TIOL-DDT 1086 · 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 color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="3">TIOL-DDT 1086</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><br> 08.04.2009 <br> Wednesday </strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Demand against Oil PSUs under Sec.11D of Central Excise Act for differential duty – CBEC Directions</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PSU</strong> Oil Companies are favourite whipping boys for Revenue hungry Commissioners. Because they pay huge Revenues. I was told by an official of the Kochi refinery that theirs was the only major manufacturing unit in Kerala and they were the target for all the wings of Revenue. Most of the demands were against them; most of the cases were against them; they contributed most for the audit paras and they had to provide the maximum guest houses and vehicles for the departmental officers.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many Commissioners found the Oil Companies good hunting ground for demanding hundreds of Crores of differential duty collected by the Oil Companies but not deposited with the government. Section 11D gave the commissioners a great opportunity to write in their resumes that they confirmed duties amounting to hundreds of Crores. The great Vijay kelkar who was Petro secretary even wrote to the Finance secretary that these Commissioners had to be reigned and such huge silly demands should be avoided.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Oil Company Dealers get their products from the refineries and also import them. These are all mixed in the tanks and cleared to bunks at a price fixed and later the prices may be changed and these depots collect excess amounts. But the excess amount has nothing to do with excise and if there is an excess, it goes into the Oil Pool Account.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Excise-man is interested in his pound of flesh and demands have been issued to collect this amount under Section 11D of the Central Excise Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue has not won a single case in Tribunal or above.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal had held that section 11D is applicable only when the excess duty is collected by a person <strong>who is liable to pay duty </strong> and the duty is collected <strong>as representing excise duty</strong>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the Depots of the Oil companies are not liable to pay duty and they did not collect these amounts as <strong>representing excise duty, </strong>they were held to be not liable to pay the amounts under section 11D.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 2008, Section 11D had been amended to include <em>‘every person' who has collected any amount in excess of the duty</em>, within the ambit of section 11D. Now a dealer would also be covered.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fine, but the Oil Companies' depots do not collect any amount <strong>as representing excise duty. </strong>In fact their invoices do not mention excise duty at all.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Board seems to be convinced that there is still hope and these amounts can be retrieved.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board had sought the opinion of the AG who had very correctly opined:</font></p> <div align="justify"> <blockquote><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the extra amount should have been collected as representing duty of excise;</font></blockquote> </div> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) The price revision took place upon revision of administrated price as opposed to revision in excise duty, presumably the extra amount collected from buyer could not have been collected as representing excise duty. If that is so, Section 11D would not be attracted.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Tribunal in the case of Bharat Petroleum Corporation Ltd. vs. CCE, Meerut 2002 (140) ELT 646 (T) has correctly held that no demand could be raised against the appellant under section 11D as it was not the manufacturer of the concerned goods.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At a meeting of the Board held on 23.07.08, Board decided that by virtue of amendment in Section 11D vide Finance Act, 2008 the differential duty, if any collected by ‘a person' would be recoverable under section 11D subject to the condition that such extra amount has been collected as duty of excise. Hence, as regards cases post amendment to section 11D of Central Excise Act, each case should be examined on merits and a view taken based on facts thereof.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wanted CCs and to bring this to the notice of field formations under their charge for needful action. And Board seeks a report.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Oil is slippery even for 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=31&filename=notification/excise/2009/file_6_9A.htm" target="_blank">CBEC's Letter F.No.6 / 9A /2008- CX1 ; dated: February 27 2009</a></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">CBI files 300 pages charge sheet against Satyam Ramalinga Raju and others</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI yesterday filed charge sheet in the XIV ACMM Court, Nampally, Hyderabad against Satyam's Ramalinga Raju and others.