Business Sucess

Circular No.118 /12/2009-ST

F.No.341/15/2007-TRU

Government of India

Ministry of Finance

Department of Revenue

(Tax Research Unit)

****

North Block, New Delhi,

23rd November, 2009.

Subject: Refund of service tax paid on foreign agent commission by exporters – Notification No.18/2009 dated 07/07/2009 – clarification – Reg.

Representations have been received from exporters, seeking clarification whether ten per cent of free on board (FOB) value of export goods allowed as foreign agency commission vide Notification 41/2007-ST dated 06/10/2007 as amended, has been reduced to one per cent vide Notification 18/2009-ST dated 07/07/2009 .

2. In the context of refund of service tax paid on foreign agency commission, Notification 18/2009 dated 07/07/2009 (in the table, sl.no.2 , condition no. 2) says “exemption shall be limited to one percent of the free on board value of export goods for which the said service has been used”. This means that amount of service tax paid, which can be refunded to the exporter, is restricted to one percent of the FOB value of export goods in relation to which the taxable service of the foreign agent was used.

3. The current rate of service tax being ten per cent and the maximum allowable limit of foreign agency commission being ten percent of FOB, one percent of the FOB value of export goods is the maximum exemption of service tax. To settle all doubts to rest, for the purpose of service tax refund, maximum allowable foreign agency commission on export goods continues to be at the pre-budget level of ten percent of the fob value of export goods till further changes are notified.

(J. M. Kennedy)

Director (TRU)

Circular No. 30/2009-Cus

F.No.: DGEP/G&J/428/2006

Govt. of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Directorate General of Export Promotion

New Delhi, the 22nd October, 2009

All Chief Commissioners of Customs/Central Excise,

All Commissioners of Customs /Central Excise.

Madam /Sir

Sub: Procedure and guidelines for import of diamonds for certification and grading and re-export thereof – reg.

A new scheme under paragraph 4A.2 has been introduced in the Foreign Trade Policy 2009-2014 (FTP) for import of diamonds for certification and grading and re-export thereof. Procedure in this regard has also been specified under paragraph 4A.14 of Handbook of Procedure Volume I (HBP). To avoid dichotomy in following the procedure by the field formations for allowing import of diamonds for the specified purpose and re-export thereof, the salient feature of this scheme and procedure in this regard are laid down.

1.

This scheme is presently allowed to the authorized offices/ agencies in India of Gemological Institute of America (GIA) in India only;
2.

GIA shall furnish a general bond to the satisfaction of the Asstt./ Dy Commissioner of Customs at the port of import, undertaking to properly account for the diamonds, to follow the specified procedure and to re-export diamonds within the prescribed period;
3.

The import shall be allowed under bill of entry having the detailed description of the diamonds, including inter alia, the dimensions, weight, colour, caratage, specification, approximate value etc of each piece of diamonds;
4.

The bill of entry should carry the endorsement “only for certification and grading”;
5.

GIA, while taking the diamonds in their unit, shall allot a unique ’control number’ for identification purposes and maintain a separate account for such diamonds;
6.

After the grading/certification, the diamonds shall be re-exported under a shipping bill containing the detailed description as was mentioned at the time of import;
7.

Cross reference of B/E shall be endorsed in the shipping bill;
8.

The onus of certification shall solely rest with the GIA, i.e. the diamonds being re-exported are the same as those imported. GIA shall submit a certificate to this effect, along with the S/B, at the time of re-export;
9.

GIA shall obtain GR waiver in respect of import and re-export as per the procedure laid down by RBI and realize the foreign exchange for the service charges in terms of RBI guidelines;
10.

The premises of GIA can be visited by Custom officers for surprise audit or checks. The Commissioner should devise a system of random audit at least twice a year;
11.

The diamonds imported for certification/grading are to be re-exported within a period of 3 months from the date of import;
12.

The importer shall submit a quarterly statement by 25th of the month succeeding quarter. The statement should reflect the B/E No. & date, details of diamonds and details of re-exports etc; and
13.

Re-export shall be allowed only from the port through which import took place.

2. Wide publicity may please be given to these instructions by way of issuance of Public/Trade Notice. Suitable Standing orders/instruction may be issued for guidance of the field officers. Difficulties, if any, in implementation of these instructions, may be brought to the notice of the Directorate General of Export Promotion.

