UNION BUDGET 2007-08

highlights

CUSTOMS

 

Education Cess

 

Secondary and Higher Education Cess on imported goods will be 1% of the aggregate duties of customs, (but excluding safeguard duty under section 8B and 8C, countervailing duty under section 9, Anti Dumping Duty under section 9 A of the Customs Tariff Act and the two Education Cesses). Items attracting customs duty at bound rates, for example, under the IT Agreement or the Indo-US/Indo-EU Textile Agreement have been exempted from this cess.

 

Export Duty

  • An export duty @ Rs.300 per metric tonne has been imposed on iron ores and concentrates, all sorts. This will cover all iron ores, whether in the form of lumps or fines.

  • An export duty @ Rs.2000 per metric tonne has been imposed on chromium ores and concentrates, all sorts. This will cover all chrome ores, whether in the form of lumps or fines.

Both the export duties come into effect immediately.

 

Peak rate of Duty

 

Peak rate of customs duty on non-agricultural goods has been reduced from 12.5% to 10% with a few exceptions. As regards textiles, only the ad valorem component has been reduced to 10%, the specific component, wherever applicable, remaining unchanged.

 

4% Additional Duty of Customs

 

All edible grade vegetable oils and their edible grade fractions falling under 15.07 to 15.15 have been exempted from additional duty of customs of 4%. Roasted molybdenum ore and concentrate has also been exempted from this levy.

 

The exemption of additional duty of customs of 4% has been extended to Cell phone parts, components and accessories from 30.04.2007 till 30.06.2009.

 

Metals

 

Customs duty has been reduced from 20% to 10% on seconds and defectives of iron and steel.

 

Make EPCG scheme more attractive, says FIEO Chief

FIEO President Mr. Ganesh Kumar Gupta is of the view that the exporters should be made eligible to import capital goods under Export Promotion Capital Goods (EPCG) scheme at ‘zero’ duty. "A liberal policy regime for EPCG Scheme should be put in place as the scheme helps modernization of our export industry, which is vital for its survival and growth in the wake of globalisation," says Mr. Gupta.

According to him, the scheme for import of capital goods at concessional rate of 5% duty was made when the peak rate of custom duty was 30%, but now with the peak rate of duty having been considerably brought down and likely to be reduced further, the concessional rate of 5% under the EPCG scheme should also be reviewed. Moreover, in the case of project import, says Mr. Gupta, import duty on capital goods has further been reduced to 7.5% from 10% without any export obligation and thus 5% duty under EPCG scheme is no longer attractive for exporters.

Additionally, FIEO Chief suggests that in order to make the EPCG scheme truly attractive, other measures are also required. Some such meaureas suggested by Mr. Gupta are - waiving the condition of maintaining average level of exports, allowing import of spares for the machineries used for export production but not imported under the scheme and facilitating availment of CENVAT facility on imports with higher export obligation.

EPCG Scheme facilitates exporters to import capital goods at concessional duty but they have to undertake some export obligation against this.

Aircraft

 

Customs duty has been imposed on aircraft @ 3%. CV duty of 16% by way of excise duty and special additional duty of customs of 4% has also been imposed on such aircraft. Parts of such aircraft will also attract these duties. Imports by scheduled airline operators will, however, be exempt. Imports by the Government and PSU’s will continue to be exempt (vide S. No.10 of Notification No.39/96-Customs).

Aircraft, not registered in India, on flight to or across India and ultimately removed within six months from the date of arrival will be exempt from all duties of customs.

 

Chemicals & Petrochemicals

  • Customs duty has been reduced from 12.5% to 7.5% on goods falling under Chapter 28 (except Titanium Dioxide which will attract customs duty at 10%), Chapter 29 (except Mannitol, Sorbitol and Caprolactam) and Chapter 31.

  • Customs duty has been reduced from 12.5% to 7.5% on goods falling under headings 3201 to 3207 (except pigments and preparations based on Titanium Dioxide, which will attract customs duty at 10%).

  • Customs duty has been reduced from 12.5% to 7.5% on goods falling under heading 3403.

  • Customs duty has been reduced from 12.5% to 7.5% on goods falling under headings 3801 to 3807 and 3809 (with few exceptions), 3810, 3812, 3816, 3817, 3821 and 3824 (except 3824 60).

  • Customs duty has been reduced from 12.5% to 7.5% on goods falling under headings 3901 to 3907 and 3909 to 3915.

