Boards Circulars have prospective effect only and not retrospective effect

Uttam Galva Steels Pvt. Ltd. Vs. CCE Raigad [2014 (12) TMI 619–Government of India] Uttam Galva Steels Pvt. Ltd. (the Appellant) was engaged in the manufacturing activity and the final products which were cleared on payment of duty included the products namely ‘H.R. Pickled Oils’ (Pickled Oils) and ‘HR Pickled and oiled coils’ (Pickled Coils). Pickled Oils and Pickled Coils were cleared for home consumption as well as exported under Rebate claim/ Bond. The Appellant had filed various Rebate claims during the period of December 2009 to April 2010 involving an amount of Rs. 3,18,72.034/- but inadvertently mentioned the Tariff Classification of Pickled Coils as 72083940 in the Rebate claims which was similar to Tariff Classification of H.R. Coils declared as input in the Appellant’s application for Central Excise Registration. However, the Appellant clarified that the inputs i.e. H. R. Coils received in the factory are subjected to the process of slitting, pickling, oiling and trimming and explained the processes involved in detail. Accordingly, it was contended that the process undertaken by the Appellant amounts to manufacture in terms of Sub Heading Note No. 3 of Chapter 72 of the Central Excise Tariff Act, 1985 which provides that the process of hardening and tempering, in respect of flat rolled products, amounts to ‘manufacture’. The Department took a view that since the Appellant did not reveal that the process of pickling and oiling amounts to hardening and tempering, therefore the process of pickling and oiling carried out by the Appellant does not amount to manufacture. Thereafter, the Adjudicating Authority rejected the entire Rebate Claim on the ground that process undertaken by the Appellant does not amount to manufacture in terms of Circular No. 927/17/2010-CX dated June 24, 2010wherein it was clarified that ‘mere undertaking the process of oiling and pickling as preparatory steps do not amount to manufacture’. Later on, the Commissioner (Appeals) also upheld the same. Being aggrieved, the Appellant filed a Revision Application before the Central Government under Section 35EE of Central Excise Act, 1944, wherein it was held that: (i) The Apex Court in the case of M. Bags Manufacturer Vs. Collector of Central Excise [1997(94) ELT 3(S.C.)] and various subsequent judgements had stipulated that the Board’s circular can have only prospective effect which is evidently the law of the land. Hence, rejection of the Rebate claims on the sole ground that the process does not amounts to manufacture by applying the Board’s Circular retrospectively i.e. prior to June 24, 2010 cannot be held sustainable and hence, liable to be set aside. (ii) In Ajinkya Enterprises, Pune, it has been held that once the duty on final product has been accepted by the Department, the Cenvat credit availed need not be reversed even if the activity does not amount to manufacture. In view of above findings, the Government set aside the Orders of the Lower Authorities and allowed Revision application..

All Rajasthan Vat Consultants Association (ARVCA) (Incorporation under process) has recently given by e-mail on 22.12.2014 Memorandum on VAT issues faced by the Traders and Professionals in the State to Hon. Commissioner of  Commercial Taxes, Rajasthan. The Memorandum Covered the following 16 topics :- 

1. The Input Credit Mismatch 

2. Speed and Capacity of RAJVAT Site 

3.  Late fees on delayed filing of Returns 

4. Issues related to Declaration Forms 

5. Exemption Scheme for Contractors 

6. Vat Audit 

7. CST on MSME Industries 

8. Registration of Dealers 

9. Commodity Based Surveys 

10. Working of CTD 

11. Refunds of Dealers 

12. Input Credit at Check Posts 

13. Entry Tax 

14. Tax Clearance Certificate 

15. Minimum Amount of Appeal 

16. Regular Meetings with professionals

Leave a Comment