OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE PUNE – II

41A  4 th  FLOOR: SASOON ROAD: OPP WADIA COLLEGE PUNE

TRADE NOTICE NO. 02 /2008

(No.02 /Gen/2008 )

            Sub: Constitution of Public Grievance Committee for Central Excise  
                    Commissionerate for the block years 2008 and 2009 reg.

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            Attention of Trade and Industry is invited to the Trade Notice No.51/2007 dtd.23.12.07 of Pune II Central Excise Commissionerate inviting nominations for the membership of PGC for the block years 2008 and 2009.

            The Public Grievance Committee (PGC) for the block years 2008-2009 in respect of this Commissionerate is formed with the following composition with immediate effect

       1.       Commissioner, Central Excise                         Chairman

       Pune II Commissionerate 

  2.     Joint  Commissioner (Tech)                             Secretary

      Central Excise, Pune II Commrt.

Organised Sector PGC :

Function of the Committee :

The Committee will look after the grievances of the Trade & Industry vis-à-vis the functioning of Central Excise officers under the Commissionerate of Central Excise, Pune II and intimate necessary action for their prompt redressal.

Meeting of the Committee:

            The committee will meet on the 4^th Wednesday of every month or any other day as may be communicated for the meeting at Hdqrs. office. If the day fixed for the meeting falls on a holiday, the meeting will be held on the following working day.

All the members of Trade Associations and Chambers of Commerce and Industries requested to bring the contents of the Trade Notice to the notice of their member constituents.

                                                                                                          (SHOBHA L CHARY )                                                                                                                COMMISSIONER CENTRAL EXCISE, PUNE II
                                                                                 F.No.VGN(30)37/TD/TECH/P II/2007
                                                                                 Pune, January 2008

MINUTES OF PGC MEETING OF PUNE II COMMISSIONERATE HELD ON 21.05.2008 AT 12.00 HRS, UNDER THE CHAIRPERSONSHIP OF SMT.SHOBHA L  

                 CHARY, COMMISSIONER, CENTRAL EXCISE PUNE II.

I.  The following PGC members attended the meeting.

II.  The Commissionrate was represented by:

1. Shri. Shambhoo Dayal, Joint. Commissioner, (Tech) Central Excise Pune II

2. Shri. S.H.Dange, Joint. Commissioner, (Service Tax) Central Excise Pune II

3. Shri. Ajit Indurkar Asstt. Commissioner of Central Excise (Tech) Pune II

4.  Shri. A.V.Nadkarni, Superintendent (Tech), Central Excise, Pune II

III.   The Chairperson welcomed the member present in the meeting.

   NO POINTS WERE RECEIVED BEFORE COMMENCEMENT OF THE MEETING.

However, the member present in the meeting raised the issues for discussion in the meeting, which are as follows-

POINT NO. 1 :-

Subject: Export Duty levied on certain items vide Notification No. 66/2008-Customs, Dated 10.05.2008:

The Government has imposed, with effect from 10 May 2008, a new levy called "Export Duty" on almost all articles of steel, including Pipes and Tubes exported. The levy is at the rate of 5% to 15% as per an exemption notification No. 66/2008-Customs, dated 10.05.2008. Since the statutory rate is 20%, there is every possibility of the export duty going up to 20% if the exemption notification is withdrawn by the Government at a later date.

The Finance Minister has introduced this levy as a part of his anti-inflationary measure as steel constitutes more than 21% of the current inflation.  The objective is to augment the domestic availability of steel products as well as soften prices. The Government is of the view that there is need for disincentivising the export of steel and hence this export duty.  

