Idt Amendments For Nov 2016

IDT for CA FINAL
AMENDMENTS FOR
NOVEMBER 2016
By CA Farooq Haque
Amendments for NOV 2016
CA Farooq Haque
FAROOQ HAQUE CLASSES
EXCISE DUTY
Page: Excise 07
A Clean energy cess has been levied on coal @ Rs 400 per tonne with effect from
01.07.2010. [Notification No.1/2016 - Clean Energy Cess]
(i)
However, education cess and secondary higher education cess is not leviable on clean
energy cess.
(ii) Further, exemption has been granted in respect of goods produced or extracted as per
traditional and customary rights enjoyed by local tribals in Meghalaya and Nagaland
without any license or lease.
(iii) Clean Energy Cess Rules, 2010 have been notified which prescribe the procedures
relating to registration, payment of cess, filing of returns, maintenance of records etc.
(iv) All coal producers would have to register with the designated officer within 30 days
and pay cess on the removal of the produce from their mines.
(v) The new levy will be paid on the basis of self-assessment.
(vi) The cess should be shown separately in the invoice or bill issued by the producers.
Page: Excise 11
Goods manufactured by a 100% EOU and brought to DTA: [Proviso to Sec.3(1)] Excise
duty is leviable on any excisable goods manufactured by a 100% EOU and brought to any
other place in India.
(a) Rate of Duty = the aggregate of the customs duties which would be leviable under
the1. Customs Act, or
2. Any other law for the time being in force
on like goods produced or manufactured outside India if imported into India.
In Suresh Synthetic Ltd.-2007, the SC held that such Duty is in nature of excise duty
and not customs duty. Hence the duty can be recovered under the provisions of
Excise Act and not Customs Act.
Partial exemption of Duty: Excise Notification 23/2003 has granted following relief:
i.
BCD- shall be exempt up to @ 50% of normal rate
ii.
CVD of VAT- shall be fully exempt
EC and SHEC: Notification No. 14/2015-C.E and No. 15/2015-C.E. exempt EC and
SHEC levied on Central Excise Duty. An explanation was added to these notifications
by N/N 26/2015 and N/N 27/2015 as follows
Explanation.- The exemption contained in this notification shall apply to excisable
goods which are produced or manufactured by a 100% EOU and brought to any other
place in India in accordance with the provisions of Foreign Trade Policy.
Therefore exemption provided under these notifications is also available for supplies
from an EOU to DTA.
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(b) Value as per customs Act: The value of such goods shall be determined in
accordance with the provisions of the Customs Act, 1962.
(c) Highest rate: If such like goods is leviable at different rates of customs duty, the
highest of those rates will be considered.
(d) Meaning of 100% EOU: Here, 100% EOU means an undertaking approved as a 100%
EOU by the Board appointed by the Central Government u/s 14 of the Industries
(Development and Regulation) Act, 1951.
It includes unit situated in Electronic Hardware Technology Park (EHTP), Software
Technology Park (STP) and Bio-Technology Park (BTP).
Illustration:
Suppose a 100% EOU removes goods in DTA at transaction value of 1,000 and BCD rate
on like goods is 10% and excise duty rate is 12.5%, then duty will be calculated as follows:
TV as per customs Act
1,000.00
50.00
Add: BCD @50% of 10%
Total
1,050.00
131.25
Add: CVD of excise u/s 3(1) of CTA @ 12.5%
181.25
Total duty payable
If the same goods are actually imported into India, duty would be payable as follows:
TV as per customs Act
1,000.00
100.00
Add: BCD @ 10%
Total
1,100.00
137.50
Add: CVD of excise u/s 3(1) of CTA @ 12.5%
7.12
Add: Cess @3% of (100+137.5)
Total
1244.62
49.78
Add: CVD of VAT @ 4% of 1238.96
294.40
Total duty payable (100+137.5+7.12+49.78)
Is Duty Payable by Government?

Section 3(1A) provides that Excise duty is payable on goods manufactured by or on behalf of
the Government (both Central and State) also.
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Page: Excise 54
TARIFF VALUE TARIFF VALUE is fixed under section 3(2) of the Central Excise Act
1944. Such value is fixed by the Central Government by notification in
the Official Gazette. Once `tariff value' for a commodity is fixed, duty is
payable as percentage of this tariff value and not the transaction value
u/s.4
Different tariff values may be fixed(a) For different classes or descriptions of the same excisable goods,
or
(b) For excisable goods of the same class or description(i)
Produced or manufactured by different classes of
producers, or manufacturers, or
(ii)
Sold to different classes of buyers
Tariff Value of
Readymade
Garments
In case of articles of
(i) apparel and clothing accessories not knitted or crocheted, falling
under Chapter 61 or 62 and
(ii) other made up textile articles or sets falling under Chapter 63
Tariff Value = @ 60 % of the retail sale price declared on retail
packages.
[tariff value of 30% increased to 60% by N/N 11/2016 w-e-f 1-3-16]
However, if goods bearing the brand name of another person are cleared
in the course of sale by a manufacturer to such person and the retail sale
price is not affixed on the goods, the transaction value of such goods
shall be deemed to be the tariff value.
Tariff Value of
articles of
jewellery
Tariff Value articles of jewellery (other than silver jewellery), falling under
sub-heading No. 7113 of the First Schedule to CETA, @ 30% of the
transaction value as declared in the invoice.
Provided such value shall not apply to articles of jewellery manufactured
from precious metal or old jewellery provided by the retail customer.
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Page: Excise 104

Rule 7: Provisional Assessment
Interest
If duty finally assessed > duty provisionally assessed[N/N 8/2016 w-e-f 1-3-16]
Assessee shall pay interest on the difference amount
Rate of interest: @ rate specified u/s 11AA (18% pa)
Period: 1st day after the due date u/r 8(1) till the date of actual payment, whether such
amount is paid before or after the issue of order for final assessment.
Explanation. - For the removal of doubt, it is hereby declared that goods under
provisional assessment, cleared in the month of January, 2015, say a provisional duty
of Rs 5000 is paid on the 6th February, 2015 [due date under sub-rule (1) of rule 8],
A further duty of Rs 9000 is paid on the 15th April, 2015, and on the same day the
documents for final assessment are submitted by the assessee.
Final assessment order is issued on the 18th June, 2015, assessing the duty payable on
goods as Rs 15000, and consequently the assessee pays a duty of Rs 1000 on the 30th
June, 2015, then
i.
no interest shall be payable on Rs 5000,
ii.
interest shall be payable on Rs 9000 from the 7th Feb, 2015, till the 15th April,
2015, and
iii.
interest shall be payable on Rs 1000 from the 7th February, 2015, till the 30th
June, 2015 as due date for payment of duty of Rs 15000 is the 6th February, 2015.
If duty finally assessed < duty provisionally assessedGovernment shall pay interest on the difference amount as per sec 11BB.
Rate of Interest: 6% pa.
Period: from the date immediately after expiry of 3 months, till the date of refund.
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Page: Excise 105

Rule 8: Manner of payment.Due date for payment of duty:
Date of payment
Assessee
Removals
If paid
If paid otherwise
electronically
Any Assessee (non the month of6th of following month 5th of following month
April to Feb
SSI)
T/O of all excisable
goods in last FYSSI unit is <=400
lacs
Mfr of jewellery is
<=12 crores
[N/N 8/16 w-e-f 14-16]
Any Assessee
the quarter ofApril to June

July to Sept
Oct to Dec
6th of month following 5th of month following

the relevant quarter
the relevant quarter
Month / quarter
31st day of March
ending March
31st day of March
Compulsory Payment through ECS: Every assessee, shall electronically pay duty
through internet banking. (N/N 19/2014 w-e-f 1-10-14). AC/DC may allow payment
otherwise after recording reasons in writing.
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Page: Excise 111. Insert before new central excise code

Centralised registration to jewelers
[Notification No. 5/2016 Central Excise (N.T.) w-e-f 1-3-2016]
1. the Central Board of Excise and Customs hereby exempts registration of every
manufacturing factory or premises engaged in the manufacture or production of articles of
jewellery other than articles of silver jewellery but inclusive of articles of silver jewellery
studded with diamond, ruby, emerald or sapphire, falling under chapter heading 7113 of the
First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (herein after referred to as
the specified goods),
where the manufacturer of such goods has a centralised billing or accounting system in
respect of such specified goods manufactured or produced by different factories or premises
and opts for registering only the factory or premises or office, from where such
centralised billing or accounting is done and where the accounts/records showing receipts
of raw materials and finished excisable goods manufactured or received back from job workers
are kept.
2. For availing the exemption contained herein, the manufacturer taking the centralised
registration shall give details of all premises (other than those of job workers), from where
such specified goods are removed for domestic clearance.
3. Notwithstanding anything contained in this notification, a manufacturer of specified goods
may also take separate registrations for all factories or premises where the
accounts/records showing receipts of raw materials and finished excisable goods
manufactured or received back from job workers are kept.
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Page: Excise 116

(8) An invoice issued under this rule by a manufacturer may be authenticated by means
of a digital signature:
Provided that where the duplicate copy of the invoice meant for transporter is digitally
signed, a hard copy of the duplicate copy of the invoice meant for transporter and selfattested by the manufacturer [omitted by N/N 8/16 w-e-f 1-4-16] shall be used for
transport of goods.
Page: Excise 118 / 119

5. Annual Return: Every assessee shall submit to the Superintendent of Central Excise, an
Annual Return for the preceding financial year to which the return relates by 30th of
November of the succeeding year.
The Annual Return is also required to be submitted by a 100% EOU
Exception: The following are not required to file the said return- [Notification no. 17/2006]
(i) assessee who paid duty of excise < Rs.100 lakhs; and
(ii) Indian Ordnance Factories, Department of Defense Production, Ministry of
Defense.
Contents of the Annual Return
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
Assessee's Name
Registration No.
Value of Inputs
Details of major Raw material independently accounting for 10% or more of total
value of raw material.
Details of expenditure urtder specifiec Heads
Goods manufactured by assessee through Job Worker
Details of sales of major Finished Goods independently accounting for 10% or more
oftotalValueofFinishedGoods
Details of other income
Job work undertaken for others
CENVAT Credit details.
6. Annual Installed Capacity Statement:(omitted by N/N 8/16 w-e-f 1-4-16)

The CBEC may, by an order extend the period by such period as deemed necessary under
the circumstances of special nature to be specified therein (N/N 25/2015 w-e-f 9-122015)
Revision of Return: [N/N 8/2016 w-e-f 1-4-16]
i. (a) An assessee, who has filed a return in the prescribed form within the date specified
under sub-rule (1) or the second proviso thereto, may submit a revised return by the
end of the calendar month in which the original return is filed.
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Explanation.- Where an assessee submits a revised return under clause (a), the
relevant date for the purpose of recovery of Central Excise duty, if any, under
section 11A of the Act shall be the date of submission of such revised return.
(b) An assessee who has filed Annual Return by the due date, may submit a revised
return within a period of one month from the date of submission of the said Annual
Return.
Compulsory E- Filing: All assessees have to compulsorily file all returns in electronic mode.
Persons exempt from the requirement of e-filing
1. Assessees availing exemption under Notification No. 49/2003 (certain goods when cleared
from a unit in the State of Uttaranchal or Himachal Pradesh) or
2. Assessees availing exemption under Notification No. 50/2003 (certain goods when cleared
from a unit located in the Industrial Growth Centre or Industrial Infrastructure Development
Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or
Commercial Estate or Scheme Area).
Late filing fees: inserted by N/N 8/2015 w-e-f 1-3-15
Where any(1) Return (ER-1, ER-3 or ER-8) or
(2) Annual Return (ER-4) or
referred to in this rule is submitted by the assessee after due date as specified for every return
or statements, the assessee shall pay to the credit of the Central Government, an amount
calculated @ Rs 100 per day subject to a maximum of Rs 20,000 for the period of delay in
submission of each such return or statement.
Summary of returns
Who is required to
file
Time limit for

filing return
10th of next month
Quarterly return by Mfr

claiming ex u/n 1/2011
Manufacturers not
eligible for SSI
concession
ER-2
Return by EOU
EOU units
10th of next month
ER-3
Quarterly Return by SSI

(clearances <=400 lacs in last
FY)
Assessee availing SSI

concession
10th of month
following quarter
ER-4
Annual Return
ER-5
Information relating to
Principal Inputs
ER-6
Monthly return of receipt and

consumption of each Principal
Inputs
Form
Description
ER-1
Monthly Return by large units
ER-8
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Assessee paying duty

of Rs 1 crore or more
pa
Assessee paying duty
of Rs 1 crore or more
pa
Same as above
10th of month
following quarter
30th November of
succeeding year
30th April of the
current year.
10th of next month
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Page: Excise 120

Rule 12AA: Job Work in Jewellery
(1) Every person (called as said person) (except an EOU or a unit located in SEZ) who gets
article of jewellery (branded or unbranded) falling under heading 7113 or 7114 of the
First Schedule to the CETA, produced or manufactured on his behalf, on job work
basis, shall obtain registration, maintain accounts, pay duty leviable on such goods
and comply with all the relevant provisions of these rules, as if he is an assessee.
Notification no. 8/2012-Central Excise (N.T.). requires duty to be compulsorily paid
by the said person, and job-worker cannot opt to pay duty
(2) Direct removal for home consumption or for export from the Job-workers place:
(a) The said person shall pay duty on such excisable goods and prepare an invoice, in
the manner referred to in rules 8 and 11, except for mentioning the date and time
of removal of goods on such invoice.
(b) The original and the duplicate copy of the invoice so prepared shall be sent by him
to the job worker, before the goods are cleared from his premises.
(c) The job worker shall fill up the particulars of date and time of removal of goods before
the clearance of goods and after such clearance the job worker shall intimate the same
to the said person for completion of the particulars in the triplicate copy of the invoice.
(d) The rate of duty shall be the rate in force on date of removal from the premises of
the job worker.
Said Person
Job Worker
(JW)
1 Jan
Buyer
In
v.
1
&
se
nt
to
JW
Prepares invoice
3 Invoices
1.
2.
3.
10 Jan
Direct Removal of
Finished Goods
Sa m e
wil
Date & Time of removal i.e. 10 Jan will

be entered by JW
said
ted to
ntima
I
e
b
l
perso
Said Person will

be put such date
& time on 3rd
Invoice
(3) The said person may supply or cause to supply to a job worker, the following goods,
namely:(a) Inputs in respect of which he may or may not have availed CENVAT credit, without
reversal of the credit thereon; or
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(b) Goods manufactured in his factory without payment of duty; under a challan,
consignment note or any other document, duly signed by him or his authorized agent.
Procedure for said person:
1. The goods should be sent under a challan, consignment note or any other document
with the following information:
1) Serial number;
2) The registration number,
3) Name of the consignee,
4) Description of goods,
5) Classification of goods,
6) Time and date of removal,
7) Mode of transport and vehicle registration number,
8) Rate of duty,
9) Quantity and value of goods,
10) Duty payable thereon (with a note that not payable in terms of Rule 12AA(5).
2. The Job work register has to be maintained wherein the details of goods sent for job
work, corresponding receipt from the job worker and in case of removal from the job
workers place details of such removal correlating to the goods sent.
3. The waste and scrap generated at the job workers place has to be received back and
co-related. If not duty on such waste and scrap has to be discharged if the credit has
been availed on the same.
4. The responsibility in respect of accountability of such goods shall lie on the said
person.
Procedure to be followed by job-worker:
(i)
The job worker has to maintain a register setting out the details as to the goods
received for job work on a supplier wise basis.
(ii) After processing the goods, the goods are to be returned under a cover of challan,
which gives reference to the document or order no. under which the same was
received so as to assist the principal to co-relating the same.
(iii) Further the register maintained should also set out the details of subsequent return
of the processed goods to the principal referring to the document under which such
goods were sent.
(iv) If the goods are removed directly from his premises, then the details as to the goods
removed, corresponding waste or scrap generated, or returned details has to be
maintained.
(4) The job worker, with or without completing the job work may,(i) return the goods without payment of duty to the said person; or
(ii) clear the goods for home consumption or for exports, subject to receipt of an invoice
from the said person, as mentioned in sub-rule (4).
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Page: Excise 128

Rule 17: Removal by unit in FTZ, SEZ, or 100% EOU
Revised Return
(1) An assessee, who has filed a return in the form referred to in sub-rule (3) within the date
specified under that sub-rule, may submit a revised return by the end of the calendar
month in which the original return is filed. [inserted by N/N 8/2016 w-e-f 1-4-16]
Explanation.- Where an assessee submits a revised return under this sub-rule, the
relevant date for the purpose of recovery of Central Excise duty, if any, under section
11A of the Act shall be the date of submission of such revised return.
Page: Excise 134

Rule 26: Penalty for certain offences
(1) Any person who acquires possession of, or is in any way concerned in transporting,
removing, depositing, keeping, concealing, selling or purchasing, or in any other manner
deals with, any excisable goods which he knows or has reason to believe are liable to
confiscation under the Act or these rules, shall be liable to a penalty not exceeding
100% of the duty on such goods or
Rs.2,000/-, whichever is greater.
Provided that where any proceeding for the person liable to pay duty have been concluded
under clause (a) or clause (d) of sub-section (1) of section 11AC of the Act in respect of duty,
interest and penalty, all proceedings in respect of penalty against other persons, if any, in the
said proceedings shall also be deemed to be concluded. [inserted by N/N 8/16 w-e-f 1-4-16]
(2) Any person, who issues(i) an excise duty invoice without delivery of the goods specified therein or abets in
making such invoice; or
(ii) any other document or abets in making such document,
on the basis of which the user of said invoice or document is likely to take or has taken
any ineligible benefit under the Act or the rules made there under like claiming of CENVAT
credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not
exceeding
the amount of such benefit or
Rs.5000/-, whichever is greater.
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Page: Excise 137. Replace the old Rules with new one as given below
The Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture
of Excisable and Other Goods) Rules, 2016
[N/N 20/2016 - Central Excise (N.T.) as amended by N/N 22/2016]
1. Short title, extent and commencement.
(1) These rules may be called the Central Excise (Removal of Goods at Concessional Rate of
Duty for Manufacture of Excisable and Other Goods) Rules, 2016.
(2) They shall come into force on the 16th day of March, 2016.
2. Application.
These rules shall apply to a manufacturer who intends to avail of the benefit of a notification
issued under section 5A(1) of the Central Excise Act, 1944 granting exemption of duty to
excisable goods when used for the purpose specified in that notification:
Provided that an un-registered manufacturer including manufacturers of exempted goods or
non-excisable goods shall be eligible to avail the benefits of the provisions of these rules after
taking registration under rule 9 of the Central Excise Rules, 2002.
3. Definitions.- In these rules, unless the context otherwise required, (b) applicant manufacturer means a manufacturer who intends to receive goods for specified
use at concessional rate of duty;
(d) information means the information provided in Form I by the applicant manufacturer;
(e) subject goods means the excisable goods which applicant manufacturer intends to
procure at concessional rate of duty;
(f) supplier manufacturer means a manufacturer who supplies excisable goods at
concessional rate of duty to applicant manufacturer;
4. Information by applicant manufacturer to obtain benefit.
(1) An applicant manufacturer shall provide an information in duplicate in the Form I to the
jurisdictional AC or DC, and the AC or DC shall forward one copy of the information to
the jurisdictional range Superintendent of the supplier manufacturer
(2) The applicant manufacturer shall number the information filed under sub-rule (1) in each
financial year.
(3) The applicant manufacturer may either provide separate information in respect of each of
the supplier manufacturer of subject goods or provide combined information for multiple
supplier manufacturers with details of each of them in Form I.
(4) The applicant manufacturer shall provide the information from time to time to receive
subject goods in quantities commensurate with expected consumption in the
manufacturing process for a period of one year or less.
(5) The applicant manufacturer shall execute a general bond with surety:
Provided that it shall be sufficient to provide a letter of undertaking by an applicant
manufacturer against whom no show cause notice has been issued under sub-section
(4) or sub-section (5) of section 11A of the Act or where no action is proposed under any
notification issued in pursuance of rule 12CCC of the Central Excise Rules, 2002 or rule
12AAA of the CENVAT Credit Rules, 2004.
(6) The applicant manufacturer shall forward a copy of information duly signed by his
authorised signatory, to the supplier manufacturer for procuring subject goods.
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5. Procedure to be followed by supplier manufacturer of subject goods.

