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Preface to Fifth Edition I-5

Acknowledgement I-7

How to study and revise this book I-9

Index to coverage of select cases of ICAI in this book [Modules 1, 2 and 3] I-11

DIVISION ONE

CHARGE, CLASSIFICATION AND VALUATION

1 BASIC CONCEPTS UNDER CENTRAL EXCISE

1.1 Taxation system - Direct and Indirect taxes 3

1.2 Constitutional background 3

1.3 Sources of central excise laws 5

1.4 Extent and applicability of central excise laws 5

1.5 Charge of excise duty - Section 3 of CEA, 1944 6

1.6 Levy v. Collection - Concept & difference 7

1.7 Factory [Section 2(e)] 9

1.8 Other definitions - Not relevant under the present law 9

1.9 Basis for levy and measurement of excise duty - Rate structure 9

1.10 Exceptions to levy 10

1.11 Types of excise duties 10

1.12 Goods - Meaning, movability and marketability 11

1.13 Excisable goods - Meaning & related concepts 14

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Module 1- Central Excise & CENVAT Credit

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1.14 Manufacture, production & deemed manufacture 15

1.15 Manufacturer - Concept & scope 26

1.16 Processing, packing/labelling/branding & assembly - Whether amounts tomanufacture ? 28

1.17 Change in tariff heading - Not relevant to identify whether a process amountsto manufacture 31

1.18 Waste or scrap - Whether dutiable ? 32

1.19 Taxable event, manner of collection & rate of duty and tariff valuation applicable 341.20 Dutiability of pre-budget stock, or, levy of duty in case of change in rate of duty

between date of manufacture & date of removal 361.21 Dutiability of intermediate products & captive consumption 401.22 Dutiability of site related activities & immovable property, or, excisability of plant

and machinery assembled at site [CBEC Order No. 58/1/2002-CX, dated 15-1-2002] 44

2 TARIFF AND CLASSIFICATION

2.1 Central Excise Tariff - Introduction and linkage with Central Excise Act 492.2 Classification of goods - Meaning, need and guidance 502.3 Power of Central Government to increase rate of duty & amend CETA 522.4 Purpose of rules for interpretation of tariff 532.5 General rule - Terms of headings, etc. to determine classification, not title

[Rule 1] 542.6 Classification of incomplete/unfinished goods and of mixtures [Rule 2] 572.7 Classification of goods prima facie classifiable under two or more headings

[Rule 3] 602.8 Akin rule [Rule 4] 632.9 Classification of packing materials/packing cases [Rule 5] 632.10 Notes to Tariff Schedule 632.11 Generally accepted principles of classification of goods, or, manner of

classification of goods 642.12 Change in classification by assessee or department - Extent and scope 652.13 HSN - Meaning, significance and legal status 662.14 Trade parlance or commercial parlance theory/test 672.15 Classification of ‘parts and accessories’ 68

3DUTY BASED ON ANNUAL CAPACITY, COMPOUNDED LEVY

SCHEME, TARIFF VALUE & MRP-BASED EXCISE DUTY

3.1 Power of Central Government to charge excise duty on the basis of capacity ofproduction in respect of notified goods [Section 3A] 75

3.2 Special procedure for payment of duty, or, compounded levy scheme [Rule 15 ofthe Central Excise Rules, 2002] 78

3.3 Duty based on ACP under section 3A & compounded levy scheme - Difference 793.4 Tariff value - Concept, fixation and valuation [Section 3(2) & 3(3)] 79

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3.5 Valuation of excisable goods based on retail sale price, or, RSP - Based exciseduty, or, MRP-based excise duty [Section 4A] 80

4 TRANSACTION VALUE BASED DUTY & VALUATION AUDIT

4.1 Transaction value - Applicability and concept [Section 4] 92

4.2 Transaction value - Meaning of [Section 4(3)(d)] 95

4.3 Assessee [Section 4(3)(a)] 96

4.4 Time and place of removal - Concept and significance 96

4.5 Related person - Meaning and concept [Section 4(3)(b)] 97

4.6 Price-cum-duty - Concept of [Explanation to section 4(1)] 97

4.7 Relationship between manufacture, classification & valuation 99

4.8 Inclusions in transaction value 100

4.9 Exclusions from transaction value 104

4.10 Central Excise Valuation Rules, 2000 - Summarised introduction 112

4.11 Valuation if price of goods is not known at time of removal [Rule 4 of CentralExcise Valuation Rules, 2000] 114

4.12 Valuation if goods are sold for delivery at a place other than place of removal[Rule 5 of Central Excise Valuation Rules, 2000] 115

4.13 Valuation when price is not sole consideration for sale [Rule 6 of Central ExciseValuation Rules, 2000] 122

4.14 Valuation if excisable goods are not sold for delivery at the time and place ofremoval, or, valuation of depot transfers [Rule 7 of Central Excise ValuationRules, 2000] 127

4.15 Valuation in case of captive consumption [Rule 8 of Central Excise ValuationRules, 2000] 133

4.16 Valuation in case of sale to, or through, related persons [Rule 9 and rule 10 ofCentral Excise Valuation Rules, 2000] 139

4.17 Valuation of goods manufactured on job-work basis [Rule 10A of Central ExciseValuation Rules, 2000] 143

4.18 Special audit in certain cases where value has not been correctly determined,or, valuation audit [Section 14A of CEA, 1944] 147

DIVISION TWO

CENVAT CREDIT

5 CENVAT CREDIT - BASICS AND DEFINITIONS

5.1 Value Added Tax (VAT) & Central Value Added Tax (CENVAT) - Concept,need and differences 151

5.2 Basics of Cenvat Credit Scheme 153

5.3 Capital goods - Definition [Rule 2(a) of Cenvat Credit Rules, 2004] 155

5.4 Input - Definition [Rule 2(k) of Cenvat Credit Rules, 2004] 159

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5.5 Input service - Definition [Rule 2(l) of Cenvat Credit Rules, 2004] 169

5.6 Final product and output service - Definition of [Rule 2(h) and 2(p) of CenvatCredit Rules, 2004] 176

6 CENVAT CREDIT - AVAILMENT AND UTILIZATION

6.1 Cenvat credit - Availment and utilization - Difference between 177

6.2 Duties/taxes of which cenvat credit may be taken [Rule 3(1) of Cenvat CreditRules, 2004] 177

6.3 Restrictions on availment of credit, or, credit in case of inputs/capital goodsmanufactured by 100% EOU/EHTP unit/STP unit and cleared to DTA[Rule 3(7)(a) of the Cenvat Credit Rules, 2004] 180

6.4 Conditional exemption subject to non-availability of credit - Credit not to beallowed [Explanation to rule 3] 181

6.5 Conditions for allowing cenvat credit - Timing and manner of availment of crediton input, input service and capital goods [Rule 4 of the Cenvat Credit Rules, 2004] 182

6.6 Utilization of Cenvat Credit [Rule 3(4) of the Cenvat Credit Rules, 2004] 188

6.7 Duty/tax-wise restrictions on utilization of credit [Rule 3(4) and rule 3(7)(b) of theCenvat Credit Rules, 2004] 190

6.8 Special provisions in respect of goods manufactured by units availing area-basedexemptions [3rd proviso to rule 3(4), Rule 5A and rule 12] 191

6.9 Deemed cenvat credit, or, credit availment at deemed rates - Power of CentralGovernment [Rule 13 of Cenvat Credit Rules, 2004] 194

6.10 Removal of cenvated input/capital goods by manufacturer or service provider -Quantum of reversal required [Rule 3(5), 3(5A) & 3(6)] 195

6.11 Write-off of input/capital goods - Credit reversal [Rule 3(5B)] 201

6.12 Reversal of credit of input and input service used in final product on which dutyis remitted under rule 21 of CER, 2002 [Rule 3(5C)] 202

