Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database More...
Article Section
Home Articles Budget SKP IDT
← Previous Next →

A Critique-Liberalisation of warehousing provisions in respect of EOUs/EHTPs/STPs

Submit New Article
 
A Critique-Liberalisation of warehousing provisions in respect of EOUs/EHTPs/STPs
By: SKP IDT
March 5, 2016
  • Contents

EOUs are Private Bounded Warehouses licensed under section 58 of the Customs Act, 1962 and permitted under section 65 of the Customs Act, 1962 to carry out manufacturing activities within bounded premises. Section 61 of the Customs Act, 1962 governs the time limit/period to which imported goods may remain warehoused.

Even though the extension of warehousing period, after the expiry of specified period, was permissible with the specific approval of Principal Commissioner of Customs or Commissioner of Customs, it was causing great difficulty to the trade/units as they were required to approach the officer to get the extension through discretionary powers vested with him.  Moreover, subjected goods, for which extension of warehousing period to be sought, were also required to be physically verified by the officer. Thus process of extension was time consuming and disruptive for smooth business operations of the units.

BUDGET 2016 has aimed at rationalizing the warehousing provisions in relation to an EOU/EHTP/STP, by substituting erstwhile section 61 with a new section extending the warehousing period. A brief comparative of relevant existing provisions vis-à-vis proposed amendments is as follows. Warehousing period for units other than EOU/EHTP/STP would continue to remain same i.e. One (1) Year.

Nature of Goods

Existing Provisions

Proposed Provisions

Capital Goods

Five (5) Years

Till clearance from warehouse.

Goods other than capital goods

Three (3) Years

Till their consumption or clearance from the warehouse.

It is also interesting to note that, though the warehousing provisions for EHTP/STP units are same as EOUs and governed by the Notification no. 52/2003-Customs-Tariff dated 31-03-2003, there were no specific reference of EHTP/STP in section 61 of the Custom Act, 1962 which governs the warehousing period for goods deposited in private bonded warehouse licensed under section 58 of the Custom Act, 1962. Now with the proposed new section, government has covered up this legal lacuna and EHTP/STP has been specifically included therein along with EOUs. 

Further, as per sub-clause (I) of clause (d) of condition specified under serial no. 3 of para 1 of the Notification no. 52/2003-Customs-Tariff dated 31-03-2003, period of utilization of goods including capital goods shall be co-terminus with validity of Letter of Permission (LoP). However, duty along with interest can be demanded if such goods are not proved to the satisfaction of the officer to have been installed or otherwise used within the unit for specified purposes with in the validity period of LoP.

In our view, in case of validity of LoP is expired and it does not get extended further, a unit would cease to be an EOU/EHTP/STP, accordingly benefits of warehousing period as mentioned in proposed section 61, i.e. till clearance from warehouse or consumption, as the case may be, would also be ceased, and duty along with interest might be demanded for goods warehoused and lying un-utilized at the time of expiry of validity.  

Flexibility to get the goods remains warehoused till clearance or consumption, as the case may be, will bring a big relief for EOU/EHTP/STP units, as no separate application for extension for goods having warehousing period expired would be required and timely extension/renewal of LoP validity  and Warehousing License would be sufficient for this purpose.

The provision of new section shall come in force on or after The Finance Bill, 2016 is enacted.

The authors are Lucky Ahuja – Manager and Anurag Hans – Senior Executive from SKP Business Consulting LLP and the above views are personal.  

 

By: SKP IDT - March 5, 2016

 

 

 
← Previous Next →
what is new what is new
  ↓     Latest Happenings     ↓  

Highlight: Notification regarding GST rate for branded cereal, pulses and flour

News: Notification regarding GST rate for branded cereal, pulses and flour

Highlight: Anti-dumping duty on import of bus/truck tyres from China

Highlight: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.

Highlight: BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map || ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version