(1) The supplier manufacturer shall avail the benefit of this notification on the basis of
information received by him under sub-rule (6) or rule 5.
(2) The supplier manufacturer shall maintain record of information received under sub-rule
(1) on the basis of which goods have been removed, the removal details, such as number
and date of invoice, description, quantity and value of subject goods and amount of
excise duty paid at concessional rate and retain the same in his records.
6. Applicant manufacturer to submit quarterly returns. - The applicant manufacturer shall,
receiving the subject goods, maintain an account indicating the quantity and value of subject
goods, the quantity of subject goods consumed for the intended purpose, and the quantity
remaining in stock, invoice wise and shall submit a quarterly return on the basis of such
records in Form II to the Assistant Commissioner or Deputy Commissioner by the tenth day of
the month following each quarter of the financial year.
7. Recovery of duty in certain cases. Where the goods cleared by the supplier
manufacturer on the basis of information provided by an applicant manufacturer, are not used
for the intended purpose, the applicant manufacturer shall be liable to pay the amount equal
to the difference between the duty leviable on such goods but for the exemption and that
already paid, if any, at the time of removal from the factory of the supplier manufacturer of the
subject goods, along with interest and the provisions of section 11A, except the time limit
mentioned in the said section for demanding duty and section 11AA of the Act shall apply
mutatis mutandis, for effecting such recoveries:
Provided that where the applicant manufacturer is found to be non-existent, the supplier
manufacturer shall be liable to pay the amount equal to the difference between the duty
leviable on such goods but for the exemption and that already paid, if any, at the time of
removal from the factory of the supplier manufacturer of the subject goods, along with interest
and the provisions of section 11A except the time limit mentioned in the said section and
section 11AA of the Act shall apply mutatis mutandis, for effecting such recoveries.
Provided further that if the subject goods on receipt are found to be defective or damaged
or unsuitable or surplus to the needs of the applicant manufacturer, he may return the subject
goods to the supplier manufacturer and every such returned goods shall be added to the nonduty paid stock of the supplier manufacturer.
Explanation. - For the removal of doubts, it is hereby clarified that subject goods shall be
deemed not to have been used for the intended purpose even if any of the quantity of the
subject goods is lost or destroyed by natural causes or by unavoidable accidents during
transport from the place of procurement to the applicant manufacturers premises or from the
supplier manufacturers premises to the place of procurement or during handling or storage in
the applicant manufacturers premises.
8. References in any rule, notification, circular, instruction, standing order, trade notice
or other order to the Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 2001 and any provision thereof shall, be construed
as references to the Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable and Other Goods) Rules, 2016 and any corresponding provision
thereof.
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CENVAT CREDIT RULES 2004

PAGE: EXCISE 143
(a) Capital Goods
For Manufacturer:
It means the following goods used(1) In the factory of the manufacturer of the final products, or
(1A) outside the factory of the manufacturer of the final products for
generation of electricity (or for pumping of water) [inserted by N/N
13/2016 w-e-f 1-4-16] for captive use within the factory:
PAGE: EXCISE 144
Ineligible Capital Goods: Any equipment or appliance used in an office. [omitted by

N/N 13/2016 w-e-f 1-4-16] Hence Capital goods used in office located within factory will
also be eligible for Cenvat Credit.
PAGE: EXCISE 146

(e) Exempted services
means a(1) taxable service which is exempt from the whole of the service tax leviable thereon; or
(2) service, on which no service tax is leviable u/s 66B of the Fin Act; or
(3) taxable service whose part of value is exempted on the condition that no credit of inputs
and input services shall be taken;
Exceptions: Following shall not be considered as exempt service (means credit can be
taken for providing these services) [amended by N/N 13/2016 w-e-f 1-3-16]
(a) which is exported in terms of rule 6A of the Service Tax Rules, 1994; or
(b) by way of transportation of goods by a vessel from customs station of clearance in India
to a place outside India
PAGE: EXCISE 146

(k) Input
It meansi.
all goods used in the factory by the manufacturer of the final product; or
ii.
any goods including accessories, cleared along with the final product, the value
of which is included in the value of the final product and goods used for providing
free warranty for final products; or
iii.
all goods used for generation of electricity or steam or pumping of water for
captive use; or
iv.
all goods used for providing any output service, or
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v.
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all capital goods which have a value <= 10,000/- per piece; [inserted by N/N 13/16
w-e-f 1-4-16]
but excludes(A) light diesel oil, high speed diesel oil or petrol;
(B)
any goods used for (a) construction or execution of works contract of a building or a civil
structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital
goods,
except for the provision of service portion in the execution of a works
contract or construction service (as listed u/s 66E(b) of the Fin Act);
(C)
capital goods, except when,(i) used as parts or components in the manufacture of final product; or
(ii) the value of such capital goods is <= 10,000/- per piece
[amended by N/N 13/16 w-e-f 1-4-16]
(D)
motor vehicles;
(E)
any goods used primarily for personal use or consumption of any employee,
such as food items, goods used in a guesthouse, residential colony, club or a
recreation facility and clinical establishment; and
(F)
any goods which have no relationship whatsoever with the manufacture of a

final product.
Explanation. - For the purpose of this clause, "free warranty" means a warranty provided
by the manufacturer, the value of which is included in the price of the final product and
is not charged separately from the customers
PAGE: EXCISE 148

(l) Input Service
means any service,For service Provider: means any service used by a provider of output service for providing
an output service; or
For Manufacturer: means any service used by the manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final products and clearance of final
products, up to the place of removal.
It Includes services used in relation to(i) setting up, modernization, renovation or repairs of a factory, premises of provider of
output service or an office relating to such factory or premises,
(ii) advertisement or sales promotion,
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(iii)
(iv)
(v)
(vi)
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(sales promotion includes services by way of sale of dutiable goods on commission

basis) [N/N 2/16 w-e-f 3-2-16]
market research,
storage up to the place of removal,
procurement of inputs,
activities relating to business, such as
(a) accounting, auditing, financing,
(b) recruitment and quality control,
(c) coaching and training,
(d) computer networking,
(e) credit rating,
(f) share registry,
(g) security,
(h) inward transportation of inputs or capital goods and outward transportation up
to the place of removal;
The exclusion list remains the same
PAGE: EXCISE 155

5. Is there any bar on utilization of credit?
Yes, Cenvat Credit cannot be utilised for payment of following duties1. duty of excise on goods in respect of which the benefit of an exemption under
notification No. 1/2011-CE, or notification No. 12/2012 (coal and fertiliser), is availed;
2. The Clean Energy Cess.
3. The Swachh Bharat cess. [N/N 2/2016]
4. The infrastructure cess [N/N 13/2016 w-e-f 1-3-16]
INPUT
No CCR
MANUFACTURER OF
GOODS
No CCR
MANUFACTURER OF SOME
OTHER GOODS OR
SERVICE PROVIDER
Concessional Duty paid under

Notification no.1/2011
Notification no.12/2012
(Coal ,Fertilizer)
PAGE: EXCISE 162

100% Credit to SSI units and jewellery manufacturer in 1st year:
SSI unit shall avail 100% CENVAT credit in respect of capital goods received in the same
financial year.
[A Unit is SSI if his aggregate value of clearances of all excisable goods for home
consumption in the preceding FY Rs 400 lakhs.
A jeweller is SSI if his aggregate value of clearances of all excisable goods for home
consumption in the preceding FY Rs 12 crores] [inserted by N/N 13/2016 w-e-f 1-3-16]
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PAGE: EXCISE 163

Maximum time for availing the credit:
Provided also that the manufacturer or the provider of output service shall not take CENVAT
credit after 1 year of the date of issue of any of the documents specified in rule 9(1) (except
in case of services provided by Government, local authority or any other person, by way of
assignment of right to use any natural resource.) [Amended by N/N 24/2016 w-e-f 13-416]
PAGE: EXCISE 163. Add the following para after CIR NO 999/6/2015
Credit of service tax paid on assignment by government of natural resources: [inserted
by N/N 24/2016 w-e-f 13-4-16]
CENVAT Credit of Service Tax paid in a financial year,
on the one time charges payable in full upfront or in instalments,
for the service of assignment of the right to use any natural resource by the
Government, local authority or any other person,
shall be spread evenly over a period of 3 years:
where the manufacturer of goods or provider of output service, as the case may be, further
assigns such right in any financial year, to another person against consideration, such
amount of balance CENVAT credit as does not exceed the service tax payable on the
consideration charged by him for such further assignment, shall be allowed in the same
financial year.
PAGE: EXCISE 165

CAPITAL GOODS [Amended by N/N 6/15 w-e-f 1-3-15]
any capital goods (on which CENVAT credit is allowed) as such, can be sent to a job
worker, for further processing, testing, repair, re-conditioning or for the manufacture of
intermediate goods or any other purpose
The capital goods should be received back in the factory / premises within 2 years of
their being so sent or directly received by job worker
Exception: jigs, fixtures, moulds and dies or tools sent by a manufacturer of final
products to another manufacturer for the production of goods; or a job worker for the
production of goods on his behalf, according to his specifications, are not required to
be brought back.
Further they can be sent directly to the premises of the other manufacturer or job
worker without bringing these to his own premises [Amended by N/N 13/2016 we-f 1-4-16]
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if the capital goods are not received back within 2 years, the manufacturer or provider
of output service shall pay an amount = the CENVAT credit attributable to the inputs
by debiting the CENVAT credit or otherwise
However, CENVAT credit can be re-availed when the inputs are received back in his
factory or premises of the provider of output service.
Capital
Goods
Factory
Credit
Availed
Rs. 16,000
- If not received in 2 years:

- If received later:
Job Worker
No reversal of credit
Return within 2 years

(Except Jigs, fixtures etc.)
Pay Amount = Credit availed i.e. Rs. 16,000
Re-Avail credit of Rs. 16,000
PAGE: EXCISE 170

Rule 6: Reversal of Credit on Manufacture or Provision of Exempt goods / service
[Rule replaced by N/N 13/2016 w-e-f 1-4-16]
1. Whether credit is allowable on Manufacture of exempt FG or provision of exempt
service?
As per new rule 6(1) The CENVAT credit shall not be allowed on
such quantity of input as is used in or in relation to
the manufacture of exempted goods or
for provision of exempted services or
input service as is used in or in relation to
the manufacture of exempted goods and their clearance up to the place of removal
or
for provision of exempted services
and the credit not allowed shall be calculated and paid by the manufacturer or the provider
of output service, in terms of the provisions of sub-rule (2) or sub-rule (3), as the case may be
:
Provided that the CENVAT credit on inputs shall not be denied to job worker of jewellery
referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs
are used in the manufacture of goods cleared without payment of duty under the provisions of
that rule. (as the duty is payable by the person getting them manufactured on his behalf)
Explanation 1.- For the purposes of this rule, exempted goods or final products as defined in
clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration
from the factory.
Explanation 2.- Value of non-excisable goods for the purposes of this rule, shall be the invoice
value and where such invoice value is not available, such value shall be determined by using
reasonable means consistent with the principles of valuation contained in the Excise Act and
the rules made there under.
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Explanation 3. For the purposes of this rule, exempted services as defined in clause (e) of
rule 2 shall include an activity, which is not a service as defined in section 65B(44) of the
Finance Act, 1994, provided that such activity has used inputs or input services
[Amended by N/N 24/2016 w-e-f 13-04-16]
Explanation 4. Value of such an activity as specified above in Explanation 3, shall be the
invoice/agreement/contract value and where such value is not available, such value shall be
determined by using reasonable means consistent with the principles of valuation contained
in the Finance Act, 1994 and the rules made thereunder.
2. What if a manufacturer manufactures only exempt goods or a service provider

provides only exempt services?
As per sub rule (2) A manufacturer who exclusively manufactures exempted goods for their
clearance up to the place of removal or a service provider who exclusively provides exempted
services shall pay the whole amount of credit of input and input services and shall, in
effect, not be eligible for credit of any inputs and input services
3. What if a manufacturer manufactures taxable as well as exempt goods or a service

provider provides taxable as well as exempt services?
As per sub rule (3) assessee has 2 options as follows:
Option 1: Ad hoc reversal of credit:
Pay an amount =
1) 6% of value of the exempted goods and 7% of value of the exempted services (2%
of value in case of transportation of goods or passengers by rail service), or
2) total sum total of opening balance of the credit of input and input services available at
the beginning of the period to which the payment relates and the credit of input and
input services taken during that period
w-e- less
What will be the amount payable if concessional duty has been paid on exempted
goods or service?
If any duty of excise is paid on the exempted goods, the same shall be reduced from the
amount payable under clause (i):
For example: if a person manufactures (apart from taxable goods), goods chargeable
at concessional rate of duty u/n 1/2011 or 12/12 (coal and fertilisers) which are regarded
as exempt goods under CCR rules, then while removing such goods amount payable
shall be calculated as follows:
Particulars
Amount
6% of value of the exempted goods and/or exempted services
xxxx
Less: Duty of excise, if any, paid on the exempted goods
xxxx
(ie., concessional duty u/n 1/2011 or 12/2012).
Amount payable under rule 6(3)(i)
xxxx
How is Credit reversed on part exemption (i.e., abatement) of value of services?
Where any part of the value of a taxable service has been exempted on the condition
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that no CENVAT credit of inputs and input services shall be taken, then the amount
payable = 7% of the value so exempted.
For example, if the abatement on certain service is 60%, the amount required to be paid shall
be 7% of 60% of the full value of service
Option 2: Actual Reversal of credit
pay an amount as determined under sub-rule (3A):
Explanation 1. - Any option shall be exercised for all exempted goods manufactured or, all
exempted services provided, and such option shall not be withdrawn during the remaining
part of the financial year.
Explanation 2. - No CENVAT credit shall be taken on the duty or tax paid on any goods
and services that are not inputs or input services
Provisional Reversal
Provisional reversal every month (quarterly for SSI):
Amount payable = Total of (i) & (iv)
(i)
the amount of CENVAT credit attributable to inputs and input services used
exclusively in or in relation to manufacture of exempted goods removed or for
provision of exempted services shall be called ineligible credit, denoted as A, and
shall be paid
(ii)
the amount of CENVAT credit attributable to inputs and input services used
exclusively in or in relation to the manufacture of non-exempted goods removed or
for the provision of non-exempted services shall be called eligible credit, denoted
as B, and shall not be required to be paid
(iii)
credit left after attribution of credit under sub-clauses (i) and (ii) shall be called
common credit, denoted as C and calculated as,-
C = T (A + B)
Explanation.- Where the entire credit has been attributed under sub-clauses (i) and (ii),
namely ineligible credit or eligible credit, there shall be left no common credit for further
attribution.
(iv)
the amount of common credit attributable towards exempted goods removed or for
provision of exempted services shall be called ineligible common credit, denoted as
D and calculated as follows and shall be paid
Provided that where no final products were manufactured or no output service was
provided in the preceding financial year, the CENVAT credit attributable to ineligible
common credit shall be deemed to be 50% of the common credit
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D=
value of exempted goods removed and

exempted Services during preceding FY
value of all Goods removed and Services (dutiable + exempted) ,

in preceding FY.
(v)
remainder of the common credit shall be called eligible common credit and
denoted as G, where, G = C D
Explanation.- For the removal of doubts, it is hereby declared that out of the total credit
T, which is sum total of A, B, D, and G, the manufacturer or the provider of the output
service shall be able to attribute provisionally and retain credit of B and G, namely,
eligible credit and eligible common credit and shall provisionally pay the amount of
credit of A and D, namely, ineligible credit and ineligible common credit.
(vi)
where manufacturer or the provider of the output service fails to pay the amount
determined under sub-clause (i) or sub-clause (iv), he shall be liable to pay the interest
from the due date of payment till the date of payment of such amount, @ 15% pa
Final (Annual) Reversal