6.13 Reversal of credit under rule 3(5B) and rule 3(5C) [Circular No. 907/27/2009-CX.,dated 7-12-2009 & Circular No. 930/20/2010-CX, dated 9-7-2010] 203

6.14 Job work - Meaning and scheme of cenvat credit [Rules 2(n), 3(1), 4(5) and 4(6)of the Cenvat Credit Rules, 2004] 204

6.15 Documents on strength of which an assessee is permitted to avail cenvat credit[Rule 9(1) and rule 9(2)] 207

6.16 Accounting for availment and utilization of credit 211

7 CENVAT CREDIT - EXEMPTED GOODS & SERVICES

7.1 Exempted goods and exempted services [Rule 2(d) and 2(e) of Cenvat CreditRules, 2004] 214

7.2 General bar on availment of credit in respect of exempted goods and services -Obligation of a manufacturer or producer of final products and a provider ofoutput service [Rule 6(1), 6(2) & 6(4)] 215

7.3 Option not to maintain separate accounts for inputs/input services - Percentagepayment or proportionate reversal [Rule 6(3), 6(3B) and 6(3D) of the CenvatCredit Rules, 2004] 218

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7.4 Manner of determination of pro rata reversal [Rule 6(3A)] 225

7.5 Goods/services for which reversal under rule 6(1) to 6(4) not required [Rule 6(6),6(7) and 6(8) of the Cenvat Credit Rules, 2004] 229

7.6 Exempted goods/services becoming taxable/dutiable or vice versa - Treatmentunder CENVAT [Rule 3(2), 3(3) and rule 11] 231

7.7 Non-reversal of credit even if process not manufacture - Power of CentralGovernment to allow non-reversal [Section 5B of CEA] 234

8 CENVAT CREDIT - PROCEDURES

8.1 Refund of cenvat credit in case of exporters exporting goods or serviceswithout payment of duty/tax [Rule 5] 235

8.2 Refund of cenvat credit to service providers providing services under partialreverse charge [Rule 5B] 238

8.3 Transfer of cenvat credit on shifting/transfer of factory of manufacturer orbusiness of service provider [Rule 10] 241

8.4 Transfer of cenvat credit of special additional duty of customs (SAD orSPL. CVD) leviable under section 3(5) of the Customs Tariff Act [Rule 10A] 242

8.5 Storage of input outside the factory of manufacturer [Rule 8] 243

8.6 Cenvat records to be maintained, and, returns to be submitted by manufactureror service provider [Rule 9(5), 9(6), 9(7), 9(9) and 9(11)] 244

8.7 Information relating to principal inputs [Rule 9A] 245

8.8 Dealers under central excise - First stage and second stage dealers - Positionunder Cenvat Credit Rules 245

8.9 Input Service Distributor (ISD) - Provisions 246

8.10 Distribution of credit on inputs/capital goods by the office or any otherpremises of output service provider [Rule 7A] 249

8.11 Recovery of cenvat credit wrongly taken or erroneously refunded [Rule 14] 250

8.12 Confiscation and penalty [Rules 15 and 15A] 251

8.13 Special audit in cases where credit of duty availed or utilised is not within thenormal limits, etc. or cenvat audit [Section 14AA of CEA] 252

8.14 Differences between valuation audit and cenvat audit 253

8.15 Large taxpayers - Concept [Rule 2(ea) and rule 12BB of Central Excise Rules,2002 & Rule 12A of Cenvat Credit Rules, 2004 read with Notfn. No. 20/2006-CE(NT)] 254

8.16 Large taxpayers - Inter-unit transfer of intermediate goods or inputs or capitalgoods for further manufacture [Rule 12A of Cenvat Credit Rules, 2004 & Rule12BB of Central Excise Rules, 2002] 255

8.17 Large taxpayers - Other procedural provisions 258

8.18 Power to impose restrictions in cases of misuse of cenvat credit or evasion ofduty [Rule 12AAA of Cenvat Credit Rules, 2004 and Rule 12CCC of CentralExcise Rules, 2002] 259

8.19 Credit of duty on goods brought to the factory [Rule 16 of the Central ExciseRules, 2002] 260

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DIVISION THREE

SSI, PROCEDURES AND EXPORTS

9 SSI EXEMPTION

9.1 Small scale industry exemption - Concept of [Not. No. 8/2003-CE] 265

9.2 Option to avail or not avail this exemption 267

9.3 Small scale industry - Eligibility limit � 400 lakhs [Not. No. 8/2003-CE] 267

9.4 Extent of exemption and exemption limit of � 150 lakhs 272

9.5 Availment or utilization of cenvat credit - Provisions 276

9.6 Branded goods - Eligibility for exemption [Para 4 of notification] 279

9.7 Dummy units created to avail of SSI-exemption - Lifting of veil and clubbingof clearances 284

9.8 Procedural concessions enjoyed by SSIs 294

10 GENERAL PROCEDURES UNDER CENTRAL EXCISE

10.1 Assessment, assessee, physical control & self-assessment 295

10.2 Provisional assessment [Rule 7] 296

10.3 Provisional assessment - Not to be done by department itself 298

10.4 Storage of non-duty paid goods outside factory [Rule 4(4)] 298

10.5 Manner of payment - Due date, mode, etc. [Rule 8] 299

10.6 Manner of payment - Consequences of delayed payment [Rule 8] 300

10.7 Payment through personal ledger account/account current 302

10.8 Persons required to take & persons exempted from registration [Section 6 readwith rule 9 & Notification No. 36/2001-CE (NT) and Central Excise Manual] 303

10.9 Registration - Procedure of [Notification No. 35/2001-CE (NT) and CentralExcise Manual] 304

10.10 Period of validity of registration certificate 306

10.11 Penal provisions for not taking registration [Section 9 and rule 25] 306

10.12 Remission of duty [Section 5 read with rule 21] 307

10.13 Remission - Certain instances where available/not available 309

10.14 Removal of inputs/intermediate goods/final products outside factory forcarrying out certain processes [Rules 16A to 16C] 311

10.15 Daily records, or, daily stock account [Rule 10] 313

10.16 Goods to be removed on invoice [Rule 11] 313

10.17 Filing of return [Rule 12] 315

10.18 Removal of goods by a 100% EOU for Domestic Tariff Area [Rule 17] 318

10.19 Scrutiny of assessment [Rule 12(3) and 12(4) and rule 17(4) and 17(5)] 319

10.20 Electronic maintenance of records and filing of returns, etc. [CircularNo. 499/65/99-CX, dated 10-12-1999] 320

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10.21 Access to a registered premises, or, submission of records [Rule 22] 321

10.22 Confiscation and penalty [Rule 25] 322

10.23 Penalty for certain offences or personal penalty [Rule 26] 323

10.24 General penalty [Rule 27] 323

10.25 Confiscation - Meaning and related aspects 324

10.26 Central Excise Officer - Meaning, hierarchy and powers 324

10.27 Adjudicating authority and adjudication 326

10.28 Monetary limits of adjudication [Section 33 and section 11A] 327

10.29 Payment of duty under protest 328

10.30 Excise Audit 2000 (EA 2000) [Central Excise Manual] 329

10.31 Power to summon persons to give evidence and produce documents ininquiries under the Act [Section 14, applicable to service tax also;corresponding provision section 108 of the Customs Act, 1962] 330

10.32 Power of search and seizure [Section 12F] 331

10.33 Search of conveyance and detention & seizure [Rules 23 and 24] 331

10.34 Return of records or documents not relied upon [Rule 24A] 332

10.35 Arrests and related provisions [Sections 13, 18, 19 and 20] 332

10.36 Vexatious search, seizure, etc., by central excise officer [Section 22] 333

10.37 Power of Central Government to make rules [Section 37] 334

10.38 Bonds - Meaning, types & other aspects [Central Excise Manual] 334

10.39 Warehousing provisions [Rule 20] 336

10.40 Goods liable to duty at concessional rate, subject to end-use for specifiedpurposes, or, end-use based exemptions 341

