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March 2016

Tax Amicus: November 2015

Valuation of composite goods under VAT laws is the subject for discussion under Article section in the November 2015 issue of Tax Amicus. The author analyses the judgment of Supreme Court which had held that battery charger of a cell phone is not a composite part of the cell phone but only an accessory and is an independent product. According to the author, there may be issues related to bifurcation of total amount charged for composite sale into value of charger and cell phone. The author is if the view that industries which provide composite goods or provide complimentary/add-on products like cameras, laptops being sold with carry case and charger might also face issue in valuation consequent to this judgment.

CBEC has empowered Principal Chief Commissioner/ Chief Commissioner of Central Excise to grant exemption from self-sealing of bulk cargo for export and this is highlighted under Notification & Circular section under Central Excise portion. Under Ratio Decidendi, this issue summarizes recent Supreme Court judgement allowing exemption under Notification No. 67/95-C.E. to clinker produced and used in manufacture of cement cleared without payment of excise duty. Gujarat High Court has ruled that clearance of goods from DTA unit to a 100% EOU would qualify as exports and hence refund of accumulated Cenvat credit is available to the DTA unit. Further this issue also covers some important Orders from different benches of CESTAT.

Customs portion covers certain recent developments by way of Circulars & Public Notices. Exporters have to now declare mandatorily their intention to claim benefit under MEIS while filing shipping bills, and the notified period for benefit of Service Export from India Scheme (SEIS) has been extended upto 31-3-2016. Ratio Decidendi under this portion highlights CESTAT, Delhi Order holding that importer and not financier is liable to pay customs duty when notification conditions are violated. CESTAT Mumbai has held that allegation of overvaluation of export goods based on market enquiry is not sustainable when the value is indicated in tax invoices issued to the exporter by local suppliers. Mumbai CESTAT in its another Order has held that blood glucose meters for use by individuals at home or work place are classifiable as apparatus for chemical analysis and not as instruments used in medical, surgical, dental or veterinary sciences. Summary of these orders can be seen in this issue of this newsletter.

Service Tax portion brings to readers a brief note on CBEC Circular on the new scheme for speedy disbursal of refund claims of exporters of services. This portion also covers a notification issued by CBEC notifying the effective date for levy of Swachh Bharat Cess (SBC). Ratio Decidendi contains several important orders and judgments including Jharkhand High Court Order holding that recovery cannot be made without adjudication of amount due. Mumbai CESTAT has held that the definition of ‘input service’ does not require that said service should be rendered in the factory premises of the manufacturer. Further, Chennai CESTAT has held that the assessee would be eligible for refund of Service tax under Notification No. 41/2007-ST and that one to one correlation of input service with exports was not required.

In Value Added Tax (VAT), Notification section covers amendments in rates of composition for developers under Goa VAT Act, 2005. Kerala High Court Order holding that no penalty is imposable on online service provider (e-commerce portal) for non-registration under Kerala VAT Act, 2003 when tax is paid by actual seller and Karnataka High Court Order holding that water for injection used for medicinal preparation would be taxable under the Kar. VAT Act, are the two important cases included under Ratio Decidendi part of VAT portion.

 

November, 2015/Issue-53 November, 2015/Issue-53

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