Stream are goods as it is a tangible property. It is marketable. Under the Excise Act, Stream is goods as it can be weighted, measured & marketed. In case of Electrical energy, generation or production coincides almost Instantaneously with its consumption. Sale, Supply and consumption takes place without any hiatus. Electricity is movable property though it is not tangible. Drawing, Designs etc are Goods drawing & designs relating to machinery or technology are goods even if payment is made for technical advice or information technology, which is intangible asset. Information transferred by e-mail is not goods as no movement of movable property is involved. Intermediate Goods will be goods if these are marketable, even if they are consumed within the factory of manufacture. Machinery will be goods if it is in marketable condition at the time of removal from factory of manufacture, even if subsequently, it is to be fastened to earth. Excisable Goods Goods excisable even if exempt from Duty- Excisable goods do not become non-excisable goods merely because they are exempt from duty by an exemption notification.

Dutiable & NON-Dutiable Goods Excisable goods are all those goods specified in the Central Excise Tariff Act, 1985. Excisable goods may be dutiable or non-dutiable. Dutiable goods are those goods which attract duty as per the Tariff. Non-dutiable goods are excisable goods on which no duty is payable, either because of Nil rate of duty because of exemption. Thus all dutiable goods are excisable goods but all

excisable goods need not be dutiable goods. Even where goods are non-dutiable, excise provisions are applicable, even if no duty is payable. Goods not included in CETA are non-excisable goods Some goods like wheat, rice, flowers, horses, Soya beans etc are not mentioned in Central Excise Tariff at all and hence they are non excisable goods. Similarly waste and scrap will be excisable goods only if specifically mentioned in CETA. Meaning of goods on which appropriate duty has been paid If an exemption notification uses the words on which appropriate duty has already been paid, it means that on which excise duty has, as a matter of fact been paid and has been paid at appropriate correct rate. Thus it cannot cover goods on which in fact, no duty has been paid. Goods manufactured in SEZ are excluded excisable goods As per section3 (1) of CE Act, duty is leviable on all excisable goods (except goods manufactured or produced in Special Economic Zone) Goods are duty paid even if Cenvat availed on those goods It has been held that inputs do not cease to be duty paid even if Cenvat Credit is taken on such inputs, i.e. the inputs do not become non-duty paid, even if Cenvat Credit is taken.

Manufacture
Section2 (h) Manufacture includes any process (I)Incidental or ancillary to the completion of manufactured product or (ii) which is specified in relation to any goods in the Section or Chapter notes of the 1st schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture or (iii) Which in relation to goods specified in 3rd schedule to the CEA, involves packing or repacking of such goods in a unit container or labeling or re-labeling of containers or declaration or alteration of retail sale price or any other treatment to render the product marketable to consumer, and the word manufacture shall be understood accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods but also any person who engages in their production or manufacture on his own account. Identity of Original Article should be lost Commonly, manufacture is end result of one or more processes and when the change occurs to a point where commercially it can be identified as a new separate article, manufacture is said to have taken place.

Assembly can be manufacture Assembly of various parts and components may amount to manufacture if new product emerges, which is movable and marketable. Assembly of computers from duty paid bought out parts amounts to manufacture. Assembly of components of air conditioner in car does not amount to manufacture as the parts are fitted at various places and at no point of time a car air conditioner as a separate and distinct commodity comes into existence. Similarly, fitting of air-conditioner kit in a car does not amount to manufacture. What is not a Manufacture? Affixing sticker of manufacturer etc on imported goods is not manufacture .[ However now if the product is covered u/s 4A, it may be deemed manufacture as defined in section 2(f)(iii) and excise duty may be payable. In case of imported goods, corresponding CVD may become payable. Changing color of an article is not manufacture. Changing and repairs of old Ornaments is not manufacture. Conversion into different variety is not manufacture. Conversion of round bar to bright bar is not manufacture. Cutting and polishing of granite Stones amount to manufacture. Cutting and polishing of raw & Uncut diamond which yield polished diamond is not manufacture as polished diamond is not a new article or thing. New model from old machine is not manufacture. Powdering is not manufacture. Repairing, reconditioning, re-making or re-processing will not amount to manufacture if no new product emerges even if some parts are inter-changed. Testing, inspection and packing of items manufactured by others is not. Upgradation / modification and Purification are not manufacture. Diesel bus to CNG bus conversion is not manufacture. Dilution of duty paid product by adding water is not manufacture, even if different item having different concentration is given different name. Printing of color & logo done on glass bottle does not amount to manufacture.

Supplying two or more items together is dutiable Sometimes two types of goods are supplied together in different packing. These are to be mixed at the user s end before use. Normally this procedure is adopted when the item has limited shelf life after mixing the two items. Manufacturer The liability to pay duty is on Manufacturer or Producer . Duty cannot be recovered form his purchaser. Hence, Excise demands, if any are always raised on manufacturer and recovered from manufacturer. Hence, it is essential to decide who is to be termed as manufacturer. Brand Owner is not the ManufacturerSome large units get their goods manufactured from others under their Brand Name, instead of manufacturing it themselves. They usually control quality & may even supply the design e.g Bajaj Electrical get many electrical goods manufactured from small scale units under their brand names. In these cases it will not be treated as Manufacturer even if they exercise quality control or allow using their Brand Name. Nature of Excise Duty Indian Constitution has given powers to Central Govt. and State Govt. to levy various taxes & duties. Powers of Central & State Govt. are enlisted in 7th Schedule to our constitution. Meaning of word levy Levy means imposition of tax. Once a tax or duty is imposed, it has to be quantified (assessed) and then collected. Once a duty is levied it has to be collected. [Otherwise, what is the point in imposing the duty, if it is not to be collected]. It cannot be collected unless the duty is quantified (assessed). Hence, normally, levy should cover imposition, collection & assessment. However, constitution specially uses the words levy and collection. Duty is levied as soon as taxable event occurs, but collection can take place any time- before, at the time or even after the taxable event. Assessee and Assessment Assessment means determining the tax liability. Duty is paid by the manufacturer on his own while clearing goods from the factory/warehouse, on self assessment . The assessee himself has to determine classification and valuation of goods and pay duty accordingly. Who is assessee - Rule 2 (C) of Central Excise is basically an invoice based self assessment, except in case of cigarettes. Rule 6 of Central Excise Rules [earlier rule 173F] states that the assessee shall himself assess the duty payable on excisable goods, provided that in case of