10.41 Consequences if subject goods not used for intended purpose, or, recoveryof duty in certain cases [Rule 6] 342

11 EXPORT INCENTIVES AND PROCEDURES

11.1 Rebate of duty [Rule 18] 344

11.2 Export without payment of duty [Rule 19] 345

11.3 Rebate under rule 18 of CER, 2002 v. Export without payment of duty withrefund of input credit under rule 5 of CCR, 2004 345

11.4 Rebate of duty paid on goods exported - Conditions/limitations 346

11.5 Rebate of duty paid on goods exported - Procedures 347

11.6 Rebate of duty paid on goods exported - Manner of claiming rebate 349

11.7 Input-stage rebate of materials used in goods exported - Conditions andprocedure 350

11.8 Export without payment of duty to country other than Bhutan - Conditions 352

11.9 Export without payment of duty to country other than Bhutan - Procedurefor removal 354

11.10 Export without payment of duty to country other than Bhutan - Cancellationof export documents, or, diversion for home consumption [Not. No. 42/2001and Central Excise Manual] 357

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11.11 Export without payment of duty to country other than Bhutan - Procedure inrespect of exported goods subsequently re-imported and returned to the factory 358

11.12 Re-entry of the goods, cleared for export under bond but not actually exported,in the factory of manufacture [CE manual] 358

11.13 Export under bond to Bhutan and, in certain cases, to Nepal - Conditions andsafeguards 359

11.14 Export under bond to Bhutan and, in certain cases, to Nepal - Procedure 360

11.15 Procurement of inputs without payment of duty for use in goods exportedunder bond - Conditions and safeguards 362

11.16 Export warehousing, or, removal of goods from factory to warehouse forexport therefrom - Conditions [Rule 20(1) and Notification No. 46/2001-C.E. (N.T.), dated 26-6-2001] 363

11.17 Export warehousing - Diversion of goods for home consumption [CircularNo. 581/18/2001-CX, dated 29-6-2001] 367

11.18 Export warehousing - Waiver of physical warehousing in case of exigency[Circular No. 581/18/2001-CX, dated 29-6-2001] 367

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Preface to Fifth Edition I-5

Acknowledgement I-7

How to study and revise this book I-9

Index to coverage of select cases of ICAI in this book [Modules 1, 2 and 3] I-11

DIVISION ONE

CHARGE, VALUATION AND CLASSIFICATION

1 CUSTOMS : BASICS AND CHARGE OF DUTY

1.1 Concept of customs duty - Source of law 3

1.2 Rules and regulations 3

1.3 Charge of customs duty or dutiable goods [Sec. 12 of Customs Act, 1962] 4

1.4 Some concepts relating to charge [Section 2] 5

1.5 Date for determination of rate of duty and tariff valuation [Sections 15 and 16of the Customs Act, 1962] 7

1.6 Determination of duty where goods consist of articles liable to different ratesof duty [Section 19] 9

1.7 Re-importation of goods [Section 20] 10

1.8 Goods derelict, wreck, etc. - Liable to duty [Section 21] 11

1.9 Remission of duty on pilfered goods [Section 13] 11

1.10 Remission of duty on lost, destroyed or abandoned goods [Sec. 23] 12

1.11 Abatement of duty on damaged or deteriorated goods [Section 22] 13

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1.12 Denaturing or mutilation of imported goods [Section 24] 14

1.13 Refund of export duty in certain cases [Section 26] 15

1.14 Refund of import duty in certain cases [Section 26A] 15

1.15 Assessment - Meaning of [Section 2(2)] 16

1.16 Self-assessment [Section 17(1) to 17(3)] 17

1.17 Reassessment [Section 17(4) and 17(5)] 18

1.18 Assessment - Audit of - On-site post clearance audit [Section 17(6)] 18

1.19 Provisional assessment - Circumstances when it is ordered [Section 18(1)] 19

1.20 Final assessment or reassessment of provisional assessment - Payment/refundof differential sum with interest [Section 18(2) to 18(5)] 19

1.21 Certain definitions as regards goods [Section 2] 22

1.22 Powers to specify and approve certain places/areas [Sections 7, 8 and 10] 23

1.23 Inland container depots and container freight stations 24

1.24 Powers to appoint/license warehouses, etc. [Sections 9, 57 and 58] 24

1.25 Power to prohibit importation or exportation of goods [Sec. 11] 26

1.26 Detection of illegally imported goods and prevention of the disposal thereof[Chapter IV-A : Sections 11A to 11G] 27

1.27 Prevention or detection of illegal export of goods [Chapter IV-B : Sections 11Hto 11M] 28

2 CUSTOMS : VALUATION OF GOODS

2.1 Valuation of imported/export goods - Transaction value [Section 14(1) ofCustoms Act, 1962] 30

2.2 Related person [Rule 2(2) of the Customs Import/Export Valuation Rules, 2007] 33

2.3 Tariff value [Section 14(2)] 33

2.4 Introduction to Customs Imported Goods Valuation Rules, 2007 34

2.5 Transaction value 34

2.6 Inclusions in transaction value [Rule 10(1)] 35

2.7 Value under all rules to include : Cost of transport, insurance & handling, etc.[Rule 10(2)] 38

2.8 Inclusions/exclusions of certain items 39

2.9 Additions under rule 10 - Scope of 40

2.10 Transaction value - Conditions for acceptance [Rule 3(2)] 40

2.11 Transaction value acceptable even if buyer & seller are related persons [Rule 3(3)] 41

2.12 Valuation if transaction value not accepted - Order of application of otherrules [Rule 3(4) and rule 6] 42

2.13 Transaction value of identical goods [Rule 4] 51

2.14 Transaction value of similar goods [Rule 5] 52

2.15 Identical goods and similar goods - Concept and difference 53

2.16 Deductive value [Rule 7] 55

2.17 Computed value [Rule 8] 56

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2.18 Residual method [Rule 9] 57

2.19 Divergence between accounting principles and customs principles as tovaluation of imported goods 58

2.20 Declaration by the importer [Rule 11] 58

2.21 Rejection of declared value [Rule 12] 59

2.22 Transaction value [Rule 2(b)] 60

2.23 Determination of the method of valuation [Rule 3] 61

2.24 Determination of export value by comparison [Rule 4] 62

2.25 Computed value method [Rule 5] 62

2.26 Residual method [Rule 6] 62

2.27 Rejection of declared value [Rule 8] 63

3 CUSTOMS : CLASSIFICATION, TARIFF & VARIOUS DUTIES

3.1 Classification of goods 64

3.2 Five column-headings of schedule to the customs tariff 64

3.3 Levy of duty where standard rate and preferential rate are specified [Section 4of the Customs Tariff Act, 1975] 65

3.4 Levy of a lower rate of duty under a trade agreement [Section 5] 65

3.5 Emergency power of Central Government to increase or levy export duties[Section 8] 66

3.6 Emergency power of Central Government to increase import duties [Section 8A] 66

3.7 Power of Central Government to amend First Schedule [Section 11A] 67

3.8 Project imports - Concept, eligible projects & investment criteria [ProjectImports Regulations, 1986] 67

3.9 List of duties levied on imports 68

3.10 Additional duty of customs u/s 3 - Manner of computation 69

3.11 Levy of additional duty equal to excise duty [CVD] [Section 3(1) & 3(2)] 70

3.12 Levy of additional duty equal to sales tax, local taxes and othercharges [Special CVD] [Section 3(5) and 3(6)] 73

3.13 Additional duty u/s 3 - Common provisions 73

3.14 Goods manufactured by 100% EOU and cleared to DTA 78

3.15 Manner of levy of duty on packaged/canned software 80

3.16 Protective duties - Levy, duration and alteration [Sections 6 and 7] 81

3.17 Safeguard duties [Sections 8B and 8C] 82

3.18 Countervailing duty on subsidized articles [Section 9] 84

3.19 Anti-dumping duty on dumped articles [Section 9A] 85

3.20 Anti-dumping duty & anti-subsidy duty - Common provisions [Sections 9 and 9Aof the Customs Tariff Act, 1975] 87

3.21 Anti-dumping duty & anti-subsidy duty - Not to be levied in certain cases[Section 9B] 89

3.22 Safeguard duty v. Anti-dumping duty 90

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3.23 Refund of anti-dumping duty in certain cases [Section 9AA] 91

