TIOL-DDT 1094 · 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 1094</font><br>
22.04.2009<br>
Wednesday</strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Reintroduction of the system of export release orders w.e.f . 1.1.2009 for export of Sugar under OGL</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Government w.e.f. 1.1.2001 had been regulating the export of sugar through export release order mechanism issued by the Directorate of Sugar. In view of the excess production of sugar in 2006-07 and 2007-08 sugar seasons and also to facilitate expeditious export of sugar, the requirement of obtaining release orders from the Directorate of Sugar for export of sugar was dispensed with vide Notification No. S.O.4310 -(E) dated 31.7.2007 up to 30.09.2008 which was subsequently extended vide Notification No. S.O 2709 (E) dated 21.11.2008 up to 31.12.2008 or till further orders in respect of exports under OGL and till further orders in cases of exports under advance authorization schemes.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since production of sugar in 2008-09 sugar season would be substantially less than the last two sugar seasons, it has been decided to reintroduce the system of export release orders w.e.f . 1.1.2009 for export under OGL . And the DGFT wants the field formations take necessary action for compliance of the above decision of the Government. This circular is issued on 20.4.2009 about something that was to happen from 1.1.2009.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway now we are into importing sugar not exporting it.</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=46&filename=notification/dgft/2008/dgft08cir081.htm" target="_blank">DGFT Cir. No. 81 (RE-09)/2004-2009, Dated: April 20, 2009</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Adjudicating Authority under Foreign Trade (Development and Regulation) Act – ADGFT and SEZ Development Commissioner to have unlimited powers</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 13 of the Foreign Trade (Development and Regulation) Act, 1992, <font color="#FF6600">Any penalty may be imposed or any confiscation may be adjudged under this Act by the Director General or, subject to such limits as may be specified, by such other officer as the Central Government may by notification in the Official Gazettte, authorise in this behalf.. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has revised the powers of adjudication. Now ADGFT and Development Commissioner, Special Economic Zones have unbridled powers on par with the DGFT. The Zonal Jt. Directors can adjudicate in cases where the value of goods is up to Rs. 50 crores.</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/dgft08not102.htm" target="_blank">DGFT Notification NO. 102 (RE-2008)/2004-2009, Dated: April 17, 2009</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Safeguard Duty on soda Ash</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Director General (Safeguard), had come to the conclusion that increased imports of Soda Ash into India from the People's Republic of China had caused and threatened to cause market disruption to domestic industry of Soda Ash and it necessitates the imposition of provisional safeguard duty on imports of Soda Ash into India from People's Republic of China.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Government has imposed a safeguard duty, at the rate of 20 per cent. <em>ad valorem </em> on import of Soda Ash, falling under sub-heading 2836 20 of the First Schedule, when imported into India from the People's Republic of China.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The safeguard duty imposed under this notification shall be effective up to and inclusive of the 5th November, 2009 unless revoked, superseded or amended earlier.</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_037.htm" target="_blank">Notification No. 37/ 2009-Customs, Dated: April 20, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Why is Courier service not figuring in rule 6(5) of the CCR, 2004?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We received this painful mail.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sir, I am faced with a unique and a colossal demand notice of cenvat credit issued by my range authorities courtesy the CERA audit.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 6(5) of the CENVAT Credit Rules, 2004 reads –</font></p>
<blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(5) Notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services.</em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This sub-rule implies that even if a manufacturer or a service provider produces or provides exempted goods/services along with dutiable final goods/services and avails CENVAT credit of the service tax paid on any of these 17 (seventeen) services but does not maintain separate accounts, he is not hit by the provisions of sub-rules (1), (2) and (3) of rule 6 of the CCR, 2004.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, although the <em><font color="#FF6600">non-obstante</font> </em> clause covers a majority of the commonly used services which carry an improbable task of being segregated, this sub-rule (5) does not include the ‘Courier services' specified in sub-clause (f) of clause (105) of section 65 of the Finance Act, 1994.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I fell into this trap and because I took the Cenvat credit of a few thousand rupees on this common Input service viz. Courier service but did not maintain separate accounts, I am faced with a demand of more than a Crore of rupees. When the non-inclusion in rule 6(5) of the CCR, 2004 was pointed out to me by the range authorities, I immediately reversed the entire credit taken on the ‘Courier Services'. <em><font color="#FF6600">But this has not helped my cause and I am now confronted with fighting my case which is going to cost me a bomb.</font></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I happened to come across the Tribunal decision in <em>CCE, Mumbai VI vs. Philips India Ltd. </em>[</font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2006/2006-TIOL-589-CESTAT-MUM.htm" target="_blank">2006-TIOL-589-CESTAT-Mum</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">]
where in a similar situation, by placing reliance on the Supreme Court decision
in <em>Chandrapur Magnet Wires </em>[</font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-41-SC-CX.htm" target="_blank">2002-TIOL-41-SC-CX</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">]
it is held that it was unjust to demand huge amount of Rs.1.09 crores u/r
57AD @8% when the inadmissible credit is only Rs.87 ,569 /-.</font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Hopefully, if you host this incident in DDT column, the Board will take cognizance of the same and do the needful before much damage is caused.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Customs RMS gets PM's Award for Excellence in Public Administration</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN
the year 2005, our Prime Minister, while addressing the Collectors' Conference,
had announced that the Government would consider introduction of Civil Service
Awards in order to motivate the Civil Servants by recognizing the extraordinary
and innovative work done by the officers of the Central and State Governments
to give their best in the service of the people. Accordingly, it has been
decided to introduce “Prime Minister's Awards for Excellence in Public Administration”.
