Rule 10A of the Central Excise Valuation- Assessable value in respect of goods manufactured on Job-work-

October 25th, 2009

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

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What does the Direct Taxes Code means to individual Indian tax payers

August 13th, 2009

With an objective to improve the efficiency and equity of the Indian Tax System by broadening the tax base through minimizing the exemptions, remove the ambiguity in the law and checking the erosion of the tax base through tax evasion, finance minister Mr. Pranab Mukherjee, released the draft of new direct taxes code to solicit the public opinion about the code before presenting it to parliament. He intends it to be effective from April 2011.

The code appears to be favoring salaried person in first instance. However, there are several points that are irritating to the salaried class.Main cause of concern is tax to be levied on withdrawals from the GPF/PPF/LIC schemes etc.Second concern is about the deduction of interest on loan taken for house construction. It appears that deduction on interest is not available if a person is living in his own house and showing no income from the house property. May be I could not understand the clause in its full sense.

How the provisions of draft direct tax code influence the income and how they influence the losses and gains in comparison to existing income tax rules, is shown below.

According to draft tax code, the gross salary will include the value of perquisites and profits in lieu of the salary. It will be reduced by the permissible deductions which include the following:

1. Professional tax paid

2. Transport allowance

3. Prescribed special allowance incurred in performance of duties to the extent actually incurred

4. Compensation under voluntary retirement scheme

5. Amount of gratuity

6. Commutation of pension

7. Pension received by the gallantry awardees

Deductions under item 4, 5 & 6 would be available to the extent the amounts are paid to or deposited in a retirement benefits account, After implementation of the code, amounts received from an approved retirement/superannuation fund will be taxable. Approved provident funds, superannuation funds, life insurer and New Pension System Trust etc will be the permitted savings intermediaries. Deposits will remain untaxed in these accounts but once withdrawals are made, the amount withdrawn will be treated as the income.

Salary will also include the following values as per new code:

1.       The value of accommodation

2.       The value of leave Travel Concession

3.       The amount received on encashment of earned leave

4.       Amount reimbursed for medical treatment

5.       The value of medical treatment free or concessional by employer

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Salary will include the income from House property. The following deductions are allowed from gross rent:

1.       Amount of taxes levied by local administration (actual amount paid)

2.       20% of the gross rent as cost of repair or maintenance

3.       Amount of any interest payable on capital borrowed

Important: If the gross rent is nil in the case of a self-occupied property, no deduction for taxes or interest will be allowed.

Tax incentives:

A. Deductions upto a limit of Rs 3.0 lakh will be allowed as per provisions of new code. These deductions will include the following items:

1. Approved provident funds, superannuation funds, life insurer and New Pension System Trust etc will be the permitted savings intermediaries.

2. Deduction for amount paid towards payment of tuition fees of children

B. Deduction of Rs 15000 (Rs 20,000 in case of a senior citizen) in respect of medical insurance premium + Rs 15000 for parent’s medical insurance premium (Rs 20,000 if parent is a senior citizen)

C. Deduction of Rs 50,000 (Rs 75,000 in case of severe disability) for medical treatment or maintenance of disabled dependent

D. Deduction of Rs 40,000 (Rs 60,000) in case of senior citizen) for expenditure on medical treatment for prescribed diseases

E. Deduction will be allowed for interest actually paid on a loan taken for higher education for self or children/spouse

F. Deduction allowed to a company for family welfare or AIDS prevention of its employees.

G. Deductions in respect to donations

Rate of income tax:

A. For individuals other than women & senior citizens: No tax upto Rs 1,60,000

For Women: No tax upto Rs 1,90,000

For senior citizens: No tax upto Rs 2,40,000

B. For individuals other than women & senior citizens: 10% tax ( Rs 1,60,001 to Rs 10,00,000)

For Women: 10% tax ( Rs 1,90,001 to Rs 10,00,000)

For senior citizens: 10% tax ( Rs2,40,001 to Rs 10,00,000)

C. For individuals other than women & senior citizens: 20% tax ( Rs 10, 00,001 to 25,00,000)

For Women: 20% tax ( Rs 10, 00,001 to 25,00,000)

For senior citizens: 20% tax ( Rs 10, 00,001 to 25,00,000)save

D. For individuals other than women & senior citizens: 30% tax ( Rs 25, 00,001 or more)

For Women: 30% tax ( Rs 25, 00,001 or more)

For senior citizens: 30% tax ( Rs 25, 00,001 or more)

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July 2nd, 2009

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

(Department of Revenue)

Notification No. 14/2009-Central Excise (N.T.)

New Delhi the 10th June, 2009

G.S.R.  (E).- In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, namely:-

1. (1) These rules may be called the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Amendment Rules, 2009.

(2) They shall come into force from the date of their publication in the official Gazette.

2. In the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, –

(a) in rule 6, for the words “Where the subject goods are not used”, the words “The said Assistant Commissioner or Deputy Commissioner shall ensure that the goods received are used by the manufacturer for the intended purpose and where the subject goods are not used” shall be substituted;

(b) For Annexure-II, the following Annexure shall be substituted, namely:

“Annexure II

Monthly Return (See rule 5)

Name of subject goods

S.No. Description of subject goods

Details

Closing balance Goods manufactured Specified purpose for procuring the goods at concessional rate of duty

Whether the goods used for specified purpose or not.
In case of export, specify the quantity exported with details of ARE 1

/ARE-2.

