Wednesday, April 30, 2008

Holidays List For the calender year 2008

Sub : Holiday List for the Calendar Year 2008
In pursuance of Clause 14 of Chapter VI of the Bye-Laws of the National Securities Clearing Corporation Limited and Regulation 6.2 of the Capital Market Segment of the National Securities Clearing Corporation Limited, the list of Clearing & Settlement holidays for the calendar year 2008 are notified below:
Sr. No.
Date
Day
Clearing HolidayDescription
1
6-Mar-08
Thursday
Mahashivratri
2
20-Mar-08
Thursday
Id-E-Milad
3
21-Mar-08
Friday
Good Friday
4
31-Mar-08
Monday
Bank Closing
5
14-Apr-08
Monday
Dr. Babasaheb Ambedkar Jayanti
6
18-Apr-08
Friday
Mahavir Jayanti
7
1-May-08
Thursday
Maharashtra Day
8
19-May-08
Monday
Buddha Pournima
9
01-Jul-08
Tuesday
RBI Annual closing
10
15-Aug-08
Friday
Independence Day
11
19-Aug-08
Tuesday
Parsi New Year
12
3-Sep-08
Wednesday
Ganesh Chaturthi
13
30-Sep-08
Tuesday
Half Yearly Bank Closing
14
2-Oct-08
Thursday
Mahatma Gandhi Jayanti & Ramzan Id
15
9-Oct-08
Thursday
Dasara
16
28-Oct-08
Tuesday
Diwali (Laxmi Puja)
17
30-Oct-08
Thursday
Diwali (Bhaubeej)
18
13-Nov-08
Thursday
Guru Nanak Jayanti
19
9-Dec-08
Tuesday
Bakri Id
20
25-Dec-08
Thursday
Christmas
The holidays falling on Saturday / Sunday are as follows:
Sr. No.
Date
Day
Clearing HolidayDescription
1
19-Jan-08
Saturday
Moharum
2
26-Jan-08
Saturday
Republic Day
3
22-Mar-08
Saturday
Holi (2nd day)
4
6-Apr-08
Sunday
Gudi Padwa
5
13-Apr-08
Sunday
Ram Navami

PAN Verification on NSDL Site

PAN can be verified on NSDL Website. By putting PAN one can get the name of the PAN Holder on the following link

Analysis of further proposed Amendments to Finance Bill, 2008

Analysis of further proposed Amendments to Finance Bill, 2008

Section 10(26AAB)

Exemption of income of an agricultural produce market committee

1. With effect from the assessment year 2009-10, any income of an agricultural produce market committee/board constituted under any law for the time being in force for the purpose of regulating the marketing of agricultural produce, will be exempt from tax.

Section 10(29A)

Exemption to income of Coir Board

2. Exemption provided to Coir Board made effective from 1-4-2002, instead of 1-4-2009.

Sections 10A and 10B

Exemption under sections 10A and 10B extended by one year

3. Exemption available under sections 10A and 10B has been extended by one more year. Consequently, these exemptions will now be available up to the assessment year 2010-11.

Section 40(a)(ia)

TDS default

4. Interest, commission, brokerage, rent, royalty, fees for technical/professional services payable to a resident or amounts payable (for carrying out any work contract) to a resident contractor/sub-contractor are subject to tax deduction under different sections of Chapter XVII-B. If tax is deductible but not deducted or if tax is deducted but not deposited (or deposited late) with the Government, then these expenses are not allowed as deduction according to the provisions of section 40(a)(ia). These provisions were incorporated by the Finance (No. 2) Act, 2004 with effect from the assessment year 2005-06.

The scheme of disallowance under section 40(a)(ia) has been modified with retrospective effect from the assessment year 2005-06 on the following lines—

Tax is deductible but not deducted

u No deduction in the current previous year

u If tax is deducted in any subsequent year, the expenditure will be deducted in the year in which TDS will be deposited by the assessee with the Government.

Tax is deductible (and is so deducted) during the last month (i.e., in the month of March) of the previous year but it is not deposited on or before the due date of submission of return of income under section 139(1)

u No deduction in the current previous year

u If tax is deposited with the Government after the due date of submission of return of income, the expenditure will be deductible in that year in which tax will be deposited.

Tax is deductible (and is so deducted) during any month but other than the last month (i.e., any time before March 1) of the previous year but it is not deposited on or before March 31 of the previous year

u No deduction in the current previous year

u If tax is deposited with the Government after the end of the current previous year, the expenditure will be deductible in that year in which tax is deposited.

Section 44AB

Compulsory Tax Audit

5. From the assessment year 2008-09, audit report under section 44AB should be obtained on or before September 30 of the assessment year.

Section 80-IB

Deductions to industrial undertakings other than infrastructure under-takings

6. If an undertaking begins refining of mineral oil on or after April 1, 2009, deduction will be allowed to such undertaking only if the following conditions are satisfied—

u It is wholly owned by a public sector company or any other company in which a public sector company or companies hold at least 49 per cent of the voting rights.

u It is notified by the Central Government before June 1, 2008.

u It begins refining during April 1, 2009 and March 31, 2012.