3. This issues with the approval of Central Board of Excise & Customs.

4. Receipt of this circular may kindly be acknowledged.

.

Yours faithfully

Sd/-

(Praveen Mahajan)

Director General

Government of India
Ministry of Finance
(Department of Revenue)

New Delhi, the 23rd September, 2009

Notification No. 39/2009-Service Tax

G.S.R. -(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service specified in sub-clause (zzb) of clause 105 of section 65 of the Finance Act, provided by a person ( hereinafter called the ‘service provider’) to any other person ( hereinafter called the ‘service receiver’) during the course of manufacture or processing of alcoholic beverages by the service provider, for or on behalf of the service receiver, from so much of value which is equivalent to the value of inputs, excluding capital goods, used for providing the same service, subject to the following conditions, namely:-

a) that no Cenvat credit has been taken under the provisions of the Cenvat Credit Rules, 2004;

b) that there is documentary proof specifically indicating the value of such inputs; and

c) where the service provider also manufactures or processes alcoholic beverages, on his or her own account or in a manner or under an arrangement other than as mentioned aforesaid, he or she shall maintain separate accounts of receipt, production, inventory, despatches of goods as well as financial transactions relating thereto.

2. This notification shall come into force on the date of publication in the Gazette of India.

Explanation.- For the purposes of this notification, the words or phrase ‘input’, or as the case may be, ‘capital goods’ shall have the meaning as is assigned to them under rule 2 of the Cenvat Credit Rules, 2004.

[F. No. 332/17/2009-TRU]

(Prashant Kumar)

Under Secretary to the Government of India

F.No. 6/10/ 2009-CX.1
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Custom

New Delhi, the 20th October 2009

To,

All the Chief Commissioner of Central Excise including LTU,

All Commissioners of Central Excise including LTU,

All Director Generals

Sir,

Subject: Assessable value in respect of goods manufactured on Job-work- Scope of Rule 10A of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000 -reg

It has been brought to the notice of the Board that some manufacturers of Motor Vehicles are getting complete Motor Vehicles manufactured by sending the Chassis of the Motor Vehicles to independent body builders for building the body as per the design/specification of the manufacturer. The practice followed is that the Chassis is transferred to the Body builder on payment of appropriate Central Excise duty on stock transfer basis and is not sold to them. The body builder avails the Cenvat Credit of the duty paid on the chassis and clears the same on payment of duty to the Depot/Sales Office/Distributer of the Motor Vehicle manufacturer. The duty is discharged by the body builder on the assessable value comprising the value of Chassis and the job charges. The Depot/Sales office of the MV manufacturer sells the vehicles at a higher price than the price on which duty has been paid. Similar practice may be prevailing in respect of other commodities also.

2. The matter has been examined. Rule 10A (ii) of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 stipulates that where the excisable goods are produced or manufactured by a job-worker, on behalf of a principal manufacturer, then in a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of the job-worker, but are transferred to some other place from where the said goods are to be sold after their clearance from the factory of job-worker, and where the principal manufacturer and buyer of the goods are not related, and the price is the sole consideration for the sale, the value of the excisable goods shall be the normal transaction value of such goods sold from such other place at or about the same time.

3. A plain reading of the aforesaid provision of law makes it clear that the assessable value for the purpose of charging Central Excise duty, in the cases where the Job-worker transfer the excisable goods to the Depot/Sale office/Distributer and/or any other sale point of the principal manufacturer, shall be the transaction value on which goods are sold by the principal manufacturer from such a place. Accordingly, after the insertion of Rule 10 A, the practice of discharging the duty on cost construction method by the body builder is not legally correct. It is, therefore, clarified that wherever goods are manufactured by a person on job work basis on behalf of a principal, then value for the purpose of payment of excise duty may be determined in terms of the provisions of Rule 10 A of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000 subject to fulfilment of the requirements of the said rule. It is requested that the practice followed in your zone may be verified for body builders of motor vehicles and/or other commodities, which are manufactured on job work basis to ensure that duty is paid correctly as per Rule 10A wherever required.

4. Trade and Industry may be informed.

5. Receipt of this circular may be acknowledged.

6. Hindi version would follow.

Yours faithfully,

(Madan Mohan)

Under Secretary to the Govt. of India