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Sanjay Dwivedi,

Advocate
01st March 2015.

Dear Sirs,
1.

The Union Budget for 2015-16 was presented yesterday. So far as C. Excise &
Service Tax laws are concerned, there are very few changes this year. We bring to
your notice, some of the important changes that may be of immediate relevance to
you. This note is not exhaustive, but we have included everything, which, in our
opinion, would be of immediate relevance to our clients & friends. The note is of
very general nature. The annexure to this note points out to some provisions
relevant to specific clients. Since they were not of general relevance to all, I have
not discussed it in the main note. You may please mail all your doubts & queries
at sanjay@srdlegal.in. We shall send a separate note on changes made in Service
Tax law.

2.

Education Cesses (on C. Excise duty) wholly exempted - General rate of duty
increased to 12.5%:
2.1. The general rate of duty has been increased to 12.5%. At the same time both the
cesses have been wholly exempted. Thus, in effect, the old rate of 12.36% has
now become 12.5%.
Note: With effect from 01/03/2015, the exemption to cess has been granted only
on C. Excise duty. Cess on Service Tax and Customs Duty continues. Also the rate
of service tax continues to be 12.36% at present. The government will announce a
date from which the new rate of service tax of 14% will become effective.

Duty

Old rate

New rate

Basic Excise Duty

12%

12.5%

Education Cess

2%

Nil

Remarks

Exempted vide Notification

SRD LEGAL, Advocates & Consultants

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no. 14/2015-CE

Sec. & Higher Ed. Cess

1%

Nil

Exempted vide Notification


no. 15/2015-CE

Total Effective rate

12.36%

12.5%

Most of other rates of basic excise duty have remained unchanged. Thus for
example the rate of 6% continues to remain as 6%. But, since the cess is nil,
effectively the old rate of 6.36% has reduced to 6%.
Duty

Old rate

New rate

Basic Excise Duty

6%

6%

Education Cess

2%

Nil

Sec. & Higher Ed. Cess

1%

Nil

Total Effective rate

6.18%

6%

2.2. Application of Cess on imported goods:


In case of imports, there are two components of education cess or Sec. & higher
Ed. Cess. The position after budget is as under:

CVD component: wholly exempted vide notification 14/2015-CE and 15/2015CE. (Even prior to budget, this was exempted, but the notifications were different)

Customs Cess: continues to be levied at 2% and 1% respectively.


3.

Duty Structure for DTA clearances made by EOU:


No more dispute about the 1st or 2nd or the 3rdcess. The duty structure has become
simple. Now there are only two duties to be levied.The structure would be as
under:
Assessable Value
Basic customs duty (BCD)

Full rate or concessional rate (as eligible)

Value for CVD (A+B)

Assessable value + BCD

CVD

equivalent

to

central

For ex. if the old rate was 12%, the new rate

SRD LEGAL, Advocates & Consultants

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excise duty

would be 12.5%

Customs Cess (2% + 1%)

This has come back due to deletion of sr. 1A


and 1B of notification 22/2003-CE

SAD

4%

Receiver of the goods would be eligible to avail credit of the CVD and SAD
components.

We may compare the old and the new duty structure hereunder

Duty component

Old rate

New rate

Basic customs duty (BCD)

As may be applicable Full rate or concessional


to the goods in

Explanation

rate (as eligible)

question
Assessable value + BCD

Value for CVD (A+B)


CVD

equivalent

to

central

12%

12.5%

excise duty
Educational Cess on CVD

0 Exempted (14/2015-CE).
Earlier 13/2012-Cus

Sec. and Higher Educational

0 Exempted (15/2015-CE).
Earlier 14/2012-Cus

Cess
Customs Educational cess

2%

Sr. 1A of notification
23/2003-CE deleted

Customs

Sec&

higher

1%

23/2003-CE deleted

educational cess
SAD

Sr. 1B of notification

4%

4%

SAD is payable only if


VAT/ CST is exempted
This is the total duty

TotalDuty

payable under Sec 3 of


C. Excise Act
Ed. Cess

2%

0 2% (payable on the total


duty above)

SRD LEGAL, Advocates & Consultants

Sec. & Higher Ed. Cess

4.

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1%

1%

SSI Exemption: There is no change in the SSI exemption. There is no


amendment to the notification 08/2003-CE.

5.

Cenvat Credit on inputs/ capital goods delivered directly at the job-workers


premises
Till now, the credit was available only when the inputs (or capital goods) were
actually received in the premises of the manufacturer/ service provider. Now, the
rules permit credit immediately when the goods are received in the job-workers
premises. Thus, we dont have to wait till the job-worker finally delivers the
goods back to us.

