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Highlights 

Job Work under Central Excise 

Res Judicata 

Workshop in Bangalore – Cenvat Credit, Reverse Charge & 

Joint Charge - December 22, 2012 

Workshop in Hyderabad - Cenvat Credit, Reverse Charge & 

Joint Charge – January 05, 2013 

Contents 

Job work under Central Excise 

Res Judicata relating to taxation matters 

Seminar in Bangalore – Cenvat Credit, Reverse and Joint 

Charge – on December 22, 2012 

In News 

Recent judicial decisions 

Training Corner 

Bangalore Seminar brochure 

Contact:- 

Hiregange & Associates 

#1010, 1 st floor, 26 th main, 

(Above Corporation Bank) 

4 th ‘T’ Block, Jayanagar, 

Bangalore 560 041 

Website – www.hiregange.com 

Branch Office:- 

"Basheer Villa" 

H.No.8-2-268/1/16/B, 

2nd Floor, Sriniketan Colony, 

Road No.3, Banjara Hills, 

Hyderabad-500 034 

(For private circulation to clients of Hiregange & 

Associates and Chartered Accountants only)

Job Work Under Central Excise 

Job work is one of the important aspects that a 

manufacturer registered under Central Excise 

should be familiar with not just because it enables 

him to plan his processes in order to optimise the 

benefits available under the Central Excise Act, 

1944 but would also enable him to cut costs on his 

manufacturing. This is so as the processes which 

pose problems or which are not cost effective at 

his end [ due to economies of scale] can be subcontracted 

or delegated to another manufacturer 

or processor who is referred to here as the job 

worker. Many a time, the job worker may be more 

efficient both in terms of the quality and cost as 

compared to the main manufacturer due to 

pursuance of core competencies. Most of the big 

manufacturers in fact make very good use of this 

concept and assign processes to more than one 

vendor which enables them to cut down on 

manufacturing costs. 

In the context of the Central Excise law, job work 

has been defined under Rule 2(n) of the Cenvat 

Credit Rules, 2004 to mean processing or working 

upon of raw material or semi-finished goods 

supplied to the job worker, so as to complete a 

part or whole of the process resulting in the 

manufacture or finishing of an article or any 

operation which is essential for aforesaid process 

and the expression “job worker” shall be construed 

accordingly. It is vital to note here that the process 

undertaken by the job worker on the goods that 

are supplied to him for job work, may or may not 

amount to manufacture. 

If one were to go by the definition of the term “job 

work”, it is evident the raw materials have to be 

supplied by another person. In Prestige 

Engineering India Ltd v CCE Meerut, (1994 (09) LCX 

0110), the Supreme Court held that when the job 

worker contributed his own material to the goods 

supplied by the customer and engaged in 

manufacturing, the activity was not one of job 

work. However, minor additions by the job worker 

would not take away the fact that the activity was 

one of job work. 

Job Work and Manufacturing 

Since excise duty is on ‘manufacture’, duty liability 

arises only when the goods are manufactured 

during job work. The test as to whether the 

process amounts to manufacture or not would be 

determined by analyzing whether a new article 

having a distinctive name, character or use 

emerges or not from the said process in ………… 

……. accordance with the decision of the Honorable 

Supreme Court in Delhi Cloth and General Mills Co. 

Ltd Vs UOI (1962(10) LCX 0001). Where the goods 

are manufactured during job work, the job worker 

would be liable to pay duty of excise on the goods 

so manufactured unless the principal manufacturer 

who has supplied him the goods for job work, 

furnishes a declaration under Notification 214/86 

dated 25.03.1986 which exempts goods 

manufactured by a job worker from duty of excise 

provided the said goods after job work are 

returned to the principal or cleared for export or 

cleared for home consumption on payment of duty 

of excise. Where the goods are returned to the 

principal, the principal should either clear it on 

payment of duty or use it in his manufacturing 

process which should result in a dutiable product 

being manufactured. The declaration as stated 

above should be given to the Assistant 

Commissioner of Central Excise who has 

jurisdiction over the factory of the job worker. 

Job work & SSI exemption 

Notification 214/86 CE (NT) has another 

significance and that is where the job worker also 

avails the benefit of notification 8/2003 CE (NT) 

dated 01.03.2003, the job work done under this 

notification would not be included for the purpose 

of determining whether or not his turnover has 

exceeded the said limit of Rs. 150 lakhs for the 

purpose of determining duty liability if any or Rs. 

400 lakhs for the purpose of determining eligibility 

to exemption u/n 8/2003 CE in the subsequent 

financial year. If working under this notification 

then job work done of even 10 crores would not be 

subjected to duty of excise in the hands of the job 

worker. 