Amount payable = Total of (i) & (iv)
the manufacturer or the provider of output service shall determine the amount of CENVAT
credit attributable to exempted goods removed and provision of exempted services for the
whole of financial year, out of the total credit denoted as T (Annual) taken during the whole
of financial year in the following manner, namely :-
(i)
the CENVAT credit attributable to inputs and input services used exclusively in or in
relation to the manufacture of exempted goods removed or for provision of
exempted services on the basis of inputs and input services actually so used during
the financial year, shall be called Annual ineligible credit and denoted as A (Annual);
(ii)
the CENVAT credit attributable to inputs and input services used exclusively in or in
relation to the manufacture of non-exempted goods removed or for the provision of
non-exempted services on the basis of inputs and input services actually so used shall
be called Annual eligible credit and denoted as B (Annual);
(iii) common credit left for further attribution shall be denoted as C(Annual) and calculated
as, C(Annual) = T(Annual) [A(Annual) + B(Annual)];
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(iv) common credit attributable towards exempted goods removed or for provision of
exempted services shall be called Annual ineligible common credit, denoted by
D(Annual) and shall be calculated as, D(Annual) =
C(Annual)
value of exempted goods removed and

exempted Services during current FY
value of all Goods removed and Services (dutiable + exempted) ,

in current FY.
(d) if the final amount is > provisional amount paid, the manufacturer or the provider of
output service, shall pay the difference, on or before the 30thJune of the next financial
year;
(e) in case of delay, interest would be chargeable @ 15% pa from 30thJune till the date of
payment;
(f) if the final amount is < provisional amount paid, the said manufacturer or the provider
of output service may avail credit of such amount;
(g) the manufacturer of the goods or the provider of output service shall intimate to the
jurisdictional Superintendent of Central Excise, within a period of 15 days from the date of
payment or adjustment, as per the provisions of clauses (d), (e) and (f) , the following
particulars, namely :(i) details of credit attributed towards eligible credit, ineligible credit, eligible common
credit and ineligible common credit, month-wise, for the whole financial year,
determined as per the provisions of clause (b);
(ii) CENVAT credit annually attributed to eligible credit, ineligible credit, eligible common
credit and ineligible common credit for the whole of financial year, determined as per
the provisions of clause (c);
(iii) amount determined and paid as per the provisions of clause (d), if any, with the date
of payment of the amount;
(iv) interest payable and paid, if any, determined as per the provisions of clause (e); and
(v) credit determined and taken as per the provisions of clause (f), if any, with the date
of taking the credit.
Reversal by Banking Co: Rule 6(3B):
Banking company & financial institution (including NBFC), engaged in providing services
by way of extending deposits, loans or advances, in addition to options given in sub-rules
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(1), (2) and (3), shall have the option to pay for every month an amount = 50% of the
CENVAT credit availed on inputs and input services in that month.
What is the due date for payment of Amount U/R 6(3) or (3A) or (3B)?
April to Feb: 5th day of the following month
Month of March: 31st March
SSI manufacturer and a service provider who is an individual or proprietary firm or
partnership firm, shall be required to pay the amount every "quarter" instead of every
month.
What if the assessee does not pay the amount voluntarily u/r 6(3), or (3A) or (3B)?
As per Explanation III, such amount shall be recovered, in the manner as provided in rule
14, for recovery of CENVAT credit wrongly taken.
What are the rules for Reversal of credit on Capital Goods?
As per rule 6(4) No CENVAT credit shall be allowed on capital goods used exclusively in
the manufacture of exempted goods or in providing exempted services for a period of
2 years from the date of commencement of the commercial production or provision of
services, as the case may be.
However credit is allowed where the final products or output services are exempt from the
whole of the duty of excise / service tax leviable thereon under any notification where
exemption is granted based upon the value or quantity of clearances made or services
provided in a financial year: (SSI and SSP exemptions)
Provided that where capital goods are received after the date of commencement of
commercial production or provision of services, as the case may be, the period of 2 years
shall be computed from the date of installation of such capital goods.
What are the cases where the cenvat credit is not required to be reversed, even when
the finished goods are exempt from excise duty?
Rule 6(6) specifically states that credit is not required to be reversed in the following cases
of removal of excisable goods without payment of duty (i) cleared to a unit in a SEZ or to a developer of a SEZ for their authorized operations;
or
(ii) cleared to a 100% EOU; or
(iii) cleared to a unit in an EHTP or STP; or
(iv) supplied to the United Nations or an international organization for their official use
or supplied to projects funded by them; or
(iva) supplied for the use of foreign diplomatic missions or consular missions or career
consular offices or diplomatic agents; or
(v) cleared for export under bond; or
(vi) Gold or silver, arising in the course of manufacture of copper or zinc by smelting, or
(vii) all goods which are exempt from Basic and Additional Customs Duty (CVD) when
imported into India and are supplied,
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(a) against International Competitive Bidding; or

(b) to a power project from which power supply has been tied up through tariff
based competitive bidding; or

(c) to a power project awarded to a developer through tariff based competitive
bidding.
(viii) supplies made for setting up of solar power generation projects or facilities.
(ix) Ethanol produced from molasses generated from cane crushed in the sugar season
2015-16 i.e. 1st October, 2015 onwards, for supply to the public sector oil marketing
companies, namely, Indian Oil Corporation Ltd., Hindustan Petroleum Corporation
Ltd. or Bharat Petroleum Corporation Ltd., for the purposes of blending with petrol, in
terms of N/N 12/2012-, dated 17-3- 2012. [N/N 21/2015 dt 7/10/15]
In which cases the cenvat credit is not required to be reversed, even when the output
service is exempt from service tax?
As per rule 6(7)/(8) No reversal of credit is required in case the taxable services are
provided, without payment of service tax(i) To a Unit in a SEZ or to a Developer of a SEZ for their authorized operations, or
(ii) When a service is exported in terms of rule 6A of the Service Tax Rules, 1994, or
when a service is provided or agreed to be provided by way of transportation of
goods by a vessel from customs station of clearance in India to a place outside India
However export service will not be regarded as exempt service if payment in foreign
currency in not brought into India within a period of 6 months or such extended period as
may be allowed from time-to-time by the Reserve Bank of India, from the date of provision
of service
Provided that if such payment is received after the specified or extended period allowed by
the Reserve Bank of India but within 1 year from such period, the service provider shall be
entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier in
terms of sub rule (3) to the extent it relates to such payment, on the basis of documentary
evidence of the payment so received.
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PAGE: EXCISE 181

Rule 7: Input Service Distributor
1. What do you mean by Input Service Distributor?
As per rule 2(m) of CCR, Input service distributor means an office of
(i) the manufacturer or producer of final products or
(ii) provider of output service,
which
receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards
purchases of input services, and
issues invoice, bill or, as the case may be, challan for the purposes of distributing
the credit of service tax paid on the said services
to such manufacturer or producer or provider or an outsourced manufacturing unit, as the case
may be;
2. What is the Procedure or manner of distribution of credit by input service distributor?
Rule 7. Manner of distribution of credit by input service distributor.The input service distributor shall distribute the CENVAT credit in respect of the service tax
paid on the input service to its manufacturing units or unit providing output service or an
outsourced manufacturing units, subject to the following conditions, namely :
(a) the credit distributed does not exceed the amount of service tax paid thereon;
(b) the credit of service tax attributable as input service to a particular unit shall be
distributed only to that unit;
(c) the credit of service tax attributable as input service to more than one unit but not to
all the units shall be distributed only amongst such units to which the input service is
attributable and such distribution shall be pro rata on the basis of the turnover of
such units, during the relevant period, to the total turnover of all such units to which
such input service is attributable and which are operational in the current year, during
the said relevant period;
(d) the credit of service tax attributable as input service to all the units shall be distributed
to all the units pro rata on the basis of the turnover of such units during the relevant
period to the total turnover of all the units, which are operational in the current year,
during the said relevant period;
(e) outsourced manufacturing unit shall maintain separate account for input service
credit received from each of the input service distributors and shall use it only for
payment of duty on goods manufactured for the input service distributor concerned;
(f) credit of service tax paid on input services, available with the input service
distributor, as on the 31st of March, 2016, shall not be transferred to any
outsourced manufacturing unit and such credit shall be distributed amongst the units
excluding the outsourced manufacturing units.
Explanation.-The provision of this clause shall, mutatis-mutandis, apply to any
outsourced manufacturer commencing production of goods on or after the 1st of April,
2016;
(g) Provisions of rule 6 shall apply to the units manufacturing goods or provider of output
service and shall not apply to the input service distributor.
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Explanation 1.- For the purposes of this rule, unit includes the premises of a provider of
output service or the premises of a manufacturer including the factory, whether registered or
otherwise or the premises of an outsourced manufacturing unit.
Explanation 2.For the purposes of this rule, the total turnover shall be determined in the
same manner as determined under rule 5:
Provided that the turnover of an outsourced manufacturing unit shall be the turnover of goods
manufactured by such outsourced manufacturing unit for the input service distributor.
Explanation 3. For the purposes of this rule, the relevant period shall be, (a) if the assessee has turnover in the preceding financial year, the said financial year;
or;
(b) if the assessee does not have turn over for some or all the units in the preceding
financial year, the last quarter for which details of turnover of all the units are available,
previous to the month or quarter for which credit is to be distributed.
Explanation 4. For the purposes of this rule, outsourced manufacturing unit means a
job-worker who is liable to pay duty on the value determined under rule 10A of the Central
Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 on the goods
manufactured for the input service distributor or a manufacturer who manufactures goods, for
the input service distributor under a contract, bearing the brand name of such input service
distributor and is liable to pay duty on the value determined under section 4A of the Excise
Act.
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PAGE: EXCISE 182

Rule 7A: Distribution of credit on inputs by the office or any other premises of output
service provider.(1) A provider of output service shall be allowed to take credit on inputs and capital goods
received, on the basis of an invoice or a bill or a challan issued by an office or premises of the
said provider of output service, which receives invoices, issued in terms of the provisions of
the Central Excise Rules, 2002, towards the purchase of inputs and capital goods.
(2) The provisions of these rules or any other rules made under the Central Excise Act, 1944,
as made applicable to a first stage dealer or a second stage dealer, shall mutatis mutandis
apply to such office or premises of the provider of output service.
PAGE: EXCISE 182. Insert after RULE 7A

Rule 7B: Distribution of credit on inputs by warehouse of manufacturer.
[inserted by N/N 13/2016 w-e-f 1-4-16]
(1) A manufacturer having one or more factories, shall be allowed to take credit on inputs
received under the cover of an invoice issued by a warehouse of the said manufacturer,
who receives inputs under cover of documents specified under rule 9 towards the purchase of
such inputs.
(2) The provisions of these rules or any other rules made under the Excise Act as applicable
to a first stage dealer or a second stage dealer, shall, mutatis mutandis, apply to such
warehouse of the manufacturer.
PAGE: EXCISE 185. Replace RULE 9A with following

Rule 9A: Annual Return
(1) A manufacturer of final products or provider of output services, shall submit to the
Superintendent of Central Excise an annual return for each financial year, by the 30th
November of the succeeding year, in the form as specified by a notification by the Board.
(2) The provisions of rule 12 of the Central Excise Rules, 2002, in so far as they relate to
annual return shall, mutatis-mutandis, apply to the annual return required to be filed under this
rule.
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PAGE: EXCISE 207: SSI EXEMPTION (FULLY CHANGE)

SMALL SCALE INDUSTRI ES EXEMPTION
1. What do you mean by Small Scale Industry for the purpose of
claiming exemption u/n 8/2003 from excise duty?
Small Scale Units are not defined in the Central Excise Act 1944. It is
defined under Industries (Development and Regulation) Act, 1951 on the
basis of investment made in plant and machinery. However the definition
given under IDRA is not applicable for the purpose of getting the
benefit of exemption under Central Excise. The basis for ascertaining
the Small Scale Units is the value of the clearances made by them in the
previous financial year
2. Which Products are covered under the SSI exemption notification?
The benefit of notification 8/2003 is restricted to the products listed in the

notification.
The notification covers most of the products.
However, the following are specifically excluded from SSI
exemption.
Iron & steel
Auto Mobile
Watches
Power driven pumps for water not conforming to Bureau of Indian
Standard (BIS)
Pan Masala Products
Tobacco products
Products covered under compounded levy scheme
3. Which undertaking is eligible for SSI exemption?
The units whose value of clearances computed in accordance of the

notification is not exceeding Rs. 400 lakh / 12 crores in the preceding
financial year are eligible for the benefit of the notification 8/2003.
Existing business: For example, if ABC Ltd. wants to claim the benefit of
the notification in the year 2016-2017, then its clearances of the year 20152016 must not exceed 4 crore / 12 crores.
New business: if ABC Ltd. has started the business in the year 2016-2017,
then it is entitled for the benefit of SSI notification as its previous years
clearances are NIL.
The exemptions given vide Notification No. 8/2003 can be summarised in
the following table:
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Value of clearances
1. First clearances of finished goods up to Rs. 150
Lakhs
2. clearances of finished goods >150 lakh
3. First clearances of the articles of jewellery for
home consumption, other than articles of silver
jewellery but inclusive of articles of silver jewellery
studded with diamond, ruby, emerald or sapphire, falling
under chapter heading 7113 of the First Schedule up to
an aggregate value of Rs. 6 crore:
Provided that during the period from 1-3-16 to 31-316 the exemption shall apply to the first clearances up
to an aggregate value of Rs. 50 Lakhs
Duty
Nil
Normal
duty
Nil
"Value" means,1. in respect of specified goods which have been notified u/s 4A of the Central
Excise Act, the value as determined in accordance with the provisions of that
section (i.e., MRP Abatement), and
2. in respect of other goods, the value as determined in accordance with the
provisions of section 4 of the Central Excise Act, or the tariff value fixed under
section 3 of the said Act;
4. What are the conditions for claiming SSI exemption?
The exemption contained in this notification shall apply subject to the

following conditions, namely: (i) Clearances in last FY: the aggregate value of clearances of all
excisable goods for home consumption by a manufacturer from one or
more factories, or from a factory by one or more manufacturers does
not exceed Rs. 400 lakhs / 12 crores in the preceding financial
year.
(ii) Option out: A manufacturer has the option not to avail the
exemption and instead pay the normal rate of duty on the goods
cleared by him. Such option may be exercised anytime during the FY,
but once exercised cannot be withdrawn during the remaining
part of the financial year;
while exercising this option, the manufacturer shall inform in writing to
the AC /DC of Central Excise with a copy to the Superintendent of
Central Excise giving the following particulars, namely:(a)
name and address of the manufacturer;
(b)
location/locations of factory/factories;
(c) description of inputs used in manufacture of specified goods ;
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(d)
description of specified goods produced;
(e)
date from which option under this notification has been
exercised;
(f) aggregate value of clearances of specified goods (excluding the
value of clearances referred to in paragraph 3 of this notification)
till the date of exercising the option;
(iii) No Credit on Inputs: the manufacturer shall not avail the credit of
duty on inputs under the CENVAT Credit Rules, 2004, used in the
manufacture of the specified goods, till the aggregate value of first
clearances does not exceed Rs. 150 lakhs / 6 crores;
However credit is allowable on inputs used in the manufacture of
specified goods bearing the brand name or trade name of another
person, which are ineligible for the grant of this exemption
(iv) Credit on Capital Goods: the manufacturer can avail credit of duty
paid on capital goods but shall not utilize the same for payment of
duty, till the aggregate value of first clearances does not exceed Rs.
150 lakhs / 6 crores;
Note: SSI is allowed to take 100% CENVAT credit on capital goods in the
1st financial year itself.
(v) More than 1 factories: where a manufacturer clears the specified

goods from one or more factories, the exemption shall apply to the
aggregate value of clearances and not separately for each factory;
Ex : Mr Z has two factories at Agra and Delhi. Turnover of Factory 1
is Rs.200 lacs and that of factory 2 is Rs.300 lacs, in such cases
turnover of both the factory shall be clubbed. Since the total turnover
of the assessee exceeds Rs.400 lacs, the assessee is not entitled to
SSI exemption.
(vi) More than 1 manufacturer: where the specified goods are cleared
by one or more manufacturers from a factory, the exemption shall
apply to the aggregate value of clearances and not separately for
each manufacturer;
Ex : In a factory, two manufacturers X and Y, manufacture their
goods. Turnover of X was Rs. 200 lacs and that of Y is Rs.300 lacs in
the preceding FY. In such case turnover of both the assessee shall be
clubbed. Since the total turnover exceeds Rs.400 lacs, both are not
entitled to SSI exemption in the current FY.
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Options available to an SSI Manufacturer?

