TIOL-DDT 1040 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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 1040</font><br> 28.01.2009<br> Wednesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Utilization of Accumulated CENVAT credit restricted in terms of Erstwhile Rule 6 (3) (c) CENVAT Credit Rules – Board Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember the complicated formula introduced in 2008 April to calculate the amount attributable to exempted goods and non-taxable/exempted services? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior to 1.4.2008 [before the amendment in rule 6 (3)] the option available to the taxpayer, under rule 6(3), was that, he was allowed to utilize credit only to the extent of an amount not exceeding 20% of the amount of service tax payable on taxable output service. However, there was no restriction in taking CENVAT credit and also there was no provision about the periodic lapse of balance credit. This resulted in accumulation of credit in many cases.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">W.e.f . 01.04.2008, under the amended rule 6(3), the following options are available to the taxpayers not maintaining separate accounts;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Option No.1 </strong>- In respect of exempted goods, he may pay an amount equal to 10% of the value of exempted goods; and in respect of exempted/non taxable services, he may pay an amount equal to 8% of the value of such exempted/on-taxable service OR</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Option No.2 </strong> - He may pay an amount equivalent to CENVAT Credit <strong>attributable </strong> to inputs and input services attributable to exempted goods and non-taxable/exempted services.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As stated earlier, many taxpayers had accumulated CENVAT credit balance as on 01.04.2008. A reference was made to the Board whether this credit balance should be allowed to be utilized for payment of service tax after 01.04.2008.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has clarified:-</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As no lapsing provision was incorporated and that the existing Rule 6(3) of the CENVAT Credit Rules does not explicitly bar the utilization of the accumulated credit, the department should not deny the utilization of such accumulated CENVAT credit by the taxpayer after 01/04/2008. Further, it must be kept in mind that taking of credit and its utilization is a substantive right of a taxpayer under value added taxation scheme. Therefore, in the absence of a clear legal prohibition, this right cannot be denied.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board deserves rich compliments for giving such wise clarifications which will considerably reduce litigation. But again it is beyond reason that Board chooses to hide such important clarifications. Why does the Board hide its good deeds? The Board can earn a lot of reputation as a responsive and responsible tax administration if such assessee friendly clarifications are given wide publicity.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As usual, this important clarification is contained in a letter written to a Commissioner with a copy marked to the DGST for informing the Trade and the Field</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=41&filename=notification/servicetax/2009/file_137.htm" target="_blank">CBEC No.137 /72/2008- CX.4 Dated: 21st November, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of Toys from China – Board reiterates instructions.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT's Notification No.82 (RE-2008)/2004-09 dated 23.01.2009 amended the Schedule - I (Imports) of the ITC(HS) Classification of Export and Import Items, 2004-09 as follows:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“(1) Import of ‘Toys' from China appearing under ITC Codes 9501, 9502, 9503 of Schedule – I of ITC(HS) Classifications of Export and Import Items is prohibited for six months with immediate effect and until further orders.”</em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC had in Circular No. 21/2008-Customs dated 18.12.2008 had instructed stringent measures such as absolute confiscation along with necessary penal action against the importer for non-compliance with the existing legal provisions as applicable on import of such toys.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Board wants the field to take further necessary action in the matter accordingly.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2009/cusinstruct.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC F. No. 450/142/2008- Cus.IV Dated: January 27, 2008</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Free Transferability of Duty Credit Scrip benefits - Exports by EOU – DGFT Clarifies DGFT Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. For exports made during the period from 1.4.2004 to 31.3.2005, EOUs are eligible for VKGUY scheme benefits.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. However, in FTP RE-2006 (issued on 7.4.2006), exports made by EOUs were <strong>made ineligible </strong> for benefits under VKGUY scheme [vide introducing Para 3.8.2.2 (c)]. Further, in FTP RE-2006, two new schemes, namely, Focus Market Scheme (FMS) and Focus Product Scheme (FPS) were introduced. Similar provisions were made under Para 3.9.2.2 (b) for FMS, and under Para 3.10.2.2 (b) for FPS. Accordingly, for the period from 1.4.2006 to 31.3.2007, exports made by EOUs <strong>(or through DTA units) </strong> are <strong> not eligible </strong> for benefits under VKGUY, FMS and FPS.