cigarettes, the superintendent or Inspector of Central Excise shall assess the duty payable before removal of goods. The assessee has to submit monthly return in ER-1/ER-2/ER-3 form. The return has to be along with Self Assessment Memorandum , where Assessee declares that a) the particulars in ER-1/ ER-2/ ER-3 return are correctly stated. b) Duty has been assessed as per provisions of section 4 or section 4A of CEA (c) TR-6 challan by which duty has been paid are genuine. TATA STEEL Jharia division submit monthly return in ER-1 form Person liable to pay excise duty Once duty liability is fixed, the duty can be collected from a person at the time and place found administratively most convenient for collection. In was held that duty can be collected from those who are neither producers nor manufacture but can be collected at later stage. Duty Liability in case of Manufactured Goods Rules 4(1) of Central Excise Rules makes it clear that excise duty is payable by the manufacture or producer of excisable goods. In case where goods are allowed to be stores the goods. Rule 4(1) makes it clear that duty is payable by person who produces or manufactures excisable goods. Duty liability in case of Goods stored in Warehouse Rule 20 of CE Rules permit warehousing of certain goods in warehouses without payment of duty. In such cases, the duty liability is on the person who stores the goods. Duty liability even when goods not sold or free replacement given during warranty period. Duty is payable even when (a) Goods are used within the factory (b) Goods are captively consumed within factory for further manufacture.(TATA STEEL Jharia division) (c) Goods are given as free replacement. Duty payable when an assessee is liable to pay sales tax and the question whether he has collected it from consumer or not is of no consequence. His liability is by virtue of being an assessee under the act. Excise duty should be considered as a manufacturing expense and should be considered as an element of cost for inventory valuation, like other manufacturing expenses. Excise duty cannot be treated as a period Cost. Types of Excise Duty Basic Excise Duty to be termed as Cenvat Basic excise duty (also termed as Cenvat as per section 2A of CEA added w.e.f 12-5-2000) is levied at the rates specified in 1st Schedule to Central Excise Tariff Act.

Special Duty of Excise Some commodities like pan masala, cars etc. are leviable with special duty[section 3(1)(b) of CEA]. These items are covered in Schedule II to Central Excise Tariff. Education Cess A new levy education Cess has been imposed w.e.f 9-7-2004 on all goods on which excise duty is payable. Rate is 2% National Calamity Contingent Duty (NCCD) A duty has been imposed vide section 136 of finance Act, 2001. This duty is imposed on Pan masala, chewing tobacco and cigarettes. It varies from 10% to 45%, NCCD of 1% was imposed on Polyester Filament Yarn, motor cars multi utility vehicles and two wheelers and NCCD of Rs per ton was imposed on domestic crude oil, vide section 169 of Finance Act,2003 w.e.f 1-32003. Education Cess The National Common Minimum Programme (NCMP) adopted by congress led UPA (United Progressive Alliance) Government after its formation, had mandated imposition of Education Cess to finance universalized quality basic education. Accordingly, Education Cess of 2% has been imposed which is payable on central excise, customs, service tax & income tax. In case of excise duty, calculation of Cess is easy. If excise duty rate is 16% Education Cess will be 0.32%. If excise duty is 24% Cess will be 0.48%. Treatment of Education Cess in Excise Duty Cenvat Credit Rules states that credit of education Cess paid on input can be utilized only for payment of education Cess on final product and /or output services. The credit cannot be used for payment of basic duty. It is necessary to show education Cess separately in Invoice & separate accounting is necessary. Since account head is different, its separate indication in TR 6 challan is also necessary. It is not necessary to pay Education Cess on Pre-budget stocks. If assessee has already paid Education Cess, he can get refund only if he proves that he has not recovered the same from his customer.

Central Excise Tariff Act, 1985(CETA) Since it is essential to prescribe different duties for different types of productions, it is necessary to classify the items under various heads. Central Excise Tariff Act, 1985 classifies all the goods under 96 chapters & specific code is assigned to each item. This classification forms basis for classifying the goods under particular chapter head & subhead to prescribe duty to be charged on that particular product. Some of them mainly used by TATA STEEL are as follows: (Chapter 27)- Mineral Fuels, Mineral Oils and Products of their Distillation; Bituminous Substances; Mineral Waxes Central Excise Duty and Tariff. (Chapter 72 -83 ) - Section XV-Base Metals and Articles of Base Metal (Chapter 84 - 85 ) - Section XVI-Machinery and Mechanical Appliances; Electrical Equipment; Parts thereof; sound Recorders and Reproducers, Television Image and Sound Recorders and reproducers, Television Image and sound Recorders and Reproducers, and Parts and Accessories of such article

Excise duty on Coal In Budget 2011,Finance Minister announced Excise duty on Coal, Coke and Coal Tar w.e.f 24.03.11 Two option has been provided in the Budget 2011 for Coal producer. Excise duty at the rate of 1% without availing the CENVAT credit on input and input services. Excise duty at the rate of 5% availing the CENVAT credit on input and input services.

Central Excise RulesIn India, excise duty is levied in accordance with the provisions of Central Excise Act,1944. The Act empowers the Central Government to make rules in pursuance of the Act. Accordingly, the following set of rules has been framed: CENVAT Credit Rules 2004. Central Excise valuation (Determination of Price of Excisable Goods) Rules 2000. The Central Excise Rules, 2002(sec 143 of the Finance Act 2002.

The Central Excise (Settlement of case) Rules, 2001. The Central Excise (Removal of Goods at concessional Rate of Duty for Manufacture of Excisable Goods) Rules,2001. Consumer Welfare Fund Rules1992. The Central Excise (Advance Ruling) Rules 2002. Central Excise(Compounding of Offence) Rules,2005

Valuation under Central Excise

Excise duty is payable one of the following basis: Specific duty, based on some measure like weight, volume, length etc. Duty as % of Tariff value fixed under Section 3(2). Duty based on Maximum Retail Price printed on carton after allowing deductions section 4A of CEA (added w.e.f 14/05/1997.) Compounded Levy Scheme. Duty as % based on assessable Value fixed under Section 4(ad valorem duty Specific Duty- It is the duty payable on the basis of certain unit like weight, length, volume, thickness etc. For example, duty on Cigarette is payable on the basis of length of the Cigarette, duty on sugar is based on per Kg basis etc. In such cases, calculation of duty payable is comparatively easy. In view of the simplicity, many goods were earlier covered under Specific Duty. However the disadvantage is that even if selling price of the product increases, revenue earned by Government does not increase correspondingly. Frequent revisions of rates have to be done, which is a slow & time consuming process. Tariff ValueIn some cases, tariff value is fixed by Government from time to time. This is a Notional Value for purpose of calculating the duty payable. Once tariff value for a commodity is fixed, duty is payable as percentage of this tariff value and not the Assessable Value fixed u/s 4. This is fixed u/s 3(2) of Central Excise Act. Government can fix different tariff value and not the Assessable value fixed u/s 4. When tariff value is prescribed under the law, that value will from the basis for assessment (and not any other value). Government cannot fix any tariff value at its whim & caprice. The tariff value can be fixed on the basis of wholesale price or average price of various manufacturers as the Government may consider appropriate.