Opening balance Received

Total of columns

(3) & (4)

Quantity consumed for the intended purpose Nature Nature
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Note – Separate entries should be made for each variety or class of goods used and manufactured.

I/We declare that I/we have compared the above particulars with the records (and) /books of my/our factory and that they are, insofar as I/we can ascertain complete.

Verified

Date:

Place:

Signature of manufacturer

Name in capital letters

Seal”

[F.No.201/30/2008-CX 6]

(Mallika Arya)
Director, Central Excise

Note: The principal rules were published in the Gazette of India part II, Section 3, Sub-section (i) vide notification No. 34/2001-CE (NT) dated the 21st June, 2001[G.S.R. 448(E) dated the 21st June, 2001] and were last amended vide notification No. 37/2003-CE(NT) dated 17th April, 2003[G.S.R. 339 (E) dated 17th April, 2003.]

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Notification No. 4/2009 – Central Excise

May 3rd, 2009

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

New Delhi, the 24th February 2009

Notification No. 4/2009 – Central Excise

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby directs that each of the notifications of the Government of India in the Ministry of Finance (Department of Revenue), specified in column (2) of the Table hereto annexed shall be amended or further amended, as the case may be, in the manner specified in the corresponding entry in column (3) of the said Table, namely :-

TABLE

S. No.

Notification number and date

Amendments

(1)

(2)

(3)

1.

3/2006-Central Excise, dated the 1st March, 2006

In the said notification, in the Table, in column (4), for the entry “10%”, wherever it occurs, the entry “8%” shall be substituted.

2.

4/2006-Central Excise, dated the 1st March, 2006

In the said notification, in the Table, in column (4), -

(i) for the entry “10% or Rs.290 per tonne, whichever is higher”, wherever it occurs, the entry “8% or Rs.230 per tonne, whichever is higher” shall be substituted;

(ii) for the entry “10% of the value of such gold potassium cyanide excluding the value of gold used in the manufacture of such goods”, wherever it occurs, the entry “8% of the value of such gold potassium cyanide excluding the value of gold used in the manufacture of such goods” shall be substituted;

(iii) for the entry “10% of the value of material , if any, added and the amount charged for such manufacture”, wherever it occurs, the entry “8% of the value of material , if any, added and the amount charged for such manufacture” shall be substituted.

3.

5/2006-Central Excise, dated the 1st March, 2006

In the said notification, in the Table, in column (4), for the entry “10%”, wherever it occurs, the entry “8%” shall be substituted.

4.

6/2006-Central Excise, dated the 1st March, 2006

In the said notification, in the Table, in column (4), -

(i) for the entry “10%”, wherever it occurs, the entry “8%” shall be substituted;

(ii) for the entry “10% + Rs.10,000 per chassis”, wherever it occurs, the entry “8% + Rs.10,000 per chassis” shall be substituted.

5.

2/2008-Central Excise, dated the 1st March, 2008

In the said notification, in the Table, in column (3), -

(i) for the entry “10%”, wherever it occurs except, for the entry occurring against S. No. 14, 16 and 18, the entry “8%” shall be substituted;

(ii) for the entry “10% + Rs.10,000 per chassis”, wherever it occurs, the entry “8% + Rs.10,000 per chassis” shall be substituted.

[F. No.354/210/2008-TRU (Part)]

[Unmesh Sharad Wagh]
Under Secretary to the Government of India

Note. -

(1)        The principal notification No.3/2006-Central Excise, dated the 1st March, 2006 was published in the Gazette of India, Extraordinary, part II, section 3, sub-section (i) vide number G.S.R.93 (E), dated the 1st March, 2006, and was last amended by notification No. 58/2008-Central Excise, dated the 7th December, 2008 published vide number G.S.R. 840(E), dated the 7th December 2008.

(2)        The principal notification No.4/2006-Central Excise, dated the 1st March, 2006 was published in the Gazette of India, Extraordinary, part II, section 3, sub-section (i) vide number G.S.R.94 (E), dated the 1st March, 2006, and was last amended by notification No. 64/2008-Central Excise, dated the 24th December, 2008 published vide number G.S.R. 887(E), dated the 24th December, 2008.

(3)        The principal notification No.5/2006-Central Excise, dated the 1st March, 2006 was published in the Gazette of India, Extraordinary, part II, section 3, sub-section (i) vide number G.S.R.95 (E), dated the 1st March, 2006, and was last amended by notification No. 58/2008-Central Excise, dated the 7th December, 2008 published vide number G.S.R. 840(E), dated the 7th December 2008.

(4)        The principal notification No.6/2006-Central Excise, dated the 1st March, 2006 was published in the Gazette of India, Extraordinary, part II, section 3, sub-section (i) vide number G.S.R.96 (E), dated the 1st March, 2006, and was last amended by notification No. 58/2008-Central Excise, dated the 7th December, 2008 published vide number G.S.R. 840(E), dated the 7th December 2008.

(5)        The principal notification No.2/2008-Central Excise, dated the 1st March, 2008 was published in the Gazette of India, Extraordinary, part II, section 3, sub-section (i) vide number G.S.R.130 (E), dated the 1st March, 2008, and was last amended by notification No. 58/2008-Central Excise, dated the 7th December, 2008 published vide number G.S.R. 840(E), dated the 7th December 2008.


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