Job work – Central Excise v Service Tax 

Where the processing undertaken by the job 

worker does not amount to manufacture, the said 

job worker would be liable to service tax even 

under the new regime of service tax. The liability in 

terms of job work can arise where the processing is 

done for the client. However one should note that 

where the processing amounts to manufacture, the 

same would not be taxable under service tax as 

the same has been specifically included in the 

negative list and the liability if any would have to 

be studied under Central Excise. The entry in the 

negative list reads as ‘any process amounting to 

manufacture or production of goods’. 

PTO 

(For private circulation to clients of Hiregange & Associates and Chartered Accountants only) 

2

Job Work Under Central Excise Contd.. 

Therefore, the criteria is whether the process 

undertaken by the job worker amounts to 

manufacture or production or not. If the process 

amounts to manufacture, but the final product is 

either exempted by virtue of any notification or is 

nil rated, even then the said activity will be 

exempted under the new regime as the criteria is 

that the process undertaken by the job worker 

should amount to manufacturer production of 

goods which has been fulfilled. 

Where the job work does not amount to 

manufacture it would amount to a service and 

unless exempted would be liable to service tax. 

Job work & Cenvat Credit 

Cenvat credit can be availed on materials sent for 

job work as per rule 4(5)(a) of the Cenvat Credit 

Rules, 2004. It has to be established from the 

records, challans or memos or any other document 

produced by the manufacturer taking the Cenvat 

credit that the goods have been received back in 

the factory within one hundred and eighty days of 

goods being sent to the job worker. So 

maintenance of proper inventory accounting 

records, job work register, details of nature of 

processing undertaken and quantities received 

back along with scrap generated would gain 

importance. The movement should be under a 

challan giving the particulars as to the Rule under 

which the same is being sent. The challan would be 

in triplicate with two copies of the same 

accompanying the goods to the job worker who 

would return one copy with the goods being sent 

back to the principal after completion of the 

process. Where the goods are sent back in lots, he 

is free to send his own delivery challan with the 

goods and send back the original delivery challan 

received from the principal, with the final 

consignment being sent to the said principal. 

If the inputs or the capital goods are not received 

back within one hundred and eighty days, the 

manufacturer shall pay an amount equivalent to 

the Cenvat credit attributable to the inputs or 

capital goods by debiting the Cenvat credit account 

with the amount so attributable to the inputs or 

capital goods not received. But the manufacturer 

can take once again the Cenvat credit so debited 

when the inputs or capital goods are received back 

in his factory. 

The Cenvat credit shall also be allowed in respect 

of jigs, fixtures, moulds and dies sent by a 

manufacturer of final products to another ……….. 

…… manufacturer for the production of goods or to a 

job worker for the production of goods on his behalf 

and according to his specifications. The restriction 

with regard to the requirement of receiving the goods 

back within 180 days from the date of sending would 

not apply to such tools, dies, fixtures and moulds. 

Valuation issues in job work 

One of the common issues confronting job workers 

paying duty of excise is that of valuation. Until 

recently the valuation had been in accordance with 

the decision of the Honorable Supreme Court in 

Ujagar Prints Ltd Vs Union of India (1989 (01) 

LCX0047) where the assessable value for the purpose 

of charging excise duty was said to comprise the 

value of raw materials supplied by the principal plus 

the conversion charges or job charges incurred by the 

job worker plus his profit margin. The margin of the 

principal on those goods manufactured by the job 

worker even if he merely traded in those goods was 

not to be subjected to duty of excise. But this position 

underwent a change from 01.04.2007 because of an 

amendment to the Central Excise Valuation 

(Determination of Price of Excisable Goods) Rules 

2000. A new Rule 10A was inserted in the said Rules 

which stipulates that where the goods are sold by the 

principal manufacturer from the factory of job 

worker, the value would have to be the transaction 

value of the goods so sold by the principal 

manufacturer. This will apply only when the principal 

manufacturer and the buyer of the goods are not 

related and price is the sole consideration for the sale 

and the goods are sold for delivery at the time of 

removal from the job worker's factory. 

In a case where the goods are not sold by the 

principal manufacturer at the time of removal of 

goods from the factory of job-worker, but are 

transferred to some other place from where the said 

goods are to be sold after their clearance from the 

factory of the job worker, the normal transaction 

value of such goods sold from such other place at or 

about the same time has to be adopted. This, in other 

words follows the principle of depot based valuation 

under Central Excise applicable where goods are 

cleared to depots of manufacturers and sold 

therefrom. Where such goods are not sold at or 

about the same time, then the normal transaction 

value of such goods at the time nearest to the time of 

removal of said goods from the factory of job-worker, 

is to be adopted. The cost of transport from the 

premises where from the goods are sold, to the place 

of delivery, would not be included in assessable value. 