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Further, in FTP RE-2007 (issued on 19.4.2007), vide Para 3.8.2.1, it was provided that ‘exports made by EOUs/BTPs who do not avail direct tax benefits/exemption shall be eligible, provided the same is not covered under Paragraph 3.8.2.2'. Similar provisions are contained in Para 3.9.2.1 of FTP RE-2007 (issued on 19.4.2007) for FMS as well as in Para 3.10.2.1 of FTP RE-2007 (issued on 19.4.2007) for FPS. <strong>This applies to exports made from 1.4.2007 onwards and has been continued till date.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. For High Tech Products, Export Promotion Scheme (a variant of FPS scheme introduced w.e.f 1.4.2007), this provision has been introduced on 1.4.2008 vide Para 3.11.2.1 of FTP RE-2008 (issued on 11.4.2008).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The expression ‘ EOUs/BTPs who do not avail direct tax benefits/exemption' would mean the following in the two possible situations:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>a. That the EOUs/BTPs have completed the period for which direct tax exemption was granted to the Unit. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In such cases, exports made by EOUs/BTPs would be eligible for Chapter 3 benefits from the date on which this exemption period is over. However, Chapter 3 benefits shall apply for exports made from 1.4.2007 onwards and not earlier, as clarified in Para 3 above. EOUs / BTPs will submit the evidence of completion of the exemption period.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>b. EOUs/BTPs have not completed the period for which direct tax exemption was granted to the Unit.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In such cases, if the EOUs/BTPs wish to claim Chapter 3 scheme benefits on exports made on or after 1.4.2007, then they will have to forego the direct tax exemption status and modify their direct tax exemption permanently and produce evidence to this effect from the jurisdictional Income Tax Authorities that they would not be claiming direct tax exemption henceforth. The change would be eligible from the date this exemption period is over. This shall apply for exports made from 1.4.2007 onwards and not earlier. EOUs/BTPs will submit the evidence of change of exemption status from jurisdictional Income Tax Authorities to RA concerned.</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/dgft08cir056.htm" target="_blank">DGFT Policy Circular No. 56 (RE-2008)/2004-2009 Dated: January 21, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Basmati Rice – DGFT changes MEP</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the current Policy, export of basmati rice is allowed only if the minimum FOB price is US$ 1200 per ton or Rs.48 ,000/- per ton. Now this is changed to, “Export permitted only if the Minimum Export Price (MEP) is USD 1100 per ton FOB or Rs. 49500/-per ton.” So the Dollar Price is reduced to 1100/- and Rupee Price is increased to 49500 – Exchange fluctuations?</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2008/dgft08not083.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 83 (RE-2008)/2004-2009 Dated: January 27, 2009</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Don't Visit North Block For Transfers – CBEC Tells Officers</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Member Sharma has issued a letter to the field has asked the officers not to visit the Board office for transfers. “I am sure you would agree that it puts pressure on the time schedule of senior officers and at times which causes embarrassment too”, he says.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He has informed the Chief Commissioners that, “no officer from the field offices should visit Board Office with the sole purpose of putting his/her request personally. You may, therefore, ensure that officers leave their Headquarters to visit Board Office with your permission for urgent/important assignments only. The officers visiting on official visit should also refrain from meeting senior officers to put forth their personal grievances regarding AGT, 2009.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last year CBDT had issued a similar letter and while reporting that in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7347" target="_blank">TIOL-DDT 872 26.05.2008</a></strong>, we had asked, <font color="#FF6600">Will CBEC issue a similar circular?</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This year the transfer shop has to be closed soon, as transfers cannot be made after the elections are announced. By the way is AGT 2008 finally over? During the last one year, the CBEC issued 33 transfer orders – on an average one every ten days. There was not a single month in which there was no transfer order.</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=70&filename=pitara/sernews/order/AGT.htm" target="_blank">CBEC Member's Letter dated January 23, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Satyam, not a System Failure – ICAI Chief</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"I have been telling constantly that Satyam is not a system failure...Satyam is an 'aberration'. It is human greed, human desire, which made all this (Satyam fraud) possible," says Institute of Chartered Accountants of India President Ved Jain. "Our accounting, auditing and ethical standards are world-class...they are well-placed," he adds. And, "I am not talking about the auditors. I am talking about Satyam founder... Ramalinga Raju , who did all these manipulations. Now, who all are involved with him is a matter of investigation, which has to come out"</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Poor rich Raju apparently was all alone when he manipulated the accounts for years and the innocent PwC was getting only five times the normal fees. Incidentally S. Gopalakrishnan , partner of PwC, now in jail, is a National Council Member of the ICAI.