3.24 Appeal to Tribunal against order determining or reviewing anti-dumping oranti-subsidy duty [Section 9C] 91

DIVISION TWO

IMPORT AND EXPORT PROCEDURES AND POWERS

4 IMPORT, EXPORT & WAREHOUSING PROCEDURES

4.1 Division of import procedures 95

4.2 Person-in-charge [Section 2(31)] 96

4.3 Arrival of vessels and aircrafts in India [Section 29] 96

4.4 Delivery of import manifest or import report [Section 30] 97

4.5 Provisions relating to unloading, etc. 98

4.6 Certain provisions not to apply to baggage and postal articles [Section 44] 99

4.7 Restrictions on custody and removal of imported goods [Section 45] 100

4.8 Entry of goods on importation or provisions relating to bill of entry [Section 46] 100

4.9 Procedure of bill of entry under e-filing [Bill of Entry (Electronic Declaration)Regulations, 2011] 102

4.10 Clearance of goods for home consumption [Section 47] 103

4.11 Procedure for disposal of goods not cleared within a specified period [Sections 48and 49] 104

4.12 Division of export procedures 106

4.13 Entry of goods for exportation, or, filing of shipping bill or bill of export [Section 50] 106

4.14 Clearance of goods for exportation [Section 51] 107

4.15 Provisions relating to e-filing, etc. of shipping bill or bill of export [ShippingBill (Electronic Declaration) Regulations, 2011] 107

4.16 Export goods not to be loaded on vessel until entry-outwards granted [Section 39] 108

4.17 Export goods not to be loaded unless duly passed by proper officer [Section 40] 108

4.18 Delivery of export manifest or export report [Section 41] 108

4.19 No conveyance to leave without written order - Applicable to both importedand export goods [Section 42] 109

4.20 Exemption of certain classes of conveyances from certain provisions of thischapter [Section 43] 109

4.21 Short-export [notice of Short-Export Rules, 1963] 110

4.22 Chapter not to apply to baggage, postal articles and stores [Section 52] 110

4.23 Transit of certain goods without payment of duty [Section 53] 110

4.24 Transhipment of certain goods without payment of duty [Section 54] 110

4.25 Transit v. Transhipment - Conditions for exemption 111

4.26 Liability of duty on goods transited under section 53 or transhipped undersection 54 [Section 55] 112

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4.27 Transport of certain classes of goods subject to prescribed conditions[Section 56] 112

4.28 Overview of provisions relating to warehousing 112

4.29 Warehousing bond [Section 59] 113

4.30 Permission for deposit of goods in a warehouse [Section 60] 114

4.31 Period for which goods may remain warehoused [Section 61] 114

4.32 Control over warehoused goods [Section 62] 116

4.33 Payment of rent and warehouse charges [Section 63] 116

4.34 Owner’s right to deal with warehoused goods [Section 64] 116

4.35 Manufacture and other operations in relation to goods in a warehouse[Section 65] 117

4.36 Power to exempt imported materials used in the manufacture of goods inwarehouse [Section 66] 118

4.37 Removal of goods from one warehouse to another [Section 67] 118

4.38 Clearance of warehoused goods for home consumption [Section 68] 119

4.39 Clearance of warehoused goods for exportation [Section 69] 119

4.40 Allowance in case of volatile goods [Section 70] 120

4.41 Goods not to be taken out of warehouse except as provided by this Act[Section 71] 121

4.42 Goods improperly removed from warehouse, etc. [Section 72] 121

4.43 Relevant dates for warehoused goods 122

4.44 Cancellation and return of warehousing bond [Section 73] 124

5CUSTOMS : DRAWBACK, BAGGAGE, IMPORT/EXPORT BY POST,STORES & COASTAL GOODS

5.1 Concept of drawback 125

5.2 Interest on drawback [Section 75A] 125

5.3 Prohibition and regulation of drawback in certain cases [Section 76] 126

5.4 Re-export of duty-paid imported goods - Conditions for allowing drawback[Section 74] 127

5.5 Re-export of duty-paid imported goods - Quantum of drawback 128

5.6 Procedure for claiming drawback on goods exported by post [Rule 3 ofRe-export of Imported Goods (Drawback of Customs Duties) Rules, 1995] 130

5.7 Statements/declarations to be made on exports other than by post [Rule 4of Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995] 131

5.8 Manner and time of claiming drawback on goods exported other than by post[Rule 5 of Re-export of Imported Goods (Drawback of Customs Duties)Rules, 1995] 132

5.9 Payment of drawback and interest [Rule 6 of Re-export of Imported Goods(Drawback of Customs Duties) Rules, 1995] 133

5.10 Repayment of erroneous or excess payment of drawback and interest [Rule 7of Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995] 133

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5.11 Power to relax [Rule 7A of Re-export of Imported Goods (Drawback ofCustoms Duties) Rules, 1995] 134

5.12 Drawback on imported materials used in the manufacture of goods whichare exported [Section 75] 134

5.13 Drawback - Meaning of [Rule 2(a) of CCEST Drawback Rules, 1995] 136

5.14 Export - Meaning of [Rule 2(c) of CCEST Drawback Rules, 1995] 136

5.15 Drawback, or, general rate of drawback, or, all industry rates [Rules 3, 4 and 5of CCEST Drawback Rules, 1995] 137

5.16 All industry rates [Notification No. 98/2013 - Customs (N.T.), dated 14-9-2013] 139

5.17 Cases where amount or rate of drawback has been : (1) not determined;or (2) low determined, or, brand rate and special brand rate [Rules 6 and 7of CCEST Drawback Rules, 1995] 140

5.18 Upper and lower limits of drawback [Rules 8 and 8A of CCEST DrawbackRules, 1995] 143

5.19 Powers of specially authorised customs officers in relation to drawback[Rule 9 and rule 10 of the CCEST Drawback Rules, 1995] 144

5.20 Procedure for claiming drawback and payment thereof [Rules 11 to 14, 16and 17 of the CCEST Drawback Rules, 1995] 144

5.21 Supplementary claim for short-paid drawback [Rule 15 of CCEST DrawbackRules, 1995] 146

5.22 Recovery of amount of drawback where export proceeds not realised[Rule 16A of the CCEST Drawback Rules, 1995] 147

5.23 Difference between section 74 and section 75 149

5.24 Baggage - Concept of 149

5.25 Baggage - Declaration, relevant date, exemption to bona fide baggage andpower to make regulations 149

5.26 Temporary detention of baggage [Section 80] 150

5.27 Baggage - Rate of duty and exemptions 151

5.28 General Free Allowance (GFA) [Rules 3 and 4] 151

5.29 Professionals returning to India [Rule 5] 155

5.30 Jewellery - Duty-free allowance [Rule 6] 156

5.31 Tourists - Duty-free allowance [Rule 7] 158

5.32 Transfer of Residence (TR) [Rule 8] 158

5.33 Provisions regarding unaccompanied baggage [Rule 9] 160

5.34 Application of these rules to members of the crew [Rule 10] 160

5.35 Provisions for import/export by post [Sections 82 to 84] 161

5.36 Procedure for clearance of goods imported by post 162

5.37 Stores - Meaning of [Section 2(38)] 162

5.38 Foreign going vessel or aircraft [Section 2(21)] 163

5.39 Stores - Concessions, exemptions, drawback [Sections 85 to 90] 163

5.40 Coastal goods - Meaning of [Section 2(7)] 164

5.41 Coastal goods - Entry, loading and clearance [Sections 92 to 94 and 96] 165

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5.42 Provisions relating to coasting vessel 165

