Leaf No:  Supplement
Month:  March
Year:  2011
central excise


Rate of duty

  • The peak Excise duty rate continues to be 10% and there is no change.
  • The goods hitherto attracting 4% rate of duty, except petroleum products, will attract 5% duty with effect from 1/3/2011. Click here for the list.
  • About 130 items, hitherto enjoying full exemption or attracting Nil rate of duty, will henceforth attract 1% duty without Cenvat credit benefit (wef 1/3/2011)…. Click here for the list of goods & features of the new 1% scheme.
  • Rate of duty on Cement and Clinker stands abnormally increased… Click here for details
  • Ready Made Garments and Made Up Articles falling under Chap 61, 62 and 63 when sold with Brand Name are brought under compulsory levy of 10% duty… Click here for details & article 

Mega Power Projects


Hitherto S.No.91A, 91B & 91C of Notification 6/2006 CE provided for supply of all goods to Mega Power Project and Ultra Mega Power Project subject to a condition that the goods are also entitled for exemption under Customs. Now the said condition has been removed and instead ‘All goods’ have been substituted with the Tariff description contained in heading 9801 of the Customs Tariff.


Click here for new exemptions & withdrawal of exemptions


 Deemed Manufacture


#   Activities such as packing, repacking, labeling, re-labelling, etc has been declared as manufacturing activity in respect of Chap 15, Chap 22 & Chap 63.

#   Process of conversion of ore into concentrates has been deemed to be manufacture under Chap 26.

#   Refining of Gold Dore Bars has been deemed to be manufacture under Chap 71.

#   Process of Galvanisation has been deemed to be manufacture under Chap 72.


 Legislative Amendments


 #   Major revamp in Section 11A... Click here for an article

#   Interest hiked to 18% from 13% Click here for an article

#   New Sections 11E,12F & 35 R introduced


Click here for legislative amendments



cenvat credit


 #   Definition of ‘Capital goods’ expanded to include specified goods used outside the factory for generation of electricity for captive use within the factory (w.e.f 01-04-2011).

#   Definition of ‘inputs’ amended (w.e.f 01-04-2011)...Click here for brief note.

#   Definition of “input services” amended (w.e.f 01-04-2011)... Click here for brief note.

#   “Exempted goods” to include goods subject to 1% excise duty as per Notification 1/2011-CE dated 01-03-2011 (w.e.f 01-03-2011). No Cenvat credit can be used for payment of duty of such goods. No Cenvat credit would be available on such 1% duty to the buyers of such goods.

#   “Exempted services” to include trading and taxable services whose part of value is exempted on condition that no credit on inputs and input services shall be taken (w.e.f 01-04-2011). With this amendment trading and services with benefit of abatement would be treated as exempted services.

#   No need to reverse credit on inputs taken outside factory for providing free warranty services.

#   Credit of Cenvat to be reversed on inputs and capital goods which are written off partially or where provision to write off partially is made (w.e.f 01-03-2011). Hitherto, reversal was contemplated only if written off/provision to write off fully was made!

#   Cenvat credit taken on input services to be reversed when any amount is returned back to the service recipient by the service provider, on or before 5th of the succeeding month (w.e.f 01-04-2011.

