TIOL-DDT 1049 · 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 1049</font><br>
10.02.2009<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Refund of 4% Special Additional Duty of Customs – CBEC Clarifies</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> had issued Circular No. 6/2008 dated 28 th April, 2008 in pursuance of Notification
No.102/2007-Customs dated 14.9.2007 regarding the procedure to be adopted
for refund of 4% Special Additional Duty of Customs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Para 7.3 of the Circular, it was clarified that in case of 4% CVD having been paid through DEPB Scrip, the amount eligible for refund should be re-credited on the relevant DEPB Scrip.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has suggested that the facility extended to DEPB scrip may also be extended to Vishesh Krishi and Gram Udyog Yojana (VKGUY), Focus Product Schemes (FPS) and Focus Market Schemes (FMS).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The gracious Board has accepted the DGFT suggestion and has decided that in case of 4% CVD having been paid through VKGUY, FPS and FMS Scrips, the amount eligible for refund should be re-credited on the relevant VKGUY, FPS and FMS Scrip.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the Chief Commissioners to inform the trade and the staff.</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_006.htm" target="_blank">CBEC Circular No. 6 /2009- Customs Dated : 9th February, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs – Exemption to ‘Virgin Olive Oil' – Virginity not doubted- CBEC Clarification</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl. No. 33A of Notification No. 21/2002-Customs dated 1.3.2002, reads as:-</font></p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">33A . </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1508, 1509, 1510, 1512, 1513, 1514, or 1515 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All goods, crude and edible grade </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nil </font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the doubt in the field is, whether this exemption is applicable to imports of Virgin Olive Oil of edible grade.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board opines:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the purpose of classification of edible oils enumerated in heading 1508 to 1515, other than olive oil, these have been simply grouped in a single heading as ‘crude' and ‘others' (refined). In respect of olive oil, it has been classified under two headings – heading 1509 and 1510; Heading 1509 covers virgin oil, refined virgin oils and their fractions. Based on the quality of olive fruit, the olive oil obtained by mechanical pressing can either be edible directly or needs refining to make it edible. Heading 1510 covers crude olive oils which are basically residue oils obtained by means of solvent extraction from the residues left after the olives have been pressed to produce olive oils of heading 1509.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no reference to the term ‘crude oil' in the explanatory notes of the Harmonized System of Nomenclature (HSN) relating to oils of heading 1509. However, in respect of other edible oils such as soya bean oil (1507), ground nut oil (1508) there is a specific mention of ‘crude oil'. A sub-heading explanatory note is also provided in HSN, to explain what constitutes as ‘crude' for the purpose of chapter sub-heading 1507.10 and 1508.10. This explains the types of oils covered under the category ‘Crude oil' which is also mentioned in the explanation to the entry at Serial No. 30 of the Notification No.21/2002-Customs dated 1.3.2002. Applying the above explanation, all virgin olive oils fall within the purview of the definition of crude oil, since the virgin olive oil is extracted from the fruit of olive tree by mechanical process and does not involve any chemical treatment.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And so the Board clarifies that:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The term ‘crude' used in the Serial No.33A of the Notification No.21 /2002 dated 1.3.2002 is intended to cover <strong>all edible oils </strong> which have not been subjected to any process of refining.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Thus, all types of olive oils, including ‘ordinary virgin olive oil' and ‘extra virgin olive oil' which have not undergone any refining process and are of edible grade, are eligible for the benefit of exemption under Serial No.33A of the notification as crude, edible oil.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The condition of edible grade of olive oil has to be certified by testing it in terms of the standard of quality specified for such goods in Appendix B to the Prevention of Food Adulteration Rules, 1955.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the Trade and staff to be informed of this clarification and pending provisional assessments to be finalized accordingly.</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=25&filename=notification/custom/2009/cuscir09_007.htm" target="_blank">CBEC Circular No. 7/2009-Customs Dated: 9 th February, 2009</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>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Duty free raw materials procured by an EOU in terms of notifications 1/95-CE and 53/97- Cus destroyed in a fire accident in the factory – <em>Prima facie</em>, the Customs and Excise duties are payable on these raw materials for non-fulfilment of conditions – Tribunal directs pre-deposit.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is really bad news for this 100% EOU.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants, a 100% EOU procured, duty free, raw materials by way of indigenous purchase as also by way of import in terms of the relevant notifications 1/95-CE and 53/97- Cus respectively. In the year 2002, there occurred a fire accident in their factory, in which <em>raw materials as such and the raw materials contained in the finished goods were destroyed</em>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants submitted a claim before the insurance company, <em>which did not include the amount of duty of Customs/Central Excise </em> which were payable in the event of non- fulfillment of the conditions of the aforesaid notifications.</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>Non-resident Company claims deduction for reimbursement of expenses incurred by third party - held, such expenses are caught within mischief of Sec 44C where key word is 'expenses of Head Office nature' - but they are allowable u/s 42 as Production Sharing Contract is a different tax regime in itself: Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> the non-resident companies operating in India, reimbursement of expenses incurred by their Head Office or parent company is common feature of expenses. And such expenses are governed by the Sec 44C of the Income Tax Act which disallows them. And, mind it, it is not an artificial disallowance of expenditure incurred by HO for the Indian branch. There is a logic behind it - since the AO cannot verify such expenses and will have no jurisdiction over it, it is perhaps one of the rationale ways to handle such difficulties. And in the latest decision the Tribunal has held that even third party expenses attributed by the assessee in place of the HO are also caught within the mischief of this provision as the language used is an expenditure in the nature of head office and not HO expenditure. Thus the Tribunal took the view that the creation of a third party expenditure was merely a devise to escape the effect of Sec 44C.</font></p>
<p align="justify"><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>Advice, consultancy or technical assistance in working system of client - covered under category of 'Management Consultant' – when there is scope for difference in interpretation, extended period of limitation would not be applicable: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>earlier days, the term "Management" was understood by the Board of Directors or by Apex Body or the Executive Body of the Organization, who regulates, supervises, directs and controls the affairs of the organisation. Now, the term “Management" has to be looked, in the context of rapidly growing profession of management consultancy. The management consultancy is available in various areas, such as, planning, technical advice, co-ordination, staffing, controlling labourers, etc. It is seen from the definition of the "Management Consultancy" in the Finance Act, 1994, it has widen the scope by the words "management of any organisation in any manner". It includes any advice, consultancy or technical assistance.</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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