5.43 Coastal goods - Miscellaneous provisions 166

6 CUSTOMS : POWERS, CONTROL & PROCEDURES

6.1 Classes of officers of customs [Section 3] 167

6.2 Adjudicating authority and proper officer [Section 2] 167

6.3 Appointment of officers of customs [Section 4] 168

6.4 Customs officers - Powers and entrustment of powers 168

6.5 Indian customs waters and its significance 169

6.6 Power to search suspected persons entering or leaving India, etc. [Section 100] 169

6.7 Power to search suspected persons in certain other cases [Section 101] 170

6.8 Persons to be searched may require to be taken before Gazetted Officer ofCustoms or Magistrate [Section 102] 170

6.9 Power to screen or x-ray bodies of suspected persons for detecting secretedgoods [Section 103] 171

6.10 Power to arrest [Section 104] 172

6.11 Power to search premises [Section 105] 173

6.12 Power to stop and search conveyances [Section 106] 173

6.13 Power to inspect [Section 106A] 174

6.14 Power to examine persons [Section 107] 174

6.15 Power to require production of order permitting clearance of goods importedby land [Section 109] 175

6.16 Seizure of goods, documents and things [Section 110] 175

6.17 Provisional release of goods, documents and things seized pending adjudication[Section 110A] 177

6.18 Offences by officers of customs [Section 136] 177

6.19 Conveyances and goods in a customs area subject to control of officers ofcustoms [Section 141] 178

6.20 Power to allow import or export on execution of bonds in certain cases[Section 143] 180

6.21 Duty deferment [Section 143A, omitted w.e.f. 10-5-2013] 181

6.22 Power to take samples [Section 144] 181

6.23 Owner, etc., to perform operations incidental to compliance with customs law[Section 145] 181

6.24 Licence for customs brokers [Section 146, as substituted by the Finance Act, 2013] 182

6.25 Liability of principal and agent [Section 147] 183

6.26 Liability of agent appointed by the person in charge of a conveyance [Section 148] 183

6.27 Procedure for sale of goods and application of sale proceeds [Section 150] 184

6.28 Certain officers required to assist officers of customs [Section 151] 185

6.29 Delegation of powers [Section 152] 185

6.30 Correction of clerical errors, etc. [Section 154] 186

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7 CUSTOMS : CONFISCATION AND PENALTIES

7.1 Certain relevant terms [Section 2] 187

7.2 Effect of confiscation [Sections 126 and 127] 188

7.3 Confiscation of improperly imported goods, etc. [Section 111] 188

7.4 Penalty for improper importation of goods, etc. [Section 112] 189

7.5 Confiscation of goods attempted to be improperly exported, etc. [Section 113] 193

7.6 Penalty for attempt to export goods improperly, etc. [Section 114] 194

7.7 Scope of confiscation of goods [Sections 118 to 121] 195

7.8 Confiscation of conveyances [Section 115] 195

7.9 Penalty for not accounting for goods [Section 116] 197

7.10 Other penalties 197

7.11 Adjudication of confiscations and penalties [Section 122] 198

7.12 Burden of proof in certain cases [Section 123] 198

7.13 Issue of show cause notice before confiscation of goods, etc. [Section 124] 199

7.14 Option to pay fine in lieu of confiscation [Section 125] 199

DIVISION THREE

FOREIGN TRADE POLICY

8 FOREIGN TRADE POLICY (FTP) – BASIC CONCEPTS

8.1 FTP - Meaning and need 207

8.2 FTP - Law governing foreign trade viz. FT (D&R) Act 208

8.3 FT (D&R) Act - Provisions relating to import/export, etc. 209

8.4 FT (D&R) Act - Penalty, confiscation, etc. 211

8.5 FT (D&R) Act - Appeal and review 213

8.6 FTP - Administration/authorities involved and relation with other tax laws 214

8.7 Components of FTP - FTP 2009-14, HBP, SION & ITC(HS) classification 215

8.8 FTP - Features of 215

8.9 FTP - Scope/coverage 216

8.10 FTP - Glossary of terms/acronyms 216

8.11 FTP - Certain definitions 219

8.12 FTP - Special focus initiatives 222

8.13 FTP - Board of trade (BOT) 223

8.14 FTP - General provisions regarding imports and exports 224

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9FTP - EXEMPTION/REMISSION SCHEMES, REWARD SCHEMES,EPCG AND DEEMED EXPORTS

9.1 Duty exemption and remission schemes - Basics 234

9.2 Duty exemption scheme - Advance authorisation scheme 235

9.3 Duty exemption scheme - Duty Free Import Authorisation (DFIA) Scheme 238

9.4 Duty remission scheme - Duty Entitlement Passbook (DEPB) Scheme 239

9.5 Duty Remission Scheme - Drawback (DBK) Scheme 239

9.6 Promotional measures in department of commerce 240

9.7 Promotional measures in DGFT 242

9.8 Reward Schemes - Basics 242

9.9 Reward Schemes - Export & trading houses/status holder 243

9.10 Reward schemes - Services exports 244

9.11 Reward schemes - Common provisions of duty credit scrip, except wherespecifically provided for 245

9.12 Reward Schemes - Served from India Scheme (SFIS) 246

9.13 Reward Schemes - Vishesh Krishi and Gram Udyog Yojana (VKGUY) (SpecialAgriculture and Village Industry Scheme) 247

9.14 Reward Schemes - Agri. Infrastructure Incentive Scrip 248

9.15 Reward Schemes - Focus Market Scheme (FMS) 249

9.16 Reward Schemes - Incremental Exports Incentivisation Scheme (IEIS) onannual basis 249

9.17 Reward Schemes - Focus Product Scheme (FPS) 251

9.18 Reward Schemes - Market Linked Focus Products Scrip (MLFPS) 251

9.19 Reward Schemes - Status Holders Incentive Scrip (SHIS) 251

9.20 Export Promotion Capital Goods (EPCG) Scheme 252

9.21 Post Export EPCG Duty Credit Scrip(s) 256

9.22 Deemed Exports - Meaning and supplies covered 256

9.23 Deemed Exports - Benefits available to suppliers 257

9.24 Deemed Exports - Benefits - Other provisions 258

10 FTP - EOUS, EHTPS, STPS, BTPS, SEZS AND FTWZS

10.1 EOU/EHTP/STP/BTP - Meaning/Eligibility 260

10.2 EOU/EHTP/STP/BTP - Application and approvals 261

10.3 EOU/EHTP/STP/BTP - Letter of Permission/Letter of Intent and Legalundertaking 261

10.4 EOU/EHTP/STP/BTP - Exports that can be made and manner 262

10.5 EOU/EHTP/STP/BTP - Imports and domestic procurements that can be made 263

10.6 EOU/EHTP/STP/BTP - Net Foreign Exchange (NFE) earnings 264

10.7 DTA Sale by EOU/EHTP/STP/BTP - Finished Products/Rejects/Waste/Scrap/Remnants and By-products 265

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10.8 EOU/EHTP/STP/BTP - Entitlements/benefits in respect of supplies from DTA 268