Value based on Retail Sale Price Section 4A of CEA empowers Central Government to specify goods on which duty will be payable based on Retail Sale Price. As per Weights & Measures Act, retail sale price indicated on the retail package should be inclusive of all taxes. However in case of Drugs, the retail price to be indicated is required to be exclusive of taxes but according to new amendment by Finance Minister that from October 8, 2006 the Retail Sale Price of drugs will come inclusive of all taxes. The Provisions for valuation on MRP basis are as follows The goods should be covered under provisions of Standards of weights & Measures Act or Rules [Section 4A(1)] Central Government has to issue a notification in Official Gazette specifying the commodities to which the provision is applicable & the abatements permissible. Central Government can permit reasonable abatement (deductions) from the Retail Sale Price [Section 4A(3)] The retail Sale price should be the maximum price at which excisable goods in packaged forms are sold to ultimate consumer. It includes all taxes, freight, transport charges, commission payable to dealers & all charges towards advertisement, delivery, packing, forwarding charges etc. If under certain law, MRP is required to be without taxes & duties that price can be the retail Sale price. If more than one retail sale price is printed on the same packing, the maximum of such retail sale price will be considered. MRP provisions are overriding provisions-Section 4A(2) uses the words notwithstanding section 4, hence when section 4A is applicable, provisions of section 4 for determination of assessable value are not applicable. Increase in retail Price after clearance from FactoryIf retail price declared on the package at the time of removal is subsequently altered to increase the price; such increased retail price will be retail price for purpose of Section 4A. It may be noted that the provision applies only when retail price is increased after Clearance. However as per section 2(f)(ii) putting label of altered price will be deemed manufacture and hence excise duty will become payable.

Cost of returnable container not to be addedSome times, goods are sold in returnable containers against refundable deposits (e.g. soft drinks, mineral water etc.). The cash deposit is for safe return of the container. In such case, the cost of container having repeated use is amortized over the expected durability of the container. The security deposit is not an additional consideration for sale of the particular product. Hence, in case of goods covered under MRP provisions, cost of such durable containers is not required to be added for valuation, unless audit of accounts reveals that cost of reusable containers has not been amortized & has not been included in the value of product. Transaction Value Fixing specific duty or tariff value is possible only for few selected items like Sugar, pan-masala, consumer goods, Cigarette etc. Generally, it is not practicable to fix specific duty or tariff value for numerous products produced. Similarly, paying duty on the basis of MRP is possible only in respect of a few selected commodities. In other cases, Central Excise is payable on the basis of value. This is called ad valorem duty. The assessable value is arrived at on the basis of Section 4 of the Central Excise Act & duty is payable on the basis of such value. Assessable Value Assessable value is the Value on which duty is payable as a percentage. Generally, by Value, we understand the Price as mentioned in Bill or Invoice. However for excise purposes, it is not possible to fully rely on such price as a) Duty is payable even if goods are not sold. b) It is desirable to have uniform policy in fixing the AV. c) Chances of manipulation in such price should be minimum. As per new section 4 w.e.f 1st July,2000, excise duty is payable on basis of transaction value. If the requirements given below are not satisfied, valuation will be done as per Valuation Rules,section 4(1)(b) The goods should be sold at the time & place of removal. Buyer and assessee should not be related. Price should be the sole consideration for the sale. Each removal will be treated as a separate transaction & value for each removal will be separately fixed.

Time and Place of removal Section 4(1) (a) states that transaction value shall be assessable value when goods are sold be assessee, for delivery at the time, in case of sale from depot/ place of consignment agent, time of removal shall be deemed to the time at which the goods are cleared from factory. Goods must be sold at the time & Place of removal Transaction Value is relevant for valuation only when goods are sold at the time & place of removal. As per Section 2(h) of CE Act, Sale & Purchase within their grammatical variations & cognate expressions, means any transfer of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration. It is noted that consideration can be paid by or to third party also. What is Not Sale at the time of removalIn view of aforesaid requirement, following are not sale of goods at factory gate for purpose of Central Excise. a) Transfer to depot/branch as there is no sale at the time & place of removal. b) Job work or processing-as here there is no sale of goods. Moreover, the job charges receive cannot be treated as consideration. Thus though there is transfer of possession it cannot be said it is for valuable consideration. Assessee & Buyer should not be related-Excise is payable only at the manufacturing stage & once the goods enter the trade no exercise is payable for further sales in wholesale or retail. Thus to reduce excise burden an unscrupulous manufacturer may sell goods at lower price to some person related to him & then subsequently the goods will be sold at a higher price. Price must be Sole consideration Price should be sole consideration of sale. Price is the consideration given for purchase of a thing. Consideration in layman s terms means in return consideration is the inducement to the contract. It is the reason or material cause of a contract. Transaction Value as Assessable Value New section 4(3) defines transaction value as the price actually paid or payable for the goods, when sold & includes in addition to the amount charged as price any amount that the buyer is liable to pay to or on behalf of the assessee by reason of or in connection with the sale, whether payable at the time of sale or at any other time, including but not limited to any amount charged for or to make provisions for advertising or publicity, marketing & selling organization expenses

storage, outward handling, servicing, warranty, commission or any other matter but does not include the amount of duty of excise, sales tax & other taxes, if any actually paid or actually payable on such goods. Sale to a Related Person Transaction value can be accepted as Assessable Value when buyer is not related to buyer. As per section 4(3)(b) persons shall be deemed to be related if (I) They are inter-connected undertakings. (II) They are relatives. (III) Amongst them, buyer is a relative & a distributor of assessee or a sub-distributor of such distributor, OR (IV) They are so associated that they have interest, directly or indirectly in the business of each other. The definition of related person includes inter connected undertakings . Only25% control is enough to make to buyer & assessee as inter connected undertakings. This would have affected many assessees. However, the provisions in respect of interconnected undertaking have been made almost ineffective in valuation rules. Now the inter connected undertakings will be treated as related person only if they are holding and subsidiary or they are related person under any other clause. If they are not treated as related person, price charged by assessee to buyer will be accepted as Transaction Value . Interconnected Undertaking Section 2(g) of MRTP Act gives definition of interconnected undertaking. It is possible to have inter-connected between two Companies, two firms, a company & a firm, a Company & a trust etc. If any of the following connection exists, the two undertakings would be deemed to be interconnected undertaking. (I) If one owns or controls another. (II) If both are owned by partnership firms there is one or more common partners (III) If both are owned by companies & a) If one company manages another of, b) If one company is subsidiary of another, or c) If both body corporate are under the same management or d) If one body corporate controls another in any other manner. Valuation when sale is through related Person-

If sale is made through related person price relevant for valuation will be normal transaction value at which the related buyer sales to unrelated buyer.