Section 115JB

Minimum alternate tax

7. With effect from the assessment year 2001-02, the amount of deferred tax and provision therefor, if debited to profit and loss account, shall be added back to the net profit to convert it into book profit. Conversely, the amount of deferred tax, which is credited to the profit and loss account, shall be deducted from the net profit to find out book profit.

Section 115WE

Fringe benefit tax - Notice for scrutiny assessment

8. Notice for scrutiny assessment shall be served on the assessee within a period of 6 months from the end of the financial year in which return is furnished. This amendment is applicable from April 1, 2008.

Section 194C

Deduction of tax at source - Payment to contractors/sub-contractors

9. With effect from June 1, 2008, an association of persons/body of individuals, whether incorporated or not, shall be liable to deduct tax at source under section 194C(1) if the books of account of the association of persons/body of individuals are required to be audited under section 44AB(a)/(b) during the immediately preceding financial year.

Section 251

Commissioner (Appeals)

10. In an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, the Commissioner (Appeals) can (with effect from April 1, 2008) confirm, reduce, enhance or annul the assessment after taking into consideration the following—

u The material and other information produced by the assessee before the Settlement Commission.

u The results of the inquiry held by the Settlement Commission.

u The evidence recorded by the Settlement Commission in the course of proceedings before it.

u Such other material as may be brought on his record.

Section 292BB

Notice deemed to be valid in certain circumstances

11. Section 292BB has been inserted with effect from April 1, 2008 to provide that where an assessee has appeared in any proceeding or
co-operated in any inquiry related to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act has been duly served upon him in time in accordance with the relevant provision of the Act. Further, such an assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was—

(a) not served upon him; or

(b) not served upon him in time; or

(c) served upon him in an improper manner.

However, the provisions of section 292BB shall not be applicable where the assessee has raised the aforesaid objections before the completion of such assessment or reassessment.

Refund of service tax paid on taxable services

Refund of service tax paid on taxable services used by exporters which are not input services but could be attributable to export activities

INSTRUCTION F. NO. 341/15/2007-TRU, DATED 17-4-2008

The Annual Supplement to the Foreign Trade Policy, 2004-09 announced on 19.4.2007 stated that service tax on services rendered and utilised by exporters would be exempted/remitted and the remission mechanism would be institutionalised after working out the modalities.

2. Committee of Secretaries (COS) examined the matter and decided that exemption from service tax could be notified and reimbursement of service tax based on receipts may be allowed provided linkage to export is established.

3. Accordingly, 16 taxable services have been notified and the service tax paid on these taxable services, which are attributable to exports even if they are not used as input services, shall be refunded to exporters [notification No.43/2007-ST, dated 29.11.07 and notification No.41/2007-ST, dated 06.10.07, as amended by notifications No.42/2007-ST, dated 29.11.07, No.03/2008-ST, dated 19.02.08 & No.17/2008-ST, dated 01.04.08].

4. Notifications No.41/2007-ST, dated 06.10.07 and No.43/2007-ST, dated 29.11.07 provide that the service tax paid on the specified taxable services by exporters shall be refunded in the prescribed manner subject to the conditions specified therein.

5. Board desires that refund of service tax paid on taxable services used by exporters for export goods should be disposed of expeditiously. The refund claims should be finalized within a maximum period of 30 days from the date of filing of refund claim. Commissioners are advised to put in place a system of review and monitoring the disposal of refund claims filed by the exporters.

6. Any refund claim filed by an exporter which is not disposed of within the maximum period of 30 days, for any reason whatsoever, should be reported by the Commissioner to the Chief Commissioner concerned in the proforma given below by the 10th of every month. If there is no such case, nil report should be sent.

Sr. No.

Name of the exporter

Date of filing of refund claim

Amount of refund sought

Reason for delay in processing the refund claim

7. Details of refund claims which are not disposed of within 45 days from the date of filing, for whatsoever reasons, should be sent by the Commissioner to Member (Service Tax) in the above mentioned proforma by email at j.kulasekhar@nic.in so as to reach by 10th of the following month with copy to Chief Commissioner concerned. Special efforts may be taken to dispose of the refund claims filed by small and medium exporters expeditiously.

8. This issues with the approval of Secretary (Revenue).

DTAA with Myanmar

No.402/92/2006-MC (18 of 2008)

Government of India / Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

***

New Delhi dated the 3rd April 2008

PRESS RELEASE

The Government of the Republic of India signed a Double Taxation Avoidance Agreement (DTAA) with the Government of the Union of Myanmar for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income on 2nd April, 2008 during the visit of HisExcellency Maung Aye, Vice Senior General and Vice Chairman, State Peace and Development Council to India. The Agreement was signed by Shri P.K. Misra, Chairman, Central Board of Direct Taxes on behalf of the Government of India and by Mr. Kyi Thein, Ambassador Extraordinary and Plenipotentiary of the Union of Myanmar to the Republic of India, on behalf of the Government of the Union of Myanmar.