Options
Value of clearances
Rate
Cenvat Credit
of duty Inputs /
Capital
input
Goods
services
a)
First
clearances
up
to
Rs.
1. Avail
Nil
Not
Available
150 lacs / 6 crores
Exemptio
available (utilised after
n
T/O of 150
lacs / 6
crores)
b) Clearances after Rs. 150 Normal
Available
Available
lacs / 6 crores
Duty
2. Not to All clearances.
Avail
exemptio
n
Normal
Duty
Available
Available
5. Which Clearances are not included in calculation of Aggregate Value of

clearances of 400 lacs / 12 crores or 150 lacs / 6 crores?
The following clearances are not to be included while calculating the last
years turnover of 400 lacs / 12 crores and current years turnover of 150
lacs / 6 crores respectivelyOf 400 lacs / 12 crores
(1) Export except to Bhutan (Nepal
deleted w-e-f 1-3-16)
(2) goods removed without payment
of duty to FTZ / SEZ / EOU /
EHTP / STP / united nation or
international Organization
(3) non-excisable goods
(4) intermediate goods used within
the factory of production
(5) Job work u/n 214/86
(6) input as such
(7) bearing the brand name or trade
name of another person except
where SSI exemption is available
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
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Of 150 lacs / 6 crores

Export except to Bhutan (Nepal
deleted w-e-f 1-3-16)
goods removed without payment
of duty to FTZ / SEZ / EOU /
EHTP / STP / united nation or
international Organization
non-excisable goods
intermediate goods used within
the factory of production
Job work u/n 214/86
input as such
bearing the brand name or trade
name of another person except
where SSI exemption is available
wholly exempt goods,
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(9) NIL Rate of duty goods.
Prem Khalsa Iron Steel Rolling Mills 2010 (HC)
While calculating the limit of Rs.400 lacs, the goods cleared on payment of
duty u/s 3A of the Excise Act are not covered in exclusion list. Hence, in
the absence of specific provision clearances made u/s 3A of the Act
cannot be excluded. It means goods cleared u/s 3A will be included
while calculating aggregate clearance of previous year.
Illustration 1:
Mr.X has furnished you following details for its last year turnover. State whether it is
eligible to SSI exemption
Total turnover 600 lacs, including following:
a. Export to USA80 lacs
b. Export to Nepal50 lacs
c. Sale carrying brand name of another 90 lacs
d. Sale to EOU 70 lacs
e. Remaining domestic sales
Solution :
SSI exemption shall be available only if SSI turnover exceeds 400 lacs
Particulars
Turnover as per accounts
Export to USA
Export to Nepal
Sale in brand name of another
Sale to EOU
Sale another State
Total Turnover
Amount (in
Rs.)
600 lacs
(80 lacs)
(50 lacs)
(90 lacs)
(70 lacs)
NIL
310 lacs
Since, turnover of the preceding year is less than 400 lacs, the assessee is entitled to
claim SSI exemption.
6. Are Goods removed with brand name of another person eligible for SSI
exemption?
The SSI exemption is not available to specified goods bearing a brand

name or trade name, whether registered or not, of another person.
Exceptions: However, in the following cases exemption will be allowed
even though goods bear the brand name or trade name of another person:
(a) where the specified goods, being in the nature of components or parts
of any machinery or equipment or appliances, are cleared for use
as original equipment in the manufacture of the said machinery or
equipment or appliances.
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The manufacturer has to follow the procedure laid down in the Central
Excise (Removal of Goods at Concessional Rate of Duty for Manufacture
of Excisable Goods) Rules, 2001. However, if the value of clearances of
the specified goods for use as original equipment does not exceed
rupees 150 lakhs in the preceding financial year, he is not required to
follow the said rules but only submit a declaration regarding such use;
(b) where the specified goods bear a brand name or trade name of(i) the Khadi and Village Industries Commission; or
(ii) a State Khadi and Village Industry Board; or
(iii) the National Small Industries Corporation; or
(iv) a State Small Industries Development Corporation; or
(v) a State Small Industries Corporation;
(c) Where the specified goods are manufactured in a factory located in a
rural area.
(d) Where the specified goods are in the nature of packing materials and
are meant for use by or on behalf of the person whose brand name they
bear.
For the removal of doubts, it is hereby clarified that packing material
includes labels of all kinds.
The exemption in respect of goods bearing a brand name or sold under a

brand name and having a retail price (RSP) of Rs. 1000 and above, falling
under Chapters 61, 62, 63 (except laminated jute bags falling under 6305,
6309 00 00, 6310), shall be restricted to Rs. 12,50,000 for the
remaining part of the financial year 2015-16.
Note: Excise Duty on Readymade Garments:
Excise duty of 2% (without CENVAT credit) or 12.5% (with CENVAT
credit) is being levied on readymade garments and made up articles of
textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308)
of the Central Excise Tariff except those falling under 6309 and 6310 of
retail sale price (RSP) of Rs.1000 and above when they bear or are sold
under a brand name.
a.
The levy is an optional levy, that is domestic manufacturers will have the
option to pay excise duty of 2% (without CENVAT credit) or 12.5% (with
CENVAT credit),
b.
The levy is restricted to such articles which have RSP of Rs. 1000 and
above, and
c.
The tariff value is 60% of the RSP.
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The value for computing the eligibility as well as the exemption limit for
purposes of SSI exemption would be the tariff value of the goods.
Explanation (C) to notification No.8/2003-C.E., dated 1st March, 2003
refers.
The SSI exemption for the month of March, 2016 will be Rs.12.5 lakh,
subject to fulfilment of other conditions of the notification No.8/2003-C.E.,
dated 01.03.2003. For this purpose, notification No.8/2003-C.E.,
dated 1st March, 2003 is being amended suitably.
The eligibility for availing of the SSI exemption in 2015-16 for the month
of March 2016 is that the value of clearances for home consumption from
one or more manufacturer from one or more unit should not have exceeded
Rs. 4 crore in the financial year 2014-15. The computation for this purpose
shall be done in accordance with the provisions of Para 3A of notification
No. 8/2003-C.E. For this purpose, a certificate from a Chartered Accountant
based on the books of accounts for 2014-15 shall suffice.
Excisable goods which were produced on or before 29.02.2016 but lying in
stock as on 9.02.2016 shall attract excise duty upon clearance.
Manufacturers shall keep a stock declaration of finished goods, goods-inprocess and inputs as on 29.02.2016 in their records duly certified by a
Chartered Accountant so as to enable the manufacturers to claim CENVAT
credit on inputs or inputs contained in goods lying in stock as already
provided for in Rule 3(2) of the CENVAT Credit, Rules, 2004, if he so
desires. No stock declaration, will, however, be required to be made
to the jurisdictional central excise authorities.
Case Laws on Brand name
(i) CCE v. Ace Auto Comp (2011) 263 ELT 3(SC).
DECISION:- Where it is shown that assessee has affixed brand name of another person
on his goods with intention of indicating a connection between his goods & goods of
another person, using such name or mark, then assessee would not be entitled to
benefit of SSI exemption. By using Brand name TATA, assessee had not only
intended to indicate a connection between goods manufactured by it & a Tata company,
but also quality of its product as that of a Tata company. Hence, assessee is disentitled
from benefit of SSI exemption notification.
(ii) Minimax Industries (2011) 269 ELT 166 (Del.)
As per the Notification, the assessee would be debarred only if it uses on the goods in
respect of which exemption is sought, the same/ similar brand name
with the intention of indicating a connection with the assessees goods and such
other person or
uses the name in such a manner that it would indicate such connection.
If there is no such intention or that the user of the brand name was entirely
fortuitous and could not on a fair appraisal of the marks indicate any such
connection, it would be entitled to the benefit of exemption.
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The assessee would also be entitled to the benefit of exemption if the brand name
belongs to the assessee himself although someone else may be equally entitled to such
name.
Hence, first of all, the name Minimax belonged to both the assessee-firm as well as
M/s Minimax Engineering Industries (MEI). Even otherwise, the use of Minimax by
the partnership firm was not with the view to indicate any connection with the MEI.
Hence, SSI-exemption could not be withdrawn.
(iii) CCEx v. Convertech Equipment Pvt. Ltd. (2011) 272 ELT 342 (SC)
When trademark of a foreign company is assigned with all rights to the assessee,
the assessee becomes the owner of such Trademark in India. Hence, use of such
trademark by the assessee on its goods doesnt violate conditions of SSI Exemption.
7. Is SSI undertaking required to register itself under Central Excise?
SSI Unit does not require registration. However, if its turnover in the preceding
financial year was Rs.90 lacs or more than such unit need to give a declaration as
follows.
Contents of Declaration
(i) Name and Address of the factory
(ii) Name and addresses of other factories/manufacture (Producing such
goods) in whom the manufacture has proprietary interest
(iii) Status of business i.e. Firm or Company
(iv) PAN and State VAT registration number
(v) Details of electricity connection
(vi) Details of the excisable goods manufactured by the factory during the
preceding financial year along with classification and valuation.
Note: Such declaration need not be filed for every year. If an SSI fails to file such
declaration then it shall not be allowed exemption
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Practical Questions
Question 1
An SSI manufacturer may like to pay full duty even when he is eligible for SSI exemption
(a) Can he do so?
(b) Why he would like to pay full duty?
(c) What is the duty payable?
Answer
(a) Yes, the concerned manufacturer can do so. In such a situation he can avail CENVAT
on inputs.
(b) He would like to pay full duty if his customer wants to avail CENVAT and if duty paid
on his inputs is quite substantial. As a result, the effective cost of the buyer will be
reduced.
(c) Duty payable will be normal duty less concession, if any available under any other
exemption notification.
Question 2
An SSI unit (manufacturing goods eligible for benefit of SSI exemption notification) has cleared
goods of the value of 60 lakhs during the financial year 2015-16. The effective rate of Central
Excise Duty on goods manufactured by it is 12.5% Ad valorem. What is the correct amount of
duty which the unit should have paid on above clearance for 2015-16.
Answer
If the relevant SSI Unit is desirous of availing CENVAT Credit on input, duty will be payable at
normal rates i.e. 12.5% on 60 lakh which works out to be 7.5 lakh. Contrarily, if the said unit
does not intend to avail CENVAT Credit on input, the duty payable will be NIL.
Question 3
A small scale unit manufacturer had achieved a sales of Rs 89 lakh during the year 2015-16.
Turnover achieved during 2016-17 was Rs 1.52 crores. Normal duty payable on the product
is 12.5%. Find the total excise duty paid by the manufacturer during 2016-17 in each of the
following cases:(A) If the unit has availed CENVAT Credit.
(B) If the unit has not availed CENVAT Credit
Answer
(A) If the unit has availed CENVAT Credit: In this case the unit is required to pay duty
at normal rates on the entire turnover i.e. 12.5% on 1.52 crores which works out to be
Rs 19 lakhs/- less Cenvat credit
(B) If the unit has not availed CENVAT Credit: In this case duty payable will be
computed as under:
(i) On Rs 150 lakhs = NIL
(ii) On subsequent sales= Normal duty @ 12.5% [i.e. 12.5% on Rs 2,00,000 which
works out to be Rs 25,000/- ]
NOTE: in this case too, CCR will be available on inputs received after the t/o crosses
150 lacs.
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Question 4
Small & Company, a small scale industry, provides the following details. Determine the
eligibility for exemption based on value of clearances for the financial year 2016-17 in terms
of Notification No. 8/2003-CE:
Particulars
Rs. (Lakhs)
(i)
Total value of clearances during the financial year 2015-16
870
(including VAT Rs 50 lakhs)
(ii) Total exports (including Bhutan Rs.200 lakhs)
500
(iii) Clearances of excisable goods without payment of duty to a unit
20
in Software Technology Park
(iv) Job work under Notification No. 214/86100
(v) Clearances of excisable goods bearing brand name of Khadi
200
and Village Industries Commission
Make suitable assumptions and provide brief reasons for your answers where necessary.
Answer
Calculation of value of clearances during financial year 2015-16
Particulars
Total value of clearances during the financial year
Less : VAT included in above
Less : Exports excluding exports to Bhutan (500-200)
Less: Clearances of excisable goods without payment of duty to a unit
in Software Technology Park
Less: Job work under Notification No. 214/86
Value of clearances
Rs.
(in lakhs)
870
(50)
(300)
(20)
(100)
400
Since the value of clearances in the previous financial year 2014-15 does not exceed Rs 400
lakh, the Small & Company is eligible to claim the benefit of Notification No. 8/2003 in the
financial year 2015-16.
Question 5
M/s. RKR manufactures footwear bearing the brand name "Lotus" which is owned by M/s.
Lotus Industries Ltd. for manufacture of detergent powder. When the department disallowed
the benefit of small scale exemption under Notification No. 8/2003-C.E. on the ground that
their goods are bearing brand name of another person, M/s. R.K.R. contended that M/s. Lotus
Industries Ltd. owns brand name Lotus only for detergent power and not for footwear. Decide
the case with reasons and mention case law, if any.
Answer
Supreme Court has held in the case of CCEx, v. Bhalla Enterprises 2004 (173) E.L.T. 225
(S.C) that:
(i) Notification No. 8/2003 dated 01.03.2003 debars those persons from the benefit of the
SSI exemption who use someone else name in connection with their goods, either with
the intention of indicating, or in a manner so as to indicate a connection between their
goods and such other person;
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(ii) there is no requirement for the owner of the trade mark using the name or mark
with reference to any particular goods;
(iii) The object of the Notification is clearly to grant benefits only to those industries which
otherwise do not have the advantage of a brand name.
In other words, if brand name of another person is used even in respect of goods of
other class or kind (different from the nature of the goods of the owner of brand name),
benefit of SSI exemption shall not be available.
In view of the aforementioned provisions, M/s RKR will not be entitled to the SSI exemption
as their goods bear the brand name LOTUS owned by M/s. Lotus Industries Ltd. The fact
that M/s. RKR uses the brand name on footwear while the same is being used by M/s. Lotus
Industries Ltd. on detergent powder is of no relevance.
Question 6
Y & Co. is a small scale unit located in a rural area and is availing the benefit of small scale
exemption under Notification No. 8/2003. during the year 2016-17. Determine the value of the
first clearances of the unit and duty liability on the basis of data given below:Rs.
(1) Total value of clearances of goods with own brand name
75,00,000
(2) Total value of clearances of goods with brand name of other parties
90,00,000
(3) Clearances of goods which are totally exempt under another
35,00,000
notification (other than an exemption based on quantity or value of
clearances)
Normal rate of Excise duty 12.5%, cess as applicable
It may be assumed that the unit is eligible for exemption under Notification No. 8/2003.
Answer
Computation of the value of first clearances and the duty liability:Particulars
1.
Value of clearances of goods with own brand name
2.
Value of clearance of goods with brand name of other parties in
rural areas
Total value of first clearances
Value on which duty is chargeable
(Rs.1,65,00,000 Rs.1,50,00,000)
Excise duty payable @ 12.5% (Rs.15,00,000 12.5%)
Rs.
75,00,000
90,00,000
1,65,00,000
15,00,000
1,87,500
Question 7
Mahesh Ltd., which is engaged in manufacturing of excisable goods, started its business on
1st June, 2015. It availed SSI exemption during the financial year 2016-17. The following are
the details available to you:
Rs.
(i)
12,500 kg of inputs purchased @ Rs 1100 per kg (inclusive of 1,37,50,000
Central excise duty @ 12.5%)
(ii)
Capital goods purchased on 31.5.2015 (inclusive of excise duty
80,00,000
@ 12.5%)
(iii)
Finished goods sold (at uniform transaction value throughout the 3,00,00,000
year)
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You are required to calculate the amount of excise duty payable by M/s Mahesh Ltd. in cash,
if any, during the year 2016-17. Rate of duty on finished goods sold may be taken as 12.5%
for the year and you may assume the selling price exclusive of central excise duty. There is
neither any processing loss nor any inventory of input and output. Output input ratio may be
taken as 2:1.
Answer
Computation of the excise duty payable by M/s. Mahesh Ltd. during the financial year
2016-17:Excise duty on dutiable clearances:- Particulars
Amount (Rs.)
Clearances of finished goods made during the year
3,00,00,000
Less : Exemption of Rs. 150 lakh under Notification No. 8/2003
(1,50,00,000 )
Dutiable clearances
1,50,00,000
Excise duty @ 12.5% (Rs.1,50,00,000 12.5%)
18,75,000
CENVAT credit available on inputs used in the manufacture of dutiable clearance
% of dutiable goods in the finished goods sold =15000000/30000000 X 100
50%
Excise duty paid on the value of inputs consumed in manufacture of dutiable
7,63,889
clearances =(1,37,50,000 x 12.5)/112.5 x 50%
CENVAT credit available on capital goods:(CENVAT credit will be available @ 100% of total excise duty in current
financial year 2015-16; (Rs.80,00,000 x 12.5 / 112.5)
Excise duty payable
Particulars
Excise duty on dutiable goods
Less: CENVAT credit available on inputs
Less: CENVAT credit available on capital goods
Excise duty payable in cash
8,88,889
Amount
(Rs.)
18,75,000
7,63,889
8,88,889
2,22,222
Question 8
If a manufacturer manufactures various products, can he avail CENVAT credit on some
products and exemption under Notification No. 8/2003-CE dated 1.3.03 on some other
products?
Answer
No, if a manufacturer manufactures various products, he has to avail CENVAT for all items or
opt for exemption for all products. CCE v. Ramesh Foods Products (2004) (SC)
---***---
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SERVICE TAX
2. What is the chargeability of Service tax?
Sec 66B of the Finance Act 1994 is the charging section. It states thatThere shall be levied a service tax @ 14%
on the value of all services,
other than those services specified in the negative list,
provided or agreed to be provided
in the taxable territory
by one person to another and
collected in such manner as may be prescribed.
Swatch Bharat Cess: @ 2% may be levied on notified services [Sec 119 of FA 2015].
Currently applicable @ 0.5% w-e-f 15-11-2015 on value of all taxable services [Discussed
on page 10]
66BA. Reference to section 66 to be construed as reference to section 66B.For the
purpose of levy and collection of service tax, any reference to section 66 in the Finance
Act, 1994 or any other Act for the time being in force, shall be construed as reference to
section 66B thereof.
SWACHH BHARAT CESS (SBC)
Background:
Chapter VI (Section 119) of the Finance Act 2015 contains provisions for levy and collection
of Swachh Bharat Cess (SBC).
The Government has announced 15th November, 2015 as the date from which the provisions
of Section 119 would come into effect (notification No.21/2015-Service Tax, dated
6th November, 2015 ).
Swachh Bharat Cess would be levied @ 0.5% on all taxable services.
Hence the effective rate of service tax plus SBC would be 14.5%.
Important Clarifications
1 Whether SBC is levied on all or selected services?
Ans. Vide notification No 22/2015-ST dated 6-11-2015, Government has notified that SBC
shall be applicable on all taxable services except services which are either fully exempt from
service tax under any notification issued under section 93(1) of the Finance Act, 1994 or are
otherwise not leviable to service tax under section 66B of the Finance Act, 1994.
2 How will the SBC be calculated?
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Ans. SBC would be calculated on the value of taxable service.