Valuation in case of Captive Consumption

This method of valuation is used by TATA STEEL Jharia division In case of Captive Consumption, valuation shall be done on basis of cost of production plus 10% [It was 15% up to 5-8-2003]. Captive Consumption means goods are not sold but consumed within the same factory or another factory of same manufacturer. The rule may also be helpful if goods are to be transferred to job worker for job work & then brought back for further processing inputs on payment of duty to job worker. The job worker can avail Cenvat Credit of duty paid on inputs & there is hardly any incentive to avoid any payment of duty. Thus the formula for determining value is simple. If the Cost of production based upon general principles of costing of a commodity is Rs 10,000 per unit, the assessable value of the goods shall be Rs 11,000 per Unit. Part Sale & part ConsumptionCBE&C, vide its circular No.643/34/2002-CX dated 1-7-2002, has clarified that if same goods are partly sold by assessee & partly consumed captive, goods sold have to be assessed on basis of transaction value & goods captive consumed should be assessed on basis of rule8. Captive Consumption by related Person In case goods are supplied to a related person but consumed by the related person & not sold, valuation will be done on the basis of cost of production plus 10% Valuation of Samples CBE&C has clarified that in case of samples distributed free, valuation should be done on basis of rule 11 along with rule 8, i.e. Cost of Production plus 10%. Principles of Cost Analysis Institute of Cost & Works Accountants of India has issued Cost Accounting Standard titled Cost of Production for Captive Consumption. The standard deals with determination of cost of production for captive consumption. Formula of Cost Cost of Production will include various cost components as defined in Cost Accounting Standard-1.The cost is classified as follows.

Analysis of Overheads for Cost of ProductionOverheads shall be analyzed into variable & Fixed Overheads. The variable production overheads shall be absorbed in production cost based on actual capacity utilization. Valuation of WIP Stock of work-in-progress shall be valued at cost on the basis of stages of completion as per the cost accounting principles. Similarly, stock of finished goods shall be valued at cost. In case the cost for a shorter Period is to be determined, where the figures of opening & closing stock are not readily available, the adjustment of figures of opening & closing stock may be ignored. Joint Products, Scrap and WasteA production process may result in more than one product being produced simultaneously. In case joint produced, joint costs are allocated between the products on a rational & consistent basis. In case of by-products, the net realizable value of scrap or waste is treated as a by-product. Abnormal Costs to be excluded- Abnormal & non-recurring costs are those arising due to unusual unexpected occurrence of events, such as heavy break down of plants, accident, market conditions restricting below normal level. Depreciation to be added This standard as well as classification of cost and classification of overheads make it clear that it is required to be treated as Overheads .

Direct Material Cost + Direct Labor Cost + Direct Expenses = Prime Cost. Prime Cost + Production Overheads + Administration Overheads + R&D Cost (Apportioned) = Cost of Production Cost of Production + Selling Cost + Distribution Cost = Cost of Sales.

Relevant provisions of Central Excise Rules INVOICINGA- Invoice generated through system in Triplicate(only) (Trough SAP) i) ORIGINAL FOR BUYER II) DUPLICATE FOR TRANSPORTER (Truck) III) TRIPLICATE FOR ASSESSEE

B- Extra copies of INVOICE can be made but not for CENVAT PURPOSES. C- TRIPLICATE copy shall be retained in bound book from each Dispatch location. Invoice shall be serially numbered and should contain the following details : Registration Number Name of the consignee Mode of transport Vehicle Number Rate of duty Qty & value of goods.

The invoice shall be prepared in triplicate. Intimation of serial number to the range excise officials in the beginning of the financial year. Production Records A- Daily stock Account formerly known as RG1 Register : For accounting of production, despatch, captive consumption of excisable goods. B-Separate RG1 Register to be maintained for each commodity. C- Entries to be made on a daily basis and rows to be filled up as nil in case of no transaction for that day. D- The first & last page of each such record shall be authenticated by authorized person. E- Records should be preserved for 5 years immediately after F.Y. F- Non maintenance of Daily Stock account attract Panel Action Cancellation of Invoice 1. Intimation of the cancelled invoice should be sent to the range superintendent within 24 hours. 2. Cancelled invoice should also be sent along with the intimation.

SERVICE TAX
General background It is a tax imposed on the services provided within the territorial boundary of India. Except Jammu and Kashmir and outside India. Service tax was imposed for first time on 3 services w.e.f. 1-7-1994 and now it is 119 services including the two new services introduced in budget 2011-12.They are Services by air-conditioned restaurants having license to serve liquor; and Short-term accommodation in hotels/inns/clubs/guest houses etc. Taxable event in service tax It is imposed under section 66 of Finance Act, 1994. Service tax is payable when advance is received. Rate of service tax

 General rate of service tax is 10.30% (including education cess 2% and SAH education cess 1%) w.e.f. 24-2-2009

Person liable to pay service tax Liability of service provider Service tax is payable by service provider. In few cases, tax is payable by service receiver, under reverse charge method Reverse charge In case of Goods Transport Agency (GTA), Import of Service, Sponsorship service and Agent of mutual fund and insurance, service tax is payable by service receiver.

Value for purpose of service tax Service Tax is payable on gross amount charged for taxable service provided or to be provided

 Tax is payable on reimbursement of expenses which are part of service Service tax not payable if amount received only as agent of service receiver Value on basis of similar service or cost If value is not ascertainable, valuation can be on basis of similar service or on basis of value which shall not be less than cost.Gross amount charged is inclusive of service tax and then tax should be calculated by making back calculations. Classification of service Service to be classified according to terms specified in various sub-clauses of section 65(105). Rules for classification of service If at first sight a taxable service is classifiable under two or more sub-clauses of section 65(105), classification shall be effected as per following rules (a) Specific description to be preferred over a general description [section 65(2)(a)] (b) Classification should be as per essential character in case of composite services [section 65(2)(b)] (c) Service which appears earlier in list of section 65(105), if service cannot be classified on above basis [section 65(2)(c)] Exception in case of port and airport services Payment of service tax Service tax payable on receipt basis Service tax is not payable on basis of amounts charged in the bills/invoice, but only on amounts actually received during the relevant period, Exception in case of associated enterprises If partial amount is received, tax will be payable on pro rata basis. A person liable to pay service tax can pay any amount in advance towards future service tax liability GAR-7 challan and e-payment Tax is payable by GAR-7 challan using appropriate accounting code. E-payment is compulsory to those who are paying service tax of more than Rs 10 lakhs per annum. For others, e-payment is optional. Mandatory interest for late payment of service tax is 18% Returns under service tax