- Team Hiregang & Associates 


3

Res Judicata relating to taxation matters 

Introduction 

Finality to assessment facilitates the assessee to plan 

his affairs and to decide the business planning for 

long term strategies. The doctrine of Res Judicata is a 

potent tool in the hands of an assessee who wants to 

prevent the Assessing Officer from shifting his stand 

year – to – year on whimsical grounds. 

However, tax authorities feel that there is no finality 

to any assessment as the principle of Res Judicata is 

not applicable to tax proceedings. 

Meaning 

The word ‘Res Judicata’ is derived from Latin. It 

literally means, a thing adjudged. It is a rule that says 

a final judgment on the merits by a court having 

jurisdiction is conclusive between the parties to a suit 

as to all matters that were litigated or that could have 

been litigated in that suit. The principle of Res 

Judicata, in the eye of law, is that if on any facts 

and/or law, a particular decision is made, then 

subsequently if any suit on similar facts and/or law is 

to be decided between the same parties, it should be 

same as made earlier. 

As per The Law Lexicon “Res adjudicata” means “A 

matter adjudged; a thing judicially acted upon or 

decided; a thing or matter settled by judgment; a 

thing definitely settled by judicial decision, the thing 

adjudged”. 

This principle operates as a bar to try the same issue 

once over. The Apex Court in the case of Sulochana 

Amma vs. Narayanan Nair - (2002-TIOL-292-SC-MISC) 

held that this principle aims to prevent multiplicity of 

proceedings and accords finality to an issue, which 

directly and substantially had arisen in the former suit 

between the same parties or their privies, decided 

and became final, so that parties are not vexed twice 

over; vexatious litigation would be put to an end and 

the valuable time of the Court is saved. It is based on 

public policy as well as private justice. 

Res Judicata does not merely prevents future 

judgments from contradicting earlier ones, but also 

prevents them from multiplying judgments, so a 

prevailing plaintiff could not recover damages from 

the defendant twice for the same injury. 

Origin of Res Judicata 

"Res Judicata pro veritate accipitur" is the full Latin 

maxim which has, over the years, shrunk to mere 

"Res Judicata”. 

The concept of Res Judicata finds its evolvement from 

the English Common Law system, being derived from 

the overriding concept of judicial economy, ………….. 

consistency, and finality. The rule of Res Judicata has 

a very ancient history it was accepted by the Romans, 

Hindu jurists, Mohammedan jurists and common 

wealth countries. It was known to Romans as ‘one 

suit and one decision was enough for any single 

dispute’. To the Hindu jurists res Judicata was known 

as ‘Purva Nyaya’ (former judgment) 

Basis of Res Judicata 

The doctrine of Res Judicata is based on three 

maxims: 

1. Nemo debet lis vaxari pro eadem causa (no man 

should be vexed twice for the same cause); 

2. Interest republicae ut sit finis litium (it is in the 

interest of the state that there should be an end 

to a litigation); and 

3. Re judicata pro veritate accipitur (a judicial 

decision must be accepted as correct). 

Pre-requisites for Res Judicata 

The pre-requisites which are necessary for Res 

Judicata are: 

1. There must be a final judgment; 

2. The judgment must be on the merits; 

3. The claims must be the same in the first and 

second suits; 

4. The parties in the second action must be the 

same as those in the first, or have been 

represented by a party to the prior action. 

Constructive Res Judicata 

‘Constructive' means ‘implied', “that which has not 

the character assigned to it in its own essential 

nature, but acquires such character in consequence 

of the way in which it is regarded by a rule or policy of 

law” (Black). If a matter which might or ought to have 

been raised in an earlier proceeding, is not raised, the 

principle of constructive Res Judicata applies. 

Source of Res Judicata in Indian Law 

Section 11 of The Code of Civil Procedure, 1908, 

defines “Res Judicata” as under:- 

“No court shall try any suit or issue in which the 

matter directly and substantially in issue has been 

directly and substantially in issue in a former suit 

between the same parties, or between parties under 

whom they or any of them claim, litigating under the 

same title, in a court competent to try such 

subsequent suit or the suit in which such issue has 

been subsequently raised, and has been heard and 

finally decided by such court.” 

From the Civil Procedure Code, the Administrative 

Law witnessed its applicability. Then, slowly but 

steadily the other acts and statutes also started to 

admit the concept of Res Judicata within its ambit. 

PTO 


4

Res Judicata relating to taxation matters contd.. 