The DTAA will cover in the case of India, income-tax and surcharge and in the case of Myanmar, the income tax and profit tax. The DTAA provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Examples of permanent establishment include a branch, factory, place of management, sales outlet etc. Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for 270 days or more. Profits derived by an enterprise from the operation of ships or aircraft in international traffic shall be taxable in the country of residence of the enterprise. Dividends, interest and royalty income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed 5% in the case of dividends and 10% in the case of interest and royalties. Capital gains from the sale of shares will be taxable in the country of source. The Agreement also incorporates provisions for exchange of information between tax authorities of the two countries and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries.

The Agreement will provide tax stability to the residents of India and Myanmar and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Myanmar.

RBI Instructions not to accept Physical Challan for Direct Tax


Mandatory electronic payment of tax by certain Categories of taxpayers w.e.f. 1.4.2008
RBI/2007-08/ 280
DGBA.GAD. No. H. 10875 / 42.01.038 /2007-08

April 10, 2008
The Chairman & Managing Director/Managing Director
State Bank of India and its Associates/
All Nationalised banks/ Axis Bank Ltd/
HDFC Bank Ltd/ ICICI Bank Ltd/ IDBI Ltd/
J&K Bank Ltd.
Dear Sir,

Mandatory electronic payment of tax by certain Categories of taxpayers w.e.f. 1.4.2008

As you are aware, the Central Board of Direct Taxes vide their Notification No. 34/2008 dated 13-3-2008 (copy enclosed) have made electronic payment of taxes mandatory for the following categories of tax payers w.e.f. 01.04.2008 :

    a. A company
    b. A person (other than a company), to whom provisions of Section 44AB are applicable.
2. In this regard the following instructions may be kept in mind while implementing the Government Notification:
    i) the status of all corporate taxpayers can be identified from the name itself. Further, the 4th digit of the PAN of all corporate assessee would necessary be 'C'. Physical challans from such assessees shall not be accepted across the counter.
    ii) In case of tax payers covered under Section 44AB, there should be no insistence of any proof of eligibility to pay tax through physical challans at the bank counters. The responsibility of making e- payment rests primarily with the taxpayer. Hence, the word of taxpayers should be taken as final.
    iii) the acknowledgement for e-payment should be made available immediately on screen by the bank concerned.
    iv) the transaction id of e-payment should be reflected in the bank's statement.
    v) each bank should prominently display on its e-payment gateway page, the official /s to be contacted in case the taxpayer faces any difficulty in making the payment, completing the e-transaction, generating the counterfoil etc.
    vi) each bank should give the ITD and NSDL a list of officials with contact particulars, to be contacted if required for any problems faced by ITD or taxpayers.
4. Necessary instructions may be issued to your branches concerned.

Yours faithfully,

(M.T.Varghese)
General Manager

Industrial Park Scheme to include to include, IT, ITES and R&D in Natural Sciences activities

Earlier Tax Exemption was available under Industrial Park Scheme, 2008 only if the units are engaged in "manufacturing" activities. But now, it has been decided to include activities of IT, ITES, R&D and natural sciences.
Extract from the Commerce Ministry speech:
"Under the Industrial Park Scheme, administered by the Department of Industrial Policy and Promotion besides manufacturing, it has now been decided to include, IT, ITES and R&D in Natural Sciences and Engineering, as industrial activities permitted in the parks. "
Detailed article on Industrial Park Scheme, 2008:

The Industrial Park Scheme, 2008 was announced to provide momentum to the manufacturing sector. This scheme replaces the earlier Industrial Park Scheme, 2002, although undertakings notified under that scheme will continue to enjoy the benefits defined under that scheme.

The 2008 scheme encourages developers to create infrastructure facilities for manufacturing units. It provides a 10-year tax holiday under Section 80-IA of the Income Tax Act, 1961 ('the Act') to any undertaking that develops, develops and operates or maintains and operates an industrial park set-up during April 1, 2006 to March 31, 2009. The scheme was notified in 2008 to give benefit retrospectively (to the units set up post April 1, 2006). Though no tax benefits are available to the units set-up in the industrial parks, they benefit indirectly in form of lower rent, higher FSI index, etc.

This scheme is different from other tax holiday schemes be it the export-oriented unit (EOU) scheme or special economic zone (SEZ). Both these initiatives are largely aimed at promoting exports and foreign exchange earnings. SEZ, per se give benefits both to the developer of an SEZ and also to the units housed in the said SEZ, unlike the Industrial Park Scheme 2008 where the benefit is limited only to the developer of the industrial park.