  • Customs duty has been reduced on glycerol waters and glycerol lyes from 30% to 20%.

  • Customs duty has been reduced on denatured ethyl alcohol from 10% to 7.5%.

Agriculture

  • Customs duty has been reduced from 7.5% to 5% on food processing machinery and sprinklers and drip irrigation systems used for agricultural and horticultural purposes.

  • Concessional rate of 5% customs duty plus Nil CVD/excise duty presently available to specified plantation machinery upto 30.04.2007, has been extended upto 30.04.2009.

  • Customs duty has been reduced on crude sunflower oil from 65% to 50% and on refined sunflower oil from 75% to 60%.

Textiles

  • Customs duty on polyester staple fibres and tow, polyester filament yarns and polyester chips has been reduced from 10% to 7.5%.

  • Customs duty on DMT, PTA and MEG has been reduced from 10% to 7.5%.

Export Promotion

  • Customs duty on cut and polished diamonds has been reduced from 5% to 3%.

  • Customs duty on rough synthetic gemstones has been reduced from 12.5% to 5%.

  • Customs duty has been reduced on unworked or simply prepared corals from 30% to 10%.

  • Raw, tanned or dressed fur skins have been exempted from CV duty of 8%.

Research & Development

  • The concessional rate of 5% customs duty plus Nil CV duty on specified items, available to public funded research institutions and non-commercial research institutions, has been extended to all research institutions (other than hospitals) registered with Department of Scientific & Industrial Research subject to certain conditions.

  • The concessional rate of 5% customs duty available on specified items for Pharmaceutical and biotechnological sector when imported for R&D purposes, by an importer or a manufacturer having an R&D wing, registered with Department of Scientific & Industrial Research, is being extended to 15 additional items.

 Health

 

Customs duty on medical equipment has been reduced from 12.5% to 7.5%.

 

Project Import

 

Digital Cinema Development Projects have been notified as project imports under Heading 9801, and will thus attract the project rate of 7.5%

 

Miscellaneous

  • Customs duty has been reduced from 5% to Nil on dredgers. Since dredgers are exempt from excise/CV duty, dredgers will be exempt from the 4% additional duty of customs.

  • Customs duty has been reduced from 5% to 2% on natural boron ore.

  • Customs duty has been reduced from 10% to 5% on a) borax or boric acid; b) butyl rubber; and c) frit.

  • Customs duty has been reduced from 12.5% to 5% on a) ceramic colours; b) watch dials and movements; and c) parts of umbrella, including umbrella panels.

  • Customs duty has been reduced from 30% to 20% on a) dammar batu; b) dextrose monohydrate; and c) dog or cat food.

  • A uniform customs duty rate of 5% has been prescribed for urea unconditionally.

  • Aramid yarns for manufacture of bulletproof jackets for supply to the Armed Forces have been exempted from both customs duty and CV duty.

  • Coking coal of high ash content of 12% or more has been exempted from customs duty.

  • Customs duty has been reduced from 7.5% to 5% on machinery for manufacturing of particle board, fibre board, etc.

Withdrawal of Exemptions

 

Customs duty exemptions/concessions on following items have been withdrawn:

  1. Chemicals, for use in the manufacture of Centchroman;

  2. Codeine phosphate or Narcotine, imported by Government alkaloid factories;

  3. Recorded magnetic tapes for producing TV serials;

  4. Specified goods like TV cameras (professional grade), audio recording equipment, tabletop desk production video machine, 8 channel video Mixer/switches etc.;

  5. Specified goods for manufacture of fly ash based goods.

FIEO Chief welcomes liberalized export procedures announced by RBI

FIEO President Mr. Ganesh Kumar has welcomed the announcement made by the RBI to delegate powers to the Authorized Dealers to extend the period of realization of export proceeds. The Authorized Dealers are now empowered to extend the period of realization of export proceeds beyond 6 months from the date of export upto a period of 6 months at a time irrespective of the invoice value. This extension will however be subject to certain conditions which have been laid down by the Central Bank.

"This flexibility would not only reduce the transaction cost but also ensure that deferred terms of credit are provided to small exporters with lesser invoice values," said Mr. Gupta. He added that this would help reduce the time and paper work required to be done by the exporter.