Half yearly return Every person liable to pay service tax has to submit half yearly return in form ST-3 in triplicate within 25 days of the end of the half-year [Rule 7]. Late fees upto Rs 2,000 are payable if return is filed late. Self Assessment Assessment is basically self assessment. Provisional assessment is permissible. Export and Import of Service Export No tax on export of service Refund if tax paid on exported service Conditions to treat a service as export (e.g. immovable property outside India, service performed outside India, recipient is located outside India) Import Tax is payable by recipient of services under method of reverse charge. Tax only if service is received in India Conditions to treat a service as import(e.g. immovable property India, service performed in India, recipient is located in India) Penalties and Appeals Penalties Penalty for late payment of service tax If service tax is not paid or belatedly paid, penalty will be minimum Rs. 200 per day or @ 2% per month, whichever is higher. No penalty can be imposed if service tax and interest is paid before show cause notice, except in case of fraud, suppression of facts etc. Heavy penalty for contravention of rules Appeals Appeal against order of authority lower than Commissioner lies with commissioner (Appeals), by assessee or as well as by department . Further appeal lies with High Court and Supreme Court. Appeals can be filed both by assessee and department. GTA (Goods Transport Agency)

Meaning- GTA means any person who provides service in relation to transport of goods by road & issuing consignment note. Where, any person means not only a natural person but also a juristic or artificial person. So it will include a natural person, partnership firm, HUF, BOI, Corporate bodies, Charitable institution, Government undertakings/ enterprises, cooperative societies etc. For GTA it is mandatory to issue consignment note. Consignment note must be serially numbered & must contain following particularsa) The name of the consigner & consignee. b) Registration no. of the goods carriage in which the goods are transported. c) Details of the goods transported. d) Details of the place of origin & destination. e) Person liable for paying the service tax, whether consigner , consignee or GTA. It may be noted that, no specific form has been prescribed for the purpose of issuing consignment note. Goods must be carried in goods carriage. Goods Carriage- Any motor vehicle constructed or adapted for use solely for the carriage of goods or any motor vehicle not so constructed or adapted when used for carriage of goods. Vehicles which are exclude from this area) Vehicles running on fixed rails like railways, tram, trolleys, etc. b) Vehicles of special type which is used within factory or any enclosed premises. c) Vehicles having less than 4 wheels fitted with an engine capacity of not exceeding 25 cubic cm. d) Hand carts, bullock carts, animal driven vehicles, hand rickshaws etc, as they are not mechanically propelled vehicles. Certain Specified persons are liable to pay service taxWhere the consignor or consignee of goods is specified persons the person liable to pay service tax shall be any person who pays or liable to freight through GTA. Specified Personsa) Any registered factory or governed by Factories Act. b) Any company registered under Companies Act. c) Any statutory corporation.

d) Any registered society. e) Any co-operative society. f) Any dealer of excisable goods registered under the Central Excise Act/ Rules. g) Any body corporate established by law. h) A partnership firm. NOTEa) When the consignor & the consignee are not the specified

person then the GTA is liable to pay Service Tax.

b) A manufacturer having credit balance in his Cenvat Account cannot utilise the credit in payment of Service Tax. Service Tax must be paid in cash or cheque for which he is liable from the place of removal.

c) The rate of Service Tax is 10.3%.

d) In case of GTA the service receiver (Specified Person) has to pay Service Tax only on 25% of the freight paid or to be paid, because 75% of the freight has been exempted without any condition. w.e.f 1/3/2008. As per PARA 7 of CIRCULAR/ LETTER D.O.F NO.334/1/2008- TRU, DATED 29-2-2008. e) It is treated as 75% of freight is the actual expenses & only 25% is the actual service received. f) Simultaneously, the benefit of Cenvat credit has been withdrawn to GTA service under Cenvat credit rule,2004. As per PARA 7 of CIRCULAR/ LETTER D.O.F NO.334/1/2008- TRU, DATED 29-2-2008. It means that having credit balance in his Cenvat Account cannot utilise the credit in payment of Service Tax. g) If Service Tax paid on GTA service, the credit can be availed on the Service Tax paid. On payment of any other duty as Output. h) If any ancillary / intermediate Service is provided in relation to transportation of goods, & the charges for such services are included in the Invoice issued by GTA & not by any other person then, such service would form a part of GTA service & therefore the exemption of 75% on total value of Invoice can be availed.

i) Full Exemption of Service Tax on Supply of necessity goods through GTA service. j) Exemption on Taxable Service relating to Small & single Consignments. Vide Notification No. 23/2008-ST, Dated 10-5-2008 (w.e.f 16-5-2008). This exemption is available to all i.e GTA, Specified Persons, Non Specified Persons. Where the gross amount charged on all consignments transported in a goods carriage does not exceed Rs. 1500. Where the different consignments are transported in the same goods carriage & meant for different consignee & the gross amount does not exceed Rs. 1500 on whole. It will benefit small scale operators operating with small or medium sized goods carriages like Tempo for short distances. In case, if the one service receiver is the specified person & the others are non specified person then the GTA has to pay Service Tax on the service provided to non specified person & not on service provided to specified person. But for exemption he will show the gross amount not exceeding Rs. 1500 then in this case no liability of Specified person. Where the gross amount charged on an individual consignment transported in a goods carriage does not exceed Rs. 750. Individual Consignments here means all goods transported in agoods carriage for a Consignee. Consignments meant for same consignee cannot be split up so as to keep the freight amount for each Bundle within the limit of Rs. 750. When Multiple consignments transported in the same goods carriage & meant for same Consignee & the freight in respect is Rs. 750 or Below is Exempted. From the point of view of Service Receiver we have to only focus on the concept of Individual Consignment i.e Exemption of Rs. 750 only.

CENVAT CREDIT
Cenvat (Central Value Added Tax) has its origin in the system of VAT (Value Added Tax), which is common in West European Countries. Concept of VAT was developed to avoid cascading effect of taxes. VAT was found to be a very good and transparent tax collection system, which reduces tax evasion, ensures better tax compliance and increases tax revenue Cenvat Credit is a scheme where the manufacturers or the output service providers are allowed a set off of the taxes paid on the inputs or the input services that are used while manufacturing the final products or providing the output service.

Application
In the manufacture of product A, if raw material X & Y are used, the manufacturer is allowed to take credit of the Central Excise Duty paid on the raw materials X & Y used in the manufacture of the final product A. He is allowed to use thiscredit while paying duty on the final product A If a manufacturer produced both exempted & dutiable products, the assessee has two options. 1. He needs to maintain separate accounts for the receipt, consumption & inventory of the inputs used in the dutiable goods. 2. If separate accounts are not maintained, the assessee can take full credit on all the inputs, but has to pay 10% on the price of the exempted goods to neutralize the credit component of the inputs used in the exempted goods. There are certain exceptions to this rule which can be seen in Rule 6 of the Cenvat Credit Rules 2004. Cenvat credit can be availed on Capital Goods, but the credit should be taken in installments, 50% can be taken in April as they fall under two financial Years. Eligibility for Capital Goods has been provided in the Cenvat Credit Rules 2004 (for e.g, goods falling Under Chapter Headings 82, 84, 85 & 90 etc of the schedule to the (Central Excise Tariff Act.) If these capital goods are used in the factory of the manufacturer, the credit can be availed. All goods except light diesel oil, high speed diesel oil & motor spirit (Petrol) which are used in or in relation to the manufacture of final products are eligible for credit. It is not mandatory always that the goods should be directly purchased from the manufacturer. The goods can also be procured from the dealers who are registered with the Central Excise Department as first stage or second stage dealers.

