BUDGETARY NOTIFICATIONS FOR CENTRAL EXCISE

[Mr. M. GOVINDARAJAN]

INTRODUCTION:

The Hon'ble Finance Minister submitted the proposals in his budget for the year 2010-11 before the Parliament.   The Finance Bill, 2010 has brought in many changes in direct taxes as well as indirect taxes.   In addition to notifications are issued by the Government by virtue of powers given in the provisions of the respective acts.   In this article the budgetary notifications for central excise is going to be discussed.

Notification No.5/2010-Central Excise (NT):

Rule 8 of Central Excise Rules provides the manner of payment of the excise duty on the goods removed from the factory or the warehouse during a month shall be paid by the 6th day of the following month, if the duty is paid electronically through internet banking and by 5th day of the following month in any other case.   The first proviso provides that in case of goods removed during the month of March, the duty shall be paid by 31st day of March.  The second proviso is related to the payment of duty availing of exemption under a Notification based on the value of clearance in a financial year.   The second proviso is now substituted with explanation vide clause (1) of this notification.

As per the notification the second proviso provides that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the 6th day of the month following that quarter, if the duty is paid electronically through internet banking and in any other case, by the 5th day of the month following that quarters, except in case of goods removed during the last quarter, starting from the 1st day of January and ending on the 31st day of March, for what the duty shall be paid by the 31st day of March.

The Explanation 1 to the said proviso provides that for the purposes of this proviso, it is hereby clarified that an assessee shall be eligible, if the aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed four hundred lakhs.  Explanation 2 to the said proviso provides that the manner of payment as specified in this proviso shall be available to the assessee for the whole of the financial year.

Clause (2) of this notification seeks to omit Rule 11(5) which provides that the owner or working partner or the Managing Director or the Company Secretary or any person duly authorized for this purpose shall authenticate each foil of the invoice book, before being brought into use.

Clause (c) (i) of the Notification seeks to omit clause (a) in the second proviso of Rule 12 (1).  Rule 12 deals with filing of returns.   Clause (c)(ii) of the Notification seeks to insert the proviso after the second proviso which provides that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, he shall file a quarterly return in the form specified by notification, by the Board, or production and removal of goods and other relevant particulars within ten days after the close of the quarter to which the return relates.  Explanation 1 to the said proviso provides that for the purposes of this proviso, it is hereby clarified that an assessee shall be eligible, if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year computed in the manner specified in the said notification did not exceed rupees four hundred lakhs.   Explanation 2 to the said proviso provides that the filing of returns as specified in this proviso shall be available to the assessee for the whole of the financial year.

The changes brought in this notification shall come into force with effect from 1st day of April, 2010.

Notification No. 6/2010-Central Excise (NT):

In this Notification, amendments are brought in Cenvat Credit Rules, 2004 ('CENVAT Rules' for short) by Cenvat Credit (Amendment) Rules, 2010. ('Rule' for short) CENVAT Rule 3 provides for availing of Cenvat Credit.  Rule 2 seeks to substitute the second proviso to CENVAT Rule 3(5).   After this substitution CENVAT Rule 3(5) reads as follows:

Rule 3(5) - When inputs or capital goods on which CENVAT credit has been taken, are removed as such from the factory or premises of the provider of output service, the manufacturer of the final products or provider of output services, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to Rule 9.

Provided that such payment shall not be required to be made where any inputs or capital goods are removed outside the premises of the provider of output service for providing the output service.

Provided that if the capital goods, on which CENVAT credit has been taken, are removed after being used, the manufacturer or provider of output service shall pay an amount equal to the CENVAT credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter or part thereof from the date of taking the CENVAT credit, namely:

(a) for computers and computer peripherals:

* for each quarter in the first @ 10%;

* for each quarter in the second year @ 8%;

* for each quarter in the third year @ 5%;

* for each quarter in the fourth and fifth year @ 1%

(b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter.

Rule 3 seeks to insert the proviso after CENVAT Rule 4(2)(a).  CENVAT Rule 4(2) (a) provides the conditions for availing credit.  The newly inserted third proviso provides that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT credit in respect of capital goods received by such assessee shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year.

The Explanation to this proviso provides for the removal of doubts, it is hereby declared that an assessee shall be 'eligible' if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year computed in the manner specified in the said notification did not exceed rupees four hundred lakhs.

This clause also seeks to substitute Rule 4(5)(b).  Rule 4(5) deals with allowing of CENVAT credit on capital goods or inputs sent to job worker.  The newly substituted Rule 4(5)(b) provides that the CENVAT credit shall be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to:

(i) another manufacturer for the production of goods; or

(ii) a job worker for the production of goods on his behalf,

according to his specifications.

Rule 4 seeks to substitute CENVAT Rule 6(6)(vii).  Rule 6 deals with the obligations of manufacturer of dutiable and exempted goods and provider of taxable and exempted services.   The newly substituted Rule provides that all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975  and the additional duty leviable under Section 3(1) of the said Customs Tariff Act which imported into India and are supplied-

a) against International Competitive Bidding; or

b) to a power project from which power supply has been tied up through tariff based competitive bidding; or

c) to a power project awarded to a developer through tariff based competitive bidding.

