TIOL-DDT 1061 · the untouched capture
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<!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 1061</font><br> 26.02.2009<br> Thursday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EOUs – Exemption – Import of Pharma Samples</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has amended Notification No. 52/2003 – Cus to add the following to the list in Annexure -I.</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“15B. Pharmaceuticals samples in retail packs (repacked from bulk packs exported by the unit) imported for retention or stability in terms of any statutory requirements.”</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This would mean that the units can import without duty sample packets made from the bulk packs exported by them – if required statutorily.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_018.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification NO. 18/2009 – Cus Dated: February 23, 2009</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EOUs – Exemption – Import of spares by Granite Units</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The list of items mentioned in Annexure V to the Notification No. 52/2003 can be imported duty free for the purposes of quarrying of granite by export oriented undertaking engaged in processing and manufacture or production of articles of granite for export.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl. No. 31 of the list is - <font color="#FF6600">Spares up to 5% value of respective goods specified at Sl. No 1 to Sl No 29</font>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is now more clearly stated as <font color="#FF6600">Spares upto a value of 5 percent of the value of respective goods specified at Sl.No.1 to Sl.No . 29 in each financial year</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similar amendment has been made in Notification No. 22/2003 – CE</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=23&filename=notification/custom/2009/ctariff09_018.htm" target="_blank">Notification NO. 18/2009 – Cus Dated: February 23, 2009</a> </strong>and <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2009/etariff09_03.htm" target="_blank">Notification NO. 03/2009 – CE Dated: February 23, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Certification of invoices for supply of goods from DTA to EOUs – DGEP clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The EOUs are eligible for deemed export benefits, one of which is refund of terminal excise duty by the DGFT/Development Commissioner. Now they would require a certificate (or endorsement on the invoice) from the excise authorities regarding duty payment, which the excise authorities will be most unwilling to give.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the DGEP has prescribed a simple procedure if an EOU needs such an endorsement.</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Maintain detailed accounts of the receipt, consumption, disposal of the goods received.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. File an intimation with the Superintendent of Central Excise within one day of the receipt of the goods with duplicate copy of the invoice.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Superintendent will depute a bond officer who will conduct a physical verification of the goods and records and will submit a report to the Superintendent.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The Superintendent will endorse the invoice and keep a copy in the Range records.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are we back to the Physical Control days? It is not mentioned as to what would happen if the Bond Officer does not turn up for verification and if the EOU gets an invoice every day, will the Central Excise officer visit the EOU every day. <strong><em>Does EOU stand for Excise Officer's Unit? </em></strong> And if the duty on an invoice is less than Rs. 5000/-, is it worth all the trouble?</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_010.htm" target="_blank">Circular No. 10/2009 – Cus Dated: February 25, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Imports under DFIA and rebate/CENVAT Credit – CBEC walks into reality</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC has issued a circular explaining the amendments made to the Notification 40/2006 Cus dated 01.05.2006. There is a widespread confusion in the officers and the importers whether they can simultaneously avail the rebate/CENVAT on the raw materials and also the benefit of Notification 40/2006. The issue is so complicated that the clarification runs into six pages and is very difficult to comprehend on first reading.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At the cost of repetition, it is requested to see a detailed analysis made on this issue in our columns by one of our contributors (<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7998"><strong>Export promotion schemes vs Cenvat Credit or Rebate under Rule 18: The myth and the reality </strong></a>– R Raghavendra Rao). It is heartening to see that the views expressed by the author were almost on the same lines of the present clarification issued after consultation with the DGFT, Department of Commerce and the Ministry of Law</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The author had suggested that there is no requirement of condition (v) in Notification 40/2006 to prohibit rebate/CENVAT on the material used in the manufacture of resultant product.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this condition has been deleted from the Notification. The circular clarifies</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The restriction imposed vide condition No. (v) of the notification No. 40/06- Cus has been deleted; thus the ‘said facilities' can now be availed by the exporter.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To explain the other features in brief,</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">1.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#FF6600">In cases where the imports take place after fulfillment of export obligation (by exporting goods manufactured by availing facilities like CENVAT/ Rebate)</font></font></p> <ul> <li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">the imported raw material should be used only in manufacture of dutiable goods. The importer shall submit a certificate from the jurisdictional Central Excise officer within 6 months from the date of clearance of the said materials, that the imported materials have been so used. In case this condition is violated, then the importer would be required to pay all duties of customs which have been exempted under notification No. 40/06- Cus dated 1.5.06.</font></li> </ul> <ul> <li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">if the materials are imported against an authorisation transferred by the Regional Authority, or the imported materials are transferred with the permission of Regional Authority, then the importer has to pay an amount equal to the additional duty of customs.</font></li> </ul> <ul> <li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">the importer also has an option to pay additional duty of customs on the imported materials and clear his goods without furnishing any bond as specified in condition No. (iiia) of the notification number 17/09- Cus dated 19.2.09. This additional duty of customs so paid shall be eligible for availing CENVAT Credit under CENVAT Credit Rules, 2004.</font></li> </ul> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In cases where the imports take place after fulfillment of export obligation (by exporting goods manufactured <font color="#663399">without</font> availing facilities like CENVAT/ Rebate)</font></p> <ul> <li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">the imported materials can be cleared without furnishing a bond specified in condition (iiia) ibid. However, the importer will have to furnish a proof to the assessing officer to the effect that the ‘said facilities' have not been availed</font></li> </ul> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In cases of imports made before the discharge of export obligation in full</font></p> <ul> <li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">the importer has to execute a bond, at the time of clearance, binding himself to the conditions specified in the notification No. 40/06- Cus dated 1.5.06 and to pay the leviable customs duties along with interest @15% in case the conditions of the notification are not complied with.