Wish List - Budget 2016

[surya narayana]

Wish list -Expectations in the Union Budget 2016

Central Excise , Service Tax & Customs

1.  Simplification of Rule 6 of Cenvat Credit Rules : Over a period of time , Rule 6 of Cenvat Credit Rules, 2004 become lengthy and complex more specifically with the procedure prescribed under Sub- Rule 3A being cumbersome and resulting in confusion among the assesses and prone to more litigation.

To avoid the complexities involved and the cumbersome procedure for arriving the amount of credit attributable to the common inputs used in the exempted goods and services based on a formulae, request the Government to delete the so called Sub-rule 3A of Rule 6 of Cenvat Credit Rules, 2004 and substitute with a simple rule prescribing that actual amount of Cenvat Credit attributable to the common inputs and input services actually used in the exempted goods and services should be reversed on a monthly basis with a condition to submit the workings with relevant documents as proof.

2.  Request to Notify Medicaments containing alcohol under M&TP Act under MRP Valuation on par with Toilet preparations containing alcohol or Narcotic drug or narcotic which were earlier notified vide Notification No. 3/2003-M&TP Dated 01.03.2003 and also to extend the cenvat facility on par with Central excise :

So far only Toilet preparations containing alcohol were notified under MRP valuation (MRP- abatement) and not the other medicaments containing alcohol or narcotic drug or narcotic. Because of this, manufacturers are facing lot of litigation with the department and hence, request the Government to notify P or P Medicaments containing alcohol or narcotic drug or narcotic also under MRP valuation on par with toilet preparations to avoid litigation under M&TP Act. It is also requested to extend the facility of Cenvat credit similar to the facility given to P or P Medicaments under Central Excise.

3. Removal of Inverted Duty Structure on P or P Medicines under Chapter 30 Central Excise: Variation in the duty rates i.e., 12% on inputs and 6% on Finished Product resulting in accumulation of Cenvat Credit and exporters are compelled to pay duty and claim the same as rebate under Rule 18 of Central Excise Rules, 2002 which is time consuming and increase in transaction cost. Hence, it is requested to increase the Duty rate on P or P Medicines from 6% to 12%.

4. Section 5A of Central Excise Act, 1944 – Mandatory availment of Exemption –

Request for restoration of earlier provision of using the own volition:

1. Earlier, the Assessee had the facility of using their own volition whether to avail exemption notification or to pay duty depending on the advantage and also the procedural requirements. In 2005 (from 13.5.2005) Section 5A of CE Act, was amended making it mandatory to avail the exemption notifications under Sub-Section 1A. This provision put the assesses in a bad position to follow all the procedural requirements which is cumbersome, time taking and painful which could have been avoided without availing the exemption had this change not been made. Hence, request the Government to amend the provisions of Section 5A of CE Act, 1944 for restoring the earlier provision of using the concept of “own Volition “

2. Where manufacturer clears goods by paying duty though there is general exemption to clear at nil rate of duty and purchaser after paying the invoice value incl. Excise duty to supplier , avails Cenvat Credit / claims TED benefit, purchaser should not be deprived of such benefit subsequently

5. Request for relaxation of the condition for renewal of LUT every year by the assessee.

Government introduced execution of LUT in place of Bond for Export clearances by the manufacturer exporters. While introducing the above, a condition of renewal of such LUT once in 12 calendar months prescribed. However, in respect of Bonds, this renewal condition was not there. Because of this renewal condition for LUT, the assesses are facing problems in getting renewal which involves lot of precious time and increase of transaction costs. Hence, it is requested to relax the condition of yearly RENEWAL with respect to LUT considering the hardship being faced by the Assesses.

6. Cenvat Credit facility on all the duties and taxes paid on inputs, input Services and Capital goods should be allowed seamlessly without any restriction.

7. Facility of Centralized registration under service tax- to be extended to Central Excise also:

New Centralized registration procedure under service tax is operational by amending rule 4(2) and 4(3) with effect from 2-11-2006. Accordingly, the centralized registration is granted by the Commissioner of Central Excise under whose jurisdiction the premises or offices, from where centralized billing or accounting is done, are located. It is requested to extend the similar trade friendly facility to central excise assesses also with a view to reduce transaction costs.

As per para 3(1) of Circular No. 586/23/2001-CX, Dated. 12-9-2001 where two premises of the same factory segregated by public road, canal, railway line, single registration may be given, and certain guidelines have been incorporated in the CE Manual as to how to determine that two premises are parts of the same factory vide Chapter 2, Part-I, Sub-para 2.2. The provisions are restrictive and discretionary. It is requested the Board should allow single license to the premises of same factory if it is in the same range and same Commissionerate.

8. Inclusion of Loan Licence /Job-work location in the definition of UNIT given under Explanation-I to Rule 7 of Cenvat Credit Rules, 2004 : In the absence of non-inclusion of Loan Licence/Job-work locations in the definition, many of the assesses registered as ISD, unable to distribute the said credit to the LL/Job-work Locations and compelled to forego the amount of ST paid . Hence, it is requested to include the Loan Licence/Job-work premises in the definition of UNIT.

9. Time limit for availment of CENVAT credit on inputs and input services: The time limit for availing Cenvat Credit within 1 year period from the date of invoice will cause hardship especially for availment of Cenvat Credit. Since payment of respective excise duty/taxes has been made by the manufacturer supplier, there should not be any imposition of time limit for taking credit. This will not affect in any way to the exchequer, therefore the restriction should be removed.