The Industrial Park Scheme, 2008, in comparison to its predecessor 2002 scheme has simplified the approval procedures. Instead of the two-level approval required under the 2002 scheme, from Secretariat of Industrial Assistance (SIA), Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and the Central Board of Direct Taxes (CBDT), the application is now required to be made only to CBDT for notification. The key conditions for undertakings to be eligible for benefits under Section 80-IA (4) (iii) are:

The date of commencement of the Industrial Park should be on or after April 1, 2006 and not later than March 31, 2009;

There shall be a minimum of 30 industrial units located in the park. The tax benefits will be available to the undertaking only after setting up of minimum number of 30 units;

For the purpose of determining the minimum number of industrial units; all units of a person and his associated enterprises will be treated as a single unit;

The park should be owned by only one undertaking. 'Industrial Park' under the scheme, means a project in which plots of developed space or built up space or a combination, with common facilities is developed and made available to the units for the purposes of industrial or commercial activities;

The area allocated to industrial units is not less than 90 per cent of the allocable area;

The minimum constructed floor area is not less than 50,000 sq.mt;

No industrial unit, along with the units of an associated enterprise, shall occupy more than 25 per cent of the allocable area; and

Industrial units shall undertake only manufacturing activity as defined in Section D of the National Industrial Classification, 2004, Code issued by the Central Statistical Organisation, Department of Statistics. This includes manufacturing of machinery and equipments, electrical machinery and apparatus, chemicals and chemical products, basic metals, motor vehicles, etc.,).

An early review of the scheme provisions highlights the following potential issues:

Unlike the 2002 scheme, the Industrial Park Scheme, 2008 has restricted applicability to manufacturing activities only for claiming tax benefits by the developer of the industrial park. The 2002 scheme provided for tax benefits to developers of industrial parks dedicated to a wider set of commercial activities such as research and development, IT and ITES, and consultancy. Currently, the only other scheme which provides for tax benefits to the developers for developing sector specific or multi-sector business parks is the SEZ.

However, the SEZs are more appropriate for large scale ventures, given their much larger minimum land area, built-up area and net worth obligations. This excludes mid-range developers of non-manufacturing business parks who are unable to either invest or pool-in the necessary land area. Therefore extending the scope of the Industrial Park Scheme, 2008 beyond manufacturing activities would fill the fiscal incentives gap for small and medium range developers.

There may be many undertakings which had applied under the 2002 scheme before March 31, 2006, and are not yet approved. With the commencement of the 2008 scheme and the approval authority now being changed to CBDT, there is no clarity for applications prior to March 31, 2006 on the approval process and if the park was intended for non-manufacturing businesses. These issues need to be sorted for the smooth functioning of the new scheme and in achieving its core purpose.

One core condition is the minimum number of 30 units and the tax benefits kicking-in only after such minimum number of units are established in the industrial park. Also it seems that requirement of minimum 30 units needs to be met at all the times for the duration of the tax holiday period. However, this seems like a harsh condition and puts unreasonable pressure on the developer for maintaining 30 units all the time. There should be flexibility built into the provisions for continuance of tax benefits for periods of defined range of sub-peak occupancy of the park. Also the restriction of any single unit not occupying more than 25 per cent of the area will preclude larger units leveraging the industrial park scheme.

As per the notification, the undertaking has to develop, develop and operate or maintain and operate an industrial park any time during the period beginning on April 1, 2006, and ending on March 31, 2009. There is lack of clarity whether undertakings which are only maintaining and operating the industrial parks are also eligible to claim tax benefits along with the developer of the industrial parks, in case such activities are performed by a separate undertaking.

The tax benefits under the Act are currently available only to the undertaking notified by CBDT and not to any other person, who may subsequently develop, develops & operates or maintains & operates the notified Industrial Park, arising from change in ownership. There is not enough clarity as to why there is a restriction on tax benefits for the successor undertaking.

If we look at the computation mechanism, Section 80 IA provides for 100 per cent tax deduction from the profits of the business. However, there has been a controversy even in the 2002 scheme on whether the profits are termed as business profits or any other income. The major source of income for a developer is rental income from leasing of units, and one of the views for calculating deduction under Section 80 IA is to consider only business income. However the categorization of income as house property income by the developer should not lead to denial of benefits. Clearly, there is scope to clarify this issue.

Notwithstanding, the Industrial Park Scheme, 2008, is a positive move and because of its smaller minimum area requirements a complimentary initiative to the SEZ framework. This scheme provides a flexible and shorter 'time-to-market' lever to state governments and other developmental agencies to pursue their economic and social developmental agenda. However, extending the scope of industrial parks beyond manufacturing, pragmatic approach to applying the condition of minimum 30 units, clarifying the overlap with 2002 scheme are some of the core challenges to be addressed for fully leveraging the benefits of this scheme.

Analysis of further proposed Amendments to Finance Bill, 2008

Analysis of further proposed Amendments to Finance Bill, 2008

Section 10(26AAB)

Exemption of income of an agricultural produce market committee

1. With effect from the assessment year 2009-10, any income of an agricultural produce market committee/board constituted under any law for the time being in force for the purpose of regulating the marketing of agricultural produce, will be exempt from tax.