Principle of Res Judicata in tax matters 

The general principle of law is that no one should 

blow hot and cold on the same set of facts to reach 

different conclusions / findings in different years. The 

need for consistency is as important for revenue 

authorities as it is expected from the assessee. The 

common understanding is that, notwithstanding the 

public policy behind the rule, it has no relevance to 

tax disputes. It is said that a finding or an opinion 

recorded by an authority or even by a court of law for 

one assessment year has no binding effect on the 

issues in subsequent assessment years. 

Views of High Court 

The Bombay High Court, in H.A. Shah and Co. vs. CIT 

(1956) 30 ITR 618 (Bom.) has held that “the principle 

of estoppel or res judicata does not strictly apply to 

the Income Tax authorities” and yet declared that “An 

earlier decision on the same question cannot be 

reopened if that decision is not arbitrary or perverse, 

if it had been arrived at after due inquiry, if no fresh 

facts are placed before the Tribunal giving the later 

decision and if the Tribunal giving the earlier decision 

has taken into consideration all material evidence.” 

In CIT vs. L. G. Ramamurthy (1977) 110 ITR 453 

(Mad.), the court laid down the principle that “…what 

is relevant is not the personality of officers presiding 

over the Tribunal but the Tribunal as an institution. If 

it is conceded that simply because of the change in 

the personnel who manned the Tribunal, it is open to 

them to a conclusion totally contradictory to the 

conclusion which had been reached by earlier officers 

manning the tribunal on same set of facts it will not 

only shake the confidence of the public in judicial 

procedure as such, but it will totally destroy such 

confidence…….that will be destructive of the 

institutional integrity itself”. 

Views of the Apex Court 

The Supreme Court in Amalgamated Coalfields vs. 

Janapada Sabha AIR 1964 SC 1013 have evinced a 

highly, balanced approach: “In considering this 

question, it may be necessary to distinguish between 

decision on questions of law which directly and 

substantially arise in any dispute about the liability for 

a particular year, and questions of law which arise 

incidentally or in a collateral manner … the effect of 

legal decisions establishing the law would be a 

different matter. If, for instance, the validity of a 

taxing statute is impeached by an assessee who is 

called upon to pay a tax for a particular year and the 

matter is taken to the High Court or brought before 

this Court and it is held that the taxing statute is valid, 

it may not be easy to hold that the decision on this 

basic and material issue would not operate as res - 

judicata against the assessee for a subsequent year”. 

In Radhasoami Satsang vs. CIT (1992) 193 ITR 321 

(SC) the Hon’ble Apex Court observed as under: 

“So far as the proposition of law is concerned, it is 

well settled and needs no further discussion. In 

taxation matters, the strict rule of res Judicata as 

envisaged by Section 11 of the Code of Civil 

Procedure, 1908 has no application. As a general rule, 

each year's assessment is final only for that year and 

does not govern later years, because it determines 

the tax for a particular period. It is, therefore, open to 

the Revenue/Taxing Authority to consider the 

position of the assessee every year for the purpose of 

determining and computing the liability to pay tax or 

octroi on that basis in subsequent years.” 

However, in an interesting comment, the Apex Court 

said, “We are aware of the fact that strictly speaking 

res judicata does not apply to income tax 

proceedings. Again, each assessment year being a 

unit, what is decided in one year may not apply in the 

following year but where a fundamental aspect 

permeating through the different assessment years 

has been found as a fact one way or the other and 

parties have allowed that position to be sustained by 

not challenging the order, it would not be at all 

appropriate to allow the position to be changed in a 

subsequent year”. 

Not pressing the ground 

There is no estoppel against law. No concession of 

law is permissible. An appellant having not pressed an 

issue before lower authorities, can still raise and 

agitate the same before the Tribunal-CIT vs. VMRP 

Firm (1965) 56 ITR 67 (74) (SC). 

Conflicting stands by revenue 

The revenue cannot take conflicting stands. It has got 

the assistance of technical persons and should be 

consistent. It cannot discriminate between the 

assessees. Seshasayee Paper and Boards Ltd. vs. CIT 

(2003) 260 ITR 419 (Mad.) 

Conclusion 

From the above discussion, it is evident that, as a 

general rule, Res Judicata does not apply in tax 

matters, be it direct tax or indirect tax. As apparent, 

we come across periodical show cause notices with 

respect to same assessee on the same matter. 

However, the principles of consistency, natural justice 

and comity apply. Based on these, the tax payers can 

be ascertained of certain aspects in their favour. 

Further, we can also understand that, the counter for 

Res Judicata can be appeal to a higher judicial forum. 

