Cenvat of CVD on Coal
Natwar Tibrewal PO STax
Regards,
Natwar Tibrewal
Birla Corporation Ltd.
9/1, R N Mukherjee Road
Kolkata - 700 001
Ph. 93399 75456
Vikram Khaitan
Dear Mr. Tibrewal,
This is with reference to the query raised in the trailing mail.
Just to brief you on the background of duty liability on coal, in Union-Budget 2011-12, excise duty @ 5% has been levied on coal w.e.f. 01-03-2011. Further an option has been provided to assessee vide Notification No. 1/2011-CE dated 01-03-2011 to pay duty @ 1% without availing CENVAT Credit thereof. However, vide Notification No. 16/2012-CE dated 17-03-2012, the entry of coal [Ch. No. 2701] in Notification No. 1/2011-CE (Supra) was deleted. The same was included in the Notification No. 12 /2012-CE dated 17-03-2012, wherein coal was exigible to excise duty of 1% with a condition that no credit has been taken in respect of the inputs or input services used in the manufacture of these goods.
Doubts were raised on CVD rate on such Coal, on which Excise Duty @ 1% has been levied. The Board vide Instruction D.O. F.No. B-1/3/2011-TRU, dated 25-3-2011 stated that the CVD is levied to provide a level playing field for the domestic manufacturers, CVD is charged at a rate equal to excise duty rate. However, in respect certain items, there are two excise duty rates. It needs to be appreciated that if CVD is levied @ 1%, the protection for the domestic manufacturer would be lost since in the country of origin, the overseas supplier enjoys input tax neutralization on goods exported to India (akin to availment of input tax credit), whereas on the other hand the domestic manufacturer suffers all the input taxes and 1% excise duty over and above that. Since 5% excise duty rate is payable when the CENVAT Credit of duties and taxes paid on inputs and input services is availed of, the tax treatment becomes equitable with the goods being imported into India, the input taxes having been neutralized in the country of export. The CVD of 5% will be applicable in respect of all the goods covered under Notification 1/2011-C.E., dated 1-3-2011 and 1% rate will not apply.
Hence, it is clear from the afore-said instructions that CVD of 5% will be applicable in respect of all the goods, which is chargeable to excise duty at two rates, one normal rate and other concessional with a condition that no CENVAT Credit has been taken, to provide a level playing field for the domestic manufacturers. CENVAT Credit of CVD paid of 5% would be available.
However, as per Notification No.12/2012-Customs dated 17.03.2012, Steam Coal [Sl. No. 123] classified under CTH 2701 19 20 has been fully exempted from basic customs duty along with 1% CVD. This dispensation has been made upto 31st March, 2014 and without any condition of non-availment of CENVAT Credit. Hence, prima-facie, Credit on CVD of 1% can be availed on Steam Coal, as per Rule 3 of CCR, 04.
Please note that the afore-said is only a prima-facie view, which can be substantiated only after further due-deliberations.
In case you require any further clarification, please let us know.
Thanks & Regards,
CA Vikram Khaitan
Director - ARV Advisory Services (P) Ltd.
--------------------------------------------------------------
D: +91-33- 2213 7625 / 3022 4196; M: +91-98315 86568
Email: vik...@arvsolutions.co.in / in...@arvsolutions.co.in
-------------------------------------------------------------
--
You received this message because you are subscribed to the Google
Groups "Exchange-Professionally" group.
To post to this group, send email to
echange-pro...@googlegroups.com
To unsubscribe from this group, send email to
echange-professio...@googlegroups.com
For more options, visit this group at
http://groups.google.co.uk/group/echange-professionally?hl=en-GB?hl=en-GB