Section 10(29A)

Exemption to income of Coir Board

2. Exemption provided to Coir Board made effective from 1-4-2002, instead of 1-4-2009.

Sections 10A and 10B

Exemption under sections 10A and 10B extended by one year

3. Exemption available under sections 10A and 10B has been extended by one more year. Consequently, these exemptions will now be available up to the assessment year 2010-11.

Section 40(a)(ia)

TDS default

4. Interest, commission, brokerage, rent, royalty, fees for technical/professional services payable to a resident or amounts payable (for carrying out any work contract) to a resident contractor/sub-contractor are subject to tax deduction under different sections of Chapter XVII-B. If tax is deductible but not deducted or if tax is deducted but not deposited (or deposited late) with the Government, then these expenses are not allowed as deduction according to the provisions of section 40(a)(ia). These provisions were incorporated by the Finance (No. 2) Act, 2004 with effect from the assessment year 2005-06.

The scheme of disallowance under section 40(a)(ia) has been modified with retrospective effect from the assessment year 2005-06 on the following lines—

Tax is deductible but not deducted

u No deduction in the current previous year

u If tax is deducted in any subsequent year, the expenditure will be deducted in the year in which TDS will be deposited by the assessee with the Government.

Tax is deductible (and is so deducted) during the last month (i.e., in the month of March) of the previous year but it is not deposited on or before the due date of submission of return of income under section 139(1)

u No deduction in the current previous year

u If tax is deposited with the Government after the due date of submission of return of income, the expenditure will be deductible in that year in which tax will be deposited.

Tax is deductible (and is so deducted) during any month but other than the last month (i.e., any time before March 1) of the previous year but it is not deposited on or before March 31 of the previous year

u No deduction in the current previous year

u If tax is deposited with the Government after the end of the current previous year, the expenditure will be deductible in that year in which tax is deposited.

Section 44AB

Compulsory Tax Audit

5. From the assessment year 2008-09, audit report under section 44AB should be obtained on or before September 30 of the assessment year.

Section 80-IB

Deductions to industrial undertakings other than infrastructure under-takings

6. If an undertaking begins refining of mineral oil on or after April 1, 2009, deduction will be allowed to such undertaking only if the following conditions are satisfied—

u It is wholly owned by a public sector company or any other company in which a public sector company or companies hold at least 49 per cent of the voting rights.

u It is notified by the Central Government before June 1, 2008.

u It begins refining during April 1, 2009 and March 31, 2012.

Section 115JB

Minimum alternate tax

7. With effect from the assessment year 2001-02, the amount of deferred tax and provision therefor, if debited to profit and loss account, shall be added back to the net profit to convert it into book profit. Conversely, the amount of deferred tax, which is credited to the profit and loss account, shall be deducted from the net profit to find out book profit.

Section 115WE

Fringe benefit tax - Notice for scrutiny assessment

8. Notice for scrutiny assessment shall be served on the assessee within a period of 6 months from the end of the financial year in which return is furnished. This amendment is applicable from April 1, 2008.

Section 194C

Deduction of tax at source - Payment to contractors/sub-contractors

9. With effect from June 1, 2008, an association of persons/body of individuals, whether incorporated or not, shall be liable to deduct tax at source under section 194C(1) if the books of account of the association of persons/body of individuals are required to be audited under section 44AB(a)/(b) during the immediately preceding financial year.

Section 251

Commissioner (Appeals)

10. In an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, the Commissioner (Appeals) can (with effect from April 1, 2008) confirm, reduce, enhance or annul the assessment after taking into consideration the following—

u The material and other information produced by the assessee before the Settlement Commission.

u The results of the inquiry held by the Settlement Commission.

u The evidence recorded by the Settlement Commission in the course of proceedings before it.

u Such other material as may be brought on his record.

Section 292BB

Notice deemed to be valid in certain circumstances

11. Section 292BB has been inserted with effect from April 1, 2008 to provide that where an assessee has appeared in any proceeding or
co-operated in any inquiry related to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act has been duly served upon him in time in accordance with the relevant provision of the Act. Further, such an assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was—

(a) not served upon him; or

(b) not served upon him in time; or

(c) served upon him in an improper manner.

However, the provisions of section 292BB shall not be applicable where the assessee has raised the aforesaid objections before the completion of such assessment or reassessment.

Procedure for claiming Refund of 4 per cent SAD on imports

Circular No.6 /2008-Customs

F. No. 401/104/2007-Cus.III

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

North Block, New Delhi. 28th April, 2008.

Subject: Procedure to be adopted for refund of 4% Additional Duty of Customs in pursuance of Notification No.102/2007-Customs dated 14.9.2007 – regarding.

I am directed to state that various representations from importers, exporters, trade and industry associations and references from some of the Customs field formations have been received in the Board seeking clarification regarding refund of 4% Additional Duty of Customs leviable under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 in pursuance of Notification No.102/2007-Customs dated 14.9.2007.

2. The Board has examined this matter in consultation with the Customs field formations. The following procedure may be adopted by the field formations in order to settle expeditiously the refund claims arising out of the exemption provided vide Notification No.102/2007-Customs dated 14.9.2007.

