Tax alert rains in tamil nadu - extension and other matters

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TAX ALERT – RAINS IN TAMIL NADU – EXTENSION AND OTHER MATTERS
Background
Chennai, Cuddalore and various parts of Tamil Nadu have witnessed
unprecedented rains and the worst possible water deluge. On one side there is so
much of human tragedy and losses and on the other side many businesses and
factories have come to a standstill due to water inundation.
Due Date for Payment of Excise Duty and Service tax/Filing of Excise Returns
The Government of India vide Office Memorandum F.No. 296/07/2015 – CX.9
dated 05.12.2015 has issued a press release in terms of which
(i) The date for payment of central excise duty and service tax for the month of
November 2015 has been extended to 20.12.2015 for all Central Excise
and Service Tax assesses in the State of Tamil Nadu.
(ii) The due date for filing of the central excise returns for the month of
November 2015 has been extended to 31.12.2015 for all Central Excise
assesses in the State of Tamil Nadu.
Tax Deduction at Source/Tax Collection at Source
The Government of India, Ministry of Finance, CBDT vide order under Section
119 of the Income Tax Act has extended the due date for payment of TDS under
Section 200(1) and TCS under Section 206C(3) for the month of November
2015 from 07.12.2015 to 20.12.2015 in respect of deductors located in the State
of Tamil Nadu.
Remission of Excise Duty
In respect of final products manufactured which have been entered in the daily
stock account that has been washed away or completely destroyed by water, the
following steps will have to be taken:-

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(i) Intimation to the authorities
(ii) Remission of duty payable on goods is allowed under Rule 21 of the Central
Excise Rules where it is shown to the satisfaction of the authorities that the
goods have been lost or destroyed by natural causes or by unavoidable
accident or are claimed as unfit for consumption or for marketing.
Application has to be made to the concerned authority based on the quantum
identified in Rule 21.
(iii) Whenever duty is ordered to be remitted under Rule 21, the Cenvat Credit
taken on the inputs used in the manufacture or production of the said goods
and the cenvat credit taken on input services used in or in relation to the
manufacture or production of said goods shall be reversed under Rule 3(5C)
of the Cenvat Credit Rules.
It may be advisable to intimate the excise authorities about the loss due to natural
causes immediately. Further, goods can be destroyed only in the presence of the
authorities. The Bombay High Court in the case of CCE Vs. Sun Pharmaceutical
Industries Ltd. (2015) 322 ELT 311 has held that where the goods have been lost
due to floods and the Department was silent despite several letters from the
assessee, the Department cannot deny remission on the ground that the assessee
has destroyed the goods unilaterally.
Write Off
Rule 3(5B) of the Cenvat Credit Rules provides that if the value of any input or
capital goods before being put into use on which cenvat credit has been taken is
written off fully or partially or any provision to write off fully or partially is made
in the books of accounts, the manufacturer or service provider is required to pay an
amount equivalent to the cenvat credit taken in respect of the said input or capital
goods.
Where the said inputs or capital goods are subsequently used in manufacture of
final products or provision of output service, the manufacturer or service provider
shall be entitled to take back the credit paid earlier.

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Remission of Customs Duty
Section 23 of the Customs Act provides for remission of duty on imported goods
lost (otherwise than as a result of pilferage) or destroyed, if such loss or destruction
is at any time before clearance for home consumption.
The Tribunal in the case of Winsome Yarn Vs. CCE (2001) 134 ELT 686 has held
that remission of duty on warehoused goods is permissible as goods cleared for
warehousing are not ‘goods cleared for home consumption’.
The Karnataka High Court in the case of CCE Vs. Symphony Services
Corporation (2012) 275 ELT 369, has held that if imported goods are damaged
due to seepage of water when they were EOU, importer can claim remission of
entire duty payable on relinquishment of title under Section 23 of the Customs Act.
Tamil Nadu Value Added Tax
Section 19(9) of the TNVAT Act provides that input tax credit shall not be
available if the goods are not sold because of any theft, loss or destruction for any
reason including natural calamity. If the dealer has availed input tax credit against
purchase of such goods, there shall be a reversal of tax credit.
CST Act
If C Forms and other statutory declaration forms in your possession have been
destroyed you may have to take necessary steps to obtain fresh forms by
complying with the requirements under the CST Act and Rules.
Flooding Impact - Records
Many companies and businesses have experienced severe flooding resulting in
inundation of factory, plant, offices and systems and records may have been
destroyed or affected. The following is a general advisory and does not represent
any specific legal requirement:
(i) Inform your excise authorities / service tax authorities about the damage or
impact of the flooding to your records and systems.

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(ii) Take photographs of areas affected in the record rooms or administration
department or finance department and if feasible have recordings.
(iii) This effort may be required not only from an insurance perspective but also
from a practical perspective since authorities could issue notices five years
later calling for past records.
***
Disclaimer:- This Tax Alert is only for the purpose of information and does not
constitute or purport to be an advise or opinion in any manner. The information
provided is not intended to create an attorney-client relationship and is not for
advertising or soliciting. K.Vaitheeswaran & Co. do not intend in any manner to
solicit work through this Tax Alert. The Tax Alert is only to share information
based on recent developments and regulatory changes. K.Vaitheeswaran & Co. is
not responsible for any error or mistake or omission in this Tax Alert or for any
action taken or not taken based on the contents of this Tax Alert.
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