Relation with Service Tax From 10th September, 2004 Cenvat Credit has been extended across goods & Services. This means a manufacturer of final products can avail the credit of excise duty paid on the inputs, and he can also avail the Service Tax paid on various services like insurance, telephone etc. for payment of central excise duty on final products. Similarly, a service provider can also avail the credit of central excise duty paid on the inputs/ capital goods/ Input Services used for providing the out put service. Input credit be taken on the final products / Service is not exempted. Only Credit is not allowed, if the final Products are exempted or the output service is exempted. Applicable Rate Same ratio will be applicable to Service Provider if he is engaged in providing both taxable & non taxable (or exempted) services, he can maintain separate accounts & take credit only on those inputs / input services which are used in taxable Services, or alternatively if separate accounts are not maintained, he is allowed to use only 20% of the credit for payment of Service tax on taxable Service. In Other words, if the tax liability is Rs100, only Rs20 can be paid from the Cenvat Credit account and the remaining Rs80 has to be paid in Cash. Concept of VAT Generally any tax is related to selling price of product. In modern production technology, raw material passes through various stages & processes till it reaches the ultimate stage. E.g. steel ingots are made in a steel mill. These are rolled into plates by a re-rolling unit, while third manufacturer makes furniture from these plates. Thus, output of the first manufacturer becomes input for second manufacturer, who carries out further processing & supply it to third manufacturer. This process continues till a final product emerges. This product then goes to distributor/ wholesale, who sales it to retailer & then it reaches the Ultimate consumer. If a tax is based on selling price of a product, the tax burden goes on increasing as raw material and final product passes from one stage to other. For example, assume that tax on a product is 10% of selling price. Manufacturer A supplies his output to B at Rs 100. Thus B gets the material at Rs 110, inclusive of tax @ 10%. He carries out further processing & sells his output to C at Rs 150. While calculating his cost, B has considered his purchase cost of materials as Rs.110 & added Rs 40 as his conversion charges. While selling product to C, B will charge tax again @ 10%. Thus C will get the item at Rs.165 (150+10% tax). As stages of production and or sales

continue, each subsequent purchaser has to pay tax again and again on the material which has already suffered tax. This is called cascading effect. Cascading Effect of conventional system of taxes A tax purely based on selling price of a product has cascading effect, which has the following disadvantages. A) Computation of exact tax content difficult. B) Varying Tax Burden as tax burden depends on number of stages through which a product passes. C) Discourages ancillarisation. D) Increases cost of production E) Concessions on basis of use is not possible. F) Exports cannot be made tax free. Input, Input Services & Capital Goods Inputs which are goods are eligible for Cenvat Credit by both manufacturer as well as service provider. Rule 2(k) defines Input means all goods except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacturer of final product or not and includes lubricating oils greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint or as packing material or as fuel or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose within the factory of production. Definition of Input covers fuel used in factory in or in relation to manufacture of final products or for any other purpose. Thus fuel will be eligible for Cenvat Credit even if electricity/Stream generated is utilized/sold outside the factory. As explained above, the words used are for any other purpose. Cenvat is available on Packaging MaterialCenvat is available on packing material as per definition of input contained in Rule 2(k)(i) of Cenvat Credit Rules. Input ServiceInput service means any service, (I) Used by a provider of taxable service. (II) Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal.

Capital Goods for Cenvat Cenvat Credit is available on inputs as well as capital goods. Some provisions are common while there are some specific provisions in respect of Cenvat on Capital Goods. General Provisions is applicable to both inputs & capital goods. Following are the Capital goods, (I) Machinery, Tools, hand tools, knives etc. falling under chapter 82. (II) Pollution Control Equipment. (III) Components, spares and accessories of the goods. (IV) Moulds and dies. (V) Refractories and refractory material (VI) Tubes, pipes and fittings thereof used in the factory. (VII) Storage tank. The goods under this category is used in TATA STEEL jharia division Capital goods should be used in the factory purpose immaterialIn case of manufacturer; the only requirement is that the eligible capital goods should be used in the factory for manufacture of eligible final products. Purpose for which these capital goods are used is not relevant. Credit on capital goods is not available if it is used in another factory. Capital goods manufactured within the factoryAs per explanation 2 to rule 2(k) of Cenvat Credit Rules, input includes goods used in manufacture of capital goods which are further used in the factory of manufacturer. Thus if a manufacturer manufactures some capital goods within the factory, goods used to manufacture such capital goods will be eligible as inputs.[i.e. 100% Cenvat Credit will be available in the same financial year]. It may be noted that capital goods manufactured within the factory and used within the factory are exempt from excise duty vide notification No.67/95-CE dated 16-031995. Conditions for availing Credit on Capital GoodsThe conditions are Duty paying documents eligible are same for Cenvat on inputs. Depreciation under section 32 of Income Tax Act should not be claimed on the excise portion of the Capital Goods. Otherwise the manufacturer will get double deduction for Income Tax Act Utilization of Cenvat Credit Central Credit can be utilized for payment of any excise duty on: 1. Any duty on any final product manufactured by manufacturer [Rule 3(4)]

2. Payment of amount if inputs are removed as such or after partial processing. 3. Payment of amount on capital goods if they are removed as such. 4. Payment of amount, if goods are cleared after repairs under rule 16(2) of Central Excise Rules. 5. Payment under Cenvat Credit Rule 6 of 10% amount on exempted goods or reversal of credit on inputs when common inputs or common input services are used for exempted as well as dutiable final products. Time Limit for taking the Credit Rule 4(1) of Cenvat Credit Rules states that Cenvat Credit can be taken immediately on receipt of inputs in the factory or the premises of service provider. Department has clarified that immediately means at the earliest opportunity when the inputs are received. However, this does not mean that if manufacturer/Service provider does not take credit as soon as inputs are received in the factory /premises of service provider, he would be denied benefit of Cenvat Credit. Such an interpretation is not tenable.. Immediately does not mean within 24 hours. It is not necessary to take credit as soon as inputs are received in the factory. However manufacturer / Service provider should take credit at the earliest opportunity. Duty / tax paying documentsAs soon as a manufacturer/service provider receives an input, he can avail Cenvat Credit of the duty paid on the inputs. However, in case of input service, he is entitled to service tax credit only when he makes payment to service tax provider. Documentary evidence is required regarding payment of duty on inputs/ tax on input services. Rule 9(1) of Cenvat Credit Rules prescribes that credit can be taken on the basis of Invoice of manufacturer from factory. Invoice of manufacturer from his depot or premises of consignment agent. Invoice issued by registered importer. Invoice issued by importer from his premises or consignment registered with Central Excise Supplementary Invoice. Bill of Entry Invoice, Bill or Challan issued by input service provider under rule 4A of Service Tax Rules.