3. Manner of refund and its receipt:

Your attention is invited to the instructions communicated vide F.No.354/129/2007-TRU dated 14.9.2007 at the time of issue of the Notification No.102/2007-Customs dated 14.9.2007. It is reiterated that the scheme of refund of 4% Additional Duty of Customs has been notified through an exemption notification, and hence, the conditions as prescribed only in the said notification will apply. All refund applications under the aforesaid notification shall be received by the concerned field formations in their Centralized Refund Section, and the applicants would be given proper acknowledgement. The status of these refund claims shall also be displayed in the online database of customs duty refunds maintained by the respective Commissionerates.

4. Time – Limit:

4.1. In the Notification No.102/2007-Customs dated 14.9.2007, no specific time limit has been prescribed for filing a refund application. Under the circumstances, a doubt has been expressed that whether the normal time-limit of six months prescribed in section 27 of the Customs Act, would apply. In the absence of specific provision of section 27 being made applicable in the said notification, the time limit prescribed in this section would not be automatically applicable to refunds under the notification. Further, it was also represented that the goods imported may have to be despatched for sale to different parts of the country and that the importer may find it difficult to dispose of the imported goods and complete the requisite documentation within the normal period of six months. Taking into account various factors, it has been decided to permit importers to file claims under the above exemption upto a period of one year from the date of payment of duty. Necessary change in the notification is being made so as to incorporate a specific provision prescribing maximum time limit of one year from the date of payment of duty, within which the refund could be filed by any person. It is also clarified that the importers would be entitled to refund of duties only in respect of quantities for which the prescribed documents are made available and the claims submitted within the maximum prescribed time of one year. Unsold stocks would not be eligible for refunds.

4.2. It is also clarified that only a single claim against a particular Bill of Entry should be permitted to be filed within the maximum time period of one year. Filing of refund claim for a part quantity in a bill of entry shall not be allowed except when this is necessary at the end of the one year period. Further, since the Sales Tax (ST) / Value Added Tax (VAT) is being paid on periodical or monthly basis, even in case of bills of entry where the entire quantity of goods are sold within a month, all such cases shall be consolidated in a single refund claim and filed with the Customs authorities on a monthly basis. In other words, there would be a single refund claim in respect of one importer in a month irrespective of the number of Bills of Entry (B/Es) processed by the respective Commissionerate.

4.3. With the extension of time limit and the requirement to file claims on a monthly basis, Board feels that the number of refund claims should be manageable for disposal within the normal period of three months. Further, in the absence of specific provision for payment of interest being made applicable under the said notification, the payment of interest does not arise for these claims. However, Board directs that the field formations shall ensure disposal of all such refund claims under the said notification within the normal period not exceeding three months from the date of receipt.

5. Documents to be enclosed with refund claim:

5.1. Notification No.102/2007-Customs dated 14.9.2007 prescribes the documents that shall be enclosed along with the refund claim. In order to ensure sanction of refund properly, it is clarified that the document evidencing payment of ST/VAT (in original) duly issued by or acknowledged by the concerned ST/VAT authorities shall be submitted by the importer. A certificate from a Chartered Accountant or any other independent authority certifying payment of ST/VAT would not be acceptable in lieu of the original documents. However, a certificate from the statutory auditor / Chartered Accountant, who certifies the importer's annual financial accounts under the Companies Act or any statute, correlating the payment of ST/VAT on the imported goods (in respect of which refund is claimed) with the invoices of sale, would be required along with the original tax / duty payment documents as proof of payment of appropriate ST/VAT for the purpose of para 2(d) & (e) of the said notification.

5.2. For the purpose of refund under this notification, it is reiterated that appropriate Sales Tax or VAT means Sales Tax or VAT in case of Intra-State sales and Central Sales Tax (CST) in case of Inter-State sales.

5.3. The exemption contained in the said notification envisages that the importer shall file a refund claim for 4% CVD ("said additional duty of Customs") paid on imported goods and shall pay on sale of the said goods "appropriate Sales Tax or VAT as the case may be". Hence, it is clear that there is no stipulation in the notification that the exemption is available only if the rate of ST/VAT is equal to or higher than the rate of additional duty of Customs; nor is there a condition that if the rate of ST/VAT happens to be lower than 4%, the refund would be restricted to the lower amount. As such, it is clarified that it will not be appropriate to reduce the refund amount in such a situation and the entire 4% CVD, if otherwise found eligible, shall be refunded.

6. Unjust enrichment:

6.1. The 4% CVD exemption under the said notification is operated through a refund mechanism, wherein the importer would have to first pay the said 4% CVD at the time of importation and, thereafter, can claim refund of 4% CVD on production of documents showing that the appropriate ST/VAT has been paid. Hence, the purpose of granting this exemption is to ensure that the importer pays either 4% CVD or the appropriate ST/VAT and not both. It is not the intention of the Government to allow the importer to recover the 4% CVD from the buyer as well as to claim refund of this amount from Customs. Hence, the principle of unjust enrichment needs to be examined in each case before sanction of refund under this notification. However, considering the voluminous transactions and the documents involved in the cycle, from import to sale, it was felt that it would be expedient to allow the importer to submit a certificate from the statutory auditor / Chartered Accountant who certifies the annual accounts of the importer, that the burden of 4% CVD has not been passed on by the importer to the buyer and to fulfill the requirement of unjust enrichment.