10.9 EOU/EHTP/STP/BTP - Other entitlements/benefits 268

10.10 EOU/EHTP/STP/BTP - Inter-unit Transfer 269

10.11 EOU/EHTP/STP/BTP - Sub-contracting 269

10.12 EOU/EHTP/STP/BTP - Sale of Unutilized Material 270

10.13 EOU/EHTP/STP/BTP - Replacement/repair of imported/indigenous goods 271

10.14 EOU/EHTP/STP/BTP - Conversion 271

10.15 EOU/EHTP/STP/BTP - Exit from EOU Scheme or debonding 272

10.16 EOU/EHTP/STP/BTP - Other Provisions 273

10.17 SEZ AND FTWZ - Concept of 273

10.18 SEZ - Import, export, manufacture and service 274

10.19 SEZ - Guidelines/purposes for setting up/establishment 275

10.20 SEZ - Various modes of setting up/establishment and brief procedure 275

10.21 SEZ - Deemed to be outside India and deemed to be Port/Airport/CustomsStation 276

10.22 SEZ - Administration, single window clearance through approval committee &jurisdiction of other authorities 276

10.23 SEZ - Various fiscal/tax incentives/concessions 277

10.24 SEZ - Recent measures to revive investor’s interest in SEZ 278

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Preface to Fifth Edition I-5

Acknowledgement I-7

How to study and revise this book I-9

Index to coverage of select cases of ICAI in this book [Modules 1, 2 and 3] I-11

DIVISION ONE

BASIC CONCEPTS UNDER SERVICE TAX

1 CHARGE OF SERVICE TAX & PERSON

1.1 Concept of service and service tax 4

1.2 Sources of service tax law 5

1.3 Extent and application [Section 64] 6

1.4 Charge of service tax [Section 66B] 7

1.5 Person and deemed separate persons 9

2 SERVICE, DECLARED SERVICES AND NEGATIVE LIST

2.1 Service - Concept of [Section 65B(44)] 11

2.2 Role of consideration [Department guidance note] 13

2.3 Service includes declared services [Section 66E] 16

2.4 Activity of transfer of title of goods/immovable properties – Not service[Section 65B(44)(a)(i) and 65B(44)(a)(ii)] 17

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Module III - Service Tax & Common Provisions Under Indirect Taxes

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2.5 Transactions only in money or actionable claims – Not service [Section 65B(44)(a)(iii)] 23

2.6 Provision of service by an employee to employer – Not service [Section 65B(44)(b)] 25

2.7 Negative list [Section 66D] 28

2.8 Statutory authorities/public authorities performing functions laid down in lawfor them – Not service 29

3 RELEVANT DATE FOR TAXATION [POINT OF TAXATION]

3.1 Date of determination of rate of tax, value of taxable service and rate ofexchange [Section 67A] 31

3.2 Point of Taxation (PoT) - Deemed date of provision of services - Generalprovisions [Point of Taxation Rules, 2011] 31

3.3 Point of Taxation (PoT) - General - Rule 3 32

3.4 PoT in case of change in effective rate of tax [Rule 4] 35

3.5 Payment of tax in case of new services [Rule 5] 37

3.6 PoT in certain other cases [Rules 7, 8 and 8A] 38

3.7 Section 67A v. PoT Rules - Determination of rate of tax 40

4 VALUATION OF SERVICES

4.1 Valuation of taxable services for charging service tax [Section 67] 41

4.2 Manner of determination of value when consideration not ascertainable [Rule 3,applicable in case of section 67(1)(iii)] 45

4.3 Inclusion in or exclusion from value of certain expenditure or costs [Rule 5] 46

4.4 Cases in which the commission, costs, etc., will be included or excluded -Items specifically includible/excludible [Rule 6] 50

5INTERPRETATION AND CLASSIFICATION OF SERVICES AND

BUNDLED SERVICES

5.1 Principles of interpretation of specified descriptions of services[Section 66F(1) and 66F(2)] 55

5.2 Bundled services [Section 66F(3)] 56

6 PLACE OF PROVISION OF SERVICES

6.1 Introduction - Need of Place of Provision (PoP) 59

6.2 Place of Provision (PoP) of service - Determination of [Section 66C] 60

6.3 Location of the service provider or service recipient [Rule 2(h) and rule 2(i) ofthe Place of Provision of Services Rules, 2012] 60

6.4 Order of application of rules – “Latter the better” [Rule 14] 62

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6.5 Place of Provision generally [Rule 3] 63

6.6 PoP of services provided on board a conveyance [Rule 12] 64

6.7 PoP of passenger transportation service [Rule 11] 65

6.8 PoP of goods transportation services [Rule 10] 66

6.9 PoP of specified services - Location of service provider [Rule 9] 67

6.10 PoP of services relating to events [Rule 6] 69

6.11 PoP of services directly relating to immovable property [Rule 5] 70

6.12 PoP of performance based services [Rule 4] 72

6.13 Some special instances [Rule 7 and rule 8] 73

6.14 PoP of notified services to be place of effective use and enjoyment of a service[Rule 13] 74

7 EXPORT OF SERVICES, SEZS AND EXPORT INCENTIVES

7.1 Export of services [Rule 6A(1) of the Service Tax Rules, 1994] 78

7.2 Power to grant rebate [Section 93A] 79

7.3 Rebate of inputs/input services when service exported [Rule 6A(2)] 79

7.4 Service provided outside India but not exported 80

7.5 Rebate of service tax paid on taxable services received by an exporter of goodsand used for export of goods [Notification No. 41/2012-ST, dated 29-6-2012] 81

7.6 Exemption to taxable services received by exporter of goods and used for exportof goods [Not. No. 31/2012 & Not. No. 42/2012-ST] 82

7.7 Exemption to services provided to exporters against debit to FMS/FPS/VKGUYDuty Credit Scrips [Not. Nos. 6/2013, 7/2013 & 8/2013-ST, dated 18-4-2013] 83

7.8 Exemption to services provided by SEZ for use in SEZ [Section 26 of SEZ Act] 84

7.9 Exemption on services received by SEZ unit/developer for authorisedoperations in SEZ [Notification No. 12/2013-ST, dated 1-7-2013] 85

8EXEMPTION TO SMALL SERVICE PROVIDERS, CHARITIES AND

UN

8.1 Power to grant exemption from service tax [Section 93] 88

8.2 Threshold exemption to small service providers up to aggregate value of� 10 lakhs [Notification No. 33/2012-ST, dated 20-6-2012] 89

8.3 Exemption to charitable activities [Entry 4 of Notification No. 25/2012-ST] 95

8.4 Services provided to United Nations, or, a specified international organization[Entry 1 of the Notification No. 25/2012-ST] 96

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DIVISION 2

TAXABILITY OF SERVICES

9 NEGATIVE LIST OF SERVICES AND RELATED PROVISIONS

9.1 Services provided by Government/local authority [Section 66D(a)] 99

9.2 Municipal functions by governmental authority - Exempt [Entry 39 of theNot. No. 25/2012-ST] 101

9.3 Services provided for assistance in municipal functions - Exempt [Entry 25of Notification No. 25/2012-ST] 101

9.4 Services by RBI - Not taxable [Section 66D(b)] 102

9.5 Agriculture related services - Not taxable [Section 66D(d) and entry 40 ofNot. No. 25/2012-ST] 102

9.6 Trading of goods - Not taxable [Section 66D(e)] 106

9.7 Process of manufacture or production of goods - Not taxable [Section 66D(f)] 107

9.8 Selling of space or time slots for advertisement - Not taxable [Section 66D(g)] 110

9.9 Toll charges - Not taxable [Section 66D(h)] 112

9.10 Betting, gambling or lottery [Section 66D(i)] 112

9.11 Entertainment/amusement - Admission/access to - Not taxable [Section 66D(j)] 114

9.12 Transmission or distribution of electricity by specified persons - Not taxable[Section 66D(k)] 116

9.13 Education, training and coaching - Coverage of [Section 66D(l) & Entry 8, 9 & 9Aof Not. No. 25/2012-ST] 117

9.14 Deceased related services [Section 66D(q)] 123

9.15 Services to, or by, foreign diplomatic mission - Not liable to service tax[Section 66D(c) & Not. No. 27/2012-ST] 124