FIEO Chief has also welcomed the facility provided to the Status Holders to write-off outstanding export dues. As per the existing provisions, Status Holder exporters are permitted to write-off outstanding bills upto an annual limit of 5 per cent of their average annual realisations during the preceding three calendar years, subject to certain conditions. Furthermore, all exporters, including Status Holder exporters, are allowed to write off 10 per cent of the export proceeds due during the calendar year, subject to certain conditions.

Rationalising this existing facility, the RBI has announced that now Status Holder exporters may write-off outstanding export dues to the extent of (i) 5 per cent of their average annual realisation during the preceding three financial years or (ii) 10 per cent of the export proceeds due during the financial year, whichever is higher.

The FIEO Chief has also complimented the RBI for allowing reduction in invoice value upto 25% as against the earlier cap of 10% in cases where the original buyer defaults on the payment and the goods are to be transferred to another buyer once they have been shipped (subject to laid down conditions).

The above measures were taken by the RBI in view of the recommendations made by its Internal Task Force. The Task Force was constituted by the Central Bank to suggest rationalisation and procedural simplification in areas related to trade.

 

CENTRAL EXCISE

 

Relief Measures

  • Excise duty has been fully exempted on (a) Packed biscuits of per Kg. retail sale price equivalent not exceeding Rs.50; (b) Food mixes (including instant food mixes); (c) Specified water purification equipment based on membrane technology; (d) Household water filters not using electricity and pressurised tap water; (e) Biodiesels.

  • Excise duty has been reduced from 16% to 8% on (a) umbrellas; (b) plywood, veneered panels and similar laminated wood falling under heading 4412; (c) footwear parts/components falling under heading 6406; and wadding, gauze.

  • Ad valorem component of excise duty on petrol and diesel has been reduced from 8% to 6%.

Textiles

  • Excise duty has been reduced from 16% to 12% on caprolactam, nylon chips and benzene for manufacture of caprolactam.

  • Optional excise duty at 12% has been prescribed on fishnet grade nylon yarns (yarns of 210 deniers and multiples thereof), nylon fishnet fabrics and fishnets.

  • Full exemption from excise duty on specified textile machinery has been withdrawn and an excise duty of 8% has been imposed thereon.

Small Scale Industries

 

Exemption limit under the SSI scheme has been increased from Rs 1 crore to Rs.1.5 crore. This will be effective from 1.4.2007.

 

Research & Development

 

Exemption from excise duty has been extended to specified items when domestically procured by research institutions (other than hospitals) registered with Department of Scientific & Industrial Research, for the purpose of research, subject to certain conditions.

 

Metals

 

The rate of compounded levy on aluminium circles has been increased from

Rs.7500/10000 per machine per month to Rs.12000 per machine per month.

 

Information Technology

  • ‘USB flash memory’ is exempt from excise duty. The exemption has now been extended to ‘flash memory’ in general.

  • ‘DVD drive’ is exempt from excise duty. The exemption has now been extended to ‘DVD drive/DVD writer’.

Tobacco products

 

Specific rates of excise duty on cigarettes have been revised upward

 

Cement

 

Dual rates of excise duty have been prescribed on cement as under:

  1. General rate (other than mini cement plants)

  2. Excise duty has been reduced from Rs.400 per metric tonne to Rs.350 per metric tonne for cement of declared retail sale price not exceeding Rs.190 per 50 Kg. bag or per metric tonne retail sale price equivalent not exceeding Rs.3800.

Retail Sale Price (RSP) Based Assessment

 

1. RSP based assessment will be extended from a date to be notified to

  1. Personal computers (including lap tops)

  2. Computer printers

  3. Computer monitors

  4. Computer key boards

  5. Scanners

  6. Computer mouse

  7. Ink cartridge with print head assembly

  8. Fax machines

  9. Modems

  10. Set top boxes for gaining access to internet

  11. Set top boxes for television sets

2. Third Schedule of the Central Excise Act is being amended so as to include these items.

 

FIEO Chief apprehends hike in cost of export credit

In an immediate reaction to the Reserve Bank of India’s Third Quarter Review of the Annual Statement on Monetary Policy for 2006-07 released on 31st January, FIEO President Mr. Ganesh Kumar Gupta has expressed apprehension that the general interest rates as well as the export credit rates may firm up further.