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The accused are: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. B. Ramalinga Raju, then Chairman of Satyam Computer Services</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. B. Rama Raju, then Managing Director</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Vadlamani Srinivas, then Chief Financial Officer</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. S. Gopalakrishnan, Auditor</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Talluri Srinivas, Auditor</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. B. Suryanarayana Raju, Director, SRSR Advisory Services Pvt Ltd</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. G. Ramakrishna, Vice President (Finance)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. D. Venkatapathy Raju, Sr. Manager (Finance)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Ch. Srisailam, Asst. Manager (Finance)</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The accused have been charge sheeted for offences of criminal conspiracy, cheating, cheating by personation, forgery of valuable security, forgery for the purpose of cheating, using a forged document as genuine, falsification of accounts and for causing disappearance of evidence. CBI has filed a 300 pages charge sheet and cited 433 witnesses and 1532 documents (Total: 65,000 pages).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI had earlier arrested the last three accused.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Ramalinga Raju does not seem to be news even as he is still languishing in jail.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Shoes – New weapon with journalists?</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are usually bothered about shoe-string budgets, with which Mr. P. Chidambaram had been struggling for years – but suddenly he is accosted with a shoe of a journalist flying in his direction. The first time I visited Parliament, I was surprised that every time, I removed my slippers, a security-man would come and direct me to put them on. I couldn't really afford to lose my slippers, but the Security-man was obviously afraid that I may throw it into Parliament.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now maybe journalists will be asked to remove their shoes before entering press conferences. Have the journalists lost faith in the power of the pen?</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Chief Commissioner promotions – At last! Thank God and Board</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the last couple of weeks, our phones were ringing non-stop and we were really scared to pick up the phones as anxious departmental officers wanted information on the promotion and posting of Chief Commissioners. We had a difficult time convincing them that we only report and don't create and we would report as soon as reportable news was available.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally the Board has promoted 14 Commissioners and transferred ten Chief Commissioners and put an end to all the speculations. In fact the list had done so many rounds that almost everybody knew who is going where.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is understood that the government is ready with the list to fill the vacancies arising in the Board soon.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Death has taken away Dr. Raja Chellaih</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RAJA JESUDOSS CHELLIAH, must have known better than anyone else about the certainty of death and taxes. The 87 year old Eminent economist died yesterday. Participating in the budget debate of 1992 in parliament, a member said, “Dr. Raja Chellaih is a Tamilian. He belongs to my neighbouring village. He was born in Kovilpatti . His recommendation is really good.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He was Chairman of the Tax Reforms Committee in August 1991 and was adviser to the FM from 1993 to 1995.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the towering economists is no more.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font></strong></font></strong></font></strong></font><font color="#663399">Income Tax</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Housing Project comprising of residential units and commercial establishments- deduction under section 80IB (10) admissible; limit on commercial use by amendment of 2005 not retrospective – ITAT Sp Bench</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> landmark decision of the Special Bench was delivered on 6.4.2009 and we bring it to you tomorrow.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central Excise</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">COD word is final - Once the Committee of Disputes declines to give permission to pursue appeal before the CESTAT, there is no question of agitating the matter: Tribunal</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAN </strong>an appeal be maintainable before the CESTAT even after COD refused permission? ‘NO' says Tribunal. But doesn't the PSU know that it cannot pursue the appeal without COD clearance?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Valuation - even if there is no flow back of any money, the fact that the price is not sole consideration is sufficient for rejecting the transaction value: CESTAT by Majority</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AGREED</strong> price is not the sole consideration and is influenced by the factor that free distribution is to be done by the appellants themselves through its medical representatives and whole planning thereof is to be done by the appellants. Thus, the buyer had been absolved of all the expenses incurred on the marketing and distribution of physician samples and the expenses to this effect have been incurred by the appellants themselves and therefore the agreed price is influenced by the factor that the distribution expenses have been taken over by the appellants themselves. Therefore even if there is no flow back of any money, the fact that the price is not sole consideration is sufficient for rejecting the transaction value.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns tomorrow for the judgements</font></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> </body> </html>