- Compiled by CA Dhanashree Prabhu 

Acknowledgements – ARTHA Study Circle 


5

In News 

McDonalds’ soft serve should be classified as icecream 

for determining excise duty: Supreme Court - 

The Supreme Court has ruled that the 'soft serve' sold 

at McDonalds India's outlets should be classified as 

ice-cream for the purpose of determining excise duty, 

upholding the excise department's claim. The 

department had issued three show-cause notices to 

the fast-food restaurant chain for April 1997-March 

2000, saying 'soft serve' would attract the 16% duty 

plus an additional duty levied on ice-cream. 

McDonalds India (Ms/ Connaught Plaza Restaurant 

(Pvt) Ltd) had opposed the classification, leading to 

the dispute. In a judgement last week, the apex court 

ruled, "We are unable to accept the argument that 

since 'soft serve' is distinct from 'ice-cream' due to a 

difference in its milk fat content, the same must be 

construed in the scientific sense for the purpose of 

classification.“ 

Source: The Economics Times 

FIU asked to track service tax evaders - The Financial 

Intelligence Unit (FIU), country’s nodal agency for 

gathering, analysing and disseminating information 

related to suspicious financial transaction, has been 

asked to work with the Directorate General of Central 

Excise Intelligence (DGCEI) to go after over 65,000 

non-filers of service tax returns, who have managed 

to escape the scrutiny of the government so far. 

Finance minister P Chidambaram has also asked the 

DGCEI “to make available some unique identifier” to 

track evaders of both the service tax and central 

excise duty. 

ITAT: Four new e-courts to be launched, hearing 

through video-conferences - The Income Tax 

Appellate Tribunal will launch e-courts in four cities 

from December 10 to facilitate hearing of cases via 

video-conferencing. The tribunal, a quasi-judicial 

body, has set up webcast facilities at Delhi, Mumbai, 

Nagpur and Ahmedabad, a first in the history of tax 

judiciary in India. In a note, ITAT said the e-courts will 

follow the procedures that are laid out for the bench 

for hearing appeals in an open court. "There is no 

difference in procedures except that the bench and 

bar are at different places connected electronically," 

the note said. 

Source: The Economics Times 

Cadbury India probed over R213-cr tax evasion 

charge - Tax authorities have detected alleged tax 

evasion of Rs 213 crore by the Indian arm of 

confectionery multinational Cadbury, now owned by 

Kraft Foods, in two separate cases and have realised 

Rs 12.6 crore in one of the cases, minister of state for 

finance SS Palanimanickam said in the Rajya Sabha. 

“Two cases of tax evasion by Cadbury India Ltd have 

been detected by the Directorate General of Central 

Excise Intelligence during the years 2009-10 to 2012- 

13 up to October 31, 2012,” the minister said in reply 

to a question in the Upper House. 

Source: The Financial Express 

Carmaker Fiat India seeks review of Supreme Court 

order on excise duty payment - Carmaker Fiat India 

has sought review of a Supreme Court order directing 

it to pay about 360 crore as additional excise duty on 

sales of its Uno cars between 1996 and 2001. "We 

have filed a review petition," said V Lakshmi 

Kumaran, lawyer for Italian carmaker Fiat's Indian 

unit, without giving further details. The court had 

passed the order on August 29. The case pertains to 

Fiat's joint venture with Mumbai-based Premier 

Automobiles at the time. Fiat was importing 

completely-knocked-down kits of its popular Uno 

hatchback and selling them in the country below cost 

price. This prompted the tax authorities to levy the 

duty on the cost price of the company's Uno 

hatchbacks. 

Tax bumps ahead for diesel cars - At a time when 

diesel-powered vehicles have been driving sales in 

the country’s otherwise sluggish automobile market, 

the industry has been hit by a double whammy. First, 

a proposal to levy an additional annual road tax of up 

to Rs 50,000 on diesel sports utility vehicles. Second, 

a suggestion before the Supreme Court to impose an 

environment tax of 25 per cent (of the cost of the 

vehicle) on diesel vehicles to curb the growing levels 

of pollution in the Delhi-National Capital Region. 

These have raised concerns in the domestic 

automobile industry, battling slow sales and high 

interest rates and fuel prices. “On an average, diesel 

vehicles are tagged 20-23 per cent higher than exshowroom 

prices of petrol variants. Once Euro-V 

emission norms come into effect, vehicle prices 

would automatically rise Rs 40,000. If there are 

additional levies, it would certainly put 

manufacturers’ investments to increase diesel 

capacity in jeopardy,” said a senior industry 

executive. 

