Our excise consultant says we need not pay education cess and secondary higher education cess on clearances from Export Oriented Units (EOU) to the Domestic Tariff Area (DTA), if the excise duty is based on the Customs duty leviable on like goods, if imported. Our excise officials say cess must be paid because the calculation of equivalent Customs duty is only for arriving at the excise duty and cess must be paid on the excise duty. What is the correct position?
As per the Ahmedabad Tribunal judgment in the case of Sarla Performance Fibres Ltd. [2010 (253) ELT 203 (Tri. Ahmedabad)] once education cess is added to the Customs duties to arrive at aggregate value of Customs duties, the question of charging education cess does not arise. What is required for the purpose of the proviso to Section 3 of the Central Excise Act, 1944 is to arrive at the aggregate of Customs duties and, once we take a view that education cess is part of the Customs duty and is an enhancement, the question of adding it again does not arise.
Under the one per cent Status Holder Incentive Scrip (SHIS) scheme, it is mentioned in Para 3.10.7 of the Handbook of Procedures, Vol. 1 (HBP) that Para 3.11.8 of this HBP shall not apply to this scheme. Para 3.11.8 deals with declaration of intent to claim Chapter 3 benefits on the shipping bill. I do not understand the connection. Can you clarify?
Para 3.11.8 of HBP says no claim under Chapter 3 shall be admissible without the said declaration of intent. Para 3.10.7 of HBP says this provision is not applicable to the SHIS scheme. What it means is although SHIS is also a Chapter 3 benefit, for the purpose of grant of the SHIS benefit, even shipping bills that do not bear the said declaration of intent will be considered. This is by way of exception to the general rule.
We had imported certain capital goods on duty payment before our service became taxable and so we did not take Cenvat Credit. Can we take the credit of such duty now?
According to the Central Board of Excise and Customs (CBEC), you cannot take Cenvat Credit now, because at the time you procured the duty-paid capital goods, you were not rendering taxable services and so, were not eligible to take Cenvat Credit. In this connection, you may refer to the Madurai Central Excise Commissioner Trade Notice no. 42/2008 (Service Tax no. 15/2008), dated 11.09.2008, which is based on CBEC letter F. No. 137/120/2008-CX.4 dated 24-6-2008. I am of the opinion that you should put this view to test at the judicial forums.
What is the annual limit for exporting goods free of charge for status holders?
The limit is Rs 10 lakh or two per cent of average annual export realisation during the preceding three licensing years, whichever is higher (HBP, Para 2.52).