TIOL-DDT 1010 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1010</font><br>
12.12.2008<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No
Duty imposed by Notification No 59/2008-CE</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MzQwNg==" target="_blank"><strong>59/2008 - Central Excise</strong></a> dated 7.12.2008, has created quite a confusion in the minds of officers and assessees. <strong>TIOL </strong> phones were incessantly ringing with anxious queries from agitated assessees as well as <em>concerned </em> officers. Even some of our technical experts had doubts.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The simple notification simply prescribed an effective rate of excise duty of 4% for most of the 24 items figuring in the notification. Of course there were a couple of 8% items and a few 20%+....</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl. No. 1 of this notification refers to <em>inter alia </em> Heading 1507 to 1515, which attract a 4% duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Sl. No 9 of Notification No. <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=Mzk1OA==" target="_blank"><strong>3/2006-Central Excise</strong></a>, Dated: March 1, 2006, these goods attract nil rate of duty. When these goods already attract a nil rate of duty by a notification issued in 2006, what happens when a notification issued in 2008 prescribes an effective duty of 4%? <strong>DDT </strong> understands that in some places, the Department has already initiated action to make the units pay the 4% duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is so much confusion in the trade that the Solvent Extractors' Association of India (SEA) has issued a clarification that they have checked up the factual position and has advised its members that there is no excise duty levied on domestically produced edible oils nor ad valorem duty on imported oils by these notifications and they continue to enjoy exemption.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Notification 59/2008 has simply made an effective rate of 4% for those goods for which there is a tariff rate of 8%. A similar exercise was done at the time of Budget 2008, when the goods which attracted a tariff rate of 16% were reduced to 14% by Notification <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MzM0OA==" target="_blank"><strong>No. 2/2008</strong></a> dated 1.3.2008. At that time the 8% rate was not touched as it was anyway less than 14%.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now there is a 4% reduction across the Board.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what is the effect of Notification No. 59/2008 which prescribes a 4% duty and Notification No. 3/2006 which prescribes a nil rate?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fortunately you don't need <strong>DDT's </strong> advice. The Board itself clarified on this situation.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While reducing the rate to 14% in this year's Budget, the JS TRU in his DO Letter <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=NDYyMQ==" target="_blank"><strong>334/1/2008- TRU</strong></a> dated 29th February, 2008, clarified,</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The general rate of excise duty (CENVAT) has been reduced from 16% to 14%. This reduction applies to all goods that hitherto attracted this general rate of 16%. In some cases, a deeper reduction has been made, the details of which are indicated in the subsequent paragraphs. These changes have been carried out by notification. The other ad valorem rates of 24%, 12% and 8% have been retained.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the reduction in the general rate has been carried out by notification, the possibility of the same product/item being covered by more than one notification cannot be ruled out. In such a situation, <strong>the rate beneficial to the assessee would have to be extended </strong> if he fulfils the attendant conditions of the exemption.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So it is clear that Notification No. 59/2008 does not impose any 4% duty, it actually exempts. If there is any other notification which prescribes a lesser rate of duty, the assessee is free to avail that and the Department cannot force the assessee to avail any particular notification.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The poor boys in TRU must have struggled for hours to sort out the 8% rates in the Tariff and draft this exemption Notification No. 59/2008; the field understands it as imposition of duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps the Board should have given a similar clarification now as they did at the Budget time, but they might not have realised that an exemption can be understood as an imposition.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty on POY - It's POY of Polyester</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=OTAxMQ==" target="_blank"><strong>86/2007 - cus</strong></a> dated 10.07.2007, the Government had imposed anti dumping duty on <em>partially oriented yarn </em> originating in, or exported from, Thailand, Indonesia, Malaysia and Chinese Taipei. Now the Government has amended the notifications to stipulate that it is "Partially Oriented Yarn <strong> of Polyester"</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=23&filename=notification/custom/2008/ctariff08_132.htm" target="_blank">Notification NO. 132/2008 - Cus Dated: 10th December, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI Announces Further Measures To Stimulate Growth</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is stimulating time! The Central Board of the Reserve Bank of India met yesterday at Kolkata and reviewed key economic, monetary and financial developments and the various steps taken since mid-September 2008 to preserve financial stability and arrest the moderation in the growth momentum in the context of the ongoing global financial crisis and the deepening recession in major economies of the world.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been decided to take the following further measures to stimulate growth in the Indian economy:</font></p>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> In order to provide liquidity support to the housing sector, and particularly to housing finance companies (HFCs) which have been adversely affected by the recent financial market developments, it has been decided to provide a refinance facility of an amount of Rs 4,000 crore to the National Housing Bank (NHB). This refinance will be available against the NHB's loans and advances to HFCs. The facility will be available at the prevailing repo rate under the LAF for a period of 90 days. During this 90-day period, the amount can be flexibly drawn and repaid. At the end of the 90-day period, the drawal can also be rolled over. This refinance facility will be available up to March 31, 2010.</font></div>
</li>
