budgetary changes c. excise - 28th feb 2015.pdf

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 [email protected]. 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 Remarks

Basic Excise Duty 12% 12.5%

Education Cess 2% Nil Exempted vide Notification

SRD LEGAL, Advocates & Consultants Page 2 of 7

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 15/2015-

CE. (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


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 Explanation

Basic customs duty (BCD) As may be applicable

to the goods in

question

Full rate or concessional

rate (as eligible)

Value for CVD (A+B) Assessable value + BCD

CVD equivalent to central

excise duty

12% 12.5%

Educational Cess on CVD 0 0 Exempted (14/2015-CE).

Earlier 13/2012-Cus

Sec. and Higher Educational

Cess

0 0 Exempted (15/2015-CE).

Earlier 14/2012-Cus

Customs Educational cess 0 2% Sr. 1A of notification

23/2003-CE deleted

Customs Sec& higher

educational cess

0 1% Sr. 1B of notification

23/2003-CE deleted

SAD 4% 4% SAD is payable only if

VAT/ CST is exempted

TotalDuty This is the total duty

payable under Sec 3 of

C. Excise Act

Ed. Cess 2% 0 2% (payable on the total

duty above)


Sec. & Higher Ed. Cess 1% 0 1%

4. 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:

- Acknowledgment by the job-worker

- Entry in records of the job-worker

- Transport documents

6. 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:


i. 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.]


9. 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.


11. 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: [email protected]

budgetary changes c. excise - 28th feb 2015.pdf

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