We are a medium-scale industry. A couple of months back, the excise audit team visited our factory, took several details and now a list of audit observations have been given to us. Our Range authorities are asking us to regularise all matters raised in the report. Some of these issues involve duty payment and interest and Cenvat Credit reversals. We asked for some time due to financial constraints but our authorities are pressing us hard to clear all the audit points. Are we required to comply within any time limit?
The audit observations are not legally binding on you but you must quickly examine whether the claims for duty, etc, have any validity. If need be, you may take suitable professional advice. If you are satisfied that there is merit in the claims of the audit party, you should pay the duty and interest as quickly as possible. If you delay, the department may issue a show cause notice (SCN) proposing imposition of penalty. You can avoid the SCN and penalty by paying the duty and interest before the SCN is issued. There is no time limit, but the department can neither wait indefinitely nor refrain from issuing the SCN on the grounds of your financial difficulty. If you see no merit in the audit objections, you may suitably inform your Range authorities, giving detailed reasons. Based on your submissions, your jurisdictional excise authorities may decide not to issue a SCN.
We have obtained an EPCG authorisation and got it invalidated for direct imports. Against the invalidation letter, a local supplier has supplied capital goods but due to some technical reasons, we have not installed the machine yet. Are we required to submit the installation certificate to customs even for domestically procured items? What is the procedure for getting the certificate?
The customs won’t enter the picture if you have not availed of any customs exemption notification. But, the Regional Authority who issued the EPCG authorisation will require the installation certificate. Please see Para 5, 3, and 2 of Handbook of Procedures, Vol. 1, which says that “Authorisation holder shall produce to the concerned RA a certificate from the Jurisdictional Central Excise Authority, confirming installation of capital goods at factory premises of authorisation holder or his supporting manufacturer(s) /vendor(s) within six months from date of completion of import.” The CBEC has issued procedural instructions for grant of installation certificate through its Circular no. 14/2008 dated 26/08/2008.
We have entertained into an annual service contract with our software vendor to fix any troubles. Are we required to pay service tax?
Maintenance or repair of any goods is liable to service tax under Section 65(105) (zzg) of the Finance Act, 1994. Explanation to section 65(64) of the said Act provides that “goods” includes computer software. So, any services provided in relation to maintenance or repair or servicing of computer software is liable to service tax under the category of “management, maintenance or repair” service.
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