TIOL-DDT 1033 · 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 1033</font><br>
16.01.2009<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Classification of footwear having uppers of a combination of leather and synthetic/textile material under Chapter 64 of the Drawback Schedule</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has received a representation from the Council for Leather Exports (CLE) that exporters are facing problems in classification of footwear having uppers made of a combination of leather and non-leather materials such as synthetic, textile material, etc. It has been stated that footwear in which less than 60% of the outer visible surface area of the upper is of leather and the remaining portion is of non- leather or a combination of leather-cum-synthetic materials, the same are being classified as "other footwear" under heading 6405 of the Drawback Schedule for which the rate of drawback is 1%.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has clarified that,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. If the predominant constituent in the upper of footwear is of leather, the upper should be considered to be of leather and the footwear should be classified under the Drawback Schedule tariff item 6403 provided the outer soles of the footwear are of rubber, plastics, leather or composition leather.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Further sub-classification under the heading 6403 may be determined in accordance with the description of the goods and the scope of various sub-tariff items under the tariff item 6403.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Similar predominance criteria will hold for goods falling under heading 6404 also. Only such footwear which cannot be classified under tariff items 6401, 6402, 6403 and 6404 of the Drawback Schedule are to be classified under the tariff item 6405.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants a suitable Public Notice and Standing Order to be issued for the guidance of the trade and <strong><font color="#FF6633">staff</font></strong><font color="#FF6633">.</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Difficulties faced, if any, in implementation of the Circular to be brought to the notice of the Board.</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=25&filename=notification/custom/2009/cuscir09_002.htm" target="_blank">CBEC Circular No. 2/2009- Cus ., Dated: January 15, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tax
free bonds by India Infrastructure Finance Company Limited – Notified under
Section 10 of IT Act</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 10 of the Income Tax Act, in computing the total income of a previous year of any person, any income falling within any of the clauses under that section shall not be included;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per item (h) of sub-clause (iv) of clause (15) of section 10, interest payable by</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>by any public sector company in respect of such bonds or debentures and subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as the Central Government may, by notification in the Official Gazette, specify in this behalf;</strong></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">is also not included in the income.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has notified the issue of tax free bonds by India Infrastructure Finance Company Limited, carrying an interest rate of up to maximum 8 per cent annum, aggregating to an amount of ten thousand Crore rupees only, to be issued by India Infrastructure Finance Company Limited, New Delhi during the financial year 2008-09, for the purpose under the section.</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=35&filename=notification/cbdt/2009/it09not009.htm" target="_blank">CBDT Notification NO. 9/2009 : Dated January 7, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Certificate Course on Forensic Accounting and Fraud Detection using IT and CAATs – ICAI's Initiative</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Institute of Chartered Accountants of India, recognizing the need for Forensic Accounting and Fraud Detection, in the emerging economic scenario, has decided to launch this Certificate Course on Forensic Accounting and Fraud Detection using IT and CAATs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAAT stands for Computer Accounting and Auditing Techniques</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Forensic Accounting and Fraud Detection specialisation is in increasing demand considering increasing incidents of cyber crimes and frauds detection. It is the practice of utilizing accounting, auditing, CAATs/Data Mining Tools, and investigative skills to detect fraud/ mistakes.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Course includes lessons on:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Assessment of the damages</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Fact finding to see whether fraud/ embezzlement has taken place</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Collection of evidences</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Investigating and analyzing financial evidences</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This, of course, has nothing to do with the Satyam Scam but that will be a live example in all the discussions.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI arrests NCB Officials taking bribe of Rs. 1.5 Lakhs</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Bureau of Investigation yesterday arrested an Inspector and a Sub Inspector of Central Bureau of Narcotics (CBN), working in the office of Dy. Narcotics Commissioner, Lucknow, for demanding and accepting a bribe of Rs. 1.5 lakhs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A complaint was lodged with CBI to the effect that the accused officials demanded a bribe of Rs. 2 lakhs for ensuring the bail of complainant's elder brother in a case under investigation at CBN, Lucknow and also not to falsely implicate his elder brother's son in the case.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The accused persons asked the complainant to come to Mahanagar Crossing in Lucknow and made him sit in the vehicle being driven by one of the accused officers and the bribe was transacted with precaution to dodge the CBI team. CBI laid a trap and both the accused were caught red handed while accepting the bribe of Rs. 1.5 lakhs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These Drug officers can ruin somebody's life by just planting some drugs and so naturally the rates of bribe are quite high.</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 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><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Availment of exemption in respect of goods covered by SSI Notf 8/98-CE and availment of MODVAT benefit in respect of goods lying outside the purview of the exemption notification is not simultaneous availment of MODVAT and SSI exemption – Tribunal distinguishes Apex Court decision of <em>Ramesh Foods</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">AS</font> </strong>rightly mentioned by a leading author of books on Indirect Taxation, the SSI exemption notification 175/86-CE although meant to cater to the ‘small scale units' proved to be one of the most complicated pieces of legislation of all times. Be it the interpretation regarding what constitutes ‘brand name' or for that matter the manner of computing the ‘aggregate value of clearances', the issues always snaked its way to the Apex Court for a final say only to be “re-interpreted” by the Revenue so as to suit its stand.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Long ago, in our <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4553" target="_blank">DDT-493 dated 17.11.2006</a></strong>, we had provided the following dope –</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>“Whether
benefit of SSI exemption is available if Cenvat Credit is taken - Board
wants opinion''</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Commissioner ought to have examined the merits of the case rather than deciding the case on limitation – Tribunal remands matter on Revenue appeal.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">THE</font></strong> respondents were engaged in the manufacture of pig iron. The process of manufacture involved reduction of iron ore by coke in a blast furnace, which required feeding of iron ore particles of specific size. As substantial quantity of iron ore fines were left behind in the process, the respondents wanted to set up a <strong><font color="#FF6633">sinter plant</font> </strong> for conversion of iron ore fines to agglomerated iron ore which could be used in the blast furnace for the production of the final product (pig iron). For the purpose of setting up this plant, they imported machinery and other capital goods, which were received in their factory during the period from December 1996 to January 1997. They did not initially take CENVAT credit on the capital goods, as the relevant rule, which was then in force, did not permit them to do so, <strong><font color="#FF6633">as the capital goods were yet to be installed</font></strong><font color="#FF6633">.</font></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>Indo-German DTAA - assessee provides consultancy through PE in India - claims deduction of expenses u/s 44DA - Application of Sec 44DA is not retrospective; Even under DTAA profit of PE is subject to domestic laws and deduction of expenses u/s 44D, a non-obstante provision, is not allowed: ITAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">AS</font></strong> <font color="#FF6633"><strong>TIOL</strong></font><strong> </strong> reported last week that <em>retrospective v prospective </em> is a constant bone of contention between the Revenue and the taxpayers whenever a new Section is inserted or an Explanation is added vide the Finance Act. Exactly the same issue is involved in this case in which the assessee is a tax resident of Germany and provides engineering consultancy service through its PE in India. For the income generated by its PE, it wanted to claim deduction of expenses incurred and took shelter under the amended Sec 44DA vide Finance Act, 2004 which made income from royalty or fees for technical service chargeable to tax on 'net basis' after allowing expenses and not on gross basis. In other words, the assessee took the plea that the amended Section was clarificatory in nature and therefore retrospective in effect.</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="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend.</font></p>
<p align="justify"><font color="#FF6666" 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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