Rule (5) seeks the substitution of CENVAT Rule 15 which deals with confiscation and penalty.   The newly substituted Rule 15 reads as follows:

15. Confiscation and Penalty: (1) If any person, takes or utilizes CENVAT credit in respect of input or capital goods or input services, wrongly or in contravention of any of the provisions of these rules, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty or service tax on such goods or services, as the case may be, or two thousand rupees, whichever is greater.

(2) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilized wrongly by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made there under with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Excise Act.

(3) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilized wrongly by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of these rules or of the Finance Act or of the rules made there under with intent to evade payment of service tax, then the provider of output service shall also be liable to pay penalty in terms of the provisions of section 78 of the Finance Act.

(4) Any order under sub-rule (1) or sub-rule (3) shall be issued by the Central Excise Officer following the principles of natural justice.

Except clause (1) of rule 3 of these rules shall come into force on 27.02.2010 clause (1) of rule shall come into force on and from the 1st day of April, 2010.

Notification No.7/2010-Central Excise (NT)

This notification seeks to amend the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 5/2006-Central Excise (NT), dated 14.03.2006.  Substitution, omission, insertion of some words is effected in this Notification.  Further it gives a table in which the exporter shall give the details which are as follows:

* Details of goods /services exported on which refund of CENVAT credit is claimed (in lakhs);

* Details of shipping bill/Bill of export/export documents etc;

* Date of export order;

* Goods/services exported;

* Quantity and value of goods exported/value of services exported;

* Invoice No. date and amount;

* Name of service provider/supplier of goods;

* Service tax/Central Excise Registration No. of service provider/supplier of goods;

* Details of service/goods provided with classification under Finance Act 1994/Central Excise Tariff;

* Service Tax/Central Excise duty payable;

* Date and details of payment made to service provider;

* Documents attached to evidence of the amount of service tax paid;

* Total export during the period for which refund is claimed;

* Total domestic clearance during the period for which refund is claimed;

* Total amount of CENVAT claimed as refund.

The Table shall be certified by a person authorized by the Board of Directors (in the case of limited company) or the proprietor or any partner (in case of partnership firm) if the amount of refund claimed is less than Rs. 5 lakh in a quarter.   In case the refund claim is in excess of Rs.5 lakh the Table shall also be certified by the Chartered Accountant who audits the annual accounts of the exporter for the purposes of Companies Act or the Income Tax Act, as the case may be.

Notification No.8/2010-Central Excise (NT):

The Central Government makes the 'Pan Masala Packing Machines (Capacity Determination and Collection of duty) Amendment Rules, 2010 ('Rule' for short) and this rule came into force with effect from 27.02.2010 to amend the 'Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 ('Pan Rules' for short).

Rule 2(a) seeks to insert some words in the definition of Pan Rules 2(b) which after substitution reads as "Notified goods" means goods specified by the Central Government by Notification No.29/2008-CE (NT), dated 01.07.2008 under Section 3A(1) of Central Excise Act, 1944.

Rule 2(b) seeks to insert the proviso after sub rule (3) after Pan Rule 6 which deals with the declaration to be filed by the manufacturer.  Sub rule 3 provides for the calculation of annual capacity of production.  The newly inserted proviso provides that in case a new manufacturer commences production of notified goods, his annual capacity of production shall be calculated pro-rata on the basis of the total number of days in that year and the number of days remaining in that year starting from the date of commencement of production of such notified goods.

Rule 2(c) seeks to substitute the seventh proviso to Pan Rule 9, which deals with the manner of payment of duty.  The newly substituted proviso provides that in case a manufacturer does not pay the duty payable by the due date, and continues to operate any packing machine, then till the time such non payment continues, he shall be liable to pay the monthly duty based on the number of operating packing machines declared in the month for which duty was last paid by him or the total number of packing machines found available in his premises at any time thereafter, whichever is higher.  It is also provided that in case a new manufacturer commences production of notified goods in a particular month, his monthly duty payable for that month shall be calculated pro-rata on the basis of the total number of days in the month and the number of days remaining in that month starting from the date of commencement of the production of such notified goods and shall be paid within five days of such commencement.

Rule 2(d) seeks to substitute the first proviso to Pan Rule 10 which deals with the abatement incase of non production of goods. The newly substituted proviso provides that during such period, no manufacturing activity, whatsoever in respect of notified goods shall be undertaken and no removal of notified goods shall be effected by the manufacturer except that notified goods already produced before the commencement of said period may be removed within first two days of the said period.

Rule 2(e) and 2(f) seeks to substitute some words in Pan Rule 15 and Rule 17.

Notification No. 9/2010-Central Excise (NT)

The Central Government made some amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 49/2008-Central Excise (NT), dated the 24th December, 2008. 

Notification No.10/2010-Central Excise (NT)

In exercise of the powers conferred by Section 3A (1) of the Central Excise Act, the Central Government hereby specifies:

* Unmanufactured tobacco, bearing a brand name, falling under tariff hearing 2401 of the First Schedule to the Central Excise Tariff Act, 1985; and

* Chewing tobacco falling under item 2403 99 10 of the said Tariff Act,

Manufactured with the aid of packing machines and packed in pouches as notified goods, on which there shall be levied and collected duty of excise in accordance with the provisions of the said Section 3A. 

This notification shall come into force on the 8^th March, 2010.

Notification No.11/2010-Central Excise (NT)

In exercise of the powers conferred by Section 3A (2) and (3) of the Central Excise Act, 1944 the Central Government makes the 'Chewing Tobacco and unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010'.  This rule shall come into force on the 8th March, 2010.