TIOL-DDT 1054 · 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 1054</font><br>
17.02.2009<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Vishesh
Krishi Gram Udyog Yojana scheme - Applicability of Notification No 41/2005-Cus – CBEC Clarifies</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 3.8.6 of the Foreign Trade Policy (FTP) Status Holders have been incentivized with duty credit scrips equal to 10% of the FOB value of agricultural exports(including benefits entitled under para 3.8.2 of the FTP). These Duty Credit Scrips can be used to import specified capital goods/equipment meant for development of agricultural infrastructure.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this connection, Directorate General of Foreign Trade had requested the Board to issue a circular to implement the aforesaid provision.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Clarifies:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Notification No.41/2005-Cus exempts all goods including capital goods which are freely importable, when imported into India against the duty credit certificate issued under Vishesh Krishi Gram Udyog Yojan (VKGUY) in accordance with para 3.8 of FTP. Since para 3.8 of FTP covers para 3.8.6 also, the present Notification No 41/2005-Cus would cover imports under para 3.8.2 and para 3.8.6 of FTP.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In terms of provisions of the FTP, the duty credit scrips under para 3.8.2 are issued to all exporters against the export of notified items. These scrips can be used for the import of inputs or goods including capital goods which are freely importable. Further, the scrips are freely transferrable.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. However, the duty credit scrip under para 3.8.6 of FTP can be issued only to status holders against the agricultural exports and can be used only for the clearance of capital goods and equipments as specified in the said para. Further, these duty credit scrips are subject to actual user condition and are not transferable.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In view of the above differences in the scrips issued under para 3.8.2 and para 3.8.6 of FTP, it is desirable that the scrips are properly verified before allowing import of permitted goods.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. It is also suggested that, due care may be taken in granting the exemption to only those goods as permitted under the respective policy paragraphs. Care may also be taken in permitting transferability only to those scrips which are issued under Para 3.8.2 of FTP.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the Chief Commissioners and Commissioners to bring these instructions to the notice of the field officers by issuing suitable Standing orders/instructions.</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_008.htm" target="_blank">CBEC Circular No. 8/2009 – cus Dated: February 16, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SSI Exemption and CENVAT Credit – Branded Goods -Long Pending Issue Solved</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 2(iii) of Notification No. 8/2003 – Central Excise dated 01.03.2003, <font color="#FF6600">the manufacturer shall not avail the credit of duty on inputs under rule 3 or rule 11 of the CENVAT Credit Rules, 2002 (herein after referred to as the said rules), paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearances of which, as calculated in the manner specified in the said Table does not exceed rupees one hundred and fifty lakhs;</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This means that during the period when exemption from duty is availed for the first clearance of 150 lakhs rupees, no CENVAT credit can be taken.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But as per para 4 of the notification, the exemption cannot be availed if the goods bear the band name of another person. Obviously then duty has to be paid. Now if duty has to be paid, can't CENVAT Credit be taken? But the para 2(iii) of the Notification bars Credit when the exemption is availed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So is simultaneous availment of exemption and Credit permissible?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Long ago in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4553">DDT 493 - 17 11 2006 </a>, </strong>we covered this issue with the question <strong>Whether benefit of SSI exemption is available if CENVAT Credit is taken?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We had also carried a story <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4466"> Open sesame </a><strong>SSI exemption and CENVAT - simultaneous availment possible; says CESTAT.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After more than two years, the Government has now amended the Notification No. 8/2003 to add a proviso to para 2(iii),</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Provided that nothing contained in this clause shall apply to the inputs used in the manufacture of specified goods bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now Credit can be availed on the branded goods cleared on payment of duty – a stand that judiciary had taken long ago and which we propagated.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is a simple issue which was under litigation for more than twenty years and which the Board could have solved very easily by amending the Notification which they have now done. Any way better late than never.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have you noticed the Board is actively into correcting several litigating issues of late? Is Chidambaram (or his absence from Finance Ministry) responsible?</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/etariff09_02.htm" target="_blank">Notification NO. 2/2009-CX., Dated: February 11, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SSI Exemption – Branded Goods – Packing Material – Plastic Bags added</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bar on availing SSI exemption to branded goods does not apply to packing materials namely, <em>printed cartons of paper or paper board, metal containers, HDPE woven sacks, adhesive tapes, stickers, PP caps, crown corks, metal labels.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has added ‘plastic bags' to the list. This means that the SSI benefit cannot be denied if the goods manufactured by SSI units bearing the brand name of another person are packing materials mentioned above.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was only a few days ago, on 12.01.2009 to be precise that in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8431" target="_blank">DDT-1029</a></strong>, we raised an issue, <strong>Branded labels - SSI exemption – Metal Labels Vs Paper Labels.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We had raised a question, “When metal labels are entitled for exemption, why not paper labels?”<br>
<br>
