01 January 0001

Tax Amicus: May 2016


'Demand of interest due to price revision – An analysis

Assessees under Central Excise ordinarily discharge duty on the goods cleared by them on the basis of invoices raised indicating the value of these goods as on the date of the clearance of these goods. The price declared in the said invoices is the transaction value of the goods in terms of Section 4 of the Central Excise Act, 1944. However, difficulties arise when the price is subsequently revised due to various factors, leading to demand of interest by the Revenue Department on the differential duty paid due to such price revision. Recently, the Supreme Court differed from judgments in precedent cases which were in favour of the Department and referred the issue to Larger Bench. The assessees can feel vindicated at least by reference to Larger Bench as commercial issues, as they arise in reality, need to be seen through the prism of business principles and practices.


Central Excise


  • Cenvat credit – Clearance of process waste cannot be treated as removal of inputs ‘as such’ – CBEC clarifies
  • Bagasse & aluminium/zinc dross are not excisable but Cenvat Rule 6 applicable

Ratio decidendi

  • Classification of items under Chapter 73 of Central Excise Tariff by itself will not exclude them from Cenvat credit – CESTAT, New Delhi
  • Cenvat credit on channels, angles, H.R. plates and welding electrodes, used in the manufacture of parts of furnace and other machinery, admissible – CESTAT, Mumbai
  • Cenvat credit - No reversal required for inputs used in finished goods which were written off – CESTAT, Chandigarh
  • Cenvat credit – Option to reverse proportionate credit – Intimation under Cenvat Rule 6(3A) not mandatory – CESTAT, Hyderabad
  • No interest on differential duty when sufficient credit available in Cenvat credit – CESTAT, Bangalore




  • Status holder recognition – Last three years of exports to be counted
  • EPCG and SFIS – Rupee payment for specified services to be counted towards benefits

Ratio decidendi

  • DRI officers do not have jurisdiction to issue SCNs for imports made prior to 8-4-2011 – Delhi High Court
  • Chemical examiner’s report not to be relied upon in absence of cross-examination– Madras High Court
  • Disposable Sterilized Dialyzer and Microbarrier for filtering blood – Calcutta High Court quashes CBEC Circular No. 19/2013-Cus.
  • Central Excise portion of drawback admissible when goods procured from open market


Service Tax


  • Parity between government, local authority and governmental authority while performing certain functions, for the purpose of service tax
  • Services provided by government / local authority – Certain rules amended

Ratio decidendi

  • Deputation of employees to group companies for marketing support – Case of joint employment, not exigible to service tax – CESTAT, Mumbai
  • Cenvat credit not deniable for absence of registration number in invoice – CESTAT, Kolkata
  • Cenvat credit of excess tax paid, reversed later is ‘not wrongly taken or utilised’ – CESTAT, Bangalore
  • Cenvat credit – Option not deniable when intimation under Rule 6(3A) filed belatedly – CESTAT, Mumbai
  • Cenvat credit availment by successor-entity - Imperfect intimation to Department not fatal to eligibility – CESTAT, Ahmedabad
  • Cenvat credit on construction service availed after completion of construction, admissible – CESTAT, Mumbai
  • Rent paid bu EOU for additional units where processing takes place – Cenvat credit admissible – CESTAT, Chennai
  • Lease equalisation levy is not consideration and not liable to service tax – CESTAT, Mumbai
  • Revised claim not delayed when original claim for refund within statutory time limit – CESTAT, Ahmedabad
  • Refund – One to one co-relation between remittance and export invoice not required – CESTAT, Hyderabad
  • Settlement Commission – Copy of Department’s report to be given to applicant – Bombay High Court
  • Excess tax paid under wrong rate can be adjusted as advance tax – CESTAT, Bangalore
  • Service tax on admission/access to entertainment – Constitutional validity upheld by Kerala High Court


Value Added Tax (VAT)


  • UP VAT – Rate of additional tax on cement increased
  • Delhi VAT – Rate of tax decreased in respect of specified products
  • MP VAT – Electric/battery run two wheelers, cars and rickshaws, exempted
  • Maharashtra VAT – Rate increased for Schedule C goods

Ratio decidendi

  • Anti-dumping duty includible in value for VAT when goods cleared from SEZ – Madras High Court
  • Input Tax Credit of tax paid on purchase of DEPB scrips, not allowed – Madras High Court


May, 2016/Issue-59 May, 2016/Issue-59

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