</font></li> </ul> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue does not end here. In case 1 above, if the resultant goods are not dutiable, it is felt that there will be a double benefit. So, it has been clarified that that unintended benefits may have occurred in cases where the duty free inputs, imported/procured subsequent to completion of EO using indigenously procured inputs and on which Cenvat credit has been availed of by the exporter, are transferred or used in the manufacture of non excisable /exempted /nil-duty goods. In suchcases, Board has directed to take action to recover revenue. </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_011.htm" target="_blank">Circular No. 11/2009 – Cus Dated: February 25, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Guide to New Assessees – Coimbatore Initiative</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Coimbatore Central Excise Commissionerate in association with the Coimbatore District Small Industries Association has released a “Guide for the New Registrants of Central Excise”.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner Rajendiran in a letter to TIOL states, <font color="#FF6600">This Commissionerate ever since its inception in 1983 is in the forefront of innovation to implement the various Taxpayer Friendly Measures. The release of the Book is one such. This measure is the first of its kind in order to educate and enlighten the assessees with regard to statutory provisions, their rights and responsibilities to enable them to comply with the law in a hassle free manner.</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you remember it was this Commissionerate which first brought out the FAQ on Service Tax which paved the way for the Board's FAQ on Service Tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This guide is quite useful not only for the new assessees, but also for the existing ones and the officers. The Coimbatore Commissioner and his team truly deserve all praise on this gift to the Trade on Excise Day.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Guide starts with a quote, “PAYMENT OF TAX IS NOT A LIABILITY; IT IS A RESPONSIBILITY”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Officers should also remember “Tax collection is not a power, it is a duty”</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/guide.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See Guide for the New Registrants</strong></font></a></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>Service Tax and Sales Tax on the same transaction</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Providing Broad Band Connectivity amounts to ‘sale of light energy' taxable under Karnataka VAT Act on the entire sale proceeds despite being assessed to Service Tax – Karnataka High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAN</strong> there be a liability to pay both VAT and Service Tax on the same activity? While deciding a VAT case, the Karnataka High Court held that the assessee was liable to pay VAT on the whole value in spite of the fact that they were paying Service Tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee is Bharti Airtel and the amount involved in this and similar cases would be mind boggling.</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>Import of Second hand photocopiers allowed without licence prior to 19.10.2005 – Kerala HC decision quashed – Tribunal LB decision in <em>Atul Commodities </em> restored – Supreme Court.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>a detailed order by the President, Justice Abhichandani , the Larger Bench of the Tribunal had in the <strong><em>ATUL COMMODITIES (P) LTD </em> - <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2005/2005-TIOL-470-CESTAT-DEL-LB.htm" target="_blank">2005-TIOL-470-CESTAT-DEL-LB</a></font>-</strong>held that second hand photocopiers are capital goods and are freely importable.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government was not prepared to allow this small benefit to the small importer and took the matter in appeal to the Andhra Pradesh High Court. The AP High Court dismissed the appeal with the terse remark that "No question of law, much less any substantial question of law, as such arises for our consideration in this appeal" - (<strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2006/2006-TIOL-59-HC-AP-CUS.htm" target="_blank"><font size="1">2006-TIOL-59-HC-AP-CUS</font></a></strong>). The government is determined when it comes to attacking the small and weak and finally the relentless battle succeeded in the Kerala High Court.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Kerala High Court set aside the larger bench order of the Tribunal even after considering the AP High Court judgement -<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2006/2006-TIOL-167-HC-KERALA-CUS.htm" target="_blank"> <strong>2006-TIOL-167-HC-KERALA- CUS</strong></a></font><strong>.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter is in appeal before the Supreme Court.</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>Condonation of Delay - cause for such serious delay is callous, irresponsible style of functioning in Department - principle of public accountability makes officers concerned responsible and liable: Bombay High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE Income Tax Department is before the High Court, seeking condonation of delay of up to four years.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A casual or a negligent litigant, who has acted with utter irresponsible attitude, cannot claim the condonation of delay in law when the right has accrued to the other side. - In performance of their functions, public officers or public servants have the duty to act judiciously, fairly and expeditiously. - Pre-occupation of an officer or officials can be a reasonable excuse, but for a short period and nothing justifies the inaction for a pretty long period running into months. If such an excuse is to be permitted in law, then the Courts would have to completely ignore the law of limitation. - Public interest imposes an obligation upon the Department as a whole to act in a channelized manner and to ensure that every appeal which is sought to be preferred by the Department is not rendered barred by time that too by inordinate and unexplained delays.</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>Job worker also buying inputs and availing credit and later raising sale invoices for recovery of cost of material from principal manufacturer – <em>Prima facie </em> no cause for denying CENVAT Credit: Tribunal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant is a manufacturer of bulk drugs on job work basis and is also operating under the Cenvat Credit Rules. Some of the material including the packing material is being supplied <strong><em>free </em></strong> by the principal manufacturer.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, applicant is also <strong><em>buying </em></strong> some of the inputs from other manufacturers under the cover of central excise invoices and on the basis of which Cenvat credit is taken.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The strength of America is not found in our government. It is found in the compassionate hearts and the enterprising spirit of our citizens. - Louisiana Governor Bobby Jindal</strong></font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns tomorrow for the judgements</font></strong></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>