TIOL-DDT 1045 · 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 1045</font><br>
04.02.2009<br>
Wednesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Committee Of Chief Commissioners – CBEC Coolly Corrects a Blunder</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With so many Commissioners and Chief Commissioners and so many Committees going around and nobody staying put anywhere for long, it is really a Herculean task for the Board to appoint and keep track of the Committees it appoints to review the orders of the Commissioners. Just look at the Committees of Chief Commissioners appointed to review the orders of the Commissioners posted in the LTUs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the first LTU in the country was started in Bangalore, the CBEC by Notification No. 5/2007- C.E (N.T.), Dated: February 12, 2007 appointed the Chief Commissioner, LTU and the Chief Commissioner of Customs , Bangalore to review the orders passed by the Commissioner of Central Excise, LTU, Bangalore.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the second LTU was started in Chennai, they amended Notification 5/2007 by Notification No. 1/2008- CX . (N.T.), Dated: January 15, 2008 to add the Chief Commissioner, LTU, Chennai and the Chennai Customs Chief Commissioner as the Committee to review the orders of the Commissioner of Central Excise, LTU , Chennai.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the third LTU was started in Mumbai, they amended the Notification again by Notification No. 25 /2008- CX ., (N.T.), Dated : May 27, 2008. But this time around the Committee consisted of the Chief Commissioner of Income Tax and the Chief Commissioner of Central Excise Mumbai-I. <strong>How can an Income Tax Chief Commissioner review an order passed by a Central Excise Commissioner? </strong> Well, Board did not seriously think of this problem at that time.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally the fourth LTU was set up in Delhi and hell was let loose! While amending the Notification No. 5/2007 by Notification No. 36 /2008- CX ., (N.T), Dated: September 25, 2008, the Board appointed a Committee of Chief Commissioners of Delhi and Chandigarh for review of the orders of the Commissioner of Central Excise, LTU, Delhi <strong>but deleted the Committees of Chief Commissioners for the LTUs of Bangalore, Chennai and Mumbai! YES, unbelievable, but it happened</strong>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now by Notification 4/2009, the Board has restored the Committees for Bangalore, Chennai and Mumbai and replaced the Chief Commissioner of Income Tax Mumbai with the Chief Commissioner of Central Excise.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All FINE! But what happens during the period when there were no Committees of Chief Commissioners to review the orders of the Commissioners, just because Board's computer deleted them?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Already Government has lost several cases in the East Zonal Bench of the CESTAT for Board's bungling in transfers and postings - what can anyone do if the Board cannot amend its own notifications properly?</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=30&filename=notification/excise/2009/exnt09_04.htm" target="_blank">Notification No. 4 /2009 Central Excise (Non Tariff)., Dated: 28 th January, 2009</a></strong></font></p>
<p align=center style='text-align:center'><b><span style='font-size:10.0pt;
font-family:"Verdana","sans-serif";color:#006600'>Customs Duty on Poppy Seeds
Reduced
<o:p></o:p>
</span></b></p>
<p style='text-align:justify'><span style='font-size:10.0pt;font-family:"Verdana","sans-serif";
mso-bidi-font-weight:bold'>Government has reduced the Customs Duty on Poppy
Seeds from 40% to 20%. Notification No. 21/2002 – <span class=SpellE>cus</span> is
amended.