We will need proof of the date of receipt by the job-worker. This can be
established from:

6.

Acknowledgment by the job-worker

Entry in records of the job-worker

Transport documents

Time limit to avail Cenvat Credit extended to one year:


In July 2014 budget, a provision had been introduced so as to deny credit beyond
six months from the date of the document. Now the time limit has been extended
to one year.

The provision applies to credit of inputs and input services. (It does not apply to
capital goods.). Now credit cannot be taken against a document older than one
year. The time limit has to be computed from the date of the document.
7.

Job-work under Cenvat Credit Rules, 2004:


The job-work provision is contained in rule 4(5) (a) and (b). The rule 4 (5) (a) has
been amended to incorporate the following:

SRD LEGAL, Advocates & Consultants


i.

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Inputs can be sent from one job-worker to another. This facility was
already available by way of boards instructions/ trade notices. Now it has
been incorporated in the rule itself.

ii.

However, separate provision has been made for sending capital goods to
the job-worker and accordingly the capital goods cannot be sent from
one job-worker to another without bringing them back to our premises.

iii.

It is essential that the goods (inputs as well as capital goods) be received


back from the job-worker within 180 days from their removal from our
premises. In case the goods were delivered to the job-worker directly from
the suppliers end, the period of 180 days would be computed from the
date of receipt of the goods by the job worker.

8.

Credit of Service Tax paid under partial reverse charge:


Please recall my note on the previous budget (July 2014). In case of tax paid
under partial reverse charge, we were entitled to avail credit of the tax paid by us
(our share), only after we pay
(a) value + tax to the service provider, and
(b) our share of tax to the government.

Now, the first condition has been deleted. Thus, we can take credit of our share of
tax immediately after we pay the same to government. However, please note:

If we do not make payment to the service provider within three months of


the date of invoice, we will have to reverse the credit taken. Off course,
we subsequently make the payment, we again become entitled to take the
credit.

[Partial Reverse Charge refers to the case where a portion of the tax is to be paid
by the service provider and balance by the service receiver directly to the
government.]

SRD LEGAL, Advocates & Consultants


9.

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C. Excise Registration:
i. Mandatory information in registration application - update within 3
months: You are requested to verify the form A-1 online and update the
following information within 3 months from today.
-

e-mail address and mobile number of the applicant.

Customs Registration No (BIN No)

Import Export Code (IEC) Number

State Sales Tax /(VAT) Number

Central Sales Tax Number

Company Index Number (CIN)

Service Tax Registration Number

We can leave the fields blank only if we dont have such registrations.

ii. Signed copy of registration certificate is not required anymore. The


notification says that a printed copy of the Registration Certificate issued
online through the website www.aces.gov.in shall be adequate proof of
registration and the signature of the issuing authority is not required on the
same.

iii. De-registration: In case we want to surrender registration, it has to be done


only online. We dont have to file hard copies. It will be approved by the
department within 30 days where there are no dues pending for recovery.

10.

Invoicing:
-

When the buyer and the consignee are different we must mention
details of the both in our invoice.

Importer sending goods directly from port (or other place of import) to
the buyers premises should put such remark on his invoice.

Invoices can be digitally signed but a hard copy of the duplicate copy
attested by the manufacturer must accompany the goods.

SRD LEGAL, Advocates & Consultants

11.

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Penalty on late filing of Returns:


Penalty of Rs. One Hundred per day has been prescribed on late filing of all the
returns (including ER-4, ER-5, ER-7). However, the maximum penalty can be Rs.
20,000/-.

12.

Supply of goods to SEZ units/ developers neither rebate nor refund of


accumulated Cenvat Credit is available
i.

Rebate on exports is available under Rule 18 of C. Excise Rules, 2002.


The rule has been amended so as to define export. The definition does
not include SEZ supplies. This is contrary to the CBEC in its circular no.
06/2010, dated 19.03.2010 wherein it was clarified that rebate is allowed
on supplies to SEZ.

ii.

Refund of Cenvat Credit accumulated due to exports is available under


rule 5: A definition of export goods has been inserted. SEZ supplies do
not find any place in the definition.

13.

We shall mail a separate note on changes relating to service tax.

Thanking you,
Yours faithfully,

Sanjay Dwivedi,
Advocate

512, Business Park, City of Joy, JSD Road, Mulund (West), Mumbai 400 080

Tel. +91-22-25656548; Tel./Fax: +91-22-25656548 e-mail: sanjay@srdlegal.in

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