#   Service tax paid under Rule 66A has been added in list of eligible credit with effect from 18-04-2006.

# Crucial amendments in Rule 6 of CCR, 2004...Click here for a brief note

Click here for a comprehensive analysis on cenvat amendments

service tax



·        Service tax to be paid on accrual basis (instead of the present receipt basis) w.e.f 01-04-2011.
·         Interest on delayed payments increased to 18% from 13%.
·        No audit for individuals with turnover up to 60 lakhs. Applicable rate of interest for such tax payers would be 15%.
·        Air-conditioned restaurants having license to serve alcoholic beverages to pay service tax on services provided while serving food and beverages...Click here for an article
·        Short – term accommodation in hotels, inns, guest houses charging Rs.1000/- per day or more has been brought under the service tax net.
Amendments to the Existing Services:
·        Scope of life insurance service expanded to cover services relating to managing investment for policy holders  ;
·        Scope of club or association service expanded to cover service provided to non members;
·        Scope of authorised service station expanded to include service provided by any person, further includes decoration services and servicing to  all motor vehicles except three wheeler rickshaws and goods carriages .
·        Business support service expanded to include operational or administrative assistance in any manner;
·        Scope of legal consultancy service to include representational service provided to business entities and services of arbitration provided by arbitration tribunal to business entity;
·        Commercial training or coaching service amended to include all unrecognised courses;
·        Health services to include service provided by clinical establishments with central airconditioning  and more than 25 beds for inpatient treatment, in relation to diagnostic test, doctors from premises of such clinical establishment.
Exemption Notifications:
Exemption to services provided by organisers of business exhibitions in relation to business exhibitions organised outside India... Click here for Notification
Abatement of 25% provided to  services rendered in relation to ‘transport of coastal goods’ and goods transported through ‘national waterways or inland water’... Click here for Notification
Exemption to works contract services when rendered for construction of residential complex or completion and finishing services under Jawarhal Nehru Urban Renewable Mission... Click here for Notification
Exemption to general insurance provided under Rashtriya Swashya Bima Yojna... Click here for Notification
Exemption to works contract service rendered within port or other port in specified areas... Click here for Notification
Exemption to transport of goods when provided to a person in India from a destination outside India to a destination outside India...Click here for Notification.
Exemption to works contract service when provide inside airport and classified under airport service ...Click here for Notification
Exemption with retrospective effect to association or chamber representing commerce or industry in respect of membership fee under ‘Club or association service’ for the period 16-06-05 to 31-03-08.
Exemption with retrospective effect to interstate or intra state transport of passengers in a vehicle baring contract carriage and tourist vehicle permit for period 01-04-2000 to 06-07-2009.
Amendment to Existing Notifications
Service tax applicable to transport of passengers by air service is revised ..... Click here for Notification
Amendment in SEZ notification widening scope of services ‘wholly consumed’ within SEZ... Click here for Notification
Works contract Composition Rules amended to restrict the credit on input services such as erection, commissioning & installation, commercial or industrial construction and construction of residential complex services to 40%, when tax has been paid on such services after availing credit on inputs .... Click here for Notification
·        No audit for individuals and sole proprietor assesees whose turnover is up to 60 lakhs;
·        Delay in filing returns to attract penalty from Rs. 2,000 to 20,000/-
·        Benefit of reduced penalty not available in cases of fraud, collusion etc unless details are available in records.
·         Prosecution under Service tax;
·        Applicable rate for service tax to be the rate prevailing at the time of rendering service ...Click here for Point of Taxation Rules & an article
·        Monetary limit of adjustment under service tax enhanced to Rs. 2,00,000/-
·        Re-categorisation of certain services under Export of Service Rules, 2005 and Import of Service Rules, 2005... Click here for an article
contact Us
editor’s desk -sindhu

 Greetings from Team SA!

Amidst hopes and speculations, Budget 2011 has been presented by Hon’ble Finance Minister. The budget affirms what has been observed in Economic survey reports for the year 2010-11 that agriculture is rebounding, manufacturing continues its momentum, and private services is picking up. Fundamentals are also stronger that savings and investment are up, exports are rising rapidly, and inflation is falling, after a prolonged hiatus!!!



• Peak rate of customs duty @ 7.5% remains unchanged. Basic customs duty rates of 2%, 2.5% and 3% unified at median rate of 2.5%

• Full exemption in respect of BCD for import of aircraft by non scheduled operators has been withdrawn and a duty of 2.5% introduced. Exemption in respect of education cesses also withdrawn.

• Full exemption for payment of CVD granted on portion of value representing consideration paid or payable for transfer of right to use such goods to those packaged or canned software which does not required affixation of RSP under the Legal Metrology Act, 2009 subject to importer being registered under service tax.

• Export duty on Iron ores lumps and fines has been increased to 20%. Full exemption from Export duty has been given to Iron ore pellets.

