'Importers can avail of customs duty exemption and concessional CVD'

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Can an importer simultaneously avail of exemption of basic customs duty under one notification and exemption of additional duty of customs (CVD) under another notification?

Yes. In its circular no. 41/2013-Cus dated October 21, 2013, the CBEC clarified that an importer, while availing of BCD exemption on steam coal under notification No. 46/2011-Customs, dated June 1, 2011, can simultaneously avail of concessional CVD at two per cent under S. No. 123 of notification No. 12/2012-Customs, dated March 17, 2012. Again, in its circular no. 334/5/2015-TRU dated April 30, 2015, the CBEC has clarified that importers can avail of the benefit of notification No. 12/2012-Customs, dated March 17, 2012 for the purposes of BCD [i.e. S. No. 197 to 203 as amended by notification No. 46/2012-Customs, dated August 17, 2012] and simultaneously avail benefit of S. No. 127 of notification no. 12/2012-Central Excise, dated March 17, 2012 for the purposes of CVD where such imports are for use in the manufacture of other fertilisers.

Is service tax payable on interest on loans?

No. Services by way of extending deposits, loans or advances — in so far as the consideration is represented by way of interest or discount — falls under the negative list of services under Section 66D(n)(i) of Finance Act, 1994.

We received advance payment from a foreign buyer for export of our goods, but we could not export within one year of receipt of advance payment, due to some problems at our end. Now, we want to return the money to the foreign buyer, but our bankers are saying that this cannot be done. Can you tell us the correct position, giving a suitable reference?

As per proviso to Para B. 8(1) of RBI Master Circular no. 14/2015-16, “in the event of the exporter’s inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilised portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank”. Therefore, you may approach RBI through your bankers for necessary permission.

For procurement of our components from local sources, we have an excise exemption notification that requires us to follow Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016. Can we claim CVD exemption on the basis of the same excise exemption?

The Customs may deny the exemption on the grounds that the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016 cannot be followed by importers. In my opinion, you can contest that on the basis of judgments in the cases of Solar Pesticides 1992 (57) ELT 201 (Bom), Hindustan Electro-Graphite Ltd. [1993 (65) ELT 46 (Tribunal)], Thermax Pvt. Ltd. [1992 (61) ELT 352 (SC)] and Malwa Industries Ltd. [2009 (235) ELT 214 (SC)]. I suggest that you go through these judgments and then take an informed decision.