10. Implementation of online sanction of Rebate claims for the terminal excise duty paid on export consignments : CBE & C earlier in the year 2001 proposed that similar to Duty Drawback, Export rebates will also sanctioned online at the time of export as the EDI system for generation of Shipping Bills are made online. However, it was stated that this implementation would be from a date notified. Even after completion of 15 years, the date of online implementation is not yet notified. Request for an early implementation of the proposal which will certainly minimize the procedural/documentation requirements and also reduce the transaction cost including time.

12. Variable rates of interest on delayed payment

1. Notification No. 12/2014-ST prescribed variable rates of interest for the delayed payments of service tax, ranging from 18% to 30% p.a. depending on the period of delay. This is effective from 1st October, 2014. This interest is penal in nature.

2. A difference may be required to be made between an admitted liability which has not paid, and cases involving differences in interpretation of law, valuation or applicability of any exemption notification. The higher interest rates may be made applicable only to delayed payments of admitted liability. The rates of interest would require revision accordingly.

13. Request for withdrawal of Payment of service Tax under partial reverse charge.

14. Request for recommendation to make use of eBRC facility implemented by DGFT for monitoring Realization of Export proceeds for Duty Draw Back Scheme by customs also: This will be of great help to the exporters who are Currently compelled to submit the hard copy of BRC within 6 months from Date of sanction of Duty Drawback to the Customs Authorities in saving precious time and energy.

Further, the Authorized Dealer Banks expressing difficulty in arranging the physical BRCs in view of the mandatory requirement of uploading the details of export proceeds realization in the DGFT eBRC Module by them on the ground of duplication of work. In this context, it is worth mention that some State Governments entered MOUs with DGFT for using the details from their eBRC Module for VAT and other purposes.

15. Request for reduction of service Tax from 14.5% to 12.5% on par with Central Excise duty rate:

16. Request for immediate inclusion of a provision in the Cenvat Credit Rules, 2004 for utilizing the accumulated balances of Edu. Cess and Secondary and  Higher Edu. cess for payment of Excise duty/Service Tax on final products  and taxable services.

17. Request to provide the facility of seamless cenvat credit of all inputs and input services used by the assesses without restriction by way of removing  the exclusions in the Cenvat credit Rules, 2004. This will help in reduction of  litigation.

18. Request for extension of transfer facility of Cenvat credit availed on inputs  and input services on par with SAD to the other units of same manufacturer  wherever required under Cenvat Credit Rules,2004. This will be of great  help to the assesses having multiple units carrying huge cenvat balances in some units and paying the duty in cash from other units where cenvat  balances are less in order to effectively utlize the Cevat credit balances lying  idle.

Discussions to this article

[vasudevan unnikrishnan]

Congrats for well reasoned suggestions/wishes.

Reg item 12 on penal interests, I may add that the provision in sec 67(2) on Cum tax may be enlarged to cover the tax and interest as well, in all cases where the tax was not billed, collected or paid by service receivers even though billed.

Another aspect worth consideration is to get the period of pendency/delay in the adjudication,appeal etc.

For the same, similar provisions as available in Cex Act and Customs Act as reproduced below

The Central Excise Act, 1944 , sec 11A (11) provides that-

“ The Central Excise Officer shall determine the amount of duty of excise under sub –section (10)-

1. Within SIX months from the date of notice where it is possible to do so,in respect of , the appeals are also to be decided, where it is possible to do so, within a period of SIX months by Commissioner (Appeals) as per sec.35A (4A); and within a period of THREE years by the CESTAT as per sec.35C(2A) of CEA,1944. Similar provisions exist in the Customs Act,1962 as well. falling under sub-section (1);
2. Within ONE year from the date of notice,where it is possible to do so,in respect of cases falling under sub section (4) or sub section (5).”

Similarly,appeals are to be disposed within Six months as per s.35A(4A) by Commissioner Appeals and Three years by CESTAT as per s.35C (2A) of CEA,1944 Corresponding provisions should be inserted for service tax matters as well.

V Unnikrishnan,Cochin.

[vasudevan unnikrishnan]

Congrats for well reasoned suggestions/wishes.

Reg item 12 on penal interests, I may add that the provision in sec 67(2) on Cum tax may be enlarged to cover the tax and interest as well,in all cases where the tax was not billed,collected or paid by service receivers even though billed.

Another aspect worth consideration is to get the period of pendency/delay in the adjudication,appeal etc.

For the same,similar provisions as available in Cex Act and Customs Act as reproduced below

The Central Excise Act, 1944, sec 11A (11) provides that-

“ The Central Excise Officer shall determine the amount of duty of excise under sub –section (10)-

1. Within SIX months from the date of notice where it is possible to do so,in respect of , falling under sub-section (1);
2. Within ONE year from the date of notice,where it is possible to do so,in respect of cases falling under sub section (4) or sub section (5).”

Similarly,appeals are to be disposed within Six months as per s.35A(4A) by Commissioner Appeals and Three years by CESTAT as per s.35 C (2A) of CEA,1944.In Customs Act also similar clause is there.

It will therefore be only prudent that Corresponding provisions are inserted for service tax matters as well.This would facilitate to claim the interest wiver for the delay on the part of dept.

note: Some jumblings in earlier mail,since corrected please.

V Unnikrishnan,Cochin.