News Flash Indirect Tax

Udyog Software (India) Ltd.

04/11/2014

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

Customs: Tariff values revised

The CBEC has issued notification 100/2014-Customs (NT) dated 31 October 2014 to fix tariff values for
specified commodities for purpose of valuation of the goods under section 14 of the Customs Act 2014. The
tariff value of gold for which the benefit of entries number 321 and 323 of notification 12/2012-Customs is
availed has been reduced to USD 391 per 10 grams (from USD 401); and the tariff value of silver for which the
benefit of serial numbers 322 and 324 of the said notification is availed has been reduced to USD 551 per
kilogram (from USD 575). There is reduction in the tariff value of palm oils and oleins, crude soyabean oil,
and brass scrap also. Only the value of areca nuts remains the same.
The notification 100/2014-Customs (NT) dated 31 October 2014 can be accessed at
http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cs-nt2014/csnt100-2014.htm.
Service Tax: Land value component of membership deductible from gross value of club service: CESTAT
Country Club, Hyderabad, offered a category of membership called membership with land and charged a
membership fee that was said to include the cost of land that was transferred to another concern for the
purpose of registration in the names of the members. In appeal by the Country Club against a demand of
service tax on these amounts, the CESTAT, Bangalore, relied upon its own earlier order to hold that the cost
of land must be deducted from the gross amount to arrive at the taxable value for service tax. The matter was
remanded to verify the amounts involved. This order of CESTAT Bangalore, in service tax appeal number
ST/1247/2010, can be accessed by entering the said information in
http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Qry.asp.
Service Tax: Payable on commitment charges in relation to loan: CESTAT
Punjab National Bank was charging commitment charges on the amount of loan sanctioned but not drawn by
the customer. A single-member bench of the CESTAT followed the earlier decision in the case of HUDCO and
observed that this is integrally connected to the service of lending and is taxable as such. This order of Delhi
bench of CESTAT in service tax appeal number 50421/2014 can be retrieved from
http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Qry.asp.
However, it may be noted that the HUDCO order has been distinguished on facts in granting stay in a case of
Andhra Pradesh State Financial Corporation recently by Bangalore bench of the CESTAT (2 members) based on
the factual scenario narrated in paragraph 10 of the said HUDCO order.
Service Tax / Cenvat Credit: Interest payable on Rule 5 refund: CESTAT
The department sanctioned refund under rule 5 of the Cenvat Credit Rules, but declined to pay interest, on
the ground that there was no provision for it in law. The CESTAT, in appeal, observed that the CBEC has
instructed its officers that refund of Cenvat credit under rule 5 of the Cenvat Credit Rules 2004 must be made
within 30 days of application by the assessee or at most within 45 days; and that this in fact placed such
refunds on a higher platform than refunds under section 11B. Interest on rule 5 refunds sanctioned and paid
belatedly would be payable as for section 11B refunds. This order of CESTAT, Ahmedabad bench, in the case
of appeal number ST/166/2011 of Reliance Industries can be retrieved in case number search from
http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Qry.asp.
Central Excise: Capital goods credit available if intention to use later in dutiable production is shown
Rule 6(4) of the Cenvat Credit Rules 2004 bars credit of duties paid on capital goods that are used exclusively
in the manufacture of exempted products. The determination of use has to be done at the time of receipt and
installation of the machinery, as per Spenta International case and the ruling of the Supreme Court in the case
of Surya Roshni. For this reason it is the settled position that if, at the time of receipt and installation of the
capital goods, they are used only for exempted products, and later the use is changed, the later use is
irrelevant, and the credit of excise duty paid on the capital goods is not available under the Cenvat Credit
Rules. However, in excise appeal number E/432/2007 of Brindavan Beverages Private Limited, the CESTAT,
Delhi bench, brought a new nuance into this discussion, and held that if the manufacturers intention was to
use the machinery for dutiable goods in the future, the credit will be available, even if the use is for
exempted goods only in the initial period of use. The CESTAT remanded the matter to examine evidence and
determine the intention of the manufacturer. This order can be retrieved from case number search at
http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Qry.asp.
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Radha Arun
Consultants to Udyog Software (India) Ltd.
radha.arjuni@gmail.com
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