The award comprises of a medal, a scroll and a cash award of <strong>Rs.1.00
lakh</strong>. In case of a group of officers/or an organization total award
money can be <strong>Rs.5.00 lakhs</strong>, subject to maximum of <strong>Rs.1.00
lakh </strong> per person.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday,
while celebrating the Civil Services Day, this award for public excellence
in administration was conferred on Indian Customs' initiative on implementation
of ‘Risk Management System' for the year 2007-08.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RMS was introduced to achieve an optimal balance between providing appropriate levels of facilitation to the international trading community and ensuring compliance with regulatory provisions. With a view to streamlining the operations of the RMS, the Risk Management Division has been created by CBEC.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While
we congratulate the Indian Customs for receiving this award, we cannot hold
back our comments on the apathy shown to this excellent initiative by its
own creator. There seems to be something terribly wrong with the <strong>PR
wing of the CBEC</strong> or the Board is stoic. This award is a great achievement.
It is an acknowledgement of the outstanding and exemplary performance. But the
Board is totally silent. We would have been only too happy to publicise this
achievement of the CBEC, but..... we simply have no formally-given information
from the Board.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
with the Prime Minister conferring the award for excellence in public administration
on this unique initiative, we hope that the officers and staff of Indian
Customs brush up their awareness quotient about this programme and strive
to effectively implement this initiative for public good.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Advice to Civil Servants</font></strong></font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>The ruler cannot dispense with you.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>You alone make him a competent ruler.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>Your position with regard to rulers is that you are the ears through which they hear, the eyes through which they see, the tongues through which they speak, and the hands through which they touch.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>No craftsman needs more than you to combine all the praiseworthy good traits and all memorable and highly regarded qualities…</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>The civil servant needs on his own account, and his master who trusts and expects him, to be mild where mildness is needed, to be understanding where judgment is needed, to be enterprising where enterprise is needed, to be hesitant where hesitation is needed.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>He must profess modesty, justice and fairness.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>He must keep secrets.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>He must be faithful in difficult circumstances.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>By virtue of his natural intelligence, good education, and outstanding experience, he must know what is going to happen to him before it happens, and he must know the results of his action before action starts.</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>He must make proper preparations for everything, and he must set up everything in its proper form…</em></font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><em>Detest prejudices with all your heart. Guard against backbiting and calumny. Beware of haughtiness, foolishness and pride.</em></font></li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Vice
President Hamid Ansari mentioned these tips given in the 8th century at the
Civil Services Day (where the award to the Customs RMS was given) and asked, “Does
of any of that not hold good today?”</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 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></strong></font></strong></font><font color="#663399">EOU</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Clearances by EOUs in DTA in the guise of rejects - rejection of transaction value upheld - value to be determined under Rule 7 of the Customs valuation rules, 1988 - Departmental Circulars contrary to statutory provisions are not binding - Second show cause notice issued by invoking larger period is not barred by limitation - CESTAT</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> case involves multiple issues. The appellant is a 100% EOU engaged in manufacture and export of all wool fabrics, wool silk and poly wool fabrics of different varieties. They availed the facility of clearing rejects in DTA upto 5% of the FOB value of exports. On investigations conducted by the officers of Central Excise, it was found that they were clearing the prime quality goods as rejects. Accordingly duty was demanded as per the proviso the Section 3 (1) of the Central Excise Act, 1944. It was also found that the appellant cleared entire rejects in DTA to their related unit and accordingly the duty was demanded by adopting the value at which the goods were sold by the related unit by invoking rule 7 of the Customs Valuation Rules 1988. The Tribunal has decided many important issues pertaining to the duty payable by EOUs , valuation of goods cleared in DTA , binding nature of Board's Circulars and invoking extended period in the second show cause notice.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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">Deduction u/s 10A has to be construed with regard to the income which is directly derived from the industrial undertaking- ITAT</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> issue is covered against the assessee in decisions of the Bombay High Court in the case of in the case of CIT vs. Sterling Foods and also M/s Pandian Chemicals Ltd. vs. CIT wherein the Hon'ble High Court has explained the term derived from and has held that it has to be directly derived from the industrial undertaking. This view had been confirmed by the Supreme Court.</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">Disposable Aluminium foil container is correctly classifiable under heading 76.15 as ‘Articles for Table use' and is entitled to benefit of exemption notification 10/2006-CE – Tribunal</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>IT </strong>is also not disputed that primary use of the product manufactured by the appellant with lid is for serving meals on the table. Further, it also cannot be said that a primary purpose in such cases is packing and not serving meals. Therefore the product gets covered by the list of items appearing in the explanatory note heading No.73.23 which is applicable to Heading No.76.15. Further, anything used for packing does not get covered by Heading 76.12 as a container. Another point that goes in favour of the appellant is that the container under Heading No.76.12 are mainly to be used as a container whereas as already mentioned main end use of the appellant product is for serving food in Railways/Air-crafts.</em></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 t</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">o <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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