<o:p></o:p>
</span></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Duty Drawback - Monitoring Realization of Export Proceeds – CBEC Initiative</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In terms of the provisions of Section 75 (1) of the Customs Act, 1962 read with sub-rule 16A (1) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, where an amount of drawback has been paid to an exporter but the sale proceeds in respect of such export goods have not been realized within the time allowed under the Foreign Exchange Management Act (FEMA), 1999, such drawback amount is to be recovered. Sub-rule 16A (2) stipulates that if the exporter fails to produce evidence in respect of realization of export proceeds within the period allowed under the FEMA, 1999 or as extended by the Reserve Bank of India (RBI), the Assistant/Deputy Commissioner of Customs shall issue a notice to the exporter for production of evidence of realization of export proceeds, failing which an order shall be passed to recover the amount of drawback paid to the claimant.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hitherto, the action to recover drawback was being taken on the basis of Export Outstanding Statement (XOS) received from RBI. The XOS is a consolidated half-yearly Statement giving details of all export Bills outstanding beyond the period prescribed for realization within 15 days from the close of the half year i.e. June/December. However, following the issuance of RBI Circular No. 61 dated 31.1.2004 dispensing with submission of declarations for export of goods of value not exceeding US$ 25,000, it is observed that a large number of the export consignments fall outside the purview of monitoring mechanism through XOS inasmuch as the shipment details of goods valued upto $ 25,000 are no longer reported through this statement.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So RBI is no more reliable and the Board has decided to put in place an in-house mechanism to monitor the realization of such proceeds for exports made under the Drawback Scheme.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate General of Systems has developed a BRC (Bank Realization Certificate) Software for ICES, the salient features of which are the following:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) The exporters filing Shipping Bills (S/Bs) under drawback shall furnish a declaration to the Assistant Commissioner/Deputy Commissioner (Drawback) providing the details of all Authorized Dealers (AD), their codes and addresses through whom they intend to realize the export proceeds. Such a declaration shall be filed at each port of export through which the exporter exports his goods. In case, there is a new addition of AD, the same is to be intimated to the concerned Custom House at the port of export.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) The system would generate on all Drawback Shipping Bills, the due date for submission of BRCs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) The exporter shall submit a certificate from the Authorized Dealer(s) in respect of whom declaration has been filed containing details of the shipments which remain outstanding beyond the prescribed time limit, including the extended time, if any, allowed by AD/ RBI . Such a certificate can also be provided by a Chartered accountant in his capacity as a statutory auditor of the exporter's account. A proforma for furnishing such negative statement is enclosed as Annexure. Further, the exporters also have the option of giving a BRC from the concerned authorized dealer(s).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Such certificates shall be furnished by the exporters on a 6 monthly basis before the 7th day of January and July in respect of exports which have become due for realization in the previous 6 months. For example, for the six-monthly period of January- June 2008 (during which exports were effected), the statement/ BRC needs to be submitted by the 7th July, 2009.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) Such certificates shall be filed by the exporter AD wise at each port. The relevant date for filing certificates shall be the date of let export order (LEO) which is the date when the export goods are in effect permitted to be exported.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) The software shall indicate list of the shipping bills under drawback where the BRC/negative statement has not been furnished by the exporter within the prescribed date. The Assistant Commissioner/ Deputy Commissioner (Export) may peruse such lists either for the entire Customs port or for an individual exporter by entering the IE code of the exporter and accordingly initiate action to recover drawback.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Each Custom House shall create a special cell for management of declarations, amendments thereto, Annexure certificates, registers etc. The cell shall be responsible for keeping the Declarations and other relevant papers in a proper manner and tracking the remittance of export proceeds.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The system will indicate to the Assistant Commissioner/Deputy Commissioner (Drawback) all cases of Drawback Shipping bills with LEO date falling on or after 1.1.2008 if the BRC /negative statement in the prescribed Annexure is not submitted by the exporter within the prescribed period. Further, the exporters are required to furnish the BRCs /negative statement in the prescribed Annexure in respect of all the Drawback Shipping Bills having LEO dates from 1.1.2004 to 31.12.2007 (separately for each six month period) within a period of four months from the date of issue of this circular.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In addition to the list of pending shipping bills (for which export realization has not been received) indicated by the system, the Commissioners shall also by way of audit, exercise special checks in case of first time exporters, exporters who have taken large amounts of drawback suddenly, sensitive destinations, sensitive products etc. so as to ensure that there is no misuse of the drawback facility. They shall also exercise random audit checks in respect of other exporters to ensure that all export proceeds are realized. During the course of audit, it may also be confirmed on a random basis whether the certificates given by the AD/CA are genuine or not by on the spot verification. A proper record of all such audit checks and the period of audit should be maintained.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Elaborate system indeed – But what were they doing for the last five years?