Cable operators not exempt from service tax

CHATROOM

We are manufacturers, exporters and traders in steel items. Our turnover from the export business is around Rs 4 crore and local sales exceed Rs 2crore, of which scrap sales constitute roughly 50 per cent. Please advise if excise duty provisions are applicable to us, and if yes, then to which type of sales. Kindly elaborate on excise duty exemption provisions.

It is not clear how much of your turnover comes from manufacturing and how much from trading. As a rule, manufacturers can avail of exemption up to Rs one crore on home clearances, subject to conditions. One of the conditions is that aggregate clearances in the previous year should not have exceeded Rs 4 crore. For traders, excise provisions enter the picture only if he wants to pass on the credit. In that case, registration as a dealer will be required. Please refer to exemption notification no 8/2003-CE dated 1.3.2006 for exemption up to Rs 1 crore on home clearances, notification no 35/2001-CE(NT) dated 26.06.2001 for the registration procedures and to Cenvat credit rules, 2004 for passing on credit.

We are a cable operator in a CAS area. We are paying service tax on our income, for which the MSO takes credit and the MSO pays service tax on his total income. Kindly advise whether legally we, as cable operators are bound to pay service tax if our income is less than Rs four lakh per month.

Notification no. 6/2005-ST dated 1.3.2005 exempts taxable services of aggregate value not exceeding Rs four lakh from the whole of the service tax, subject to conditions. This exemption is not available to taxable services provided by a person under a brand name or trade name, whether registered or not, of another person and recipients of taxable service who are made liable to pay service tax under section 68 of the Finance Act, 1994.

If an EOU is clearing his final product in DTA, and the final product is manufactured out of indigenous material, then how should one pay duty on DTA clearance? On MRP or transaction value?

As per Section 3 of the Central Excise Act, 1944, the value has to be determined in terms of section 14 of the Customs Act, 1962. As per CBEC circular no 268/85-CX.8 dated 29.09.94, invoice value can be accepted where invoice price of such goods is in the nature of a "transaction value" and in conformity with the provisions of rule 3 of the revised customs valuation rules, 1988. However, where the parameters given in rule 3 of the said rules are not satisfied, the assessable value may be determined as indicated in CBEC circular no 23/84-CX.6, dated 29.05.1984.

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