</ul>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">With a view to mitigating the pressures on account of the recent developments on loan disbursements to Indian exporting companies and for honouring disbursements under export lines of credit extended at the behest of the Government of India to overseas financial institutions, sovereign governments and other entities for financing imports from India, it has been decided to provide a refinance facility to the EXIM Bank. The refinance facility will be of an amount of Rs 5,000 crore. It will be available at the prevailing repo rate under the LAF for a period of 90 days. During this 90-day period, the amount can be flexibly drawn and repaid. At the end of the 90-day period, the drawal can also be rolled over. This refinance facility will be available up to March 31, 2010.</font></div>
</li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Reserve Bank will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action as appropriate. The Reserve Bank will endeavour to minimise the stress on various sectors of the economy on account of the international financial crisis and the global slowdown. The policy objective is to ensure adequate availability of liquidity in the system and to maintain conditions conducive for flow of credit for all productive purposes, particularly to the housing, export and small and medium industry sectors.<br>
<br>
The Central Board of Directors of the Reserve Bank meets at least once every quarter. The Board has scheduled meetings in Mumbai, Chennai and Kolkata each year. The post-budget meeting of the Board, traditionally held in New Delhi, is addressed by the Union Finance Minister. The other meetings of the Board are held in the remaining state capitals by rotation. The main function of the Central Board of the Reserve Bank is to provide overall direction to its affairs.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Inspectors, examiners and Preventive officers to be called 'Customs and Excise officers'</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More
than three years ago in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1164" target="_blank">TIOL-DDT
53 14 2 2005</a>, </strong>we had reported the Bharadwaj Committee's recommendations, <em>inter
alia</em>, to re-designate Inspectors as Customs and Excise officers. After
more than three years - and God knows in which cabinet the file is gathering
dust. The word 'Inspector' carries with it several contours ranging from
contempt to fear. We have all kinds of inspectors - sanitary inspectors,
drug inspectors, police inspectors and of course excise inspectors. The word
conjures up the ugly image assigned to Inspector Raj. The very fact that
somebody is going to inspect you makes you feel a little suspect - a little
less. Maybe we should find a more trade friendly name. The Head of Canadian
Police is called Chief Constable.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CST - When does 'sale' take place?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 3 defines when a sale or purchase of goods takes place in the course of inter-State trade or commerce. Two tests are applied, one of which is that a sale or purchase takes place in the course of inter-State trade if it occasions movement of the goods from one State to another, and the other test is that a sale or purchase takes place by transfer of documents of title, during the movement of the goods from one State to another.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you an important judgement of the Supreme Court - delivered just yesterday.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8284" target="_blank">Breaking News</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">- Monday'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 realized from clients but not deposited in Government treasury - Conscious disregard to law -there is no alternative to prevent future recurrence by appropriate dose of penalty - Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is true that modern criminology does not encourage the imposition of severe or savage sentences against criminals, because the deterrent or punitive aspect of punishment is no longer treated as a void consideration in the administration of criminal law. But it must be remembered that ordinary offences with which the normal criminal law of the country deals are committed by persons either under the pressure of provoked and unbalanced emotions, or as a result of adverse environments and circumstances, and so, while dealing with these criminals who, in many cases, deserve a sympathetic treatment in a few cases, are more sinned against than sinners, criminal law treats punishment more as a reformative or corrective than as a deterrent or punitive measure.</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>India-Brazil DTAA - assessee is a shipping company - income arising out of transportation of cargo by feeder vessel to mother vessel not eligible for treaty benefits if vessels are not owned, leased or chartered to assessee; If cargo is shifted to another vessel owned by consortium of shippers at mid-way port, benefits to be allowed for income attributable to onward voyage</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INDIA </strong>has Double Taxation Avoidance Agreements with most of its key trading partners. But there is so much of variety in these agreements that some of the litigations become a trend-setter. For instance, the expression 'Operation of Ships' has a different connotation in the context of India-Brazil tax treaty than the one generally seen in the case of OECD Model Tax Convention. And that is how the assessee, a shipping company, partly lost the case before the Tribunal. Distinguishing the expression <strong>'Operation of Ships' </strong> in this context the Tribunal held that <strong>the benefits will be admissible only if the ships are owned or leased or chartered to the assessee. </strong> If the assessee simply books cargo and the same is transported by vessels owned by others, the assessee cannot claim benefits of the tax treaty under Article 8. Since the goods were transported by feeder vessels to mother vessels, not owned by the assessee, the income arising from such activities has been held to be taxable in India.</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>ISD calls at local call rates - Customs angle - Goods imported by STPI unit diverted - Confiscation of goods and penalty confirmed - Duty payable even if goods are not redeemed - no penalty on firm and proprietor:</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> installed equipments were used for unintended and unauthorised purposes. Using these imported equipments and the facility provided by STPI and using the MTNL lines taken in the name of a telemarketing company, they have operated as a parallel Telecom authority. It is clear case of violation the conditions of the Notification No 140/91-Cus dated 22-10-91 and therefore, the goods are liable for confiscation.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend.</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>
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