</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now ‘Plastic bags' are covered but ‘paper labels' are still elusive.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When will this amendment come? We had asked in DDT 1029 - <strong>Will the Board clarify or leave the matter to the consultants and courts?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7918" target="_blank">DDT 959- 25.09.2008</a></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=30&filename=notification/excise/2009/etariff09_02.htm" target="_blank">Notification NO. 2/2009-CX., Dated: February 11, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Seniority List of Commissioners – CBEC circulates Draft List</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC wants to hold an urgent DPC for promotion to the grade of Chief Commissioner from Commissioners and the first requirement for this is an authenticated and updated Seniority List of Commissioners, which not very surprisingly, the Board doesn't have. So they have circulated a draft list of the Commissioners to all Chief Commissioners to verify the list and call for objections so that the list can be finalised and submitted to the UPSC for initiating the process of promotions. The list contains 273 names with SN Saha of the 1986 batch as the last name.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems they have over seventy vacancies of Commissioner and if some Commissioners get promoted, there will be more. If the Board cannot make these promotions they should abolish these posts.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/seniority-list-commrs.pdf" target="_blank">CBEC
F.No.A.32012/02/2009-Ad.II </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ultimately, this is your money, and you deserve to know where it's going</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">President Obama is celebrating the passage of the American Recovery and Reinvestment Act as a "major milestone on our road to recovery," while still emphasizing that we have many miles yet to go.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"This historic step won't be the end of what we do to turn our economy around, but the beginning," said the President. He invokes President Kennedy, who said, "Do not pray for easy lives. Pray to be stronger men. Do not pray for tasks equal to your powers. Pray for powers equal to your tasks."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
President Obama acknowledges that some people are sceptical about the plan given how Washington has performed in the past, which is why he's encouraging people to check back at a website where, once the plan is in action, citizens are able to track the funds.<br>
<br>
"Ultimately, this is your money, and you deserve to know where it's going and how it's spent," he says.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sound and Fury Signifying Nothing – Interim Budget</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who asked you to expect anything in this interim budget? Congressmen may not be good at economics, but you must give it to them – they know their politics – they were there for more than sixty years.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Stock market which has more monkeys than bears and bulls reacted sharply, because they understand neither politics nor economics.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the frills associated with the Budget were there including the customary photo sessions inside and outside the North Block.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But now that Pranab Mukherjee is in the South Block, he would like to continue to be there, preferably in a better room rather than move to the North Block.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yam Raj (death) and Kar Raj (tax) are two certainties of life – while Yam Raj comes only once in our life Kar Raj is with us every day – between the two, there is an annual budget.</font></p>
<p align="center"><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/interim_fm.jpg" alt="Legal Corner Icon" width="350" height="254" hspace="5" border="0" align="center"></b></strong></strong></strong></strong></strong></strong></strong></font></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>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Depreciation u/s 32 - lease vs financial transactions - any benefit allowed by AO cannot be taken back by tribunal; however, second lease transaction found to be sham on ground that sub-lease date preceded lease date: Apex Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> Revenue, confronting lease transaction vs financial transaction is a regular affair. It is often the assessee who succeeds. But this time Revenue has largely succeeded in proving that the lease transaction was a sham and the assessee was not entitled to claim depreciation under Section 32(1)(ii) of the Income-tax Act. This was regarding the second transaction. For the first transaction, the partial disallowance was deleted on the principle that anything allowed by the AO cannot be taken away by the Tribunal.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sales Tax</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Natural gas, furnace oil, light diesel oil and naphtha consumed by industry to generate electricity which is then used in manufacture of end products, namely, caustic soda and industrial chemicals can be considered to be 'raw material' or 'consumable source' under Gujarat Sales Tax Act – matter remanded: Supreme Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RESPONDENT</strong>-assessees have received the benefit of exemption during the period 2001-2005. They got that benefit under the Circular dated 19th February, 2001, which Circular was sought to be superseded by the impugned Circular dated 2nd September, 2005. The 2005 Circular was challenged before the Gujarat High Court in number of writ petitions filed by respondent-assessees.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The controversy before the Supreme Court is whether the Commissioner on the administrative side under the Gujarat Sales Tax Act had the authority/competence to issue the 2001 Circular. Several judgements of the Supreme Court and High Courts were cited.</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>Once tribunal has granted full waiver at least in two similarly situated cases, it would not be proper to take a different view and deny full waiver of pre-deposit: Bombay HC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>petitioners are an ex-servicemen company incorporated under the Companies Act, 1956. The petitioners and similar other companies are incorporated pursuant to a Memorandum of Understanding entered into with the Ministry of Energy and the Ministry of Defence. The shares of the petitioners are held by war widows and disabled soldiers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present petition filed under 226 of the Constitution of India, the petitioners are challenging the order dated 8/10/2008 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench at Mumbai in </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2008/2008-TIOL-2074-CESTAT-MUM.htm" target="_blank">2008-TIOL-2074-CESTAT-MUM</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">,
wherein the tribunal has directed the petitioners to deposit a sum of Rs.30
lakhs as a condition for hearing the appeal filed by the petitioners.</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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