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>An emergency light goes off</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The office of the President is like an emergency light. It comes on automatically when there is a crisis and goes off automatically when the crisis passes.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> One such Great, R Venkataraman is no more. From North Block to Rashtrapati Bhavan, he brought dignity to every office he held. While criticising the Janata Government after taking over as the Finance Minister, he told Parliament,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“I have referred to the developments in the past three years not with a view to apportion blame or trade accusations but merely to highlight the historical setting in which our current problems have to be viewed. This is clearly not the time for indulging in mutual recriminations. The real challenge is to evolve a viable national consensus for solving the formidable problems now facing the country. In this vital national task, we seek the active cooperation of all sections of this House. I would like to take this opportunity to share with the House the manner in which we are tackling the present grave economic crisis.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">May His Soul rest in Peace.</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 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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>For any period prior to 15.9.98, benefit of exemption under Notification 1/95-CE was admissible to Furnace Oil procured indigenously by 100% EoU and used for generation of steam in boilers – Holding so, Tribunal dismisses Revenue appeal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> respondents, a 100% Export Oriented Unit, are engaged in the manufacture and export of Terry Towels. Furnace Oil procured by them indigenously under exemption notification 1/95-CE was used in boilers, for the generation of steam which in turn was used for drying up of finished goods.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate of Anti Evasion, after conducting investigations, issued show-cause notice to the respondents demanding Central Excise Duty of over Rs.13 lakhs on the ground that the benefit of the Notification No.1/95-CE dated 4.1.95 was not available to Furnace Oil procured by them during the period 01.04.1996 to 14.09.1998.</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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Swamiji in jail - His income cannot be treated as income of TRUST - amounts which have ‘come in' are income – examining all donors is as practical as examining all Puri Temple pilgrims - burden of proving source is on assessee – we will not lightly or easily disturb concurrent factual findings: Madras HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> petitioner is a swamiji and his address is Cuddalore Central Prison. The story starts from the time the assessee came to India from Sri Lanka. He attracted some devotees. Definitely from 1984, there appears to have been an Ashram. According to the assessee, he was advised to found a Trust. There are bald statements or recitals that the individuals had no right and that the properties belonged to the Trust. The trust deed is dated 08-07-1994 and registered on 20-07-1994. The author of the Trust is the assessee. He had given a sum of Rs.501 /- for the creation of the Trust. He has named about eight persons including himself as the trustees of the Trust. In 1994 when the Trust came into existence it owned no property. On 23-11-1994 and 29-11-1994, the assessee's premises called ‘ Premananda Ashram' were subjected to search. The documents showing substantial investment in bank deposits and immovable properties were seized in the search u/ s.132 and they revealed that the assessee is liable to tax.</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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Delayed Refund – Revenue asked to pay 10% interest: High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case had many turns and twists. It all started when the appellant imported a variable induction furnace equipment vide bill of entry dated 22.1.1979. Following the judgment of the Supreme Court in the case of <em>Sandvik Asia Ltd </em>, the High Court accepted the prayer of the appellant to the extent that simple interest be awarded @ 10% per annum from the date of order i.e. 6.2.1996 to the actual date of refund i.e. 23.11.1998.</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Unloading of coal from rail wagons and discharging them to conveyor belt through track Hopper – Liable to Service Tax under 'Cargo Handling Service' - As it is a question of interpretation, extended period of limitation not applicable and no penalty: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellants had entered into a contract with Sanjay Gandhi Thermal Power Station, Birsinghpur for handling work relating to unloading of coal from rail wagons and discharging them to the conveyor belt through the track Hopper. The work also includes breaking and pushing of coal lumps of bigger size into track Hopper. This work was being handled within the premises of the power house. The contract envisages that the appellants engage sufficient labourers for timely completion of the work of unloading.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner has held that the work handled by them falls under the category of "Cargo Handling Services" and demanded service tax amounting to Rs. 63,77,374/-.</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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p> <p align="justify"><font color="#FF6600" 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>