The following issues arise due to this levy of Export Duty:

1.                  PROCUREMENT OF INPUTS UNDER ADVANCE AUTHORIZATION (LICENCE):

a.                   In case of certain items of exports like “Tubes and Pipes”, the input “Steel” is imported against Advance Authorization (License) where under no import duty is required to be paid. Here, the manufacturer is under an obligation to export the entire finished goods manufactured out of such duty free imported inputs. The entire raw material imported is processed in India and the processed goods i.e. Finished Goods are required to be exported. The duty free import of inputs make the finished goods competitive in the international market. This levy is, therefore, nothing but levy of customs duty on the processing as well as the raw material.

b.                  By levying export duty on in such cases, will make product very uncompetitive. There will be a setback to the exporters because this will hugely increase selling price and the same will not be competitive in the market.

c.                   Thus, the manufacturers of such products like “Tubes and Pipes” are left with not other alternative but to :-

(i)                  Stop / discontinue exports and pay customs duty / interest / penalty on the raw material imported due to failure to meet the export obligation and pay damages to the foreign importer; or

(ii)                To export the goods at a loss.

2.                  The intention of the Government to impose export duty, seems to increase supply of steel products in domestic market & to lessen exports .

3.                  Such levy may affect investments for creation of additional capacities and   moving out of production of all such items, on which export duty is levied, to other countries adversely affecting employment in India.

4.                  From the Notification it is seen that the Government has generally levied export duty on ‘non-alloy steel’ items. Therefore, the member seeks clarification whether the words “non-alloy” was not inserted through oversight at Sr. No. 15 (Heading No. 41).

DECISION: -

            The issue pertains to Customs therefore the chair-person requested the member to take up the matter with concerned authorities so that the matter may be referred to the Board for necessary action if any.

POINT :-2

Non-submission of Counterfoil copy with the ER-1 and ST- 3 Return when payment is made electronically.

As per EASTEST Scheme, taxpayer is making payment of the Taxes under G.A.R.7 Challan, electronically and he is receiving single copy of Counterfoil of G.A.R.7Challen as the evidence of payment.

            Taxpayer required to submit ER-1 and /or ST-3 Return.

            In the cases of Electronic payment s, taxpayer is not enclosing copy of Tax payment challan as like TR6 Challan along with the said returns, as he is not receiving additional copy of counterfoil and as such he is submitting the said returns with out G.A.R.7 challan’s counterfoil. Also status of tax payment can be seen on website.

( Refer Pune II Trade Notice No. 30/2007 Dated 01.06.2007) .

            However while submitting ER-1 /ST-3 Returns, Central Excise Staff is asking/ insisting to submit counterfoil copy along with ST-3 or ER-1 Return.

            As Taxpayer is not having additional copy of counterfoil it is requested that suitable clarification may be issued to the staff for not to insist for counterfoil copy along with ER-1 or ST-3 Return when payments are made electronically.

DECISION: - The chair person expressed that the difficulty faced by the assesses is genuine and needs to be addressed. Till the solution is find out, the assesses in mean time may furnish self attested copy of the G.A.R.7 along with the Returns.

POINT:- 3

            A service Tax provider duly registered with the department under category of “Errection/Installation.” service seek clarification as to how to pay duty on scrap  generated while providing service.

Whether payment of Excise Duty under STR/STC no., is permitted?

DECISION: - This issue needs in depth examination and will be replied in due course because the point is received during ongoing proceedings of the meeting..

POINT:- 4

            The members have informed of difficulties faced by them  and also non-cooperation from the focal banks while making payment of  duty and getting the G.A.R.7 challan.

DECISION: The chairperson informed that this office has already taken up the issues with higher authorities and requested the member to submit a detailed list of difficulties faced by the assesses, so that the matter may be taken up with the Authorities of the Banks.

MINUTES OF RAC/PGC MEETING HELD ON 26-06-2008 AT 10.00 HRS., UNDER THE CHAIRMANSHIP OF SHRI B.S.VASUDEV, COMMISSIONER, CENTRAL EXCISE PUNE II.

The following RAC/PGC members attended the meeting.

The Commissionerate was represented by:

4.      Shri. Shambhoo Dayal, Joint Commissioner, (Tech) Central Excise Pune II

5.      Shri. Ajit Indurkar Asstt. Commissioner of Central Excise (Tech) Pune II

   The Chairperson welcomed the members present in the meeting.