No Cenvat Credit if final products/ Service exemptAs per basic principle of VAT, credit of duty or tax can be availed only for payment of duty on final product or output services. As a natural corollary, if no duty is payable on final product or output services, credit of duty/tax paid on inputs or input services cannot be availed. Maintain Separate InventoryMaintain separate inventory and accounts of receipt and use of inputs (expect fuel) and input services used for exempted final products / exempted output services. In such cases, he should not avail Cenvat Credit of the inputs and input services which are used in exempted final services at all 6(2) of Cenvat Credit Rules. Payment of credit means Cenvat Credit not availedSometimes; assessee may take Cenvat Credit by mistake. This does not mean that he cannot rectify his mistake and must pay 10% amount. He can rectify the mistake by reversing Cenvat Credit. Some services eligible even if partly used for manufacture of exempted goods/ Output servicesAs per rule 6(1), proportionate Cenvat is disallowed if input/ input service is used partly in manufacture of exempted final product or provision of exempted output services. The services are: Consulting Engineer, Architect, Interior Decorator, Management Consultant, Real Estate Agent, Security Agency Services, Scientific or technical consultancy, Banking and Financial Services, Insurance Auxiliary Services concerning life insurance business, Commissioning and Installation, Maintenance or repair. Exempted goods do not mean non-excisable goods-Goods which are not mentioned in Tariff are not exempted goods as they are neither goods chargeable to Nil rate of duty. Payment of amount on exempted final productsIf assessee opts not to maintain separate accounts in respect of inputs & input services utilized for exempted output services, he has to pay amount of 10% of total price of exempted final product. When to pay the amountThe rules does not state when the amount should be paid. It is established principle that if statute does not provide any time limit, the thing should be done in reasonable time.

What to do if goods are not soldAs per rule 6(3)(b) the amount is payable on total price, excluding sales tax and other taxes, if any paid on such goods, of the exempted final product charged by the manufacturer for sale of such goods at the time of their clearance from factory (Note that the term if any applies to taxes & not the price ). If the goods are not sold, there is no price . In such case, correct view is that it is not necessary to debit any amount . However, department has not accepted this view. It has clarified that if there is no sale assessee has no option but to keep separate records of inputs & not to take credit in respect of inputs which have been used in or in relation to manufacture of exempted final product. The amount should not be recovered as duty, but may be recovered as amountThe amount paid on exempted final product/exempted final product /exempted output services should be shown as amount and can be recovered by the manufacturer/ service provider from buyer. ReturnsA manufacture has to be submit returns to Range Superintendent of Central Excise in the prescribed forms ER-1 to ER-6 in respect of Cenvat availed, Principal Inputs, Utilization of Principal inputs etc. Others have to submit returns as follows1. Quarterly return by first stage/ second stage dealer within 15 days from close of quarter [rule 9(8)] 2. Half yearly return within one month from close of half year, by provider of output services [rule 9(9)] 3. Half yearly return within one month from close of half year, by Input Service Distributor [rule 9(10)] No Cash RefundIn some cases; it may happen that duty paid on inputs may be more than duty payable on final products. In such cases, though the Cenvat Credit will be available to the manufacturer/ Service provider, he cannot use the same and the same will lapse. There is no provision for refund of the excess Cenvat Credit. However, the only exception is in case of exports where duty paid on inputs used for exported goods is refundable.

Storage of inputs outside the factoryInputs should be stored within the factory. If manufacturer is unable to store the inputs inside the factory for want of space, hazardous nature of goods etc., he can store the inputs outside the premises. The storage point will be treated as extension of the factory. Permission from Assistant/ Deputy Commissioner is necessary. Accounting Treatment of Inputs in CenvatIt needs following consideration-Since credit is available of excise duty /service tax paid while obtaining inputs / input services, duty/service tax paid on inputs while purchase is not an expense but an asset. Un-availed Cenvat is not available as refund (expect when it is a case of exports). This may happen when duty/ service tax paid on inputs is more than duty payable on final product. Cenvat is available instantly on receipt of inputs/ payment of input service & Cenvat Credit may be utilized even before inputs/ input services on which Cenvat is availed are actually used in production. Rule 4(4) of Cenvat Credit Rules provides that depreciation should not be claimed on Cenvat Credit availed. Credit on Inputs and Capital goods can be taken as soon as goods are received in the factory. In case of service tax, credit can be taken as soon goods are received in the factory, only after payment of Bill is made to the person who had provided input service. Credit of Education Cess and NCCD can be utilized for payment of education cess and NCCD only. Valuation of stock of Inputs, WIP and finished goods also needs consideration. Cenvat Credit in Service Tax Cenvat credit when taxable as well as exempted services provided If assessee is providing both taxable and exempt services, Cenvat credit can either be taken on proportionate basis or 6% amount is required to be paid on value of exempted services.

CENVATABLE Invoice as per Rule 11 of CE Rules 2002 is issued by Manufacturer The copies of the invoices issued by a first stage dealer and a second stage dealer shall be marked at the top as First Stage Dealer and Second Stage Dealer respectively. The invoice shall be A) Serially numbered and shall contain the registration number B) Address of the concerned Central Excise Division, C) Name of the consignee, D) Description & classification of goods, E) Time and date of removal, F) Mode of transport and vehicle registration number, G) Rate of duty, H) Quantity and value of goods and the duty payable thereon. Provided that in case of a proprietary concern or a business owned by Hindu Undivided Family, the name of the proprietor or Hindu Undivided Family, as the case may be, shall also be mentioned in the invoice. CENVATABLE Invoice as per Rule 11 of CE Rules 2002 is issued by First Stage Dealer & the Second Stage Dealer The copies of the invoices issued by a first stage dealer and a second stage dealer shall be marked at the top as First Stage Dealer and Second Stage Dealer respectively. The invoice shall be A) Serially numbered and shall contain the registration number B) Address of the concerned Central Excise Division, C) Name of the consignee, D) Description & classification of goods, E) Time and date of removal, F) Mode of transport and vehicle registration number, G) Rate of duty, H) Quantity and value of goods and the duty payable thereon.

