Honeymoon of manufacturers in J & K, Kutch & North-East is Over

Refined or white sugar, imported upto 31st December 2010 exempted from Customs duty-Customs Tariff Notification No.8 excise exemption notification for Jammu & Kashmir modified-Central Excise Tariff Notification No.1 Air India may lower retirement age to 55 to cut cost Board of Approval to decide fate of denotification of Essar's Hazira SEZ on 11th February Revenue's comments on 1st Discussion Paper on GST-click on the link below for details SC rules service of notice on the assessee under Section 143(2) within the prescribed period of time is a pre-requisite for framing the block assessment under Chapter XIV-B of the Income Tax Act, 1961-AIT-2010-43-SC HC rules assessee is entitled to benefit under Income Tax on delayed payment of PF if the payment is made before the return is filed-AIT-2010-42-HC Authority for Advance Ruling rules the amount received by the foreign company from the Government of Tamil Nadu under the contract is essentially in the nature of “fees for technical services” within the meaning of Explanation 2 to Section 9(1)(vii) of the Income-tax Act, 1961 read with Article 12.4 of DTAA and cannot be regarded as consideration for the sale of designs and drawings-AIT-2010-38-AAR Authority for Advance Ruling rules payment received by the applicant from VARs (“third party re-sellers”) on account of supplies of software products to the end-customers (from whom the licence fee is collected and appropriated by VAR) does not result in income in the nature of royalty to the applicant and moreover payments received by the applicant cannot be taxed as business profits in India in the absence of permanent establishment as envisaged by Article 7 of the India-Japan Tax Treaty-AIT-2010- 36-AAR lending or borrowing money between two associated enterprises comes within the ambit of international transaction and whether the same is at arms length price has to be considered-The question of rate of interest on the borrowing loan is an integral part of arms length price redetermination in this context-AIT-2010-37-ITAT Export and Import of Currency-RBI Circular No.30 HC rules a petition under Article 226 of the Constitution would be maintainable for questioning reopening of the assessment in a case such as this where the preconditions for the exercise of the power have not been fulfilled-recourse to the power under Section 147 cannot be sustained on a mere change of opinion, there being no failure of the assessee to disclose fully and truly, all material facts necessary for assessment-AIT-2010-35-HC Definitive Anti dumping duty imposed on import of Carbon Black used in rubber applications falling under sub heading 2803 00 10, originating in, or exported from, Australia, China PR, Russia and Thailand-Customs Tariff Notification No.6 Tariff Value for import of Brass scrap is 3597 and for poppy seeds 4392-Customs Non-Tariff Notification No. 10 Adjustment of “Advance Tax in respect of Fringe Benefits” for Assessment Year 2010-11 against “Advance Tax”-Income Tax Circular No.2 CBDT clarifies it is the choice of the assessee whether to file an objection before the Dispute Resolution panel against the draft assessment order or not to exercise this option and file an appeal later before CIT (Appeals) against the assessment order passed by the AO

JUDGMENTS

CENTRAL EXCISE

CUSTOMS

exchange rate

SERVICE TAX

INCOME TAX

VAT

FINANCE ACTS

FINANCE BILLS

EOU STPI

SEZ

DGFT

RBI

NTT

RESOURCES

Email | Print

Honeymoon of manufacturers in J & K, Kutch & North-East is Over

RS Sharma Advocate

Modification of excise exemption scheme for Jammu & Kashmir, Kutch, North-East & Sikkim is like changing the rules of the game after the game has already started. The Scheme was more lucrative than the scheme of Uttaranchal & Himachal because of the twin benefits. Though Uttaranchal & Himachal Units get outright exemption from excise duty and thus not required to pay any excise; a special mechanism was provided by the Government for J & K, Kutch , North-East & Sikkim. The Notifications for these States exempted that portion of the excise duty, which was paid by the manufacturers in cash. According to the mechanism prescribed in pre-amended Notifications ; the manufacturer was first required to pay the excise duty and thereafter, whatever was paid in cash(other than CENVAT) was refunded. It is also a part of the scheme that the buyer of any input or capital goods on which such exemption is availed ; gets full CENVAT Credit including the portion of duty refunded to the manufacturer. The provisions of section 11B of Central Excise Act do not apply in case of all these Notifications.

The following Central Excise Tariff Notifications have been issued on 27th March 2008 amending the existing scheme in Jammu & Kashmir, Kutch, North-East & Sikkim.

16/2008	Exemption from Excise duty in Kutch Notification No. 39/2001 amended
17/2008	Exemption from Excise duty in North-East Notification No. 32/99 amended
18/2008	Exemption from Excise duty in North-East Notification No. 33/99 amended
19/2008	Exemption from Excise duty in J & K Notification No. 56/2002 amended
20/2008	Exemption from Excise duty in North-East Notification No. 20/2007 amended
21/2008	Exemption from Excise duty in J & K Notification No. 56/2003 amended
22/2008	Exemption from Excise duty in J & K Notification No. 57/2002 amended
23/2008	Exemption from Excise duty in Sikkim Notification 71/2003 amended

As a fallout of the amendment in the abovesaid Notifications , in the preamble, for the words and figures, “to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2002”, the words “to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit” has been substituted with effect from 1st April 2008.

As a result, the refund of only duty paid on value addition will be admissible to a manufacturer in place of unlimited refund of duty paid in cash. As a general norm 36 per cent of duty has been treated as duty for value addition whereas a different percentage of value addition has been notified for Chapters 29, 30, 33. 34, 38, 39, 40, 72, 73 , 74 , 76 & 85.

The only solace is that the manufacturer has the option not to avail the rates specified in the Notifications and apply to the Commissioner of Central Excise for fixation of a special rate representing the actual value addition in respect of any goods manufactured and cleared under these notification, if the manufacturer finds that four-fifths of the ratio of actual value addition in the production or manufacture of the said goods to the value of the said goods, is more than the rate specified in the said Table expressed as a percentage.

Investment of Lakhs of Crores was made by Industrialists in Jammu & Kashmir, Kutch, Sikkim & North-East after working out the incentives and sops. Though the Government was concerned with a drain of revenue in doling out Crores as refund to these Units; the Industrialists are in for a shock and have already approached the Advocates for filing Petition in High Courts for challenging the amendments as the Government seems to have backtracked from its promise and , therefore, it is a case of Promissory Estoppel.

Several Delhi based Industrialists deserted their wives and families and migrated to Jammu & Kashmir for setting up Units. Last night I got a call at 12.30 Hours from the jubiliant wife of such an Industrialist who told me that her husband has decided to wind up his Project in Jammu & Kashmir due to change in Policy and has decided to shift back to Delhi. I asked the rich and lonely lady as to why she was disturbing me at odd hours? The lady told me that she wanted to cross check about the change in policy from a Consultant as she had a big doubt that her husband was making her an April Fool.

(The Writer is an Advocate & Consultant based in Delhi and is advising several MNCs PSUs & Indian Corporates on Indirect Tax Issues. He can be mailed at rssharma@gmail.com)

Related News: