Minutes of Public Grievance Committee(PGC) Meeting held on 14th Oct. 2016 at 11 :30 hrs at Kendriya Utpad Shulk Bhawan. 36-37. Sector-32. Gurgaon - Customs - Public Notice No. 97/2015-16

OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE, GURGAON-I PLOT NO-36 37 SECTOR-32 GURGAON HARYANA C. No. IV(16)/Ggn-I/Hqrs. Tech./PGC/97/2015-16 Date: .10.2016 Public Notice No. 97/2015-16 Sub: Minutes of Public Grievance Committee(PGC) Meeting held on 14th Oct. 2016 at 11 :30 hrs at Kendriya Utpad Shulk Bhawan. 36-37. Sector-32. Gurgaon Meeting of Public Grievance Committee(PGC) of Gurgaon-l Commissionerate was held on 14.10.2016 under the Chairmanship of Sh. Yogender Garg, Commissioner. The following officers and Committee members attended the meeting:- Departmental Officers :- (i) Ms. Komila Punia, Deputy Commissioner (Anti-Evasion/Div-II) (ii) Ms. Rajni Sharma, Assistant Commissioner (Division-I) (iii) Ms. Devshree, Assistant Commissioner (Division-III) (iv) Ms. Jyotika, Assistant Commissioner (Division-V) (v) Sh. Mahavir Singh, Superintendent (Technical) (vi) Sh. Manoj Kumar Goril, Inspector (Technical) (vii) Sh. Anurag Verma, Inspector (Technical) Members from Trade/Trade Associations:- (i) Sh. Anuj Nagpal, Gurgaon Industrial Association (ii) Sh. Ashish Chaudhary, Gurgaon Industrial Association (iii) Sh. C.S. Sharma, M/S Enrich Agro Food Products (iv) Sh. Mukesh Mishra, Hero Motocorp Ltd. At the outset the Commissioner welcomed the officers and members of the trade. The following points came up for discussion:- Issue raised Comments by the Chairman Points raised by the Gurgaon Industrial Association. 1. Many small scale industrial units registered members of Gurgaon Industrial Association (GIA) have been working as ancillary units to main industries on job work basis. These units have been undertaking activities of painting, powder coating and electroplating on the parts, components and articles falling under Chapter 84, 85 and 87 of the Central Excise Tariff Act, 1985. The units are of the understanding that the services provided by them are intermediate production process not amounting to manufacture and liable to service tax. The field officers are of the view that activity of carrying out an intermediate production process as job work in relation to any goods, on which appropriate duty is payable by the principal manufacturer has been exempted from payment of service tax under Notification No. 25/2012-ST and it is mandatory to claim said exemption. Job workers cannot forego said exemption and accordingly cannot charge service tax on the job work charges. The members of the Association are of the understanding that they can charge service tax based on the following understanding that there is no provision in the Finance Act, 1994 similar to Section 5A(1A) of the Central Excise Act, 1944 which mandates that the exemption notification has to be compulsorily followed. Presuming but not admitting that it is compulsory to claim exemption, such compulsion could be applied only in case of unconditional/absolute exemption notification. Exemption granted in Notification No. 25/2012-ST is conditional exemption and hence it cannot be forced to opt mandatorily. The Indirect Tax system is based on the concept of value addition where tax paid at earlier stage is allowed to be taken as credit and there should not be any breakage in the chain. There is no revenue loss to government as the tax is being charged and paid. When the government is at no loss, there is no justification to arbitrarily impose conditions not existent in the law. It has been consistently held by judiciary that job worker cannot be compelled to opt for exemption under Finance Act, 1994. The Members of Association seek clarification whether they can charge service tax on the job work charges or is it compulsory to claim exemption from service tax? 2. Many of job workers have been charging service tax on job work charges for job work undertaken on the material supplied by principal manufacturer. The field officers have been disallwing credits to the principal manufacturer alleging that the service tax charged by job worker is not valid and hence its credit cannot be taken. The members of the Association are of the understanding that service tax charged by job workers should be allowed as credit to principal manufacturer based on grounds that there is nothing in the law, as mentioned above, which prohibits the job worker from charging service tax. The service tax so charged by job worker is eligible as cenvat credit to principal manufacturer and credit should be allowed accordingly. Presuming but not admitting that service tax cannot be charged by job worker, the principal manufacturer should not be denied credit so long as the tax paid has been accepted by department. The Members of Association seek clarification whether the practice adopted by field officers to disallow credits to the principal manufacturer? If not, filed officers should be suitably instructed not to issue show cause notices to principal manufacturers for claiming credit of service tax charged by job workers. After deliberations with the members, the chairman informed that no SCNs on the issue have been issued in GGN-I. After it was apprised that the SCN have been issued by the Audit Commissionerate, the chairman informed that the issue would be taken up with Audit Commissionerate. It was informed that so long as the principal manufacturer is clearing the goods on payment of Central Excise duty, then exemption of service tax would be available to the job worker. In case service tax is being charged on an intermediate process (not amounting to manufacture) by such a job worker, credit of such service tax would be available to the principal manufacturer. It is also learnt that the GIA has also represented the to the Board. Now, Board is seized of the subject matter and decision will be forthcoming soon. Point forwarded by the Trade/ M/s. Maruti Suzuki India Ltd- Issue Involved - Cenvat Credit of infrastructure cess on vehicles returned- Infrastructure cess at specified rates on all goods falling under chapter heading 8703 of the First Schedule to the Central Excise Tariff Act has been introduced with effect from 01.03.2016. Proviso to Rule 3(4) of Cenvat Credit Rules has been introduced with effect from 01.03.2016 to provide that cenvat credit shall not be utilized for payment of Infrastructure Cess. In some cases, the vehicles which have been sold by the vehicle manufacturer are returned back to factory uinder Rule 16 of the Central Excise Rules. On such return of vehicles, the vehicle manufacturer avails cenvat credit of the duties paid at time of invoicing. Thereafter when the vehicle is re-invoiced, again duties are charged in accordance with Rule 16 of the Excise Rules. The issue involved is that on return of vehicle under Rule 16, the manufacturer will not be entitled to avail credit of the Infrastructure Cess paid at time of invoicing (since infrastructure cess has not been specified as a duty on which credit is allowed under Rule 3(1) of Cenvat Credit Rules). Thereafter if the process on the returned vehicle amounts to manufacture , then at the time of re-invoicing of vehicle, again Infrastructure Cess would be charged. This will lead to charging of Infrastructure Cess twice. The subject issue was discussed in RAC also and has already been referred to the Board. The Chairman directed the AC(Tech) to take up the matter with the Chief Commissioner Office for referring the matter to Board for allowing Credit of Infrastructure Cess for the purpose of Rule 16 of Central Excise Rules, 2002. The meeting ended with a vote of thanks to the Chair. Assistant Commissioner(Tech.)