3 Whether SBC would be required to be mentioned separately in invoice?
Ans. Yes. SBC needs to be charged separately on the invoice, accounted for separately in
the books of account and paid separately under separate accounting code as notified.
4 How will the SBC be calculated for services under reverse charge mechanism?
Ans. In case of reverse charge under section 68(2) of the Finance Act, 1994, the liability is
shifted from service provider to the service recipient. Government has issued notification No.
24/2015-Service Tax dated 12th November, 2015 to provide that reverse charge under
notification No.30/2012-Service Tax dated 20th June, 2012 shall apply mutatis mutandis for
the purpose of levy of Swachh Bharat Cess .
5 How will SBC be calculated for services where abatement is allowed?
Ans. Taxable services, on which service tax is leviable on a certain percentage of value of
taxable service, will attract SBC on the same percentage of value as provided in
the notification No. 26/2012-Service Tax, dated 20th June, 2012. So, this notification would
apply for SBC also in the same manner as it applies for service tax.
For example, in the case of GTA, effective rate of tax [i.e., Service Tax + SBC] would be 30%
of (14% Service Tax + 0.5% SBC) = 4.35% (i.e., 4.20%+0.15%)
6 How would the tax (Service Tax and SBC) be calculated on services covered
under Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006.?
Ans. The tax (Service Tax and SBC) on services covered by Rule 2A, 2B or 2C of Service
Tax (Determination of Value) Rules, 2006, would be computed by multiplying the value
determined in accordance with these respective rules with [14% + 0.5%].
Therefore, effective rate of tax (i.e., Service Tax + SBC) for different services would be
Original works under the works contract
5.8% [i.e., 40% of (14% + 0.5%)]
Other works contract
10.15% [i.e., 70% of (14% + 0.5%)]
Restaurant
5.8% [i.e., 40% of (14% + 0.5%)]
Outdoor catering
8.6% [i.e., 60% of (14% + 0.5%)]
7 Whether SBC would be applicable on services covered by Rule 6 of Service Tax Rules
(i.e. air travel agent, life insurance premium, purchase and sale of foreign currency and
services by lottery distributors/selling agents)
Ans. Sub-rule (7D) to rule 6 has been inserted vide notification 25/2015-Service Tax, dated
12th November, 2015 so as to provide that the person liable for paying the service tax under
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sub-rule (7), (7A), (7B) or (7C) of rule 6 of Service Tax Rules, shall have the option to pay
SBC as determined as per the following formula:Service Tax liability [calculated as per sub-rule (7), (7A), (7B) or (7C)] X 0.5% / 14%
For example an air travel agent would be liable to pay SBC as follows (basic fare assumed to
be Rs. 10,000.
1. Domestic bookings = 0.7% of 10,000 x 0.5% / 14% = Rs 2.5
Hence total tax = 70+2.5 = 72.5
2. International bookings = 1.4% of basic fare x 0.5% / 14% = Rs 5
Hence total tax = 140+5 = 145
The option under this sub-rule once exercised, shall apply uniformly in respect of such services
and shall not be changed during a financial year under any circumstances.
8 What would be the point of taxation for Swachh Bharat Cess?
Ans. As regards Point of Taxation, since this levy has come for the first time, all services
(except Negative List or wholly exempt ones) are being subjected to SBC for the first time.
SBC, therefore, is a new levy, which was not in existence earlier. Hence, rule 5 of the Point of
Taxation Rules would be applicable in this case.
Therefore, in cases where payment has been received and invoice is raised before the service
becomes taxable, i.e. prior to 15th November, 2015, there is no liability of Swachh Bharat Cess.
In cases where payment has been received before the service became taxable and invoice is
raised within 14 days, i.e. up to 29th November, 2015, even then the service tax liability does
not arise.
Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov,
2015, invoice in respect of which is issued on or after that date and payment is also received
on or after that date.
Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015
but payment is received prior to that date and invoice in respect of such service is not issued
by 29th Nov, 2015.
9 How would liability be determined in case of reverse charge services where
services have been received prior to 15.11.2015 but consideration paid post
15.11.2015?
Ans. In respect of reverse charge mechanism, SBC liability is determined in accordance with
Rule 7 of Point of Taxation Rules, as per which, point of taxation is the date on which
consideration is paid to the service provider. And if consideration is not paid within 3 months
of invoice, then the next day following the expiry of 3 months. SBC liability in such case will
be 0.5% x Value of taxable service.
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10 Whether Cenvat Credit of the SBC is available?

Ans. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be
availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.
11 Does a person providing both exempted and taxable service and reversing credit
@ 7% of value of exempted service under Rule 6 of Cenvat Credit Rules, does he need
to reverse the SBC also?
Ans. As SBC is not integrated in the Cenvat Credit chain, reversal of SBC is not required
under Rule 6 of Cenvat Credit Rules, 2004.
Summary of effective rates of Service Tax
Point of Taxation
Rate of tax
On or before 31-05-2015
12.36%
1-06-15 to 14-11-2015
14%
On or after 15-11-2015
14.5%
MEGA EXEMPTION
6.
Services provided by(a) an arbitral tribunal to (i) any person other than a business entity; or
(ii) a business entity with a turnover up to Rs.10 lakhs in the preceding financial year;
(b) a partnership firm of advocates or an individual as an advocate other than a senior
advocate, by way of legal services to(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover <= 10 lakh in the preceding financial year; or
(c) a senior advocate by way of legal services to a person who is not ordinarily carrying
out any activity relating to industry, commerce or any other business or profession
[(b) and (c) replaced by N/N 9/2016 w-e-f 1-4-16]
legal service means any service provided in relation to advice, consultancy or
assistance in any branch of law, in any manner and includes representational services
before any court, tribunal or authority;
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9B. Services provided by the Indian Institutes of Management, as per the guidelines of the
Central Government, to their students, by way of the following educational programs,
except Executive Development Program, (a) 2 year full time residential Post Graduate Programs in Management for the Post
Graduate Diploma in Management, to which admissions are made on the basis of
Common Admission Test (CAT), conducted by Indian Institute of Management;
(b) fellow program in Management;
(c) 5 year integrated program in Management.
[Inserted by N/N 9/2016 w-e-f 1-3-16]
Following entries 9C and 9D shall be inserted by N/N 9/2016, w-e-f 1-4-16
9C. Services of assessing bodies empaneled centrally by Directorate General of Training,
Ministry of Skill Development and Entrepreneurship by way of assessments under Skill
Development Initiative (SDI) Scheme;
9D. Services provided by training providers (Project implementation agencies) under Deen
Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development
by way of offering skill or vocational training courses certified by National Council For
Vocational Training.
12.
Services provided to the Government, a local authority or a governmental authority

by way of construction, erection, commissioning, installation, completion, fitting out,
repair, maintenance, renovation, or alteration of (a) a civil structure or any other original works meant predominantly for use other than
for commerce, industry, or any other business or profession;
(b) a historical monument, archaeological site or remains of national importance,
archaeological excavation, or antiquity specified under the Ancient Monuments and
Archaeological Sites and Remains Act, 1958;
(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii)
an art or cultural establishment;
(d) canal, dam or other irrigation works;
(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage
treatment or disposal; or
(f) a residential complex predominantly meant for self-use or the use of their employees
or other persons specified in the Explanation 1 to clause 44 of section 65B of the said
Act;
[(a), (c) and (f) omitted w-e-f 1-4-15 vide N/N 6/2015]
Residential complex means any complex comprising of a building or buildings,
having more than one single residential unit;
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Single residential unit means a self-contained residential unit which is designed

for use, wholly or principally, for residential purposes for one family;
12A. Services provided to the Government, a local authority or a governmental authority by
way of construction, erection, commissioning, installation, completion, fitting out,
repair, maintenance, renovation, or alteration of (a) a civil structure or any other original works meant predominantly for use other
than for commerce, industry, or any other business or profession;
(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical,
or(iii) an art or cultural establishment; or
(c) a residential complex predominantly meant for self-use or the use of their
employees or other persons specified in the Explanation 1 to clause (44) of
section 65 B of the said Act;
under a contract which had been entered into prior to the 1st March, 2015 and on
which appropriate stamp duty, where applicable, had been paid prior to such date:
Provided that nothing contained in this entry shall apply on or after the 1st April, 2020
13.
Services provided by way of construction, erection, commissioning, installation,

completion, fitting out, repair, maintenance, renovation, or alteration of,(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;
(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal
Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;
(ba) a civil structure or any other original works pertaining to the In-situ rehabilitation of
existing slum dwellers using land as a resource through private participation under
the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing
slum dwellers.
(bb) a civil structure or any other original works pertaining to the Beneficiary-led
individual house construction / enhancement under the Housing for All (Urban)
Mission/Pradhan Mantri Awas Yojana
(c) a building owned by an entity registered under section 12AA of the Income tax Act,
1961 and meant predominantly for religious use by general public;
Religious place means a place which is primarily meant for conduct of prayers
or worship pertaining to a religion, meditation, or spirituality;
(d) a pollution control or effluent treatment plant, except located as a part of a factory;
(e) a structure meant for funeral, burial or cremation of deceased;
14. Services by way of construction, erection, commissioning, or installation of original

works pertaining to,(a) Airport or Port [deleted by N/N 6/15 w-e-f 1-3-15] Railways, excluding monorail
or metro; [Amended by N/N 9/2016 w-e-f 1-3-16] Earlier it was including monorail
and metro.
Explanation.-The services by way of construction, erection, commissioning or
installation of original works pertaining to monorail or metro, where contracts were
entered into before 1st March, 2016, on which appropriate stamp duty, was paid,
shall remain exempt.
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(b) a single residential unit otherwise than as a part of a residential complex;

(c) low- cost houses up to a carpet area of 60 square meters per house in a housing
project approved by competent authority empowered under the Scheme of
Affordable Housing in Partnership framed by the Ministry of Housing and Urban
Poverty Alleviation, Government of India;
(ca) low cost houses up to a carpet area of 60 square metres per house in a housing
project approved by the competent authority under:
(i) the Affordable Housing in Partnership component of the Housing for All
(Urban) Mission/Pradhan Mantri Awas Yojana;
(ii) any housing scheme of a State Government.
(d) post- harvest storage infrastructure for agricultural produce including a cold storages
for such purposes; or
(e) mechanised food grain handling system, machinery or equipment for
units processing agricultural produce as food stuff excluding alcoholic beverages;
14A. Services by way of construction, erection, commissioning, or installation of original works
pertaining to an airport or port provided under a contract which had been entered
into prior to 1st March, 2015 and on which appropriate stamp duty, where applicable,
had been paid prior to such date:
Provided that Ministry of Civil Aviation or the Ministry of Shipping in the Government of
India, as the case may be, certifies that the contract had been entered into before the
1st March, 2015:
Provided further that nothing contained in this entry shall apply on or after the 1st April,
2020
15. Services provided by way of temporary transfer or permitting the use or

enjoyment of a copyright,(a) covered under section 13(1)(a) of the Copyright Act, 1957, relating to
original literary, dramatic, musical or artistic works; or
(b) of cinematograph films for exhibition in a cinema hall or cinema theatre
16. Services by a performing artist in folk or classical art

forms of (i) music, or (ii) dance, or (iii) theatre, if the
consideration charged for such performance is < = Rs. 1.5
lakh [Amended by N/N 9/2016 w-e-f 1-4-16] excluding
services provided by such artist as a brand ambassador;
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23.
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Transport of passengers, with or without accompanied belongings, by (a) air, embarking from or terminating in an airport located in the state of Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at
Bagdogra located in West Bengal;
(b) non-air-conditioned contract carriage (other than radio taxi), for transportation of
passengers, excluding tourism, conducted tour, charter or hire; or [Modified by NN
06/2014 dated 11/07/14]
(c) ropeway, cable car or aerial tramway; [Omitted by N/N 9/2016 w-e-f 1-4-16]
Radio taxi means a taxi including a radio cab, by whatever name called, which is in
two-way radio communication with a central control office and is enabled for tracking
using Global Positioning System (GPS) or General Packet Radio Service (GPRS)
As per section 2(7) of Motor Vehicles Act, 1988
"Contract carriage" means a motor vehicle which carries a passenger or passenger or
passengers for hire or reward and is engaged under a contract, whether expressed or
implied, for the use of such vehicle as a whole for the carriage of passengers mentioned
therein and entered into by a person with a holder of a permit in relation to such vehicle
or any person authorised by him in this behalf on a fixed or an agreed rate or sum-- (a)
on a time basis, whether or not with reference to any route or distance; or (b) from one
point to another, and in either case, without stopping to pick up or set down passengers
not included in the contract anywhere during the journey, and includes-- (i) a maxicab;
and (ii) a motor cab notwithstanding that separate fares are charged for its passengers.
26.
Services of general insurance business provided under following schemes (a) Hut Insurance Scheme;
(b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as
Integrated Rural Development Programme);
(c) Scheme for Insurance of Tribals;
(d) Janata Personal Accident Policy and Gramin Accident Policy;
(e) Group Personal Accident Policy for Self-Employed Women;
(f)
Agricultural Pumpset and Failed Well Insurance;
(g) premia collected on export credit insurance;
(h) Weather Based Crop Insurance Scheme or the Modified National Agricultural
Insurance Scheme;
(i)
Jan Arogya Bima Policy;
(j)
National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);
(k) Pilot Scheme on Seed Crop Insurance;
(l)
Central Sector Scheme on Cattle Insurance;
(m) Universal Health Insurance Scheme;
(n) Rashtriya Swasthya Bima Yojana; or
(o) Coconut Palm Insurance Scheme;
(p) Pradhan Mantri Suraksha Bima Yojna [inserted by N/N 12/15 w-e-f 30-4-15]
Following clause inserted by N/N 9/2016, w-e-f 1-4-2016
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(q) Niramaya Health Insurance Scheme implemented by Trust constituted under the
provisions of the National Trust for the Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disabilities Act, 1999
Following entry inserted by N/N 9/2016 w-e-f 1-4-2016 namely,26C. Services of life insurance business provided by way of annuity under the National
Pension System regulated by Pension Fund Regulatory and Development Authority of
India (PFRDA) under the Pension Fund Regulatory And Development Authority Act,
2013
27. Services by the following persons in respective capacities (a) sub-broker or an authorised person to a stock broker;
(b) authorised person to a member of a commodity exchange;
(c) mutual fund agent to a mutual fund or asset management company;
(d) distributor to a mutual fund or asset management company;
(e) selling or marketing agent of lottery tickets to a distributer or a selling agent;
[Omitted by N/N 6/2015 w-e-f 1-4-15]
(f) selling agent or a distributer of SIM cards or recharge coupon vouchers;
(g) business facilitator or a business correspondent to a banking company with respect to
a Basic Savings Bank Deposit Account covered by Pradhan Mantri Jan Dhan Yojana
in the banking companys rural area branch, by way of account opening, cash deposits,
cash withdrawals, obtaining e-life certificate, Aadhar seeding;
(ga) any person as an intermediary to a business facilitator or a business correspondent
with respect to services mentioned in clause (g);
(gb) business facilitator or a business correspondent to an insurance company in a rural
area; or
[(g), (ga) and (gb) inserted by N/No. 20/2015 w-e-f 21st October, 2015]
(h) sub-contractor providing services by way of works contract to another contractor
providing works contract services which are exempt;
Business facilitator or Business correspondent means an intermediary appointed
under the business facilitator model or the business correspondent model by a banking
company or an insurance company under the guidelines issued by Reserve Bank of India;
39. Services by Government, a local authority [inserted by N/N 22/2016 w-e-f 13-4-16] or
a governmental authority by way of any activity in relation to any function entrusted to
a municipality under article 243W of the Constitution.
Governmental authority means an authority or a board or any other body;
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by Government,
with 90% or more participation by way of equity or control, to carry out any function
entrusted to a municipality under article 243W of the Constitution;
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48. Services provided by Government or a local authority to a business entity with a turnover
up to Rs 10 lakh in the preceding financial year.
[inserted by N/N 07/2016 w-e-f 1/04/16]
Following entries inserted by N/N 9/2016 w-e-f 1-4- 2016
49. Services provided by Employees Provident Fund Organisation (EPFO) to persons
governed under the Employees Provident Funds and Miscellaneous Provisions Act,
1952;
50. Services provided by Insurance Regulatory and Development Authority of India (IRDA) to
insurers under the Insurance Regulatory and Development Authority of India Act, 1999;
51. Services provided by Securities and Exchange Board of India (SEBI) set up under the
Securities and Exchange Board of India Act, 1992 by way of protecting the interests of
investors in securities and to promote the development of, and to regulate, the securities
market;
52. Services provided by National Centre for Cold Chain Development under Ministry of
Agriculture, Cooperation and Farmers Welfare by way of cold chain knowledge
dissemination;
Following entry inserted by N/N 9/2016 w-e-f 1st June 2016, namely:53. Services by way of transportation of goods by an aircraft from a place outside India up
to the customs station of clearance in India.
Following entries 54 to 63 inserted by N/N 22/2016 w-e-f 13-4-16]
54. Services provided by Government or a local authority to another Government or local
authority:
Provided that nothing contained in this entry shall apply to services specified in subclauses (i),(ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994;
55. Services provided by Government or a local authority by way of issuance of passport,
visa, driving licence, birth certificate or death certificate;
56. Services provided by Government or a local authority where the gross amount charged
for such services does not exceed Rs. 5000/- :
Provided that nothing contained in this entry shall apply to services specified in subclauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994:
Provided further that in case where continuous supply of service, as defined in clause (c)
of rule 2 of the Point of Taxation Rules, 2011, is provided by the Government or a local
authority, the exemption shall apply only where the gross amount charged for such
service does not exceed Rs. 5000/- in a financial year;
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57.
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Services provided by Government or a local authority by way of tolerating nonperformance of a contract for which consideration in the form of fines or liquidated
damages is payable to the Government or the local authority under such contract;
58. Services provided by Government or a local authority by way of(a) registration required under any law for the time being in force;
(b) testing, calibration, safety check or certification relating to protection or safety
of workers, consumers or public at large, required under any law for the time being
in force;
59. Services provided by Government or a local authority by way of assignment of right to
use natural resources to an individual farmer for the purposes of agriculture;
60.
Services by Government, a local authority or a governmental authority by way of any

