Our buyer abroad has supplied free of charge one of the raw materials required for making our export product. We have cleared the same on duty payment. We are not too sure as to how to show the values in the export documents. Can you guide us please?
You can prepare the invoice showing the full value of the goods and show the deduction of the value of raw materials supplied by the buyer to arrive at the amount due. Your ARE1 value must include the value of raw materials supplied by the buyer. In the shipping bill you show the full value as you have shown in the invoice and the deduction for value of materials supplied free of charge and the balance due. The amount that you will actually receive from the buyer can be shown in the GR form.
We have rented commercial property to a trading firm. Now, the firm says that no service tax has to be paid for renting immovable property due to some High Court judgement. What is the correct position?
In the case of Home Solution Retail India Vs. Union of India [2009 (237) ELT 209 Del], the Delhi High Court has held that mere renting immovable property is not a taxable service but only any service provided in or in relation to renting immovable property. The Government may appeal to the Supreme Court against the order. Till the Supreme Court decides the case, there will be uncertainty. In the meantime, there are two alternatives. As the landlord, you may take a security deposit from the tenant and give an undertaking that you will refund the amount to the tenant in case the Supreme Court upholds the Delhi High Court judgement. Alternatively, you may take an undertaking from the tenant that they will pay the amount of service tax, if the Supreme Court upholds the Delhi High Court judgment.
We are manufacturing dutiable and non-dutiable products. We take Cenvat Credit of the common inputs. We have debited the Cenvat account for 10 per cent of the value of the goods and collected the same from the buyer. Now, the audit party says that 10 per cent amount has to be deposited with the Government under Section 11D of the Central Excise Act, 1944. Can you advise whether we need to do that?
As long as the amount of 10 per cent is paid to the Government (even by utilising the Cenvat Credit in terms of Explanation-II to Rule 6 of the Cenvat Credit Rules, 2004), the provisions of section 11D shall not apply even if the amount is recovered from the buyers. However, Cenvat credit of the said amount of 10 per cent cannot be taken by the buyer. Therefore, the said 10 per cent amount should be shown in the invoice as “10 per cent amount paid under Rule 6 of the Cenvat Credit Rules, 2004”. In this connection, you may refer to CBEC Circular no. 870/8/2008-CX dated 16th May 2008.