The members presented certain points for discussion.  The Points received in writing taken up for discussion.

Points from Shri S.D.Modani RAC member –CII

Point No, 1 :-  Refund of Export Duty collected between 10.05.2008 and  13.06.2008:

1          The Government had imposed, effective May 10,   2008, a levy called "Export Duty" on almost all articles of steel, including Pipes and Tubes, @ 5% to 15% in terms of Third Schedule to the Finance Act, 2008 amending Second Schedule to the Customs Tariff Act, 1975.

2.         The Finance Minister had introduced this levy as a part of its anti-inflationary measures, as steel constitutes more than 21% of the current inflation.  The objective is to augment the domestic availability of steel products as well as soften prices. The Government is of the view that there is no need for any incentives for the export of steel and hence this export duty. From the Government’s intention to impose export duty, it is clear that Government expect that by levying export duty, the steel manufactured in India will be made available for consumption in India instead of being exported and thus this would curtail the inflation in the Country. 

3.         However, this levy was found to be unjustifiable particularly in the case of certain items of exports like “Tubes and Pipes”, the input “Steel” is imported against Advance Authorization (License) without payment of import duties since the exporter has undertaken the obligation to export the entire finished goods made  out of such duty free imported inputs. The duty free imports of inputs make the finished goods competitive in the international market.

4.         Similarly, levying export duty made the products very uncompetitive. This would be a huge setback since the Indian products became costlier in the competitive international market leading to loss of business and valuable foreign exchange earnings. Consequently, the manufacturers of such products like “Tubes and Pipes” are left with no  alternative but to stop/discontinue exports and pay customs duty / interest / penalty on the raw material imported under Advance Authorization due to failure to meet the committed export obligation and pay damages to the foreign importer as well or to export the goods at a loss.

5.         It was also possible that this levy might have adversely affected the investments for creation of additional capacities and   moving out of production of all such items, on which export duty is levied, to other countries adversely affecting employment in India.

6.         Considering the above situation and the representation from the manufacturers, the Government of India, vide its Notification No. 77/2008-Customs dated 13^th June, 2008, granted full exemption from the payment of export duty on “Tubes and Pipes of Iron or Steel”.

7.         The export duty on Tubes & Pipes was exempted before 10^th May, 2008 and after 12.06.2008. Therefore, there is no logic to levy export duty during this period.

8.         It now requested that the export duty paid during 10.05.2008, the date on which export duty was levied, and 13.06.2008, when the export duty was withdrawn, be refunded to the exporters who were not able to recover the same from the importer customer abroad.

Decision:   The Chairman explained that the levy and collection of Export duty is administered by the Customs authorities and refund of such duty shall also be dealt with by the Customs only. The trade may therefore approach the Customs authorities for such refund.  However the chairman agreed to refer the matter to the Customs Authorities.

Point from Shri.V.P.Jagadale ,Kolhapur

POINT: 2  :- Pending Adjudication with Addl. Commissioner C.EX Pune –II

Ms/ Western Precicast Pvt. Ltd.Miraj, received Show cause- cum- Demand issued by The Additional Commissioner of Central Excise Pune II Vide F.No.VGN (73)15-19/Adj/P-II/07/163 Dated 08.02.2007 The assessee submitted the reply on 12.03.07 and requested for hearing . They have already sent two reminders dated 25.10.2007 and 19.04.2008 but there is no response from the Department.

Decision:- The Chairman explained that due to some conflicting Appellate pronouncements, the case could not be decided and was kept in Call Book. Now the case has been  taken up for adjudication and   Personal Hearing in the matter has been fixed on 8^th July, 2008 and will be decided soon. 

Points from Shri. P.G.Medhe Member RAC,Kolhapur

POINT:3   CENVAT Credit on Old M.S. Scrape Sale :-

Every year we use to sale Old M.S.Scrap material by calling tenders.  The said Old M.S.Scrap material is removed from the Plant after using 20 to 25 years. Audit party raises points to pay excise duty on such material or to show them details of the original purchase invoice vide which we have paid the Excise Duty. It is very difficult for us to maintain the records of such each and every small material. Hence, we compel to pay excise duty on such Old Scrape Material unnecessarily.