• Fresh Export duty on de-oiled rice bran cake has been introduced which will attract 10% duty.

• Rate of duty on following commodities has been reduced - mineral gypsum, ore and concentrates, carbon black feed stock, bio based asphalt, specified life saving drugs, raw silk, cotton waste nylon yarn, stainless steel scrap (fully exempted), specified agricultural machinery, tunnel boring machinery and parts ad components thereof used for highway development projects, parts and components of high voltage transmission equipments, micro irrigation equipments, solar lantern or lamps Amendments to Notification 21/02-Cus...Click here for Notification 21/2011- Cus

• Definition of ‘Completely knocked down unit for vehicles of CTH 8703 and 8711 inserted to exclude such units containing pre assembled engine or gear box or transmission mechanism or chassis where such part or sub assemblies are installed ....
Full exemption from basic customs duty and SAD and CVD at 5% extended to specified parts of hybrid vehicles. Exemption is subject to actual user condition and is available till 31.03.2013.

• Water pumping station and water reservoir included in scope of projects eligible for water supply projects ...Click for Notification 13/2011-Cus and 16/2011-Cus

• All clearance from SEZ to DTA exempted from SAD if they are not exempt from VAT/Sales tax.

• Full exemption from BCD and CVD on parts/components used for manufacture of PC connectivity cable and parts and components of battery charger, hands free head phones etc....Click here for Notification 19/2011 dated 01-03-2011

• Full exemption from SAD on parts, components, accessories for manufacture of mobile handsets including cellular phones.....Click here for notification 22/2011 dated 01-03-2011

• Clause 58 of Finance Bill 2011 proposes for imposing definitive safeguard duty retrospectively on imports of caustic soda lye during the period 4/12/2009 to 31/3/2010.

• It is clarified that Cement and Steel which goes into the construction of Power Projects are not entitled for the benefit of exemption.

• Security amount to tendered at the time of registering of contracts under project imports has been reduced to 2% of the Contract Value with a ceiling of Rs.1 Crore which shall be provided in the form of Bank Guarantee and the same need not be renewed if the finalisation of assessment does not take place within 6 months from the date of submission all relevant documents by the importer. 

Legislative Amendments


• Self assessment provisions introduced for import and export of goods by importer or exporter. Customs officer may verify the assessment made by the importer/exporter and call for any documents for verification and if the assessment is found to be incorrect, then he may re assess the duty liability. If such re-assessed duty liability is not accepted by the importer/exporter then the officer is required to pass speaking orders. In all other cases, other than those warranting issue of speaking order, the customs is empower to conduct audit either at the custom house or by visiting the importer’s premises. Provisional assessment provisions made applicable for importer/exporter unable to do self assessment.
• Time limit for claiming refund of duty and interest enhanced from six months to one year. Section 28 amended accordingly.
• Rate of Interest increased to 18% vide notification 17/2011-Cus dated 01-03-2011.
• Section 110A is amended to provide for release of seized goods by the adjudicating authority instead of Commissioner
• Section 124 is amended to provide issuance of show cause notice with the approval of Asst Commissioner instead of Deputy Commissioner
• Section 131D is inserted to empower Board to issue instructions regarding non filing of appeal in line with the National Litigation Policy
• Section 142A is inserted to create first charge on the property of the defaulter for recovery of Customs dues
• Section 150 is amended to provide for retention of balance of sales proceeds of unclaimed cargo sold in auction if they cannot be paid to the owner within 6 months.

before parting ... -jk
“et tu, brute”
DISCLAIMER: The views expressed and the information provided in this newsletter are of general nature and is not intended to address the circumstances of any particular individual or entity. Further the above content should neither be regarded as comprehensive nor sufficient for making decisions. Although we endeavor to provide accurate and timely information, there is no assurance or guarantee in this regard. No one should act on the information or views provided in this publication without appropriate professional advice. It should be noted that no assurance is given for any loss arising from any actions taken or to be taken or not taken by anyone based on this publication.
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