9.16 Transport of passengers and related services [Section 66D(o)] 124

9.17 Services by way of Transportation of goods [Section 66D(p)] 128

9.18 Transport of goods - Goods transport agency [Section 66D(p)] 132

9.19 Banking/financial services & money changing services [Section 66D(n) read withsection 65B(44)] 136

10 DECLARED SERVICES & RELATED PROVISIONS

10.1 Renting of immovable property - Declared service [Section 66E(a) & section 66D(m)] 145

10.2 Activities relating to delivery of goods on hire purchase, etc. - Declared service[Section 66E(g)] 151

10.3 Hiring, leasing, licensing, etc. of goods without transfer of right to use - Declaredservice [Section 66E(f)] 153

10.4 Information technology software related services - Declared service [Section66E(d)] 157

10.5 Intellectual property right related services [Section 66E(c)] 160

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10.6 Agreeing to refrain from an act, or, to do an act etc. - Declared service[Section 66E(e)] 165

10.7 Service portion in catering/restaurant transactions - Declared service[Section 66E(i) read with entry 19 & 19A of Not. No. 25/2012-ST] 167

10.8 Construction services, except where entire consideration is received aftercompletion - Declared service [Section 66E(b)] 172

10.9 Works contract services - Declared service [Section 66E(h)] 176

10.10 Exemption relating to works contract/construction services [NotificationNo. 25/2012-ST] 185

11OTHER SERVICES – EXEMPTION, ABATEMENT, COMPOSITION

RATES

11.1 Religious services [Entry 5 of Notification No. 25/2012-ST] 189

11.2 Medical and health care services [Entry 2, 2A & 3 of Not. No. 25/2012-ST] 189

11.3 Legal services - Exemption [Entry 6 of Not. No. 25/2012] 192

11.4 Classical or folk artists except brand ambassadors - Exempt [Entry 16 ofNotification No. 25/2012-ST] 193

11.5 Parking service - liable to service tax 194

11.6 Exemption to Unincorporated Body/NPO providing services to members[Entry 28 of Not. No. 25/2012-ST] 194

11.7 Exemption to transfer of a going concern [Entry 37 of Not. No. 25/2012-ST] 196

11.8 Exemption to services provided to a recognized sports body [Entry No. 10 ofNotification No. 25/2012-ST] 196

11.9 Exemption to sponsorship of certain sport events [Entry 11 of Not. No. 25/2012-ST] 197

11.10 Exemption to technical testing or analysis of newly developed drugs [Entry 7 ofNot. No. 25/2012-ST] 197

11.11 Exemption to certain General insurance, Life insurance & ESI Schemes[Entry 26, 26A and 36 of Not. No. 25/2012-ST] 197

11.12 Exemption to public/free telephone [Entry 32 of Not. No. 25/2012-ST] 198

11.13 Exemption to news collection/provision, public libraries, public conveniencesand slaughtering of animals [Entry 17, 33, 35 and 38 of Not. No. 25/2012-ST] 198

11.14 Exemption to organization of business exhibition outside India [Entry 31 ofNot. No. 25/2012-ST] 199

11.15 Exemption to services received from provider of service located in non-taxableterritory [Entry 34 of Not. No. 25/2012-ST] 199

11.16 Exemption to certain intermediary services [Entry No. 29 of Not. No. 25/2012-ST] 200

11.17 Exemption to services provided by TBI/STEP (incubator) [NotificationNo. 32/2012-ST, dated 20-6-2012] 202

11.18 Exemption to services provided by incubatee upto � 50 lakh for 3 years [Entry 27of Not. No. 25/2012-ST] 202

11.19 Tour operator services - Abatement [Entry 11 of Not. 26/2012-ST] 203

11.20 Optional composition schemes for payment of service tax - Air travel agent andlife insurance companies [Rule 6(7) and 6(7A) of the Service Tax Rules, 1994] 205

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DIVISION 3

PROCEDURES UNDER SERVICE TAX

12PAYMENT OF SERVICE TAX (INCLUDING REVERSE CHARGE) &ACCOUNTING

12.1 Payment of service tax [Section 68] 211

12.2 Person liable to pay service tax in respect of notified services [Rule 2(1)(d) ofthe Service Tax Rules, 1994 read with Notification No. 30/2012-ST] 211

12.3 Manner of payment of service tax [Rule 6 of Service Tax Rules, 1994] 219

12.4 Excess payment of service tax and adjustment thereof against liability ofsubsequent period 224

12.5 Credit of service tax when service not provided or amount of invoicere-negotiated [Rule 6(3)] 224

12.6 Consequences of failure to make payment or delay in payment - Interest andpenalty [Sections 75 and 76] 230

12.7 Accounting entries in relation to service tax 232

13 REGISTRATION UNDER SERVICE TAX

13.1 Registration - Persons liable to take registration and time-limit [Section 69read with rule 4 of the Service Tax Rules, 1994 and Service Tax (Registrationof Special Category of Persons) Rules, 2005] 233

13.2 Registration - More than premises - Centralized registration or separateregistration [Rule 4(2), rule 4(3) and rule 4(3A)] 235

13.3 Registration - Procedures [Rule 4(1A) and rule 4(4) to 4(8)] 235

14ASSESSMENT, SELF-ASSESSMENT AND RETURNS UNDER SERVICE

TAX

14.1 Assessee and assessment 238

14.2 Types of assessment - Self-assessment, provisional assessment and bestjudgment assessment [Sections 70, 72 and rule 6(4)] 239

14.3 Returns by an assessee - Submission, revision and fees for delayedsubmission [Rules 7, 7B and 7C of the Service Tax Rules, 1994] 241

14.4 Returns by persons other than assessee 242

14.5 Scheme for submission of returns through service tax return preparers[Section 71] 243

15 INVOICE, RECORDS, AUDIT, POWERS AND OTHER PROVISIONS

15.1 Taxable service to be provided or credit to be distributed on Invoice, Bill orChallan [Rule 4A of the Service Tax Rules, 1994] 244

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15.2 Records [Rule 5] 246

15.3 Access to a registered premises [Rule 5A] 247

15.4 Procedure and facilities for large taxpayer [Rule 10] 247

15.5 Special audit - To Deal with Valuation, Cenvat Credit and multiple-locationbased accounts [Section 72A] 248

15.6 Department audit – Frequency norms 249

15.7 Appointment of officers [Rule 3] 250

15.8 Rectification of mistake [Section 74] 250

15.9 Power to search premises [Section 82] 251

15.10 Application of certain provisions of Central Excise Act [Section 83] 252

15.11 Penalty for contravention of rules and provisions of Act for which no penaltyis specified elsewhere [Section 77] 253

15.12 Power of adjudication of penalty [Section 83A] 254

DIVISION 4

COMMON PROVISIONS UNDER INDIRECT TAXES

16 INDIRECT TAX LAWS (IDTL) : RECOVERY & INTEREST

16.1 Show-cause notice (SCN) - Concept and requirements of 257

16.2 Recovery of duties/interest not levied or not paid or short-levied or short-paidor erroneously refunded [Section 11A] 258

16.3 Recovery in case of non-evasion cases [Section 11A(1) to 11A(3)] 262

16.4 Recovery in cases of evasion - Extended period of limitation [Section 11A(4) to11A(7) and 11A(9)] 263

16.5 Recovery - “Relevant date” for computing period of limitation [Explanation tosection 11A] 264

16.6 Recovery - Adjudication of demand [Section 11A(10) to 11A(14)] 265

16.7 Interest on delayed payment of duty [Section 11AA] 268

16.8 Power not to recover duty of excise not levied or short-levied as a result ofgeneral practice [Section 11C] 269

16.9 Duties of excise collected from the buyer to be deposited with the CentralGovernment [Section 11D] 270

16.10 Interest on the amounts collected in excess of the duty [Section 11DD] 272

16.11 Provisional attachment to protect revenue in certain cases [Section 11DDA] 272

16.12 Recovery of sums due to Government [Section 11] 273

16.13 Liability under Act to be first charge [Section 11E] 276

16.14 Recovery of service tax not levied or paid or short-levied or short-paid orerroneously refunded [Section 73] 277

16.15 Various other provisions under service tax law in relation to recovery 281

16.16 Recovery of duties not levied or short-levied or erroneously refunded[Section 28] 282

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export obtained by collusion, etc. is utilized by some other person [Section 28AAA] 284