Old service specific accounting codes for payment of 

service tax restored - A list of 120 descriptions of 

services for the purpose of registration and 

accounting codes corresponding to each description 

of service for payment of tax has been provided. The 

description provided is only for the purpose of 

statistical analysis. The sub-head “other receipts” is 

meant only for payment of interest payable on 

delayed payment of service tax. 


6

Recent judicial decisions 

INDIAN ACRYLIC LTD. VERSUS COMMISSIONER OF 

C.EXCISE, CHANDIGARH-II 2012 (28) S.T.R. 354 (TRI- 

DEL) 

Background: The appellant is a manufacturer of 

acrylic fibre, acrylic top etc. and were availing the 

facility of Cenvat credit of duty paid on inputs, capital 

goods and Service Tax paid on inputs services used in 

or in relation to manufacture of final products. The 

appellants are availing the services of foreign agents 

and were paying commission on said agents located 

outside India. They were discharging the Service Tax 

liability in respect of such commission paid to the 

foreign agents in terms of provisions of Rule 

2(1)(d)(iv) and (v). The lower authorities have denied 

the utilization of Cenvat credit availed by the 

appellant on the capital goods, for the purpose of 

discharging their Service Tax liability on the ground 

that the appellant cannot be treated as provider of 

taxable service. The stand of the Revenue is that after 

the deletion of Explanation appearing in Rule 2(p) of 

Cenvat Credit Rules, which conferred status of output 

service provider to an assessee, the assessee cannot 

be held to be provider of output services and 

appellants are not entitled to utilize the credit. 

Issue: The issue required to be decided in present 

appeal is as to whether the appellant can utilize the 

Cenvat credit so earned by them for discharge of 

Service Tax liability in respect of overseas commission 

agent. 

Decision: Utilization of Cenvat credit is in accordance 

with the law inasmuch as the Rule 2(r) of Cenvat 

Credit Rules conferred status of service provider to an 

assessee who paid the Service Tax as a recipient of 

service. If the appellant is the person liable to pay 

service tax, he would be deemed to be provider of 

taxable service by fiction of law and therefore, the 

service provided by him will be deemed to be output 

service under Rule 2(p) of the Rules. It is held that 

the appellant is entitled to utilize the Cenvat credit 

for discharge of Service Tax for the commission paid 

to the overseas agents. 

INDIA TRIMMINGS PVT LTD VERSUS COMMISSIONER 

OF C.EX. COIMBATORE 2012 (28) S.T.R. 401 (TRI 

CHENNAI) 

Background: The appellants are manufacturer and 

exporter. They have taken the services of GTA and 

paid commission to overseas service provider. No 

service tax was paid under reverse charge mechanism 

and on pointing out the same by the Department, the 

appellants paid service tax along with interest. 

Thereafter, the appellant was issued SCN for …….. 

…. appropriation of the amount of service tax and 

interest paid and proposing penalty u/s 78 of the 

Finance Act 1994. Counsel for the appellant 

submitted that they were under a bona fide belief 

that they are not required to pay service tax on above 

services as they were not a service provider and if at 

all they had paid service tax they would have entitled 

to take credit of the same and there will be a 

situation of revenue neutrality and therefore 

allegation of suppression is not sustainable. 

Reference was made to the case of Amman Steel 

Corporation Vs CCE, Trichy. Revenue contended that 

as the appellant is dealing with excisable and taxable 

service, they must be aware of law. 

Issue: The issue for consideration is that whether not 

showing the amount of GTA availed and commission 

paid from overseas by the appellant in their ST-3 

Returns and nonpayment of service tax on the same 

amounts to suppression and whether proposing 

penalty u/s 78 is sustainable in the above case. 

Decision: If appellant have paid the service tax they 

are entitled to credit of the same and in this view, it 

cannot be said that by suppressing the fact that the 

appellants are going to get extra benefit on account 

of suppression. Penalty u/s 78 was waived. 

COMMISSIONER OF CENTRAL EXCISE, JAIPUR 

VERSUS KEC INTERNATIONAL LTD. 2012 (28) S.T.R. 

399 (TRI DEL) 

Background: The respondent were engaged in the 

manufactuer of galvanized parts of transmission 

tower and lining falling under Chpater 73 of the 

Schedule to the Central Excise Tariff Act, 1985. The 

raw material for the said final product is billet and it is 

purchased from outside and sent directly to the 

factory of job worker who converts the same into 

angles and channels. Revenue’s contention is that 

Service Tax paid on GTA service received is not 

available to them as credit 

Issue: The issue in consideration is that whether 

cenvat credit can be availed on service tax paid on 

GTA as the raw materials were not brought into the 

respondents’ factory and are directly sent to the job 

worker. 