Provided that in case of a proprietary concern or a business owned by Hindu Undivided Family, the name of the proprietor or Hindu Undivided Family, as the case may be, shall also be mentioned in the invoice. The same invoice is issued by the First Stage Dealer & the Second Stage Dealer the only Difference between the invoice isFirst Stage Dealer It is the person who is registered under Central Excise Act as First Stage dealer & purchase Goods from Manufacturer or his agent under cenvatable Invoice as per Rules. It means transfer of possession of goods. In this particular case the possession is being directly transferred to First Stage dealer from the manufacturer. In First Stage Dealer Invoice Price is after the Profit margin on the Manufacturer Invoice & then excise & different cess is charged & VAT / CST is also charged. Second stage dealer It is the person who is registered under Central Excise Act as second stage dealer & purchase Goods from the First stage dealer under cenvatable Invoice as per Rules. It means transfer of possession of goods. In this particular case the possession is being directly transferred to Second Stage dealer from the First Stage dealer. And in second Stage Dealer Invoice the Profit margin is added on the Invoice issued by the First Stage dealer & then excise & different cess is charged & VAT / CST is also charged. NOTEThe provisions of this Rule 11 shall apply to goods supplied by a first stage dealer or a second stage dealer:

Provided that in case of the first stage dealer receiving imported goods under an invoice bearing an indication that the credit of additional duty of customs levied on the goods shall not be admissible & on the resale of the imported goods, must be indicated on the invoice issued by him that no credit of the additional duty levied shall be admissible; For the second stage dealer the same condition is followed & credit on the additional duty paid on customs cant be availed either by second stage dealer or the end user. The invoice shall be prepared in triplicate in the following manner, namely:(i) the original copy being marked as ORIGINAL FOR BUYER;

(ii)

the duplicate copy being marked as DUPLICATE FOR TRANSPORTER;

(iii) the triplicate copy being marked as TRIPLICATE FOR ASSESSEE. Before making use of the invoice book, the serial numbers of the same shall be intimated to the Superintendent of Central Excise having jurisdiction. In a normal commercial Invoice raised by wholesaler, distributor or dealer, excise duty will not be charged separately. In fact the dealer cannot charge excise duty in his invoice separately as he has not paid the same. A dealer is required to indicate in his invoice the excise duty paid on goods by the buyer. However, this should not be separately charged to buyer. Details of excise duty paid by the manufacturer should only be shown separately in the invoice. The amount of excise should not be recovered from buyer separately showing it as excise duty. CONCEPT OF TRANSIT SALE: A registered person places an order on a manufacturer for supply and delivery of goods directly to a consumer and the goods are accordingly transported from the manufacturers premises to the users premises without being brought to the registered persons premises. In such a situation manufacturer will issue an invoice under Rule 52A. This invoice under Rule 52A will contain, in addition to the prescribed details including the consignees name and address, mentioned therein, the registered persons name and address, on account of whose instructions the goods have been despatched. The consignee in this case will be the end user. In such a situation the registered persons invoice is not required for availment of Cenvat credit.

FINDINGS AND LIMITATION

Findings: 1) Coal Mines in Jharia Division is for the Production of Coal for the Captive Consumption & not for Sale. 2) Earlier Coal was Excisable goods & comes under Central Excise & Tariff Act 1985 but Tariff was Nil but by Notification in Union Budget 2011 the Rate is specified as a) 1% without CENVAT b) 5% with CENVAT 3) For availment of Cenvat credit the material should be purchased from the registered manufacturer, 1st stage Dealer, 2nd stage Dealer registred under Central Excise Act 1944.

4) CENVAT Credit can be availed a) 100% credit can be availed on Input goods. b) 100% credit can be availed on services received but only on payment made thereon. c) 50% credit can be availed on Capital Goods & the rest 50% credit can be availed in next year. 5) MRP Provisions are overriding i.e (Superior) It means the provisions made by the Government in case of MRP based goods like FMCG products then it is decided that 15% or 20% less the MRP the Excise is to be paid as the case may be. 6) In case of incorrect MRP Government will ascertain MRP & penalty can be imposed. 7) Deemed manufacturer: It means a Person or Firm involve in Repacking, Packing, Labelling, Relabeling is treated as Deemed manufacture. 8) In case of Captive Consumption i.e the Case of TATA STEEL duty is payable on basis of Cost of Production + 10% margin on that Cost. 9) In case of Salesa) Transaction value is not acceptable. b) Value of similar goods is acceptable. c) Transport Cost only up to Place of Removal is includible. d) Money value of other consideration is acceptable. 10) Valuation in case of Sale from depot/ BranchHighest price on the date of removal is the assessable value.

11) Service Tax is imposed on the services provided within territorial boundary of india. Excepta) Services provided in Jammu & Kashmir. b) Outside India 12) Rate of Service Tax 10.30% (Education Cess @ 2% on 10% & SH Education Cess @ 1% on 10%).

13) If advance is received against the Service is to be delivered the Service Tax is to be paid as it is assumed that payment is only received on service provided.

14) Liability of Service Tax is in hand of service provider but in Reverse Charged method the liability is with Service receiver. 15) Now JVAT i.e Jharkahnd Value added Tax is a) 5% earlier it was 4% w.e.f 15/5/11. b) 8% c) 14% earlier it was 12.5% w.e.f 15/5/11.

CONCLUSION AND SUGGESTION

The Words are used quite often during my summer project that is Tax Planning. Tax Planning means a) taking advantage of the legitimate concessions and exemptions provided in the tax law and thus reducing the tax liability. b) arranging business operations such that tax liability is reduced i.e when two methods is possible to achieve an objective, select one which results in lower tax liability. An assessee should take following precautions while deciding any tax planning idea. (a) Disclose All Material Facts- Normally a demand of duty can be raised for a period of six months prior to show cause notice. However, this period can be increased to five years in case of fraud, collusion, suppression of facts or willful misstatement. Thus, all relevant facts must be disclosed. An unexpected huge demand for past five-year period may be disastrous for the assessee. (b) Discuss with Excise Authorities & Experts- A plan of assessee can be discussed with excise authorities and experts and he need not be over confident in these matters. (c) Study Product & Pricing Policies An assessee need to study the product and pricing policies thoroughly and ensure that these are so designed that unnecessarily heavy duty is not paid. (d) Interest on Late Payment Interest is payable for late payments. Thus, if payment is delayed by filing appeal etc. and so designed that unnecessarily heavy duty is not paid.

(e) Heavy Penalty for Tax Avoidance: An assessee should remember that wrongful availing Cenvat or contravening any provision of excise rules with intent to evade duty is offence and penalty can be very heavy. Hence, in case of doubt, it may be advisable to make payment of duty under protest and claim refund. However in such cases, it must be ensured that only lower duty is charged to buyers. The extra duty should not be recovered from customers. Otherwise, even if refund claim is sanctioned later, one will not get the amount.

BIBLIOGRAPHY
www.coalnic.in www.cbec.in www.coalindia.in www.nlcindia.in www.scclmines.com

Books Preferred: Indirect Taxes Law & Practice Sanjeev Kumar Indirect Taxes Law & Practice Yogendra Bangar & Vandana Bangar Indirect Taxes Law & Practice V.S. Datey. Central Excise manual by R K Jain Central Excise Tarrifs by R K Jain