activity in relation to any function entrusted to a Panchayat under article 243G of the
Constitution;
61. Services provided by Government or a local authority by way of assignment of right to

use any natural resource where such right to use was assigned by the Government
or the local authority before the 1st April, 2016:
Provided that the exemption shall apply only to service tax payable on one time
charge payable, in full upfront or in installments, for assignment of right to use such
natural resource;
62. Services provided by Government or a local authority by way of allowing a business entity
to operate as a telecom service provider or use radiofrequency spectrum during the
financial year 2015-16 on payment of licence fee or spectrum user charges, as the case
may be;
63. Services provided by Government by way of deputing officers after office hours or on
holidays for inspection or container stuffing or such other duties in relation to import
export cargo on payment of Merchant Overtime charges (MOT).
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OTHER EXEMPTIONS
6.
Services by TBI / STEP / Bio incubators: Notification No. 32/2012- Service Tax,
dated 20th June, 2012
Full exemption of taxable services, provided or to be provided, by
(i)
(ii)
(iii)
a Technology Business Incubator (TBI) or

a Science and Technology Entrepreneurship Park (STEP) recognized by the National
Science and Technology Entrepreneurship Development Board (NSTEDB) of the
Department of Science and Technology, Government of India or
bio-incubators recognized by the Biotechnology Industry Research Assistance
Council, under Department of Biotechnology, Government of India
Conditions1. that the STEP or the TBI or bio-incubators , who intends to avail the exemption,
shall furnish the requisite information in Format I containing the details of the
incubator along with the information in Format II received from each incubatee to
the concerned Assistant Commissioner or the Deputy Commissioner of Central
Excise, as the case may be, before availing the exemption; and
2. That the STEP or the TBI or bio-incubators shall furnish the information in the said
Format I and Format II in the same manner before the 30th day of June of each
financial year.
9.
Exemption to Information Technology Software
NOTIFICATION No. 11/2016-Service Tax w-e-f 1st March, 2016
Full exemption to Service in relation to Information Technology Software
When such Information Technology Software is recorded on a media covered under
Chapter 85 of the First Schedule to the CETA, 1985,
Retail sale price is required to be declared on package of such media, under the
provisions of the Legal Metrology Act, 2009 or the rules made thereunder or under any
other law for the time being in force,
Conditions:(i) the value of the package of such media either domestically produced or imported, has been
determined u/s 4A of the Central Excise Act, 1944 for levy of excise duty or CVD; and
(ii) (a) the appropriate duties of excise on such value have been paid by the manufacturer,
duplicator or the person holding the copyright to such software, as the case may be, in respect
of such media manufactured in India; or
(b) the appropriate duties of customs including the additional duty of customs on such value,
have been paid by the importer in respect of such media which has been imported into India;
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(iii) a declaration made by the service provider on the invoice relating to such service that no
amount in excess of the retail sale price declared on such media has been recovered from the
customer.
Notification No. 11/2016-Central Excise w-e-f 1st March, 2016
Exemption in case of media with recorded Information Technology Software
where the retail sale price is not required to be declared on package under the
provisions of the Legal Metrology Act, 2009 or the rules made thereunder or under any
other law for the time being in force,
Exemption = excise duty payable on the portion of the value of Information Technology
Software recorded on the said media, which is leviable to service tax under section 66B
read with section 66E of the Finance Act, 1994:
Provided that the manufacturer shall make a declaration in the format specified in AnnexureI, regarding value of Information Technology Software recorded on the said media, which is
leviable to service tax under section 66B read with section 66E of the said Finance Act, to the
Principal Commissioner of Central Excise or the Commissioner of Central Excise, as the case
may be :
Provided further that the person liable to pay service tax is registered under section 69 of the
said Finance Act, read with rule 4 of the Service Tax Rules, 1994 and undertakes to pay
service tax leviable thereon in the format specified in Annexure-I.
Similar exemption is given from CVD on importation of software under Notification
No. 11/2016 - Customs
Annexure-I
1. Name of the manufacturer:
2. Address of the manufacturer:
3. Central Excise Registration No. (If registered):
4. Service tax registration of the person liable to pay service tax:
To,
(i) Commissioner/Principal Commisisoner Central Excise (Jurisdictional), (complete address)
(ii) Commissioner/Principal Commisisoner Service Tax (Jurisdictional Executive and
Jurisdictional Audit), (complete address) [through (i) above]
Sir,
I hereby declare that,
1. I have manufactured and cleared media with recorded Information Technology Software,
under Chapter 85 of the First Schedule to the Central Excise Tariff Act, 1985 ( 5 of 1986), in
the month of ________, Year______. I have availed the benefit of notification no. 11/2016C.E dated the 1st March, 2016 and the exempted value under the said notification, which is
leviable to service tax under section 66B read with section 66E of the Finance Act, 1994, is
Rs. _____________ .
2. I have paid (GAR-7 Challan enclosed) or undertake to pay service tax on such value of
services provided, for which I am registered with _________________________(details of
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Jurisdictional Principal Commissioner or Commissioner of Service Tax) under service tax

registration no.__________________.
Name and signature of manufacturer/authorised signatory.
10. Services provided under the Power System Development Fund Scheme of the Ministry
of Power exempted from service tax
Exemption from service tax has been granted to taxable services provided under the
Power System Development Fund Scheme of the Ministry of Power by way of(A) re-gasification of Liquefied Natural Gas (LNG) imported by the Gas Authority of
India Limited (GAIL);
(B) transportation of the incremental Re-gasified Liquefied Natural Gas (RLNG)
(e-bid RLNG) to specified power generating companies or plants subject to
fulfillment of certain conditions prescribed in the exemption notification.
However, the exemption shall not be available if such RLNG and LNG are used for
generation of electrical energy by captive generating plant as defined in section 2(8) of
the Electricity Act, 2003.
Further, the exemption shall be valid only till 31.03.2017.
[Notification No. 17/2015 ST dated 19.05.2015]
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ABATEMENTS
8. What do you mean by ABATEMENT. Which services are entitled for abatement from
value and to what extent?
Abatement means reduction from value of taxable services. [N/N 26/2012]
Table
Sl.
No
Description of taxable
service
Financial
leasing
including
hire
purchase.
The abatement is only allowed on interest
(i.e., Installment Principal) and not on
other amounts charged like lease
management
fee,
processing
fee,
documentation charges & admin fee
Abatement
(%)
Conditions
90
Nil.
Transport of goods by Rail [other than 2A

below]
70
No CENVAT credit on inputs

& capital goods.
Input services allowed
[amended by N/N 8/16 w-ef 1-4-16]
2A
Transport of goods in containers by Rail

by any person other than Indian Railway
60

and capital goods.
70

and capital goods.
30

classifiable under Chapters 1
to 22 of the CETA, 1985
Transport of passengers, with or without

accompanied belongings by rail
Bundled service by way of supply of food
or any other article of human consumption
or any drink, in a premises (including hotel,
convention center, club, pandal, shamiana
or any other place, specially arranged for
organizing a function) together with
renting of such premises
The amount charged shall be = gross
amount charged + FMV of all goods and
services supplied by the service receiver the amount charged for such goods or
services- VAT or sales tax levied thereon:
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Sl.
No
service
Transport of passengers by air, with or

without accompanied belongings
(a) By economy class
(b) By any other class
Renting of hotels, inns, guest houses,

clubs, campsites or other commercial
places meant for residential or lodging
purposes.
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Abatement
(%)
60
40
40
Conditions

and capital goods
Input service allowed
No CENVAT credit on
inputs and capital goods.
Input service allowed
Services of goods transport agency in

relation to transportation of goods
other than used household goods.
[amended by N/N 8/16 w-e-f 1-4-16]
Ancillary services such as loading /

unloading,
packing
/
unpacking,
transshipment, temporary storage etc.,
would form part of the goods transport
agencys (GTA) service if such services
are provided by a GTA in the course of
transportation of goods and the charges
for such services are included in the
invoice issued by the GTA, and not by any
other person. [Circular No. 186/5/2015
dated 05.10.2015]
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70
No CENVAT credit on
inputs, input services and
capital goods has been
taken by the service provider
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Sl.
No
service
7A
Services of goods transport agency in

relation to transportation of used
household goods.
Services provided by a foreman of chit

fund in relation to chit
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Abatement
(%)
Conditions
60
No CENVAT credit on
capital goods has been
taken by the service provider
30
No CENVAT credit on
capital goods
(i) No CENVAT credit on
inputs and capital goods
Renting of any MOTOR CAB
The amount charged shall be = the amount

charged + FMV of all goods (including fuel)
and services supplied by the recipient(s) in
or in relation to the service.
Provided that the FMV of goods and
services so supplied may be determined in
accordance with the GAAP [Inserted by
N/N 8/16 w-e-f 1-4-16]
60
(ii) CENVAT credit on input

service of renting of motor
cab has been taken in the
following manner:
(a) Full CENVAT credit if
service provider is paying
service tax on 40% of the
value; or
(b) Up to 40% CENVAT
credit if service provider is
paying service tax on full
value;
(iii) CENVAT credit on other
input services not allowed
9A
10
Transport of passengers, with or without

accompanied belongings, by
(a) a contract carriage other than
motor cab.
(b) a radio taxi.
(c) stage carriage [Inserted by N/N 8/16
w-e-f 1-6-16]
Transport of goods in a vessel
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60
No CENVAT credit on
inputs, input services &
capital goods
70
No CENVAT credit on
inputs & capital goods.
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Sl.
No
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Abatement
(%)
Conditions
Services by a tour operator in relation to,- [amended by N/N 8/16 w-e-f 1-4-16]
(i) a tour, only for the purpose of arranging

or booking accommodation for any
person
90

inputs, capital goods &
input services other than
the input service of a tour
operator
(ii) The invoice indicates
that it is towards the
charges
for
such
accommodation.
(iii) Not applicable if invoice
does not include the cost of
accommodation.
70

inputs, capital goods &
input services other than
the input service of a tour
operator
(ii)The bill indicates that the
amount is the gross amount
charged for such a tour.
70

inputs.
(ii) The value of land is
included in the amount
charged from the service
receiver.
11
(ii) Any services other than specified at (i)

above. (including package tour)
Construction of a complex, building, civil

structure or a part thereof (consideration in
part or full recd before completion cert)
12.
The amount charged shall be = amount

charged for the service + FMV of all goods
and services supplied by the recipient(s) amount charged for such goods or services,
and - VAT or sales tax, if any, levied
thereon:
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Practice Questions
Example 1
XY Travels Pvt. Ltd., located in New Delhi, is engaged in providing services of renting of
motorcab and discharges its service tax liability by availing abatement granted under
Notification No. 26/2012 ST dated 20.06.2012. Value of services rendered by the company
during the month of December, 2015 is Rs. 5,50,000 (before availing abatement). The
company has sub-contracted part of its services to YZ Cabs Pvt. Ltd., which is also engaged
in providing services of renting of motorcab. Total value of such sub-contracted services is Rs.
50,000 and service tax payable thereon is Rs. 7,000 + SBC Rs.250
Determine the net service tax liability of XY Travels Pvt. Ltd. (to be paid in cash) for the month
of Dec 2015.
Answer
Computation of net service tax liability (to be paid in cash) of XY Travels Pvt. Ltd. for
Dec, 2015
Particulars
Value of services
Less: Abatement @ 60%
Value of taxable service
Service tax @ 14%
Less: CENVAT credit [Note 2] [40% of 7000]
Net service tax
SBC @ 0.5% of 2,20,000
Total amount payable in cash
(Rs.)
5,50,000
3,30,000
2,20,000
30,800
2,800
28,000
1,100
29,100
Notes
1. up to 40% CENVAT credit of input service of renting of a motor cab provided by a subcontractor to the main contractor (providing service of renting of motor cab) could be
availed by the main contractor if the sub-contractor is paying service tax on full value i.e.,
no abatement is being availed by sub-contractor.
2. Since YZ Cabs Pvt. Ltd. has paid service tax on full value (Rs. 50,000 x 14% = Rs. 7000),
XY Travels Pvt. Ltd. can avail credit up to Rs. 2,800 (40% of Rs. 7,000).
3. Since XY Travels Pvt. Ltd. is a company, reverse charge provisions will not apply in its
case. Further, provisions of partial reverse charge will not apply in case of YZ Cabs Pvt.
Ltd. also, as it is a company too.
4. No cenvat credit allowed on SBC
Example 2
Determine the net service tax liability to be paid in cash in each of the following independent
cases:
i.
Value of services provided by a radio taxi operator is Rs.1,00,000. The operator does
not avail CENVAT credit on inputs, capital goods and input services used for providing
the said service. It intends to avail abatement, if any, granted for such service.
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ii.
Value of services provided by a Company running air-conditioned buses for point to

point travel is Rs. 5,00,000. The buses do not stop to pick or drop the passengers
during the journey. The Company does not avail CENVAT credit on inputs, capital
goods and input services used for providing the said service. It intends to avail
abatement, if any, granted for such service. The Company has sub-contracted part of
its services to another Company running air-conditioned buses for point to point travel.
Total value of such sub-contracted services is Rs. 50,000 and service tax payable
thereon is Rs. 7,000.
iii. Value of services provided by a Company running non air-conditioned buses for point
to point travel is Rs. 1,00,000. The buses do not stop to pick or drop the passengers
during the journey. The Company does not avail CENVAT credit on inputs, capital
goods and input services used for providing the said service. It intends to avail
abatement, if any, granted for such service.
Answer
1. Travel by radio taxis or radio cabs, whether or not air-conditioned, is liable to service
tax. However, an abatement of 60% has been extended to transport of passengers by
a radio taxi. The abatement would be available if CENVAT credit on inputs, capital
goods and input services, used for providing the taxable service, has not been taken
under the provisions of CENVAT Credit Rues, 2004.
Thus, in the given case, since CENVAT credit on inputs, capital goods and input
services is not being availed by the radio taxi operator, he can claim the abatement of
60% which will make the effective rate of service tax as 5.6% [40 x 14%]. Thus, service
tax liability to be paid in cash will be Rs. 5,600 [Rs. 1,00,000 x 5.6%] + SBC Rs. 200/(0.5% or 40% of 100000). In this case, entire service tax liability of Rs. 5,800 will have
to be paid in cash as benefit of CENVAT credit cannot be availed.
2. Transport of passengers by air-conditioned contract carriages has been made liable to
service tax. However, an abatement of 60% is available under entry 9A in Notification
No. 26/2012 ST. The aforesaid abatement would be available if CENVAT credit on
inputs, capital goods and input services, used for providing the taxable service, has
not been taken under the provisions of CENVAT Credit Rues, 2004.
In the given case, the buses are contract carriages since they are used for point to
point travel and they do not stop to pick or drop the passengers during the journey.
Since the Company does not avail CENVAT credit on inputs, capital goods and input
services, it can claim the abatement of 60% which will make the effective rate of service
tax as 5.6% [40 x 14%]. Thus, service tax liability to be paid in cash will be Rs. 28,000
[Rs. 5,00,000 x 5.6%] + SBC (0.5% of 40% of 5,00,000 = Rs 1,000.
It is to be noted that whereas credit of input service received by a person engaged in
providing services of renting of motorcab from a sub-contractor has been allowed
under entry 9 of Notification No. 26/2012 ST, the same is not allowed for contract
carriages other than motorcab under entry 9A. Therefore, entire service tax liability of
Rs 29,000 will have to be paid in cash.
3. Transport of passengers by contract carriages for purposes other than tourism,
conducted tour, charter or hire by non air-conditioned contract carriages is wholly
exempt from tax. In the given case, the buses are contract carriages since they are
used for point to point travel and they do not stop to pick or drop the passengers during
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the journey. Thus, no service tax is payable by the Company running non airconditioned buses (contract carriage) for point to point travel as the same are exempt.
Example 3
ABC Constructions Ltd. has provided the following details with respect to individual residential
units constructed by it in various cities as part of residential apartments:
Flat
Carpet Area
Amount
Type
(sq. ft.)
Charged(Rs)
A.
1980
1,10,00,000
Part of consideration received before issuance
of completion certificate by the competent
B.
2000
1,00,00,000
authority
C.
2500
1,05,00,000
D.
2400
99,50,000
Entire consideration received before issuance
of completion certificate by the competent
E.
2100
1,00,00,000
authority
F.
1600
80,00,000
Entire consideration received after issuance of
G.
1940
90,00,000
completion certificate by the competent
authority
Following details are also available:
Amount
Type of building
Charged(Rs)
Multi-level parking for
Local Development
3,10,00,000
Authority
Part of consideration received before issuance of

completion certificate by the competent authority
Entire consideration received before issuance of

completion certificate by the competent authority
Entire consideration received after issuance of
Shopping Mall
30,00,00,000 completion certificate by the competent
authority
In all the above construction activities, value of land is included in the amount charged from
the service receiver and CENVAT credit on inputs used for construction has not been availed.
You are required to compute the taxable value of the construction service, if any, in each of
the case on the basis of the service tax law as applicable for the month of June, 2015.
Office Complex
12,20,00,000
Answer
Computation of value of taxable service of construction of residential complexes
Flat
Carpet Area
Amount
Taxable Value = Amount
Abatement %
Type
(sq. ft.)
Charged(Rs)
charged Abatement
A.
1980
1,10,00,000
70
33,00,000
B.
2000
1,00,00,000
70
30,00,000
C.
2500
1,05,00,000
70
31,50,000
D.
2400
99,50,000
70
29,85,000
E.
2100
1,00,00,000
70
30,00,000
F.
1600
80,00,000
70
24,00,000
It is not a case of service
G.
1940
90,00,000
N.A
but a sale.
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Computation of value of taxable service of construction of commercial buildings