Decision: Held that billets are admittedly the raw 

material for the respondent’s final product and if the 

said billets are brought to the factory by the 

respondents and then sent to the job workers, there 

could be no dispute about the availability of credit of 

service tax paid on GTA service. 


7

Training Corner 

Recently CA Roopa Nayak, CA Akbar Basha and CA 

Gaurav Shah conducted a training session in M/s 

Balakrishna & Co. The training program was very well 

appreciated by the qualified Chartered Accountants 

of the firm as well as the articled assistants. 

With the objective of holistic learning, we have come 

up with the training modules. 

Training Program for Chartered Accountants Firms 

This program would be conducted to enlighten and 

empower the Practicing Chartered Accountants in 

conducting the statutory, internal & tax audits 

wherein value additive suggestions to clients may get 

appreciation. This will be conducted at the respective 

offices of Chartered Accountants by qualified and 

skilled staff of Hiregange & Associates. 

Program Highlights 

• Focus on impact of indirect taxes during statutory 

audit, internal audit and other areas of practice 

• Use of case studies and practical aspects 

• To enlighten and empower the Practicing CAs in the 

field of Indirect Taxation 

• Program will be conducted at your respective office 

• Topics for the program will be of your selection 

from the Annexure 

• Programs will be conducted by qualified and 

experienced staff of Hiregange & Associates 

Who are eligible for the program 

• Chartered Accountant company/firms at Bangalore 

who do not currently practice in the field of Indirect 

Taxation 

• Chartered Accountant company/firms at Bangalore 

who wish to enter the field but with sound 

fundamental knowledge of the subject or add this 

competency 

Proposed Modules are:- 

• Major aspects to be checked in the Statutory Audit, 

Internal Audit, Tax Audit having implications under 

indirect tax (IDT) 

• How to provide Value Addition to the auditee in 

Statutory/ Internal Audit with respect to IDT 

• Impact of Joint and Reverse Charge 

• Reconciliation between Excise / Service Tax returns 

to financials and other statutory returns. 

• Common errors made by assessee in Central Excise 

/ Service Tax. 

• How to fill Central Excise Returns & ST returns 

• Introduction on Central Excise viz.- Concept of 

manufacture, Levy of Excise duty, Classification of 

goods, Exemption, Valuation Implication, Exports. 

• Introduction on Service Tax viz.- Negative List, Levy 

of Service Tax, Exemption, Valuation aspects, Point 

of Taxation Rules, Place of Provision of Service 

Rules and Aspects related to filing of Returns. 

Training Program for Clients of Hiregange & 

Associates 

Client Specific Training: 

This is for specific clients in specific areas such as 

Basic Accounting, Tax Planning and Impact of Indirect 

Taxes in their day-to-day working. This program 

would be conducted to enlighten and empower the 

finance team of the company in the field of Indirect 

Taxation. 

We have devised two approaches to this programme. 

• To conduct it at H&A premises fortnightly (on 

Saturdays) 

• To conduct it at your respective office (on the date 

and time mutually agreed) 

Program Highlights 

• Focus of indirect taxes in the effective day-to-day 

working. 

• Use of case studies and practical aspects 

• To enlighten and empower our Clients in the field 

of Indirect Taxation 

• Topics for the program will be of your selection 

from the Annexure 

• Programs will be conducted by qualified and 

experienced staff of Hiregange & Associates 

Who are eligible for the program 

The Indirect Taxation Training Programs are 

exclusively for the Clients of Hiregange & Associates 

Proposed Modules are:- 

• Introduction on Central Excise 

• Introduction on Service Tax 

• Availment of credit under Central Excise/Service 

Tax & VAT 

• Impact of indirect tax on cost 

• Means of ensuring maximum credit (CE/ST/VAT) 

• Accounting entries in Indirect Tax 

• Impact of Joint and Reverse charge to the entity 

• Filling of Excise Returns 

• Filling of New format of Service Tax returns 

• Common errors under Central Excise & Service Tax 

• Preventive measures to avoid common errors 

• Strengthening Internal Control with respect to 

Indirect Taxation 

• Reconciliation between Excise / Service Tax return 

with financials and other statutory returns 

• Point of Taxation Rules 

• Place of Provision of Service Rules 

• How to make a refund application 

For further information please contact 

CA Akbar Basha 

akbar@hiregange.com 

CA Dhanashree Prabhu 

dhanashreeprabhu@hiregange.com 


8

Workshop on 

“CENVAT CREDIT – 

UNDER NEW ST LAW” 

Saturday, 22 nd December, 2012 

Between 09 am & 06 pm 

@ Springs Hotel & Spa 

#19, H. Siddaiah Road, Bangalore – 02 

(Next to Urvashi Theatre and near BBMP pay & park) 