As per provisions, M.S.Scrap Material is not at all a Excisable Item. Suitable directives may please be issued to the concerned about not to charge the excise duty on Old M.S. Scrape Material.

Decision:- The Chairman  explained that if the scrap is generated out of manufacturing of the goods, the assessees have to pay duty on the transaction value of the scrap and in such cases there shall not be any requirement to maintain the records for many years being generated during routine manufacturing activities.  As regards scrap of Capital goods the assessees have to keep the original invoices for minimum 10-12 years so as to enable the assessee to show to the department the depreciated value for the purpose of payment of duty or proportionate reversal of the Cenvat credit. After exhaustion of depreciated value, the scrap can be cleared on transaction value.

POINT: 4        Question of CENVAT Credit of Service Tax on Outward Freight paid on Levy Sugar Transport:- 

The prices of the levy sugar are fixed by the Govt. of India and Govt. Of  India issues Release Orders for levy quota. The levy sugar prices are Ex-Factory prices.  The concerned state is use to take delivery of the levy sugar quota from the sugar factory godown.  The freight charges from the godown of sugar factory to railway goods yard are borne by the factory, out of which some portion i.e. 0.13 ps. per K.M. is paid by the levy sugar nominee. In spite of this, audit parties are pressing us to revert the CENVAT credit availed by us being the out going freight.

Requested for guide lines in the matter.

Decision:- The Chairman explained that in view of statutory  provisions the  place of removal in respect of finished goods is either  the factory gate or the depot therefore, in such a case there is no problem .However in many cases, it is observed that the Customers insisted the assessee to deliver the finished goods at their door steps. In such cases the assessee should prepare the invoice  inclusive of freight amount charged  upto the customers destination and pay central excise  duty on total amount . If such duty is paid the assessee shall be eligible for Cenvat on outward freight and it will  be the responsibility of the assessee to establish that the central excise duty was paid on the value inclusive of outward freight.

POINT: 5        CENVAT credit on material purchased and used for replacement purpose:-  

We use to avail CENVAT credit of duty paid on goods like M.S. Plates, M.S.Beams, Angles, Channels and Welding Rods as a capital goods credit.Audit parties are raising the objection for the same, saying that these items are not covered by the definition of Capital Goods as given in Clause (a)(A)(i) of Rule 2 of the Cenvat Credit Rules 2004 or they are not in the nature of components, spares and accessories of any capital goods as meant in Clause (a)(A)(iii) abide and they are not amongst other specific goods from the meaning of Capital Goods and hence no credit is available as Capital Goods.

We use such material for the replacement of the machinery parts, which are directly related to the final product, hence such items may please be considered for CENVAT Credit and suitable directions in this regard may please be issued.

Decision: -  The Chairman explained that the Cenvat credit on such material used in the replacement/installation of capital goods, which are used in or in relation to the manufacture of final products is allowed.  The Cenvat credit on such materials used in the construction of office building/compound wall and similar civil structure is not allowed.

Points from Shri.S.S.Ratnaparkhi PGC Member –CII representative

POINT: 6 GAR -7 Challan

Assesses are paying Excise Duty & Service Tax through E-payment through Bank of India. While making payment, in Bank software there is no provision for entering 1% S & H Edu. Cess payment separately, hence in Cess column Assesses have to enter clubbed amount i.e. 2% Edu. Cess + 1% S & H Edu. Cess & accordingly cyber receipt show basic duty + Cess ( total of 2%+1% )

In monthly ER-1 return as well as in ST-3 return duty payment of 2% Edu Cess & 1% S & H Edu Cess is required to shown separately. Since cyber receipt is showing total amount for both types,ST-3 and ER-1 Return amount is not matching with Cyber Receipt for 2% Edu Cess & 1% S & H Edu Cess. It is difficult for Assesses to convince on head wise Payment of tax to audit party or Range Offices.