Taxable Value
Amount
Type of building
Abatement %
= Amount charged
Charged (Rs)
Abatement
Multi-level parking for Local
3,10,00,000
70
93,00,000
Devpt Authority
Office Complex
12,20,00,000
70
3,66,00,000
Shopping Mall
30,00,00,000
N.A
It is not a case of
service but a sale.
Example 4
Answer with respect to applicability of service tax in the following cases during the month of
June, 2015:
(i)
Service provided by a private transport operator to a School in relation to
transportation of students to and from a School.
(ii)
Services provided by way of vehicle parking to general public in a shopping mall.
(iii)
Service provided by way of repair or maintenance of aircraft owned by a State
Government.
(iv)
Exhibiting movies on television channels.
(v)
Transportation of petroleum and petroleum products and household effects by
railways.
(vi)
Transportation of postal mails or mail bags by a vessel.
Answer
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Exempt. Transport of students services provided TO an educational institution is

exempt from service tax.
Taxable. Services provided by way of vehicle parking to general public are not
exempt from service tax.
Taxable. Services of repair or maintenance of aircraft owned by Government are
not so exempt.
Taxable. The benefit of exemption in relation to copyrights for cinematograph films
is restricted only to films exhibited in a cinema hall or theatre. Therefore, exhibition
of cinematograph films in a place other than cinema hall or theatre, are taxable.
Taxable. Transportation of petroleum and petroleum products and household
effects by railways are not exempt from service tax.
Taxable. Transportation of postal mails or mail bags by a vessel are not exempt
from service tax.
Example 5
Discuss whether service tax is leviable in respect of transportation services provided by
Raghav Goods Transport Agency in each of the following independent cases:
Customer
Nature of services provided
Amount charged
A
Transportation of milk and salt
20,000
Transportation of books on a consignment transported
B
3,000
in a single goods carriage
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Transportation of chairs for a single consignee in the

goods carriage
600
Answer
Customer
Nature of services
provided
Transportation of
milk
Transportation of
books on a
consignment
transported in a
single goods
carriage
Transportation of
chairs for a single
consignee in the
goods carriage
Amount
charged
Taxability
20,000
Exempt. Transportation of milk and salt by

goods transport agency is exempt vide
Notification No. 25/2012-S.T. dated
20.06.2012.
3,000
Service tax is leviable, as the gross

amount charged for transportation of
goods on a consignment transported in a
single goods carriage > Rs. 1,500
600
Exempt, as gross amount charged for

transportation of all goods for a single
consignee < Rs.750/-
Example 6
Airport Authority of India (AAI) awarded a contract for construction of an airport in the Nicobar
Islands to Ananyana Construction Ltd., for Rs 100 lakh in August, 2015. Are the services of
Ananyana Construction Ltd. subject to service tax and if so, determine the amount of service
tax payable?
Answer
N/N 6/2015 has amended mega exemption notification No. 25/2012, w-e-f 1-4-15 and has
excluded services by way of construction of an airport from the exemption. Therefore, the
services of Ananyana Construction Ltd. are subject to service tax. Tax payable would be =
14% of 100 lakhs = 14 lakhs
Example 7
Basic Computer Centre (BCC) provided services of Rs 8.4 lakh during the financial year 201415 in respect of repair and maintenance of computers under the unregistered brand name of
BIIT Computers. Is BCC entitled for small service provider exemption of Rs10 lakh under
Notification No. 33/2012 - S.T. dated 20.06.2012, in the current financial year 2015-16?
Answer
Notification No. 33/2012-S.T. dated 20.06.2012 provides threshold exemption of Rs10 lakh in
the current financial year if the aggregate value of taxable services rendered by a provider of
taxable service from one or more premises does not exceed Rs 10 lakh in the preceding
financial year. However, the said exemption will not be available to taxable services provided
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by a person under a brand name or trade name of another person, irrespective of the fact
whether such brand name or trade name is registered or not.
Since in the present case, Basic Computer Centre provides taxable services under the brand
name of another person-BIIT Computers even though such brand name is unregistered, it is
not entitled to avail threshold exemption of Rs.10 lakh.
Example 8
Robinson Bank Ltd. furnishes the following information relating to services provided and the
gross amount received during the month of December, 2015. Compute the value of taxable
service and service tax payable:
Rs.(Lakhs)
i. Amount of commission received for debt collection service
10
ii. Discount earned on bills discounted
4.5
iii. Value of sale and purchase of forward contract
5.7
iv. Charges received on credit card and debit card facilities extended
3.8
v. Penal interest recovered from the customers for the delay in
2.6
repayment of loan
vi. Commission received for service rendered to Government for tax
6.0
collection
vii. Interest earned on reverse repo transaction
25.0
Note: Robinson Bank Ltd. is not eligible for small service providers exemption under
Notification No. 33/2012 ST dated 20.06.2012.
Answer
Computation of value of taxable service and service tax payable by Robinson Bank Ltd.
Sl. No. Particulars
Rs.
1)
Commission received for debt collection service [Note 1]
10,00,000
2)
Discount earned on bills discounted [Note 2]
3)
Value of sale and purchase of forward contract [Note 3]
4)
Charges received on credit and debit card facilities extended
3,80,000
[Note 4]
5)
Penal interest recovered from the customers for the delay in
repayment of loan [Note 5]
6)
Commission received for service rendered to Government for
6,00,000
tax collection [Note 1]
7)
Interest earned on reverse repo transaction [Note 6]
Total
19,80,000
Value of taxable service [ .] rounded off

[since all the amounts are total amounts received]
service tax
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17,29,258
2,42,096
SBC
8,646
Total
2,50,742
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Notes:
1. Commission received for debt collection service and commission received for service
rendered to Government for tax collection are neither transactions in money nor
covered in negative list or under any exemption notification and are thus liable to
service tax.
2. Services of bills discounting where the consideration is represented by way of
discount, is covered in the negative list of services.
3. Sale or purchase of forward contracts, being transaction in money, is outside the
scope of the definition of service.
4. Credit extended through credit and debit cards is not in the nature of loan or advance
for interest and thus, the charges received is consideration for the services rendered
by way of credit card.
5. Penal interest recovered from the customers for the delay in repayment of loan is not
a consideration for an activity. Further, since services of extending loans in so far as
the consideration is represented by way of interest is covered in the negative list,
penal interest charged for delay in repayment of loan will also not be liable to service
tax.
6. Reverse repo being a security, which is goods is excluded from the definition of
service.
Example 9
Florus Advertising agency received the following charges during the quarter ended
31.03.2016, for the services rendered by it:Services rendered
Amount(Rs)
Sale of space for advertisement in newspaper
45,000
Services related to preparation of advertisement
85,000
Sale of time for advertisement to be broadcast on Radio
65,000
Advertisement via banner at public places
50,000
Sale of time for advertisement to be broadcast on TV Channel
1,00,000
Aerial bill-boards
90,000
Canvassing advertisement for publishing on a commission basis
35,000
Compute the service tax liability of Florus Advertising agency for the quarter ended
31.03.2016.
Notes:
1. Point of taxation for all the aforesaid cases falls during the quarter ended 31.03.2016.
2. All the charges stated above are exclusive of service tax.
3. Small service providers exemption, under Notification No. 33/2012 need not be taken
into account while solving the aforesaid question.
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Answer
Selling of space or time slots for advertisements in print media is included in the Negative
List of services u/s 66D of the Finance Act, 1994.
Hence, sale of space for advertisement in print media is not taxable.
Thus, the amount of service tax payable by Florus Advertising agency for the quarter ended
31.03.2016 would be as follows:Particulars
Sale of space for advertisement in newspaper
Services related to preparation of advertisement
Sale of time for advertisement to be broadcast on FM Radio
Advertisement via banner at public places
Sale of time for advertisement to be broadcast on TV Channel
Aerial bill-boards
Canvassing advertisement for publishing on a commission basis
Service tax @ 14%
SBC @ 0.5%
Amount (Rs)
85,000
65,000
50,000
1,00,000
90,000
35,000
4,25,000
59,500
2,125
Example 10
ASB Ltd., has a real estate business. It furnishes the following information pertaining to
services provided:
Construction services provided to International Labour Organisation
10,00,000
Construction of private clinic of a doctor
50,00,000
Repair service provided to State Government relating to plant for
25,00,000
sewerage treatment
Construction of roads in a factory
20,00,000
Construction of residential complex meant for use of Member of
80,00,000
Parliament
Renting of residential dwelling for use as residence
2,00,000
Repair and maintenance of a Railway Station
15,00,000
Compute the value of taxable service and the service tax liability of ASB Ltd. assuming that it
is not eligible for small service providers exemption under Notification No. 33/2012 ST dated
20.06.2012.
Answer
Computation of value of taxable service and service tax liability of ASB Ltd:Construction services provided to International Labour Organisation
(Note-1)
Construction of private clinic of a doctor
Repair service provided to State Government relating to plant for
sewerage treatment (Note-1)
Construction of roads in a factory (Note-2)
Construction of residential complex meant for use of a Member of
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Nil
50,00,000
Nil
20,00,000
80,00,000
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Parliament (Note-2)
Renting of residential dwelling for use as residence (Note-3)
Repair and maintenance of a Railway Station (Note-2)
Service tax @ 14%
SBC @ 0.5%
Total
Nil
15,00,000
1,65,00,000
23,10,000
82,500
23,92,500
Notes:
1. Following service are exempt from service tax vide mega exemption notification Notification No. 25/2012-ST dated 20.06.2012:(a) Any services provided to the specified international organisation.
(b) Repair service provided to State Government relating to plant for sewerage treatment.
(c) Construction of residential complex meant for use of a Member of Parliament.
2. Following are not covered by exemption notification
(i) Construction of roads which is not for use by general public is taxable.
(i) Construction of residential complex meant for use of Member of Parliament is taxable.
(ii) Services by way of construction, erection, or installation of original works pertaining to
railway. Therefore, repair and maintenance of railways is liable to service tax.
3. Services by way of renting of residential dwelling for use as residence are included in
the negative list and hence, are not taxable
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What are the Cases in which the commission, costs, etc., will be included or
excluded?
Rule 6: Inclusions / Exclusions

(1) the value of the taxable services shall include
(i) the commission or brokerage charged by a broker on the sale or purchase of
securities including the commission or brokerage paid by the stock-broker to any subbroker;
(ii) the adjustments made by the telegraph authority from any deposits made by the
subscriber at the time of application for telephone connection or pager or facsimile or
telegraph or telex or for leased circuit;
(iii) the amount of premium charged by the insurer from the policy holder;
(iv) the commission received by the air travel agent from the airline;
(v) the commission, fee or any other sum received by an actuary, or intermediary or
insurance intermediary or insurance agent from the insurer;
(vi) the reimbursement received by the authorised service station, from manufacturer for
carrying out any service of any motor car, light motor vehicle or two wheeled motor
vehicle manufactured by such manufacturer;
(vii) the commission or any amount received by the rail travel agent from the Railways or
the customer;
(viii) the remuneration or commission, paid to a C&F agent rendering services of
clearing and forwarding operations in any manner;
(ix) the commission, fee or any other sum, paid to agent by the insurer in relation to
insurance auxiliary services provided by an insurance agent; and
(x) the amount realised as demurrage or by any other name for the provision of a service
beyond the period originally contracted or in any other manner relatable to the
provision of service.
(2) Subject to the provisions contained in sub-rule (1), the value of any taxable service, as the
case may be, does not include
(i) initial deposit made at the time of application for telephone connection or pager or
facsimile (FAX) or telegraph or telex or for leased circuit;
(ii) the airfare collected by air travel agent;
(iii) the rail fare collected by rail travel agent; and
(iv) interest on delayed payment of any consideration for the provision of services or
sale of property, whether movable or immovable
Provided that this clause shall not apply to any service provided by Government or a
local authority to a business entity where payment for such service is allowed to be
deferred on payment of interest or any other consideration [Inserted by N/N
23/2016 13th April, 2016]
(v) the taxes levied by any Government on any passenger travelling by air, if shown
separately on the ticket, or the invoice for such ticket, issued to the passenger, and
(vi) Accidental damages due to unforeseen actions not relatable to the provision of
service.
(vii) Subsidies and grants disbursed by the Government, not directly affecting the value
of service.
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POINT OF TAXATION RULES
Rule 5 states that in cases of new services.No tax is payable,

(1) if (i) Invoice has been issued, and
(ii) the payment is received
before such service became taxable, or
(2) if
(i) Payment has been received before the service becomes taxable, and
(ii) Invoice has been issued within 14 days of the date when the service is taxed for
the first time.
Following explanations inserted w-e-f 1st March 2016 by N/N 10/2016
Explanation 1. - This rule shall apply mutatis mutandis in case of new levy on services.
Explanation 2. - New levy or tax shall be payable on all the cases other than specified above
7. What is POT in case of service chargeable on reverse charge basis?

As per Rule 7(1) POT in case of Service receivers liable to pay tax u/s 68(2) (ie.,on reverse
charge basis) shall be the Date of Payment.
Provided that where the payment is not made within a period of 3 months of the date of
invoice, the point of taxation shall be the date immediately following the said period of 3
months. [Amended by N/N 13/14 w-e-f 01-10-14]
Provided also that where there is change in the liability or extent of liability of a person
required to pay tax as recipient of service u/s 68(2) of the Act, in case service has been
provided and the invoice issued before the date of such change, but payment has not
been made as on such date, the point of taxation shall be the date of issuance of invoice.
Illustration - M/s. BIB Ltd. imported certain taxable services valuing Rs. 45 lakhs.
The services were provided on 15-11-2015.
An advance of Rs. 15 lakh (towards value) was paid by BIB Ltd. on 15-10-2015.
Date of Invoice was 01-12-2015.
Rs 25 lakhs were paid on 10-12-15 and the balance of Rs. 5 lakhs on 15-4-2016.
M/s. BIB Ltd., being the recipient of service, is the person liable to pay service tax as notified
u/s 68(2) of the Finance Act, 1994.
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POT
Remarks
15-10-2015
For the advance payment of Rs. 15 lakh, the date of making payment by
the service receiver
10-12-2015
For Rs. 25 lakh, the date of making payment shall be the POT u/r 7, as the
payment is made within 3 months of the date of issue of invoice.
01-03-2016
For Rs.5 lakhs, the payment is not made within 3 months of issue of invoice,
hence POT immediately on expiry of 3 months from date of invoice
What is POT in case of service provided by the government or local authority to a

business entity?
As per proviso to rule 7 in case of services provided by the Government or local authority
to any business entity, the point of taxation shall be the earlier of the dates on which, (a) any payment, part or full, in respect of such service becomes due, as specified
in the invoice, bill, challan or any other document issued by the Government or local
authority demanding such payment; or
(b) payment is made.
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PAYMENT OF SERVICE TAX
1. Who is required to pay Service Tax?