Similar seminar in Hyderabad will be held on January 05, 2013 

Contact :- 


# 1010, 1 st Floor, 26 th Main, (Above Corporation Bank) 

4 th ‘T’ Block, Jayanagar, Bangalore – 560 041 

Ph No. 4121 0703 / 2653 6404 

Web : www.hiregange.com 

CA. Prateek Marlecha– +91 99000 68911 

Email: prateekm@hiregange.com 

CA. Dhanashree Prabhu – +91 99000 68920 

Email: dhanashreeprabhu@hiregange.com 

(Only for CAs and clients of Hiregange & Associates)

Price is what you pay. Value is what you get. – Warren Buffet 

The benefit under CENVAT credit is the value we can add to our organisation. The 

changes brought about by the Finance Act, 2012 are varied and distinct. Not just basic 

tax laws, even the way we look at CENVAT benefits have changed. Value based 

business is the need of the hour. Keeping this in mind, we have designed this 

workshop to throw light on the value that appropriate 

can add. 

About the Workshop 

availment of CENVAT credit 

Come along with enthused spirits on 22 nd of December 2012 to ‘avail and utilise’ the 

benefits of CENVAT credit at Springs Hotel & Spa from 9.00 A.M. to 6.00 P.M. at 

workshop conducted by Hiregange & Associates. 

Snapshot of Schedule 

Start Duration 

Topic 

Speaker 

Time (in min) 

9.30 20 Registration 

9.50 10 Welcome Address 

10.00 90 Benefits under Capital Goods and Senior Partner, H & A 

inputs to manufacturers and service 

providers 

11.30 15 Tea Break 

11.45 75 Benefits under input services to Shri. Rajesh Kumar T. R. 

manufacturers and service providers 

1.00 45 Common errors and disputes in Shri. Rajesh Kumar T. R. 

CENVAT credit 

1.45 15 Panel Discussion 

2.00 60 Lunch Break 

3.00 90 Reverse charge vis a viz Place of Shri. Badrinath 

Provision of Service Rules 

4.30 15 Tea Break 

4.45 60 Joint charge – applicability and Smt. Roopa Nayak 

compliance 

5.45 15 Open House 


Featured Speakers 

Shri Rajesh Kumar T. R. - Apart from being a Chartered Accountant, he is a graduate 

in Law. Involved in providing strategic indirect tax consultancy and representation 

services. Also written many articles on Central Excise and Service tax published in 

various professional journals and co-authored many books. He is a visiting faculty for 

MBA course of M.P. Birla Institute for management Studies, Bangalore and 

Siddaganga School of Mangement, Tumkur. 

Shri. Badrinath N. R. - Apart from being a Chartered Accountant, he is also a Cost 

Accountant and specializes in Indirect Taxation. His area of expertise spans over 

Central & State levies which include Central Excise, Customs, Service Tax, Commercial 

Taxes and Foreign Trade. He is very closely associated with the subject specialization 

and has addressed the officers at Central Board of Excise and Customs, members of 

the ICAI and Institute of Internal Auditors. He is a faculty for Indirect Taxation at MATS 

School of Business and IT. 

Smt. Roopa Nayak - Is a Chartered Accountant by profession, qualified in 2008. Coauthor 

of books like Central Excise Made Simple (e-book & KSCAA publication), 

background material for Indirect Taxes Certificate Course, ICAI. She is an active 

contributor of articles to Peenya Industries Association and KSCAA. 

The workshop would be of special interest to:- 

Top level Company officials – For Strategic business decisions 

Middle level Company officials – For regular and day-to-day compliance 

Chartered Accountants in practice – To update their knowledge and 

educate their clients 

Fee structure 

Delegate Fee – Rs. 1,500/- 

For 3 or more delegates from the same organization fee – Rs. 1,250/- each 

Includes service tax applicable @ 12.36% 

The fee covers delegate kit, lunch and refreshments 

Kindly issue Cheque/DD in favour of “Hiregange & Associates”, payable at Bangalore 


Map & Directions 

For details regarding the venue contact :- 

Springs Hotel & Spa 

Mr. Suresh F&B Executive 

Ph no. +91 93420 50099 

For registrations contact :- 


# 1010, 1 st Floor, 26 th Main, (Above Corporation Bank) 

4 th ‘T’ Block, Jayanagar, Bangalore – 560 041 

Ph No. 4121 0703 / 2653 6404 

Web : www.hiregange.com 

CA.Prateek Marlecha– +91 99000 68911 

Email: prateekm@hiregange.com 

CA. Dhanashree Prabhu – +91 99000 68920 

Email: dhanashreeprabhu@hiregange.com

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