TIOL-DDT 1009 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1009</font><br> 11.12.2008<br> Thursday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Classification of bura, makhana, mishri, hardas and battasas (patashas). - Board issues Section 37B order</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday's <strong>DDT </strong> had explained that the above mentioned items were sugar products and exempted.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">First of all are they excisable?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board explains:-</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These products are made from sugar. The manufacturing process is as follows:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. Sugar is added to boiled water in an open pan manually to obtain sugar solution and some hydrogen sulphide is passed through the solution for bleaching.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. Patasahas are obtained by splashing the solution on a piece of wood which converts sugar into amorphous sugar.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. Hardas are prepared by pouring the solution into moulds which is then allowed to cool.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. Alchidanas/makhanas are obtained by the passing the sugar solution of appropriate consistency through sieve so as to convert into granulated lumps of sugar.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e. Misri is obtained by pouring the solution into drums where threads are already placed and the solution is allowed to dry around the threads.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">f. Bura is obtained by beating the dried solution with wooden debbies manually.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These products contain sucrose content of more than 90%.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Do these processes amount to manufacture? Board observes,<font color="#FF6633"> "When a customer asks for Batasha, no shopkeeper would give him sugar or vice versa. Thus reading this judgment of Apex Court along with the series of judgement starting from DCM case makes it clear that processes undertaken will amount to manufacture."</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Having decided that the process amounts to manufacture, what is the classification? From the explanatory notes to HSN it is quite evident that sugar in all forms, containing more than 90% of sucrose contents will be classified as sugar under heading number 1701. The sugar preparations like sweetmeats, confectionery and candies will classifiable under heading 1704.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the CBEC directs that</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. The process of making bura, makhana, mishri, hardas and battasas (patashas) from sugar shall amount to manufacture in terms of provisions of Section 2(f) of the Central Excise Act, 1944 and will be liable to pay excise duty.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. These products shall be classified under heading no 17019100, provided that they fulfil the conditions of sub-heading note 1 and 2.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Notes read as,</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. For the purposes of sub-headings 1701 11 and 1701 12, "raw sugar" means sugar whose content of sucrose by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5 degree.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. For the purposes of sub-heading 1701 11 or 1701 12 or 1701 91, "Sugar" means any form of sugar in which the sucrose content, if expressed as the percentage of the material dried to constant weight at 105<sup>o</sup> C would be more than 90.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants pending cases to be disposed of based on the above clarification.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Since the Government had anyway decided to exempt these products with effect from 5th December 2008, why couldn't they be exempted with retrospective effect? Will there be a Section 11 C Notification?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2008/excircular879.htm" target="_blank">CBEC Circular No. 879/17/08- CX, Dated : December 05, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Foreign Trade Policy - to remain in force till amended</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 1.2 of the Foreign Trade Policy, <font color="#FF6633">This Foreign Trade Policy 2004-2009 (FTP), incorporating provisions relating to export and import of goods and services, shall come into force with effect from 1st April, 2008 and <strong>shall remain in force up to 31st March, 2009 </strong> unless otherwise specified.</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now it is amended to read as, <font color="#FF6633">"This Foreign Trade Policy (FTP) 2004-2009 (RE-2008), incorporating provisions relating to export and import of goods and services, shall come into force with effect from 1st April, 2008 and shall remain in force <strong>'till further amendments' </strong> unless otherwise specified."</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe the Commerce Ministry is sure that it will not be able to announce the new FTP by 1st April 2009 and has taken precautions three months in advance, lest they should forget. A good example for Revenue to emulate.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2008/dgft08not070.htm" target="_blank">DGFT Notification NO. 70 (RE-2008)/2004-2009, Dated: December 8, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>And so will the Handbook Of Procedures (HOP) - remain in force</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similar amendment is made to para 1.1. of the Handbook of Procedures, v1 (RE 2008), which earlier read as,</font></p> <blockquote> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In pursuance of the provisions of paragraph 2.4 FTP, the Director General of Foreign Trade (DGFT) hereby notifies the compilation known as HBP v1, HBP v2 and Schedule of DEPB rates. These compilations, as amended from time to time, shall remain in force <strong>until 31st March, 2009 except DEPB scheme which shall continue to be operative till May 2009.</strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And this will now read as</font></p> <blockquote> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In pursuance of the provisions of paragraph 2.4 of FTP, the Director General of Foreign Trade (DGFT) hereby notifies the compilation known as HBP v1, HBP v2 and Schedule of DEPB rates. These compilations, as amended from time to time, shall remain in force <strong>'until further amendments' except DEPB Scheme which shall continue to be operative till May 2009.</strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But here is a problem - in May 2009, there may not be a proper government and what will happen from 1st June 2009 - No DEPB?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn113.htm" target="_blank">DGFT Public Notice No. 113 (RE-2008)/2004-2009, Dated: December 8, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Clarification regarding Service Tax Refund</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the Policy <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTAxODU=" target="_blank"><strong>Circular No. 1</strong></a> dated 11.4.08, DGFT had stated that the Department of Revenue has clarified that, <font color="#FF6633">(c) Clearing and Forwarding (C&F) Agency Service is not leviable to Service Tax;</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now DGFT has clarified that Department of Revenue have now issued Notification <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MzA2NA==" target="_blank"><strong>No. 33</strong></a> dated 7.12.2008 allowing refund of Service Tax paid on the services provided by a Clearing and Forwarding Agent in relation to Export Goods.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the clarification given by the DGFT in April 2008 is withdrawn, because the clarification given by Revenue was wrong? CBEC had issued the Notification on 7th December - a Sunday and on 8th December the DGFT is ready with its clarification correcting its earlier clarification - Good work DGFT.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft08cir047.htm" target="_blank">DGFT Policy Circular No. 47 (RE-08)/2004-2009 Dated: December 8, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FEMA - Foreign Travel - Mode of payment in Rupees</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Authorised Dealers are allowed to accept payment in cash up to Rs. 50,000 (Rupees Fifty Thousand only) against sale of foreign exchange for travel abroad (for private visit or for any other purpose). Wherever the sale of foreign exchange exceeds the amount equivalent to Rs.50,000, the payment must be received only by a -</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) crossed cheque drawn on the applicant's bank account, or</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) crossed cheque drawn on the bank account of the firm/company sponsoring the visit of the applicant, or</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Banker's cheque/Pay Order/Demand Draft.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With a view to provide flexibility in the mode of payment against sale of foreign exchange, in addition to the payment by Rupees/through crossed cheque/Banker's cheque/Pay order/Demand draft, RBI has directed that Authorised Dealers Category I & II and FFMCs may also accept the payments made by the traveller through debit cards/credit cards/ prepaid cards for travel abroad (for private visit or for any other purpose) provided -</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) KYC/AML guidelines are complied with,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) sale of foreign currency/issue of foreign currency travellers' cheques is within the limits (credit/prepaid cards) prescribed by the bank,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) the purchaser of foreign currency/foreign currency travellers' cheque and the credit/debit/prepaid card holder is one and the same person.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2008/rbi08cir040.htm" target="_blank">RBI Circular No. 40/ RBI., Dated: December 10, 2008</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">- Tomorrow's cases</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - Institutions imparting higher education and conferring degrees recognized by law cannot be equated to 'commercial' training centres engaged in coaching - Service tax demands amounting to Rs. 57 crores set aside: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WORD</strong> 'commercial' qualifies 'coaching or training centre' and not 'coaching or training' in the statutory definition - Registered society without any profit motive and exempt from IT outside the purview of 'commercial coaching or training service' - When activities of institution are widely known in public domain including department allegation of suppression with intention to evade tax not sustainable.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax - when there is a <em>bonafide </em> surrender and undisclosed income is computed merely on basis of such surrender, no penalty would be imposable under Section 158 BFA (2) of Act: Delhi High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is apparent that the undisclosed income has been computed merely on the basis of the surrender made by the assessee in the course of the block assessment proceedings - had there been no surrender, the Assessing Officer could not have determined the undisclosed income inasmuch as the Tribunal has returned a finding of fact that there is no evidence relatable to the search on the basis of which such undisclosed income could have been determined.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SILs submitted by original licence holders for cancellation to DGFT find their way into open market although allegedly cancelled by DGFT - appellant purchases these from brokers and imports consignments on their strength - Appellant a victim of circumstances - No case for demand of customs duty: Tribunal by majority</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INSOFAR</strong> as the customs authorities are concerned, a licence which is not forged, produced for clearance of goods, is otherwise valid to cover the goods in terms of description, quantity, value and all other material particulars. In other words, the Customs authorities have no jurisdiction to sit over a dispute to title to the licences as between two individuals.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>