The following concessions/ changes have also been made:
i. Full exemption from excise duty has been provided to goods falling under Chapter 68 manufactured at the site of construction for use in construction work at such site. This was demand of the construction industry. Earlier it was available to goods manufactured from specified material but now it is exempted from duty if these are manufactured at site and erected at site. But the dispute on the definition of “site” and “marketability” will continue. This ambiguity was reflected in the case of AFCONS INFRASTRUCTURE LTD. [2008 (232) E.L.T. 274 (Tri. - Del.)] in which partial stay was granted on the view given that since the girders are manufactured as a part of the contract and are tailor-made for a particular location and are of no use for other buyers, they are not excisable goods. However, it was held in the case of ASIAN TECHS LTD. [2005 (189) E.L.T. 420 (Tri. - LB)] that since the girders are capable of being transported from one place to another, they are capable of being marketed and hence chargeable to excise duty. Moreover, in the case of GEO TECH FOUNDATIONS & CONSTRUCTION [2008 (224) E.L.T. 177 (S.C.)] this issue of marketability was being raised but the appeal was rejected on the grounds of it being time barred and hence the marketability issue was not considered.
ii. Recorded smart card and tags are exempt from excise duty. A condition has been added to this exemption so that it would be available only if the manufacturer does not avail of Cenvat credit of the duty paid on inputs for these goods.
iii. Articles of jewellery on which brand name or trade name is indelibly affixed or embossed (branded jewellery), have been fully exempted from excise duty. The increase in custom duty on gold and silver will set off the same.
iv. Full exemption has also been provided to EVA compound manufactured on job-work basis for further manufacture of footwear.
1.) SSI Exemption:
There is no change either in the exemption limit or the eligibility limit for the small scale exemption. Under para 4(e) of Notification No. 8/2003-CE dated 01.03.2003, specified items that are in the nature of packaging material are excluded from the purview of the brand name restriction. This dispute has arisen due to Apex court decision in case of Kohinoor Elastic. This matter has been represented by us and amendment has come. But still we are trying for 11C notification. One more item viz. ‘printed laminated rolls’ has been added to this list with immediate effect. As a consequence, manufacturers of printed laminated rolls bearing the brand name of another person and fulfilling the conditions of the notification would be entitled to full exemption from excise duty for their first clearances of this item (for home consumption) not exceeding Rs. 150 lakh during the remaining part of this financial year i.e. 2009-10.
‘Inputs’ which are eligible for availing Cenvat credit shall not include cement, angles, channels, CTD or TMT bar and other items used for construction of shed, building or structure for support of capital goods. This means that earlier it was included. A lot of litigation on this score and matter has been referred to Larger bench in case of Vandana Global. This amendment does not have retrospective effect. Thus, it will mean that earlier it was included and this is the reason it has been excluded. But the department will lose this case due to this amendment. This was seen by us when the service tax on commission on lottery services was introduced. It was held that earlier it was not taxable and as such tax has been imposed on the same.[Notification No. 16/2009-CE (NT) refers].
Rule 6(3) of the Cenvat Credit Rules, 2004 is being amended to prescribe that a manufacturer of both dutiable and exempted goods using common inputs, who does not maintain separate accounts, shall pay an amount equal to 5% of the total price of the exempted goods instead of 10%.[Notification No. 16/2009-CE (NT) refers]. We have pleaded this matter on many forums. Our article on this issue was published in Excise Law Times. Thank God, this anomaly has been removed. The rate of reversal @ 10% was good when the duty was 16%. But when the rate of Central Excise duty is 8% then reversal @ 10% is not understandable. You will take credit on inputs @ 8% on its value and reverse the cenvat credit @ 10% on value of exempted goods. This was absurd position. This has been rectified.
Power of High court: – Recently the Apex Court of India has given the verdict in case of Hongo (India) Pvt. Limited that High Court does not have power to condone the delay in filing of appeals. This power has been vested in High Courts to condone the delay in filing appeals, applications and memorandum of cross objections if sufficient cause is shown.
Classification of Betel nuts:- The Highest Court of India has given verdict in case Crane Betel nut powder works that the process of adding or mixing Cardamom, copra, menthol, spices, sweetening agents or any other ingredients other than lime, katha or tobacco to betel nut does not amount to manufacture. To nullify the same, it is specifically excluded from Chapter 8 and a note has been inserted in Chapter 21 to term this process as manufacture. The parliament has power to nullify the acts of judiciary. This will have immediate effect.
Rule 9 A(2) provides for compounding of offences. Certain type of offence and circumstances has been excluded from the preview of compounding provisions.
Rule 14A provides for cost audit for valuation of finished goods and Rule 14AA provides for the cost audit of inputs when the credit is taken is more than normal by a unit. Cost accountants were eligible for conducting such audit. Now, Chartered Accoutant are also eligible for doing the same. This is good opportunity for CAs.
Rule 23A has been amended to provide that Advance Authority constituted under Section 28 F of Custom Act will be eligible to deal with cases under Central Excise as well.
Notifications relating to Compounded levy for induction furnace units have been amended retrospectively. This is great weapon in the hand of parliament.
One more important amendment from the point of view of assessee has come. Department seizes the documents while making the case but only few documents are relied upon in show cause notice. Rest of the documents should be returned to party within a month. There was Board circular also on this issue. But now it is incorporated in the Act itself. But issue of show cause notice also takes a considerable time. Moreover, there is always proviso below the Rule. Here also, the commissioner can retain these documents on giving reasons in writing.