For E-payment all Bankers software need to be designed as per Excise and Service Tax Procedural and legal requirement.  To overcome above difficulty it is requested to take up the issue with Bankers at Higher level to make suitable modification in the software to have separate entry for 1% S & H Edu Cess.

Decision:-  The Chairman suggested that till the improvement in the software for deposition of duty, the trade may open accounts in the banks, where e-payment facility is available and the trade should maintain the records of the breakup of Education Cess. It was agreed upon that the matter will be taken up with Banks.  As regards the column to mention the name of the assessee in the receipts of GAR 7 Challans, the Chairman suggested that the trade may write their name on their own on the said challan.  The Chairman has also agreed to take up the matter with  the Board to modify the proforma of GAR 7.

POINT: 7

Since taxable services are increasing every year and currently there are +100 Services under Service Tax net, Service tax assesses are facing various procedural difficulties or queries on Service tax matters.

To have immediate assistance to the assesses, it will help if e-mail helpline at headquarter Pune II Commissionrate will be introduced. With this Assesses can give e-mail feedback on various queries or procedural difficulties of the assessee on Service Tax and Department Officials can give on line response/reply thru E-mail.

This will help to resolve many procedures issues speedily. At present in Pune III Commissionrate such helpline facility is available.

Decision:-The Chairman informed that an ‘On Line-Help Centre’ has been introduced in Pune-II Comm’rate with e-mail address cexkop1online @yahoo.com and Trade Notice in this regard is already issued.  The chairman has also  suggested  the trade to make their queries  very clear  and precise so that the reply may be  given within a day. 

POINT: 8

Assessee are filing Annexure -19 along with export documents with Range offices but there is delay in getting  acceptance of proof of export from Division office. During EA-2000 Audit, CERA Audit party is asking acceptance of proof of export. 

It is requested that guideline may be issued for time frame for release of acceptance letters against submission of Annexure 19 by Assesses.

Decision: -  The Chairman has informed the trade that a time limit of one month for acceptance of Proof of Export is being fixed if all relevant documents are submitted by the exporter.  He also suggested to the trade that if the proof of export in form Annexure 19  is not available, the trade may show the copies of  relevant document’s  and receipt of claim for acceptance of proof of export at the time of internal audit/CERA. 

9. The Chairman then allowed the trade to present points/queries on the spot.  The points/queries are as follows:

1.                  The Trade requested for a Toll free telephone for Help Line

The Chairman replied that there is no problem to install a toll free telephone line , but if the problem presented is complicated  then the matter cannot be resolved on the spot, hence in such cases this system will not be helpful. Therefore he  suggested to take  benefit of newly introduced On-Line HelpCentre.

2 The representative of M/s.Hindustan Latex Ltd. Presented a query that they are purchasing Chemicals/raw material on payment of duty and they are manufacturing exempted as well as dutiable goods and they want to avail the facility of Cenvat Credit. 

      The Chairman suggested that if the inputs are common the assessee may take Cenvat Credit of the same and on the clearance of the exempted goods they should pay an amount @ 10% of the value of final product or they may reverse the part of Cenvat Credit, which is contained in the exempted goods before clearance.

3. It was also presented that  to provide facility to pay consolidated S.Tax for all services provided by a S.Tax payer, as similar facility of lumpsum payment for products falling under different Chapters is available in Central Excise.

The Chairman agreed to take the matter with the Board.

4.  Shri Sudhir Padurannar, Internal Auditor of M/s.Ghatge Patil Transport presented a query that they are paying S.Tax near about 10 to 12 lakhs per month but they do not know what record is to be maintained and hence they are facing problems at the time S.Tax payment.

           The Chairman mentioned that there is no statutory record prescribed for Service Tax.  The Assessee may keep records, which they felt suitable.  He further added that the assessee may deposit the amount of service tax more than what is payable and  the difference can be adjusted in next month.