</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=25&filename=notification/custom/2009/cuscir09_005.htm" target="_blank">CBEC Circular No. 5/2009- Cus ., Dated: February 2, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exemption to parts when used within the factory in the manufacture of goods falling under heading Nos. 86.01 to 86.06 – Section 11C Notification issued</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has issued a Section 11C Notification in respect of parts, when used within the factory in which they have been produced, in the manufacture of goods falling under heading Nos. 86.01 to 86.06, of the First Schedule to the Central Excise Tariff Act for the period 1.3.1993 to 3.5.1993 that is for a period of two months.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For your ready reference, it may be stated that a Notification under Section 11C of the Central Excise Act is a virtual retrospective exemption for certain goods for which there was a practice of not paying duty. Mostly it is a retrospective correction of Board's mistakes. And Chapter 86 refers to Railway locos and other vehicles.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. 88/93- C.E. , dated 4-5-1993, <em>parts, when used within the factory in which they have been produced, in the manufacture of goods falling under heading Nos. 86.01 to 86.06 of the Schedule to the Central Excise Tariff Act </em> were exempted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But this was only with effect from 4.5.1993 and so the period from 1.3.1993 to 3.5.1993 had to be covered and now a Section 11C notification is issued to stipulate that no duty is required to be paid – the notification comes after more than FIFTEEN years! Litigation must be relentlessly going on somewhere.</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=30&filename=notification/excise/2009/exnt09_01.htm" target="_blank">Notification No. 1 /2009 Central Excise (Non Tariff)., Dated: 7th January, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI arrests RAW Official</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RAW </strong> is the powerful External Intelligence Agency of India – when you think of RAW, you think of CIA, ISI, KGB and the like. You think RAW must be busy analysing what plans Obama has for India or what kind of terrorists are planning to land up in India with what kind of weapons. But here is a senior officer of the RAW who went and got caught by CBI while accepting a bribe of one lakh rupees out of an agreed amount of Eight lakhs of rupees.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dr. ASN Rao, a scientist with RAW of Director's rank had allegedly demanded the bribe from a Chennai-based export firm in exchange for providing it with an export licence.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While Rao, a Doctorate in Physics might not have been seriously involved in intelligence gathering, the fact that a senior RAW official has been arrested by the CBI is a blot to the High-profile RAW.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What MADAM said years ago that ‘Corruption is a global phenomenon' was just the fact of life after all.</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>Service Tax</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ahmedabad Management Association is not liable to pay Service Tax on commercial coaching, club or convention services: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHETHER</strong> the training programmes conducted by AMA can be called as commercial training or coaching. The answer is <strong>no </strong> in view of the following:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. AMA is not a commercial concern.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. The purpose of the training is not commercial.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii. The objective of the AMA in conducting the programme is not commercial and whatever extra income is earned, it is flowed back into the association and is used for public purpose.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv. The programmes conducted by the AMA can be considered as continuing education programmes and not as commercial training or coaching.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">v. No specific skills which prepare candidates for a particular job or an examination are imparted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">vi. The diploma programmes/courses conducted by AM/ amount to education or continuing education and no commercial training or coaching.</font></p>
</blockquote>
<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>Indo-USA DTAA - Indian subsidiary hires services of seconded employee of parent company - payment made towards reimbursement of salary cannot be treated as fee for technical services and no TDS is deductible u/s 195: ITAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee in this case is a 100% subsidiary of its US-based parent company. It enters into a secondment agreement with the parent company for deputing a technically qualified employee for its own software development work in India and agrees to reimburse the cost. Now the issue is - can this payment made as reimbursement of salary paid to the seconded employee by the parent company be treated as fee for technical services as per Explanation 2 below Sec 9(1)(vii) and also under Article 12(4) of the DTAA ? Is any TDS u/s 195 is to be deducted while remitting the amount?</font></p>
<p align="justify"><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>100% EOUs - Whether imported goods warehoused in premises of 100% EOU are to be held to have been removed from warehouse when same are issued for manufacture within the 100% EOU ? - Matter goes to Larger Bench</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>unit had imported the HSD by availing the benefit of Notification 52/2003 Cus dated 31.3.2003. However, the department denied the exemption in respect of Additional duty of Customs on the ground that the Notification No.52 /2003- cus dated 31.3.2003, exempted only basic customs duty and additional customs duty imposed under Section 3 of the Customs Tariff Act and not the additional customs duty imposed under Section 128 of the Finance Act, 2003 and confirmed demand of additional duty of customs. The Commissioner (Appeals) allowed the benefit of exemption, but the revenue was in appeal before the Tribunal. The EOU was also in appeal for the subsequent period as their appeal was dismissed by the Commissioner (Appeals) for non-compliance of pre-deposit.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants, without going into the complexities as to whether the exemption under Notification 52/2003 Cus can also be extended to the Additional Duty of customs levied under the Finance Act, 2003 or not, (<strong>Please see <a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8140">DDT990 </a> for a detailed analysis of this issue</strong>) raised an interesting argument before the Tribunal. It was argued that the entire operations of the EOU are carried out in a warehouse as the goods were not removed from the warehouse the question of payment of duty does not arise.</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>
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