TIOL-DDT 1072 · 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 1072</font><br>
17.03.2009 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Conversion of DTA into EOU – FTP amended</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Para 6.7 of the Foreign Trade policy,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Applications for setting up of units under EOU scheme, other than proposals for setting up of units in services sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by BoA), shall be approved or rejected by the Units Approval Committee within 15 days as per criteria indicated in HBP v1.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) In other cases, approval may be granted by BoA set up for this purpose as indicated in HBP v 1.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Proposals for setting up EOU requiring industrial licence may be granted approval by Development Commissioner after clearance of proposal by BoA and DIPP within 45 days.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now a new Clause (d) is added,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Applications for conversion into an EOU/EHTP/STP/BTP unit from existing DTA units, having an investment of Rs. 50 crores and above in plant and machinery or exporting Rs. 50 crores and above annually, shall be placed before BoA for a decision.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Para 6.19,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Existing DTA units, may also apply for conversion into an EOU/EHTP/STP/BTP unit, and Income Tax benefits under Section 10A and 10B will be available for plant, machinery and equipment already installed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Existing EHTP/STP units may also apply for conversion/erger to EOU unit and vice-versa. In such cases, units will remain in bond and avail exemptions in duties and taxes as applicable.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But why this “placing before the BoA ?” – More government is more nuisance.</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=45&filename=notification/dgft/2008/dgft08not095.htm" target="_blank">DGFT Notification No. 95 (RE-2008)/2004-2009, Dated: March 13, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Diamond Dollar Accounts – Track Record and Turnover reduced</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 4A.19 of the Foreign trade policy relating to Diamond & Jewellery Dollar Accounts reads as,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Firms and companies dealing in purchase/sale of rough or cut and polished diamonds/precious metal jewellery plain, minakari and/or studded with/without diamond and/or other stones, with a track record of at least <strong><font color="#FF6600">3 years</font> </strong> in import or export of diamonds/coloured gemstones/diamond and coloured gemstones studded jewellery/plain gold jewellery, and having an average annual turnover of Rs. <strong><font color="#FF6600">5 crore </font></strong> or above during preceding three licensing years, may also carry out their business through designated Diamond Dollar Accounts (DDA).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now it is amended to read as,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Firms and companies dealing in purchase/sale of rough or cut and polished diamonds/precious metal jewellery plain, minakari and/or studded with/without diamond and/or other stones, with a track record of at least <strong><font color="#FF6600">two</font> </strong> years in import or export of diamonds/coloured gemstones/diamond and coloured gemstones studded jewellery/plain gold jewellery, and having an average annual turnover of Rs.<font color="#FF6600"> <strong>3 crores</strong></font><strong> </strong> or above during preceding three licensing years, may also carry out their business through designated Diamond Dollar Accounts (DDA). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the track record of at least <strong><font color="#FF6600">3 years</font> </strong> is now reduced to <strong> <font color="#FF6600">two</font> </strong> years and the average annual turnover of Rs. <strong><font color="#FF6600">5 crore</font> </strong>is reduced to Rs. <strong><font color="#FF6600">3 crores</font>.</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=45&filename=notification/dgft/2008/dgft08not096.htm" target="_blank">DGFT Notification No. 96 (RE-2008)/2004-2009, Dated: March 13, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Shifting of factory – what about final products?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We received this query from one of our Netizens.</font></p>
<blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">I am a manufacturer. The manufacturing operations are being carried out in a rented gala in an industrial estate in Mumbai. I avail Cenvat credit and discharge Central Excise duty. Recently, the owner of the industrial estate served us a notice to vacate the premises as he wants to construct a shopping mall. Bad times have fallen upon us, Sir. I have managed to get another premises on hire on the outskirts of the town. I would be surrendering my registration certificate and shifting the installed machinery, raw materials and cenvatted inputs to the new place in a month's time. There are no Central Excise dues pending against me as on date and hence I do not foresee any problems in cancellation of registration certificate.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">As far as transfer of the Cenvat credit lying un-utilized is concerned, I am aware that rule 10 of the Cenvat Credit Rules, 2004 lays down the procedure and the precautions that I have to take while relocating the factory.However, my problem is that I am having a huge stock of finished goods lying in the factory as on date and in spite of my best efforts I am unable to find buyers for the entire finished goods. So, when the day comes for me to move out of the present premises, I will also be required to shift the finished goods. I am aware that as per Rule 4 of the Central Excise Rules, 2002, I would be required to pay the Central Excise duty on these goods. I do not wish to clear these goods to a non-existent buyer and bring back these goods to my new factory premises as it also incurs un-necessary expenditure on account of local taxes, transportation charges etc. A friend of mine informed that this is the only procedure that is available and which is legally permitted in terms of Rule 16 of the CER, 2002.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">I find that the earlier rule 47 of the CER, 1944 contained the following sub-rule (5) which could cater to the situation that I am in. It read –</font></p>
<blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“(5) Notwithstanding anything contained in sub-rule (1), the Central Board of Excise and Customs may, <strong>in exceptional circumstances </strong> having regard to the nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, <strong>permit a manufacturer to store his goods in any other place outside such premises</strong>, without payment of duty subject to such conditions as it may specify; and the provisions of sub-rules (2) to (4) shall apply to such place of storage as they apply for storage of goods in a store-room or other place of storage within the premises of the manufacturer, where the goods are made.”</em></font></p>
</blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">I am also aware that the munificent Central Board of Excise and Customs has extended facility to store non-duty paid goods outside the factory premises even during the regime of the CER , 2001 and the current CER , 2002 although there are no express provisions in the rules, as communicated through its Circular 610/1/2002- CX dated 01.01.2002 and modified by Circular 709/25/2003- CX dated 23.04.2003 (whereby even the Merchant Overtime charges prevalent earlier as per the concept of physical supervision has been waived).</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">As to whether the said Circulars can be made applicable to my case is what I am apprehensive about.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, through the <strong>DDT </strong> column, I solicit the views of the Netizens.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Any solution for him?</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mother of India's PM?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">She has the distinction of having been the daughter-in-law of a Prime Minister, the wife of a Prime Minister, the political boss of a Prime Minister, but will/can she become the mother of a Prime Minister?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">May be; we will know in May.</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>DTA clearance from EOU – Exemption to terry towels made out of duty paid fabrics – As EOU obtained inputs under CT-3 without duty, not eligible for exemption: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION NO.</strong> 8/97-CE dt.1.3.97 issued under Section 5A of Central Excise Act, 1944 prescribed a concessional rate of excise duty on the DTA clearances of 100% EOU, if the goods had been produced wholly from raw-materials produced or manufactured in India and the clearances have been made as per the provisions of Exim Policy. The concessional rate prescribed under this notification is the duty of exercise leviable under Section 3 of Central Excise Act, 1944 on the like goods produced or manufactured in India, other than in a 100% EOU or a free trade zone. In other words when the 100% EOU manufactures its finished products wholly out of indigenous raw-materials, the DTA clearance of such goods, if made as per the Exim Policy, would attract duty at the same rate at which such goods produced by a unit in DTA would suffer the Central Excise Duty.</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>Agent
of a non-resident can be independently taxed as a representative assessee;
The option is with the Income-tax authorities and not with the non-resident
or his agent to claim that he be assessed under a particular clause of
section 163; The word "including" or "includes" enlarges the meaning of
the expression and effect is to import and add things or person which would
not otherwise be regarded as 'included' in that sense. – ITAT Special Bench</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> would have looked absurd to provide such an opportunity of being heard to a person who has accepted and never disputed his liability to be assessed as an agent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Question before the Special Bench was, <em>"Whether on the facts and in the circumstances of the case the time limit provided u/s 149(3) would apply to the assessee who has voluntarily filed the return of his principal non-resident, and in whose case no order u/s 163 has been passed treating him as the agent of the non-resident?”</em></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>Study Centres of University collecting fees directly from students – liable to pay tax under 'commercial coaching and training': CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOREOVER</strong>, even if regular colleges are wrongly allowed the exemption that cannot be a ground to grant the exemption to the centres unless they satisfy the conditions of the notification. There is no dispute that the appellants do not satisfy one of the two conditions of the notification. The only-ground taken in support of the claim by the centres is that the authorities do not tax similar other providers of service. Centres cannot validly take this ground to claim the benefit.</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>
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