As manufacturers of Kraft Paper, we were availing exemption under S.No. 90 of Notification No.4/2006-CE dated 1.3.2006, which prescribes 'nil' duty for first clearance of 3,500 metric tons (MT). We used to purchase duty paid inputs but not take Cenvat Credit if they were to be used for clearance of 'nil' duty goods. We used to maintain separate books and even store such inputs separately. Inputs on which we used to take Credit were stored and accounted for separately and used only in the manufacture of dutiable final products, after crossing the exemption limit of 3,500 MT. The audit party says that we cannot take any Cenvat Credit till we reach the exemption limit. Can you cite some case law that can help me?
In the case of Santoshi Enerprises, [2007) 213 ELT 254 (Tri.Del), on similar facts, the Tribunal noted, "on perusal of the record, there is no iota of evidence that the inputs in question were consumed by the appellant during the exemption period", and held that "at any event, the Modvat credit cannot be denied on the ground that the inputs were purchased during exemption period." Based on this judgment, you may represent that you have not consumed any inputs on which you have taken Credit, in the manufacture of exempted goods.
If a bank in India gives us a loan in rupees against a guarantee from our foreign collaborator, will it be treated as External Commercial Borrowing?
As per RBI Master Circular no. 12/2012-13 dated 2.7.2012, borrowing and lending in Indian Rupees between two residents (i.e., you and your bank) does not attract any provisions of the Foreign Exchange Management Act, 1999. In cases where a Rupee loan is granted against the guarantee provided by a non-resident, there is no transaction involving foreign exchange until the guarantee is invoked and the non-resident guarantor required to meet the liability under the guarantee may discharge the liability by remitting the funds to India In such cases, if he enforces his claim against you to recover the amount seeks repatriation, you can repay the guarantor, provided the amount remitted does not exceed the rupee equivalent of the amount paid by the non-resident guarantor against the invoked guarantee, says the Circular. The Reserve Bank Notification No. FEMA.29/ RB-2000 dated September 26, 2000 has granted general permission to a resident, being a principal debtor, to make payment to a person resident outside India, who has met the liability under a guarantee.
If we export cold rolled steel sheets (HS Code 72091820) to Nepal and receive payment in foreign exchange, what benefits can we get? Will we get the same benefits if we receive payment in rupees?
The benefits of duty drawback or of Chapter 3, 4 or 5 of Foreign Trade Policy will not be available if you get payments in rupees from Nepal, except counting the exports for the purpose of status recognition. The excise rebate/bond procedures will remain the same whether you get payment in rupees or foreign currency.
In the case of Santoshi Enerprises, [2007) 213 ELT 254 (Tri.Del), on similar facts, the Tribunal noted, "on perusal of the record, there is no iota of evidence that the inputs in question were consumed by the appellant during the exemption period", and held that "at any event, the Modvat credit cannot be denied on the ground that the inputs were purchased during exemption period." Based on this judgment, you may represent that you have not consumed any inputs on which you have taken Credit, in the manufacture of exempted goods.
If a bank in India gives us a loan in rupees against a guarantee from our foreign collaborator, will it be treated as External Commercial Borrowing?
As per RBI Master Circular no. 12/2012-13 dated 2.7.2012, borrowing and lending in Indian Rupees between two residents (i.e., you and your bank) does not attract any provisions of the Foreign Exchange Management Act, 1999. In cases where a Rupee loan is granted against the guarantee provided by a non-resident, there is no transaction involving foreign exchange until the guarantee is invoked and the non-resident guarantor required to meet the liability under the guarantee may discharge the liability by remitting the funds to India In such cases, if he enforces his claim against you to recover the amount seeks repatriation, you can repay the guarantor, provided the amount remitted does not exceed the rupee equivalent of the amount paid by the non-resident guarantor against the invoked guarantee, says the Circular. The Reserve Bank Notification No. FEMA.29/ RB-2000 dated September 26, 2000 has granted general permission to a resident, being a principal debtor, to make payment to a person resident outside India, who has met the liability under a guarantee.
If we export cold rolled steel sheets (HS Code 72091820) to Nepal and receive payment in foreign exchange, what benefits can we get? Will we get the same benefits if we receive payment in rupees?
The benefits of duty drawback or of Chapter 3, 4 or 5 of Foreign Trade Policy will not be available if you get payments in rupees from Nepal, except counting the exports for the purpose of status recognition. The excise rebate/bond procedures will remain the same whether you get payment in rupees or foreign currency.
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