According to him, the rates of export credit for Indian exporters are already much higher than the rates applicable for their counterparts in other countries and any further increase in these rates would prove detrimental for India’s exports. "Any increase in interest on export credit will further undermine our competitiveness in global trade which is already being eroded by the weakening of Dollar against Indian Rupee," said Mr. Gupta. Indian Rupee has appreciated by 0.8 percent against US Dollar and by 3.4 per cent against Japanese Yen during the current financial year so far as per the data available upto January 25, 2007.

FIEO Chief also says that though the RBI had been exercising restraint in increasing the interest rates for the past one year, the unbridled inflation beyond 6% has forced the Central Bank to tinker with the rates increasing BPLR by 100 basis points.

While there has been a marginal increase in the repo rate in the Review announced by the RBI, other rates and parameters such as reverse repo, bank rate and CRR remain the same. The RBI has stated categorically that it would use all policy instruments to ensure the appropriate modulation of liquidity responding to the evolving situation.

 

Withdrawal of Exemptions

 

Excise duty exemptions/concessions have been withdrawn on following items:

  1. Chemical reagents manufactured by Hindustan Antibiotics Ltd. For use in manufacture of kits for testing narcotics drugs and psychotropic substances;

  2. Optical glass manufactured by the Central Glass and Ceramic Research Institute, Kolkata for use by any Department of the Central Government;

  3. Goods like brooms, hand operated mechanical floor sweepers, mops, feather dusters, prepared knots and tufts of broom or brush; pain pads & rollers, squeezes etc.;

  4. Recorded video cassettes intended for television broadcasting, supplied in formats such as U-matic, Betacam or any similar format;

  5. Nicotine polacrilex gum;

  6. Dust and powder of synthetic stones;

  7. Cold-set high speed printing machines;

  8. Specified parts of set top boxes.

OTHER AMENDMENTS/CHANGES IN CUSTOMS ACT AND CENTRAL EXCISE ACT

 

Customs

  • A new section 14 is substituting existing section 14. The new section provides that the value of imported goods and export goods shall be the transaction value of such goods, as determined in accordance with the rules made in this behalf.

  • Section 27 of the Customs Act, 1962 is being amended by inserting a proviso in sub-section (1) to provide that the relevant date for the purpose of refund of duty in consequence of any judgement, decree, order or direction of appellate authority, Appellate Tribunal or any court shall be the date of such judgement, decree, order or direction.

  • Section 28E I (ii) of the Customs Act, 1962 is being amended by inserting an Explanation in clause I so as to clarify that ‘joint venture in India’ means a venture in which at least one of the participants, partners or equity holders is a non-resident having substantial interest in the joint venture and exercising joint control over it.

  • Sub-Section (2) of Section 75A of the Customs Act, 1962 is being amended to provide that in case of erroneous refund, the interest shall be charged at the rate fixed under section 28AB, from the date of payment of drawback till the date of recovery of such drawback.

  • In view of the specific legislation covering SEZs, Chapter XA of the Customs Act, 1962 has become redundant. Customs Act, 1962 is accordingly being amended to omit Chapter XA of the said Act.

  • Section 127A of the Customs Act, 1962 is being amended so as to provide that an applicant can file an application before the Settlement Commission only in respect of cases pending before the adjudicating authority. It further provides that in respect of cases referred back by the Appellate Tribunal, Court or any other authority to the adjudicating authority for fresh adjudication, the applicant shall not be entitled to file an application;

  • Section 127B of the Customs Act, 1962 is being amended so as to provide that an applicant shall be eligible to file an application in respect of cases in which he admits short levy on account of misclassification, under valuation, inapplicability of exemption notification but not in respect of the goods not included in the Bill of entry or Shipping Bill, as the case may be.

  • Section 127C of the Customs Act, 1962 is being amended so as to specify time limit at every stage for disposal of the application filed before the Settlement Commission. It, inter alia, provides that in respect of an application filed on or before 31st May, 2007, the order shall be passed by 29th February, 2008, and in respect of application made on or after 1st June, 2006, the order should be passed within 9 months of the application.

  • Section 127E of the Customs Act, 1962 is being amended with a view to debar the Settlement Commission from re-opening the completed proceedings in respect of applications received on or after 1.6.2007;

  • Section 127F of the Customs Act, 1962 is being amended so as to make consequential changes in view of the amendments made in section 127C;

  • Section 127H of the Customs Act, 1962 is being amended so as to debar the Settlement Commission from granting immunity from prosecution for any offence under Indian Penal Code or any Central Act for the time being in force other than Customs Act.