6.2. In view of the above, it is clarified that the doctrine of unjust enrichment will apply to 4% CVD refunds Scheme under the said exemption notification issued in terms of Section 25(1) of the Customs Act, 1962. However, importers may produce a certificate from the statutory auditor/Chartered Accountant who certifies the importer's annual financial accounts under the Companies Act or any statute, explaining how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment. In addition to the aforesaid the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person.

7. Other miscellaneous issues:

7.1. As regards the other doubt expressed by certain field formations on the effective date of the operation of refund scheme, it is stated that the said notification No.102/2007-Customs was issued on 14.9.2007. Accordingly, it is clarified that only those cases where 4% CVD was paid on or subsequent to 14.9.2007, will qualify for refunds under this scheme subject to fulfillment of prescribed conditions.

7.2. In respect of the doubt that whether the stamping or hand-writing of declaration in the invoice would be acceptable for the purpose of fulfilling the condition as mentioned in para 2(b) of the said notification, it is clarified that a stamp on the invoice (to state that no CENVAT Credit is admissible) should suffice for the purpose of para 2 (b) of the said notification.

7.3. On the issue that in case of 4% CVD having been paid through DEPB Scrip, whether refund could be paid by cash, it is clarified that instead of refunding the duty in cash, the amount eligible for refund should be re-credited on the relevant DEPB Scrip.

8. In view of the above clarifications, you are requested to kindly take further necessary action in the matter. The above instructions are being issued so that necessary administrative arrangements are made to deal with 4% CVD refund claims and the refund claims are sanctioned properly. Accordingly, all the concerned Commissioners of Customs / Central Excise may kindly ensure for proper implementation of these instructions of the Board.

9. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.


Circular No.6 /2008-Customs

F. No. 401/104/2007-Cus.III

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

North Block, New Delhi. 28th April, 2008.

Subject: Procedure to be adopted for refund of 4% Additional Duty of Customs in pursuance of Notification No.102/2007-Customs dated 14.9.2007 – regarding.

I am directed to state that various representations from importers, exporters, trade and industry associations and references from some of the Customs field formations have been received in the Board seeking clarification regarding refund of 4% Additional Duty of Customs leviable under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 in pursuance of Notification No.102/2007-Customs dated 14.9.2007.

2. The Board has examined this matter in consultation with the Customs field formations. The following procedure may be adopted by the field formations in order to settle expeditiously the refund claims arising out of the exemption provided vide Notification No.102/2007-Customs dated 14.9.2007.

3. Manner of refund and its receipt:

Your attention is invited to the instructions communicated vide F.No.354/129/2007-TRU dated 14.9.2007 at the time of issue of the Notification No.102/2007-Customs dated 14.9.2007. It is reiterated that the scheme of refund of 4% Additional Duty of Customs has been notified through an exemption notification, and hence, the conditions as prescribed only in the said notification will apply. All refund applications under the aforesaid notification shall be received by the concerned field formations in their Centralized Refund Section, and the applicants would be given proper acknowledgement. The status of these refund claims shall also be displayed in the online database of customs duty refunds maintained by the respective Commissionerates.

4. Time – Limit:

4.1. In the Notification No.102/2007-Customs dated 14.9.2007, no specific time limit has been prescribed for filing a refund application. Under the circumstances, a doubt has been expressed that whether the normal time-limit of six months prescribed in section 27 of the Customs Act, would apply. In the absence of specific provision of section 27 being made applicable in the said notification, the time limit prescribed in this section would not be automatically applicable to refunds under the notification. Further, it was also represented that the goods imported may have to be despatched for sale to different parts of the country and that the importer may find it difficult to dispose of the imported goods and complete the requisite documentation within the normal period of six months. Taking into account various factors, it has been decided to permit importers to file claims under the above exemption upto a period of one year from the date of payment of duty. Necessary change in the notification is being made so as to incorporate a specific provision prescribing maximum time limit of one year from the date of payment of duty, within which the refund could be filed by any person. It is also clarified that the importers would be entitled to refund of duties only in respect of quantities for which the prescribed documents are made available and the claims submitted within the maximum prescribed time of one year. Unsold stocks would not be eligible for refunds.

4.2. It is also clarified that only a single claim against a particular Bill of Entry should be permitted to be filed within the maximum time period of one year. Filing of refund claim for a part quantity in a bill of entry shall not be allowed except when this is necessary at the end of the one year period. Further, since the Sales Tax (ST) / Value Added Tax (VAT) is being paid on periodical or monthly basis, even in case of bills of entry where the entire quantity of goods are sold within a month, all such cases shall be consolidated in a single refund claim and filed with the Customs authorities on a monthly basis. In other words, there would be a single refund claim in respect of one importer in a month irrespective of the number of Bills of Entry (B/Es) processed by the respective Commissionerate.