As per Sec 68 following persons are required to pay service tax(1) Every person providing taxable service shall pay service tax in the prescribed manner
and within the prescribed time.
(2) Deemed service provider:
in respect of notified taxable services, the service tax shall be paid by such person and in
such manner as may be prescribed and all the provisions of this Chapter shall apply to
such person as if he is the person liable for paying the service tax in relation to such
service.
Provided that the Central Government may notify the service and the extent of service tax
which shall be payable by the deemed service provider and the remaining part of the
service tax shall be paid by the actual service provider.
Notification No. 30/2012-Service Tax
The Central Government hereby notifies the following taxable services and the extent of
service tax payable thereon by the person liable to pay service tax for the purposes of the
said sub-section, namely:
I. The taxable services,
(A)
(i)
provided or agreed to be provided by an insurance agent to any person carrying
on the insurance business;
(ia) in relation to service provided or agreed to be provided by a recovery agent to a
banking company or a financial institution or a non-banking financial company,
the recipient of the service; [Inserted by N/N 10/14 dated 11-07-14]
(ib) provided or agreed to be provided by a mutual fund agent or distributor ,to a mutual
fund or asset management company [Inserted by N/N 7/15 w-e-f 1-04-15]
[omitted by N/N 18/2016 w-e-f 1-4-16]
(ic) provided or agreed to be provided by a selling or marketing agent of lottery
tickets in relation to a lottery in any manner to a lottery distributor or selling
agent of the State Government under the provisions of the Lottery
(Regulations) Act, 1998
[Amended by N/N 18/2016 w-e-f 1-4-16]
(ii)
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provided or agreed to be provided by a goods transport agency in respect

of transportation of goods by road, where the person liable to pay freight is,
(a) any factory registered under or governed by the Factories Act, 1948;
(b) any society registered under the Societies Registration Act, 1860 or under
any other law for the time being in force in any part of India;
(c) any co-operative society established by or under any law;
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(d) any dealer of excisable goods, who is registered under the Central Excise
Act, 1944 or the rules made thereunder;
(e) any body-corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including
association of persons;
(iii)
provided or agreed to be provided by way of sponsorship to any bodycorporate or partnership firm located in the taxable territory;
(iv)
provided or agreed to be provided by,(A) an arbitral tribunal, or

(B) a firm of advocates or an individual advocate other than senior
advocate, by way of legal services, or [Amended by N/N 18/2016 w-e-f 14-16]
(v)
Government or local authority by way of support services [Omitted by N/N 7/15

w-e-f 1-4-16] excluding,1. renting of immovable property, and
2. services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D
of the Finance Act,1994,to any business entity located in the taxable
territory;
(vi) Provided or agreed to be provided by a person involving an aggregator in any

manner. [Inserted by N/N 7/15 w-e-f 1-03-15]
As per Rule 2(aa) of service tax rules, 1994, aggregator means a person, who
owns and manages a web based software application, and by means of the
application and a communication device, enables a potential customer to connect
with persons providing service of a particular kind under the brand name or trade
name of the aggregator;
Provided that if the aggregator does not have a physical presence in the taxable
territory, any person representing the aggregator for any purpose in the taxable
territory shall be liable for paying service tax;
Provided further that if the aggregator does not have a physical presence or does
not have a representative for any purpose in the taxable territory, the aggregator
shall appoint a person in the taxable territory for the purpose of paying service
tax and such person shall be liable for paying service tax.
(iva) provided or agreed to be provided by a director of a company or body corporate
to the said company or body corporate;
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(vii) provided or agreed to be provided by way of

(a) renting of a motor vehicle designed to carry passengers to any person
who is not in the similar line of business, or
(b) supply of manpower for any purpose, or
(c) security services, or
(d) service portion in execution of works contract
By
any individual,
Hindu Undivided Family or
partnership firm, whether registered or not,
including association of persons,
Located in the
taxable territory
To
a business entity registered
as body corporate
Located in the
taxable territory
(B) Provided or agreed to be Provided by any person which is located in a non-taxable territory and
Received by any person located in the taxable territory;
(II) The extent of service tax payable thereon by the person who provides the service and
the person who receives the service for the taxable services specified in (I) shall be as
specified in the following Table, namely:Table
Sl
No
Description of a service
service tax
payable by
ASP
service tax
payable by
DSP
services provided or agreed to be provided by an

insurance agent to any person carrying on
insurance business
Nil
100%
1A
service provided or agreed to be provided by a

recovery agent to a banking company or a
financial institution or a non-banking financial
company
Nil
100%
1B
in respect of services provided or agreed to be

provided by a mutual fund agent or distributor, to a
mutual fund or asset management company
Nil
100%
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1C

provided by a selling or marketing agent of lottery
tickets in relation to lottery in any manner to a
lottery distributor or selling agent of the State
Government under the provisions of the Lottery
(Regulations) Act, 1998 [Amended by N/N 18/16
w-e-f 1-04-16]
Nil
100%
services provided or agreed to be provided by a

goods
transport
agency
in
respect
of transportation of goods by road
Nil
100%

provided by way of sponsorship
Nil
100%
services provided or agreed to be provided by an

arbitral tribunal
Nil
100%

firm of advocates or an individual advocate other
than a senior advocate by way of legal services
[Amended by N/N 18/16 w-e-f 1-04-16]
Nil
100%
5A

director of a company or a body corporate to
the said company or body corporate
Nil
100%
services provided or agreed to be provided by

Government or local authority
excluding (1) renting of immovable property, and
(2) services specified in sub-clauses (i), (ii) and (iii)
of clause (a) of section 66D of the Finance
Act,1994, i.e.,
(i) services by the Department of Posts by way
of speed post, express parcel post, life
insurance and agency services provided
to a person other than Government;
(ii) services in relation to an aircraft or a
vessel, inside or outside the precincts of a
port or an airport;
(iii) transport of goods or passengers
Nil
100%
(a)
services provided or agreed to be
provided by way of renting of a motor vehicle
designed to carry passengers on abated value to
any person who is not engaged in the similar line
of business
Nil
100 %
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(b) in respect of services provided or agreed to

be provided by way of renting of a motor vehicle
designed to carry passengers on non-abated
value to any person who is not engaged in the
similar line of business
50%
50%
services provided or agreed to be provided by

way of supply of manpower for any purpose or
security services
NIL
100%
services provided or agreed to be provided in

service portion in execution of works contract
50%
50%
10
any taxable services provided or agreed to be

provided by any person who is located in a nontaxable territory and received by any person
located in the taxable territory
Nil
100%
11
in respect of any service provided or agreed to be

provided by a person involving an aggregator in
any manner [Inserted by N/N 7/15 w-e-f 1-03-15]
Nil
100%
Explanation-I. - The person who pays or is liable to pay freight for the transportation of
goods by road in goods carriage, located in the taxable territory shall be treated as the
person who receives the service for the purpose of this notification.
Explanation-II. - In works contract services, the service recipient has the option of
choosing the valuation method as per choice, independent of valuation method adopted by
the provider of service.
Security services means services relating to the security of any property, whether
movable or immovable, or of any person, in any manner and includes the services of
investigation, detection or verification, of any fact or activity;
2. What is the due date for payment of service tax?

As per Rule 6(1) of Service Tax Rules, the service tax shall be paid to the credit of the Central
Government before the following due dates
Individual / Proprietary firm /
Any other person
Partnership firm / HUF and
OPC ***
Quarter in which the service is Month in which the service
Duration
deemed to be provided as per the is deemed to be provided
POT rules
as per the POT rules
th
6 day of the month following the 6th day of the following
Payment by ECS:
quarter
month
Payment by any other 5th day of the month following the 5th day of the following
mode
quarter
month
st
31st March
Month
/
quarter 31 March
ending march
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*** OPC is required to make payment on quarterly basis if aggregate value of taxable
services provided from one or more premises is <= 50 lakhs in the previous financial year
[HUF and OPC added by N/N 19/2016 w-e-f 1-4-2016]
Compulsory ECS payment: Every assessee is required to pay tax electronically. AC or
DC of Central Excise may for reasons to be recorded in writing, allow the assessees to deposit
the service tax by any mode other than internet banking. (N/N 9/14 w-e-f 1-10-14)
Exception from POT Rules:
Individuals, Partnership firms and OPC [added by N/N 19/2016 w-e-f 1-4-16] whose
aggregate value of taxable services provided from one or more premises is < or = Rs. 50 lakhs
in the previous FY:
The service provider shall have the option to pay tax in the current financial year on actual
receipt basis on value of taxable services provided or agreed to be provided by him up to a
total of Rs. 50 lakhs.
[Means payment is to be made with reference to month or quarter in which payment is received
and not on the basis of POT rules.]
Composition Scheme
2. Life insurance service [Rule 6(7A)] [w-e-f 1-6-15]
An insurer carrying on life insurance business shall have the option to pay tax:
(i) on the gross amount of premium charged from a policy holder reduced by the
amount allocated for investment, or savings on behalf of policy holder, if such
amount is intimated at the time of providing of service;
(ii) in all other cases,
3.5% of the premium charged in the 1st year and
1.75% of the premium charged in the subsequent years.
1.4% of premium in case of single premium annuity policy [inserted by
N/N 19/2016 w-e-f 1-4-16]
However, such option is not available in cases where the entire premium paid by the policy
holder is only towards risk cover in life insurance.
RETURNS [Sec 70]

(1) Every person liable to pay the service tax shall himself assess the tax due on the services
provided by him and shall furnish to the Superintendent of Central Excise, a return in such
form and in such manner and at such frequency and with such late fee not exceeding
Rs.20,000/-, for delayed furnishing of return, as may be prescribed.
(2) Persons or class of persons notified under section 69(2) shall furnish to the
Superintendent of central excise a return in such form and in such manner and at such
frequency as may be prescribed.
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Rule 7 of service tax Rules: Form and due date of Returns

(1) Every assessee shall submit a half-yearly return in Form ST-3 or ST-3A; as the case
may be, along-with a copy of GAR-7 challan, in triplicate for the months covered in the
half yearly return.
(2) Every assessee shall submit the half-yearly return by the 25th of the month following the
particular half-year.
(3) Every assessee shall submit the half-yearly return electronically
(3A) Notwithstanding anything contained in sub-rule (1), every assessee shall submit an
ANNUAL RETURN for the financial year to which the return relates, in such form and
manner as may be specified in the notification in the Official Gazette by the Central Board
of Excise and Customs, by the 30th day of November of the succeeding financial year;
(3B) The Central Government may, subject to such conditions or limitations, specify by
notification an assesse or class of assesses who may not be required to submit the annual
return referred to in sub-rule (3A) [inserted by N/N 19/2016 w-e-f 1-4-16]
(4) The CBEC may, by an order extend the period of filing the return under sub-rule (1) or (3A)
by such period as deemed necessary under circumstances of special nature to be specified
in such order
Rule 7B of service tax rules: Revision of Return
(1) an assessee may submit a revised return, in form ST-3, in triplicate, to correct a mistake
or omission, within a period of 90 days from the date of submission of the original return.
(2) An assessee who has filed the annual return under rule 7(3A) by the due date may
submit a revised return within a period of 1 month from the date of submission of the
said annual return [inserted by N/N 19/2016 w-e-f 1-4-16]
Explanation: - Where an assessee submits a revised return, the relevant date for the
purpose of recovery of service tax, if any, u/s 73 shall be the date of submission of such
revised return.
Rule 7C of service tax rules: Delay in furnishing the return
(1) Where the return prescribed under rule 7(1) is furnished after the due date the person liable
to furnish the said return shall pay following feesPeriod of delay
Fees to be paid
15 days from the date
Rs.500/beyond 15 days but up to 30 days Rs.1000/beyond 30 days from the due date Rs.1000/- + Rs.100/- for every day from the 31st day till
the date of furnishing the said return.
Maximum Rs.20,000/-
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Reduction / Waiver of fees: where the gross amount of service tax payable is NIL, the
Central Excise officer may, on being satisfied that there is sufficient reason for not filing the
return, reduce or waive the penalty
(2) Where the annual return referred to in sub-rule (3A) of rule 7 is filed by the assessee after
the due date, the assessee shall pay to the credit of the Central Government, an amount
calculated at the rate of Rs. 100 per day for the period of delay in filing of such return, subject
to a maximum of Rs. 20,000/- [inserted by N/N 19/2016 w-e-f 1-4-16]
Details to be disclosed in the Return
Month wise details of [for each Category / Classification of Services]
a) Amount received towards the taxable value
b) Amount received in advance towards taxable service to be provided
c) Amount billed for exempted services and services exported without payment of tax
d) Amount billed for services on which tax is to be paid
e) Abatement claimed -value
f) Notification number of abatement and exemption
g) Service tax payable
h) Education cess payable
i) GAR-7 challan date and number
j) Credit details for service tax provider/ recipient
First Return [Rule 5(2)]
At the time of filing the 1st Return every assessee should furnish a list of the following
a) Records prepared / maintained for Provision of services (both taxable and exempted)
Receipt or Procurement of Input Services
Payment for such input services
Receipt, purchase, manufacture, storage etc. of inputs and capital goods
b) Records for other activities such as manufacture and sale of goods Financial records
maintained in the normal course of business
Monetary threshold limits enhanced for prosecution and arrest in central excise and
service tax [Circular No.1009/16/2015 CX dated 23.10.2015]
Prosecution
Revised guidelines have been issued on prosecution under central excise and service Tax.
The significant aspects of the guidelines are:
(a) Monetary limit: Prosecution will normally not be launched unless evasion of central
excise duty or service tax, or misuse of CENVAT credit in relation to offences specified
under section 9(1) of the Central Excise Act, 1944 or section 89(1) of the Finance
Act,1994 is = or > Rs. 1 crore. It may be noted that though there is no change in the
monetary limits (Rs. 50 lakh) prescribed under the concerned sections, these
directions have been issued to optimally utilize limited resources of the Department.
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(b)
Habitual evaders: Notwithstanding the above limits, prosecution can be launched in
the case of a company/ assessee habitually evading tax/ duty or misusing CENVAT credit
facility.
A company/ assessee would be treated as habitually evading tax/ duty or misusing CENVAT
credit facility, if it has been involved in 3 or more cases of confirmed demand (at the first
appellate level or above) of central excise duty or service tax or misuse of CENVAT credit
involving fraud, suppression of facts etc. in past 5 years from the date of the decision such
that the total duty or tax evaded or total credit misused is = or > Rs. 1 crore.
(c)
Authority to sanction prosecution: The criminal complaint for prosecuting a person
can be filed only after obtaining the sanction of the Principal Chief/Chief Commissioner of
Central Excise or Service Tax as the case may be. Once the sanction for prosecution has
been obtained, criminal complaint in the court of law will be filed as early as possible by an
officer of the jurisdictional Commissionerate authorized by the Commissioner.
(d)
Cases when prosecution would not be filed: Prosecution would not be filed merely
because a demand has been confirmed in the adjudication proceedings particularly in cases
of technical nature or where interpretation of law is involved.
(e)
Adequacy of evidence: One of the important considerations for deciding whether
prosecution can be launched is the availability of adequate evidence. The standard of proof
required in a criminal prosecution is higher as the case has to be established beyond
reasonable doubt whereas the adjudication proceedings are decided on the basis of
preponderance of probability. Therefore, even cases where demand is confirmed in
adjudication proceedings, evidence collected would be weighed so as to likely meet the test
of being beyond reasonable doubt for recommending prosecution. Decision will be taken on
case-to-case basis considering various factors, such as, nature and gravity of offence,
quantum of duty/tax evaded or CENVAT credit wrongly availed and the nature as well as
quality of evidence collected.
(f)
Stage for launching of prosecution: Normally, prosecution may be launched
immediately on completion of adjudication proceedings.
If the party deliberately delays completion of adjudication proceedings, prosecution may be
launched even during the pendency of the adjudication proceedings, where offence is grave
and qualitative evidences are available [in view of the decision of Supreme Court in case of
Radhe Shyam Kejriwal 2011(266)ELT 294
Arrest
Pursuant to the enhancement in prosecution limits, monetary limits for arrest have also been
enhanced. Henceforth, arrest of a person in relation to offences specified under clauses (a) to
(d) of section 9(1) of the Central Excise Act, 1944 or under clauses (i) or (ii) of section 89(1)
of the Finance Act, 1994, may be made in cases where the evasion of central excise duty/
service tax or the misuse of CENVAT credit is = or > Rs. 1 crore.
[Circular No.1010/16/2015 CX dated 23.10.2015]
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COMMON TOPICS
Interest on delayed payment of duty:
[Sec. 11AA of CEA, Sec.28AA of CuA & 75 of Fin Act 1994]
@ 15% pa for excise and customs
Interest
Rate
Notification No. 15/2016 - Central Excise (N.T) (w-e-f 1-4-16)
Notification No. 33/2016 - Customs (N.T.) (w-e-f 1-4-16)
However, in service tax, With effect from 01.10.2014, Notification No.
12/2014 ST dated 11.07.2014 prescribes slab rates of interest as under.
Up to 6 months
18% pa
6 months to 1 year
18 % for the first 6 months

24 % beyond 6 months.
More than 1 year
18 % for first 6 months

24 % for next 6 months
30 % beyond 1 year.
Small Service Providers: will get 3% concession

(i.e.,whose value of taxable services provided in a financial year, does not
exceed Rs. 60 lakh
during any of the financial years covered by the notice, or
during the last preceding financial year, as the case may be)
Mandatory
Payment
Notwithstanding anything contained in any judgment, decree, order or

direction of the Appellate Tribunal or any court or in any other provision of
this Act or the rules made there under, the person, who is liable to pay duty,
shall, in addition be liable to pay interest, whether such payment is made
voluntarily or after determination of the amount of duty by the proper officer.
Period
Excise and service tax: From the date on which such duty becomes due
up to the date of actual payment.
Customs: From the 1stday of the month succeeding the month in which the
duty ought to have been paid or from the date of such erroneous refund, as
the case may be, up to the date of payment of such duty
Waiver of
interest
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No interest is payable where the duty becomes payable under an order, instruction or direction by CBEC, and
such amount is voluntarily paid in full within 45 days from the date of the
order,
Without reserving any right of appeal.
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IDT for CA FINAL

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Amendments for NOV 2016

Is Duty Payable by Government?

Amendments for NOV 2016

Amendments for NOV 2016

Page: Excise 104

Amendments for NOV 2016

Page: Excise 105

the quarter ofApril to June

6th of month following 5th of month following

31st day of March

Amendments for NOV 2016

Page: Excise 111. Insert before new central excise code

Amendments for NOV 2016

Page: Excise 116

Page: Excise 118 / 119

6. Annual Installed Capacity Statement:(omitted by N/N 8/16 w-e-f 1-4-16)

Amendments for NOV 2016

Time limit for

Quarterly return by Mfr

10th of next month

Quarterly Return by SSI

Assessee availing SSI

Monthly return of receipt and

Monthly Return by large units

Assessee paying duty

10th of next month

Amendments for NOV 2016

Page: Excise 120

Date & Time of removal i.e. 10 Jan will

Said Person will

Amendments for NOV 2016

Amendments for NOV 2016

Page: Excise 128

Page: Excise 134

Amendments for NOV 2016

Amendments for NOV 2016

5. Procedure to be followed by supplier manufacturer of subject goods.

Amendments for NOV 2016

CENVAT CREDIT RULES 2004

PAGE: EXCISE 144

Ineligible Capital Goods: Any equipment or appliance used in an office. [omitted by

PAGE: EXCISE 146

PAGE: EXCISE 146

all goods used for providing any output service, or

Amendments for NOV 2016

any goods which have no relationship whatsoever with the manufacture of a

PAGE: EXCISE 148

Amendments for NOV 2016

(sales promotion includes services by way of sale of dutiable goods on commission

The exclusion list remains the same

PAGE: EXCISE 155

Concessional Duty paid under

PAGE: EXCISE 162

Amendments for NOV 2016

PAGE: EXCISE 163

PAGE: EXCISE 165

Amendments for NOV 2016

- If not received in 2 years:

Return within 2 years

PAGE: EXCISE 170

Amendments for NOV 2016