  • Section 127J and 127K of the Customs Act, 1962 are being amended so as to make consequential changes in view of the amendments made in section 127C;

  • Section 127L of the Customs Act, 1962 is being amended so as to provide that an applicant can apply for settlement only once during his lifetime so that the scheme of settlement is not treated as a permanent amnesty scheme by the tax evaders.

  • Section 127MA of the Customs Act, 1962 is being omitted as it has outlived its utility;

  • Section 129 of the Customs Act, 1962 is being amended by inserting a new subsection (6) therein with a view to debar the President, Vice-President or other Member of the Customs, Excise and Service Tax Appellate Tribunal from appearing, acting or pleading before the said Tribunal on ceasing to hold office.

  • Section 129D of the Customs Act, 1962 is being amended so as to provide that the Committee of Chief Commissioners or the Commissioners shall review the orders of the Commissioner or adjudicating authorities below the rank of Commissioner within a period of three months as against the present period of one year from the date of communication of the decision or order of the Adjudicating Authority.

Central Excise

  • In view of the specific legislation covering Special Economic Zones, sub-section (1) of Section 3 of the Central Excise Act, 1944 is being amended to omit the provisions relating to ‘free trade zone’ and substitute the meaning of ‘special economic zone’ so as to harmonize the said provisions with the Special Economic Zone Act, 2005.

  • Section 11B of the Central Excise Act, 1944 is being amended by inserting a new sub-clause (ec) in clause (B) of Explanation to provide that the relevant date for the purpose of refund of duty in consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, shall be the date of such judgment, decree, order or direction.

  • Section 23A I of the Central Excise Act, 1944 is being amended by inserting an Explanation in clause I so as to clarify that ‘joint venture in India’ means a venture in which at least one of the participants, partners or equity holders shall be a non-resident having substantial interest in the joint venture and exercising joint control over it.

  • Section 31 of the Central Excise Act, 1944 is being amended so as to provide that an applicant can file an application before the Settlement Commission only in respect of cases pending before the adjudicating authority.

  • Section 32A of the Central Excise Act, 1944 is being amended so as to empower the Chairman, Settlement Commission to constitute a Bench consisting of three Members and the senior among the Members shall act as the presiding officer of the Bench, if the Vice-Chairman is not one of the Members;

  • Section 32E of the Central Excise Act, 1944 is being amended so as provide that the applicant shall be eligible to file an application in respect of the case in which he admits short levy on account of misclassification, under valuation, inapplicability of exemption notification or CENVAT credit but not in respect of the goods for which he had not filed a return.

  • Section 32F of the Central Excise Act, 1944 is being amended so as specify time limit at every stage for the disposal of the application filed before the Settlement Commission. It, inter alia, provides that in respect of an application filed on or before 31st May, 2007, the order shall be passed by 29th February, 2008, and in respect of application made on or after 1st June, 2006, the order should be passed within 9 months of the application.

  • Section 32H of the Central Excise Act, 1944 is being amended with a view to debar the Settlement Commission from re-opening the completed proceedings in respect of applications received on or after 1.6.2007;

  • Section 32 I of the Central Excise Act, 1944 is being amended so as to make consequential changes in view of the amendments made in section 32F;

  • Section 32K of the Central Excise Act, 1944 is being amended so as to debar the Settlement Commission from granting immunity from prosecution for any offence under Indian Penal Code or any Central Act for the time being in force other than Central Excise Act.

  • Section 32M and Section 32N of the Central Excise Act, 1944 are being amended so as to make consequential changes in view of the amendments made in section 32F;

  • Section 32 O of the Central Excise Act, 1944 is being amended so as to provide that an applicant can apply for settlement only once during his lifetime so that the scheme of settlement is not treated as a permanent amnesty scheme by the tax evaders.

  • Section 32PA of the Central Excise Act, 1944 is being omitted as it has outlived its utility;

  • Section 35E of the Central Excise Act, 1944 is being amended so as to provide that the Committee of Chief Commissioners or the Commissioners shall review the orders of the Commissioner or adjudicating authorities below the rank of Commissioner within a period of three months as against the present period of one year from the date of communication of the decision or order of the Adjudicating Authority.