4.3. With the extension of time limit and the requirement to file claims on a monthly basis, Board feels that the number of refund claims should be manageable for disposal within the normal period of three months. Further, in the absence of specific provision for payment of interest being made applicable under the said notification, the payment of interest does not arise for these claims. However, Board directs that the field formations shall ensure disposal of all such refund claims under the said notification within the normal period not exceeding three months from the date of receipt.

5. Documents to be enclosed with refund claim:

5.1. Notification No.102/2007-Customs dated 14.9.2007 prescribes the documents that shall be enclosed along with the refund claim. In order to ensure sanction of refund properly, it is clarified that the document evidencing payment of ST/VAT (in original) duly issued by or acknowledged by the concerned ST/VAT authorities shall be submitted by the importer. A certificate from a Chartered Accountant or any other independent authority certifying payment of ST/VAT would not be acceptable in lieu of the original documents. However, a certificate from the statutory auditor / Chartered Accountant, who certifies the importer's annual financial accounts under the Companies Act or any statute, correlating the payment of ST/VAT on the imported goods (in respect of which refund is claimed) with the invoices of sale, would be required along with the original tax / duty payment documents as proof of payment of appropriate ST/VAT for the purpose of para 2(d) & (e) of the said notification.

5.2. For the purpose of refund under this notification, it is reiterated that appropriate Sales Tax or VAT means Sales Tax or VAT in case of Intra-State sales and Central Sales Tax (CST) in case of Inter-State sales.

5.3. The exemption contained in the said notification envisages that the importer shall file a refund claim for 4% CVD ("said additional duty of Customs") paid on imported goods and shall pay on sale of the said goods "appropriate Sales Tax or VAT as the case may be". Hence, it is clear that there is no stipulation in the notification that the exemption is available only if the rate of ST/VAT is equal to or higher than the rate of additional duty of Customs; nor is there a condition that if the rate of ST/VAT happens to be lower than 4%, the refund would be restricted to the lower amount. As such, it is clarified that it will not be appropriate to reduce the refund amount in such a situation and the entire 4% CVD, if otherwise found eligible, shall be refunded.

6. Unjust enrichment:

6.1. The 4% CVD exemption under the said notification is operated through a refund mechanism, wherein the importer would have to first pay the said 4% CVD at the time of importation and, thereafter, can claim refund of 4% CVD on production of documents showing that the appropriate ST/VAT has been paid. Hence, the purpose of granting this exemption is to ensure that the importer pays either 4% CVD or the appropriate ST/VAT and not both. It is not the intention of the Government to allow the importer to recover the 4% CVD from the buyer as well as to claim refund of this amount from Customs. Hence, the principle of unjust enrichment needs to be examined in each case before sanction of refund under this notification. However, considering the voluminous transactions and the documents involved in the cycle, from import to sale, it was felt that it would be expedient to allow the importer to submit a certificate from the statutory auditor / Chartered Accountant who certifies the annual accounts of the importer, that the burden of 4% CVD has not been passed on by the importer to the buyer and to fulfill the requirement of unjust enrichment.

6.2. In view of the above, it is clarified that the doctrine of unjust enrichment will apply to 4% CVD refunds Scheme under the said exemption notification issued in terms of Section 25(1) of the Customs Act, 1962. However, importers may produce a certificate from the statutory auditor/Chartered Accountant who certifies the importer's annual financial accounts under the Companies Act or any statute, explaining how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment. In addition to the aforesaid the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person.

7. Other miscellaneous issues:

7.1. As regards the other doubt expressed by certain field formations on the effective date of the operation of refund scheme, it is stated that the said notification No.102/2007-Customs was issued on 14.9.2007. Accordingly, it is clarified that only those cases where 4% CVD was paid on or subsequent to 14.9.2007, will qualify for refunds under this scheme subject to fulfillment of prescribed conditions.

7.2. In respect of the doubt that whether the stamping or hand-writing of declaration in the invoice would be acceptable for the purpose of fulfilling the condition as mentioned in para 2(b) of the said notification, it is clarified that a stamp on the invoice (to state that no CENVAT Credit is admissible) should suffice for the purpose of para 2 (b) of the said notification.

7.3. On the issue that in case of 4% CVD having been paid through DEPB Scrip, whether refund could be paid by cash, it is clarified that instead of refunding the duty in cash, the amount eligible for refund should be re-credited on the relevant DEPB Scrip.

8. In view of the above clarifications, you are requested to kindly take further necessary action in the matter. The above instructions are being issued so that necessary administrative arrangements are made to deal with 4% CVD refund claims and the refund claims are sanctioned properly. Accordingly, all the concerned Commissioners of Customs / Central Excise may kindly ensure for proper implementation of these instructions of the Board.

9. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.