16.18 Various other provisions under customs law in relation to recovery 285

17INDIRECT TAX LAWS (IDTL) : EVASION PENALTY AND PUNISH-MENT

17.1 Penalty for short-levy or non-levy or non-payment or short-payment orerroneous refund of duty in certain cases [Section 11AC] 287

17.2 Offences and penalties [Section 9] 290

17.3 Compounding of offences [Section 9A(2)] 292

17.4 Offences by companies, firm & other association of individuals [Section 9AA] 294

17.5 Power of court to publish name, place of business, etc., of persons convictedunder the Act [Section 9B] 295

17.6 Presumption of culpable mental state [Section 9C] 295

17.7 Relevancy of statements under certain circumstances [Section 9D] 296

17.8 Power of courts to order forfeiture [Section 10] 296

17.9 Presumption as to documents in certain cases [Section 36A] 296

17.10 Service of decisions, orders, summons, etc. [Section 37C] 297

17.11 Publication of information respecting persons in certain cases [Section 37E] 298

17.12 Offences and penalties [Section 89] 299

17.13 Penalty for suppressing, etc., of value of taxable services [Section 78] 302

17.14 Penalty for offences by director, etc., of company [Section 78A, inserted byFinance Act, 2013] 306

17.15 Various other provisions under Service Tax Laws 306

17.16 Penalty for short-levy or non-levy or erroneous refund of duty or interest incertain cases [Section 114A] 307

17.17 False declaration, false documents, etc. [Section 132] 308

17.18 Obstruction of officer of customs [Section 133] 308

17.19 Evasion of duty or prohibitions [Section 135 read with section 104] 308

17.20 Preparation [Section 135A] 310

17.21 Cognizance of offences [Section 137(1) and 137(2)] 311

17.22 Compounding of offences [Section 137(3)] 311

17.23 Offences to be tried summarily [Section 138] 311

17.24 Service of order, decision, etc. [Section 153] 312

17.25 Various other provisions under Customs Laws 312

18INDIRECT TAX LAWS (IDTL) : CIRCULAR, EXEMPTION &REFUND

18.1 Circulars/instructions/orders issued by CBEC [Section 37B] 313

18.2 Power to grant exemption from duty of excise [Section 5A] 315

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18.3 Refunds - Presumption that incidence of duty transferred 318

18.4 Effect of presumption that incidence of duty transferred - Principle ofunjust enrichment 319

18.5 Consumer welfare fund - Concept and utilization [Sections 12C and 12D] 320

18.6 Refund - Meaning of [Expl. to section 11B] 320

18.7 Claim for refund of duty and interest, if any, paid on such duty - Time-limitand relevant date [Section 11B(1) and Expl.] 321

18.8 Claim for refund - Circumstances in which refund allowed to applicant[Section 11B(2) and 11B(3)] 322

18.9 Interest on delayed refunds [Section 11BB] 329

18.10 Provisions under service tax 330

18.11 Claim for refund of duty [Section 27] 330

18.12 Other provisions under Customs Laws 333

19 INDIRECT TAX LAWS (IDTL) : ADVANCE RULINGS

19.1 Advance rulings - Need and concept of 336

19.2 Authority for Advance Rulings (AAR) 336

19.3 Advance ruling - Meaning of [Section 23A(b)] 337

19.4 Applicant - Meaning of [Section 23A(c)] 337

19.5 Application for advance ruling [Section 23C] 338

19.6 Procedure on receipt of application [Section 23D(1) to (3)] 339

19.7 Pronouncement of advance ruling [Section 23D(4) to (7)] 340

19.8 Applicability of advance ruling [Section 23E] 341

19.9 Advance ruling to be void in certain circumstances [Section 23F] 341

19.10 Powers of authority [Section 23G] 342

19.11 Miscellaneous 342

19.12 Appearance by authorised representative [Section 35Q] 343

19.13 Advance ruling and application for advance rulings 344

19.14 Other provisions relating to advance rulings under service tax 345

19.15 Activity, applicant and application for advance rulings 345

19.16 Other provisions relating to advance rulings under customs 346

20 INDIRECT TAX LAWS (IDTL) : SETTLEMENT OF CASES

20.1 Settlement of cases - Concept of 347

20.2 Case - Meaning of [Section 31(c)] 347

20.3 Assessee - Meaning of [Section 31(a)] 349

20.4 Application for settlement of cases - Conditions for filing an application forsettlement [Section 32E] 349

20.5 Procedure on receipt of an application - Acceptance or rejection of application[Section 32F(1) and (2)] 354

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20.6 Procedure when application allowed to be proceeded with [Section 32F(3)and (4)] 354

20.7 Passing of settlement order [Section 32F(5) to (9)] 355

20.8 Settlement order becoming void - Adjudication revives [Section 32F(10)] 356

20.9 Customs and Central Excise Settlement Commission - Constitution, jurisdictionand powers [Sections 32, 32A, 32B, 32C and 32D] 356

20.10 Power of Settlement Commission to order provisional attachment to protectrevenue [Section 32G] 357

20.11 Powers & procedure of Settlement Commission [Section 32-I] 357

20.12 Inspection, etc., of reports [Section 32J] 357

20.13 Power of Settlement Commission to grant immunity from prosecution andpenalty [Section 32K] 358

20.14 Power of Settlement Commission to send a case back to the Central ExciseOfficer [Section 32L] 360

20.15 Bar on subsequent application for settlement in certain cases [Section 32-O] 360

20.16 Order of settlement to be conclusive [Section 32M] 361

20.17 Other provisions 362

20.18 Provisions under Service Tax 362

20.19 Application for settlement of cases [Section 127B] 362

20.20 Provisions under customs law identical to Central Excise 363

21 INDIRECT TAX LAWS (IDTL) : APPEALS, REVIEW & REVISION

21.1 Appeals to Commissioner (Appeals) [Section 35] 366

21.2 Department’s appeal against its own orders - Commissioner to review and directfiling of appeal to Commissioner (Appeals) [Section 35E(2)] 368

21.3 Procedure in appeal before Commissioner (Appeals) [Section 35A] 369

21.4 Production of additional evidence before Commissioner (Appeals) [Rule 5 of theCentral Excise (Appeals) Rules, 2001] 370

21.5 Revision by Central Government [Section 35EE] 371

21.6 Appellate Tribunal - Constitution [Section 129 of the Customs Act, 1962] 373

21.7 Appeals to the Appellate Tribunal [Section 35B] 374

21.8 Department’s appeal against its own orders - Committee of Chief Commissionersto review order of Commissioner and direct filing of appeal to Appellate Tribunal[Section 35E(1)] 376

21.9 Orders of Appellate Tribunal [Section 35C] 380

21.10 Power of Tribunal to rectify any mistake apparent from record [Section 35C(2)] 383

21.11 Procedure of Appellate Tribunal [Section 35D, read with section 129C ofCustoms Act] 385

21.12 Deposit, pending appeal, of duty demanded or penalty levied and interest ondelayed refund of pre-deposit [Sections 35F and 35FF] 387

21.13 Appeals to High Court [Sections 35G and 35K] 390

21.14 Appeal to the Supreme Court [Sections 35L and 35M] 392

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21.15 Exclusion of time taken for copy [Section 35-O] 394

21.16 Appeal not to be filed in certain cases [Section 35R] 395

21.17 Recovery during pendency of stay application [Circular No. 967/1/2013-CX.,dated 1-1-2013, as read down in various judgments till date] 397

21.18 Provisions under service tax 398

21.19 List of provisions where differences exist 399

21.20 List of identical provisions 400

APPENDIX : Amendments by Finance Act, 2013 403

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