  • Section 35F of the Central Excise Act, 1944, is being amended so as to insert an Explanation therein with a view to widen the scope of expression ‘duty demanded’. The proposed amendment provides for inclusion of amount determined under section 11D; amount of erroneous CENVAT credit taken; amount payable under rule 57CC of Central Excise Rules, 1944; amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004; interest payable under the provisions of this Act or the rules made thereunder; within the ambit of expression ‘duty demanded’ in addition to the duty specified under section 3 of the said Act for the purpose of pre-deposit, pending appeal, under section 35F of the Act.

  • Section 37 (4) of the Central Excise Act, 1944 is being amended so as to reduce the penalty from Rs.10000 to Rs.2000 for possessing, transporting, removing, depositing, keeping, concealing, selling or purchasing any excisable goods which are liable to confiscation. Similarly, section 37 (5) is also being amended to reduce the penalty from Rs.10000 to Rs.2000.

‘New’ measures will expedite movement of export cargo: FIEO President

Expressing satisfaction over a series of circulars issued by the Department of Revenue in line with the recommendations of the Inter-Ministerial Group on simplification of customs procedures, FIEO President Mr. Ganesh Kumar Gupta has said that the provisions of these circulars would facilitate expeditious movement of export cargo and would reduce transaction cost for export.

As provided under these circulars, perishable cargo for export would now be examined only on the basis of credible intelligence or information and thus in most cases perishable cargo for export would not be subject to any examination.

In the case of transshipment between any two custom airports, uniformity would be brought about as per the new guidelines issued. Until now, divergent practices were being followed at different international airports for transshipment of cargo. Moreover, from now onwards, the Cargo Transfer Manifest (CIM) prepared by the carrier/console agent will itself serve as the application form for transshipment and no separate application for transshipment will be required

 

The Central Excise Rules, 2002 have been amended as under (with immediate effect):

  1. An explanation has been inserted in rule 8 to provide that for the purposes of this rule, the expressions ‘duty’ or ‘duty of excise’ shall also include the ‘amount’ payable in terms of the CENVAT Credit Rules, 2004.

  2. Rule 8 has been further amended to make e-payment mandatory for payment of duty by all assessees who have paid excise duty of rupees 50 lakh or more in cash during the preceding financial year. This provision would come into effect from 01.04.2007;

  3. Sub-rule (2) of rule 11 has been amended to provide that the invoice shall also contain address of the jurisdictional Central Excise Division. This change will come into force from 01.04.2007;

  4. Rule 21 has been amended to increase the power of remission given to various officers of central excise.

  5. Rules 25 & 26 are being amended to reduce the minimum penalty from the present level of rupees ten thousand to rupees two thousand. This change will be effective on enactment of Finance Act, 2007.

  6. A new sub-rule (2) has been inserted in rule 26 to provide for penal action against the person who issues CENVAT invoices without delivery of goods mentioned therein and also against the person who is involved in fabricating

Central Excise documents or any other document like shipping bill, bill of lading, etc., based on which the user of said document is likely to take or has taken any ineligible benefits like CENVAT credit, refund, etc.;

 

The CENVAT Credit Rules, 2004 have been amended as under (with immediate effect):

  1. Necessary amendments have been made in the Cenvat Credit Rules, 2004 to allow credit of Secondary and Higher Education Cess paid on inputs and capital goods, which can be utilized for payment of Education cesses only.

  2. Sub-rule (2) of rule 9 has been amended to provide that the CENVAT credit can be taken if all the particulars as prescribed under the rules are available on the invoice or other duty-paying document. Further, in case any of the required particulars (other than specified particulars) are not available on the document, the Assistant/Deputy Commissioner may allow the credit subject to his satisfaction that (i) goods/services covered by said document has been received by the asseessee, and (ii) the receipt of said goods/services has been accounted for in the books of accounts of the receiver. Consequential amendments have also been made in rule 15(1) and 15(3), which provides for penal action. Subrule (3) of rule 9 has been deleted;

  3. Sub-rule (11) has been inserted in rule 9 so as to allow an assessee to rectify mistakes and file revised return within 60 days from the date of filing of original return, subject to specified conditions;

  4. New sub-rules (3) & (4) have been inserted in rule 11 to provide that when a person opts for exemption from whole of duty (in case of conditional notification) or where a product becomes exempted absolutely, in such cases, the CENVAT credit taken on inputs lying in stock, or in process or contained in the final product lying in stock should be reversed. Similar provision has been made in respect of cases wherein taxable service becomes exempted. However, no reversal of credit of input services is required to be made in such cases.

SERVICE TAX

 

Following are some important changes relating to service tax

  • The threshold limit of service tax exemption for small service providers is being increased from the present level of Rs.4 lakh to Rs.8 lakh with effect from 01.04.2007. Consequent upon the increase in the threshold exemption limit from Rs. 4 lakh to Rs. 8 lakh, the limit for obtaining service tax registration has also been increased from Rs. 3 lakh to Rs. 7 lakh.

  • Following services are specifically included in the list of taxable services:

  1. Service provided by a telegraph authority in relation to telecommunication service

  2. Service provided in relation to mining of mineral, oil or gas

  3. Service provided in relation to renting of immovable property for use in the course or furtherance of business or commerce

  4. Service provided in relation to the execution of a works contract

  5. Service provided in relation to development and supply of content for use in telecom services, advertising agency services and on-line information and database access or retrieval services

  6. Service provided by any person, except a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern, in relation to asset management including portfolio management and all forms of fund management

  7. Service provided in relation to design services 

AMENDMENTS IN THE SERVICE TAX RULES, 1944

  1. It is proposed to dispense with the requirement of submission of original registration certificate to the department at the time of intimation of any changes. As per the amended provisions, the assessee is required to submit only a self-certified copy of the registration certificate. Rule 4, Form ST-1 and ST-2 are being suitably amended for this purpose. Department will issue the amended registration certificate after cancelling the original registration certificate issued earlier.

  2. It is proposed to extend self-adjustment of excess service tax paid to all assessees subject to the following conditions:

  • Self-adjustment of excess credit is allowed on account of reasons other than interpretation of law, taxability, classification, valuation or applicability of any exemption notification.

  • Excess amount paid and proposed to be adjusted should not exceed Rs.50,000 for the relevant month or quarter.

  • Adjustment can be made only in the succeeding month or quarter.

  • The details of self-adjustment should be intimated to the Superintendent of Central Excise within a period of 15 days from the date of adjustment. However, assessees who have centralised registration can adjust the excess service tax paid on their own without any monetary limit provided the excess amount paid is on account of delayed receipt of details of payments from branch offices.

3.  Rule 7B is being inserted to allow an assessee to rectify mistakes and file revised return within 60 days from the date of filing of the original return;

4.  Rule 2(1)(d)(vii) is being amended so that service tax is required to be paid under reverse charge method in relation to sponsorship service only if the recipient of service is located in India. In other words, if the recipient of sponsorship service is located outside India, in such cases, service tax is required to be paid by the service provider and not by the recipient. This change will come into effect from 1st April, 2007.

 

AMENDMENTS IN THE CENVAT CREDIT RULES, 2004

  1. 6(3) is being amended to provide an option to general insurance Rule service providers providing taxable as well as exempted insurance schemes and do not maintain separate input / input services credit accounts to utilise CENVAT credit proportionate to the inputs and input services used in providing taxable services. The scheme is optional and is effective from 1st April, 2007. The scheme is applicable only to general insurance services referred to in section 65(105)(d).

  2. Rule 9 is being amended to insert sub-rule (11) to allow an assessee to rectify mistakes and file revised return within 60 days from the date of filing of original return. This change will come into effect from 1st March, 2007.

Amendments in the Export of Services Rules, 2005:

 

Rule 3 is being amended with effect from 1st March, 2007, to

  1. substitute the words ‘delivered outside India and used outside India’ with the words ‘provided from India and used outside India’ in sub-rule (2); and

  2. clarify that that both rule 3(1) and 3(2) are to be satisfied for provision of service to be treated as export of services.

Import Enquiries from Cote d’ Ivoire

Soap making plant (capacity 30-40,000 soaps per day) with automatic packaging system, Milk mixing machine, Automatic bottle filling machine

Contact: Mr. Germain Kouame
Kimpex Unic
Abidjan
Tel: 225-22434786/226-06347444
Email:  kikmpxci@yahoo.com

 Pharma products, medicines and computers

Contact: Mr. N’ Zi Delamarre
Dimension Plus
08 BP 1564 Abidjan 08
Tel: 22507974994
Fax: 20220784
Email: jiredimensionplus@yahoo.fr

Federation of Indian Export Organisations
New Delhi, INDIA.