TIOL-DDT 1119 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#660099" size="3">TIOL-DDT 1119 </font><br>
27.05.2009 <br>
Wednesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Imposition of mandatory penalty equal to duty under Section 11AC even though duty is paid before the issue of Show Cause Notice – Board circulates Supreme Court Order </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The L&J wing of the CBEC is apparently very strong. They have communicated to the field on 21 st May, a decision of the Supreme Court delivered on 12 th May! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board communicates that the Supreme Court in case of U.O.I Vs. Rajasthan Spinning & Weaving Mills and Commissioner of Customs & Central Excise Vs. Lanco Industries Ltd [<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=37&filename=legal/sc/2008/2008-TIOL-192-SC-CX-LB.htm"><strong>2008-TIOL-192-SC- CX -LB</strong></a></font>] had clarified that when the <strong><font color="#FF6633">conditions spelled out under Section 11AC</font> </strong> of the Central Excise Act, 1944 are fulfilled, there is no discretion to reduce the mandatory penalty equal to duty even though the duty is paid before the issue of Show Cause Notice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Of
course the Supreme Court had also said that in almost every case relating
to penalty, the decision [<em>D haramendra Textile Processors </em> - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=37&filename=legal/sc/2008/2008-TIOL-192-SC-CX-LB.htm">2008-TIOL-192-SC-CX-LB</a></strong>]</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> is
referred to on behalf of the Revenue as if it laid down that in every case
of non-payment or short payment of duty the penalty clause would automatically
get attracted and the authority had no discretion in the matter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fair enough, they can close their eyes to views against them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is final that when conditions under Section 11AC are fulfilled, there is no escape from mandatory equal penalty, irrespective of when the duty is paid. What has conveniently not been told to the Supreme Court by the Revenue is that there is hardly any Show Cause Notice without invoking Section 11AC . To start with, nobody in the department will or can issue a Show Cause Notice within the normal limitation period of one year – so invariably the ingredients of Section 11AC are invoked and routinely confirmed. In fact many assessees are coerced/requested not to raise the limitation issue while defending SCNs on the ground that action will be initiated against lower level officers. Adjudication and Appellate Authorities of the Department will never pass an order against Revenue on the question of limitation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So it is always Section 11AC and always mandatory penalty! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Board deserves all praise for acting at the speed of light. It is heartening to note that there are officers in the Board who read Court judgements and react to them. This will greatly improve conditions for both officers and assessees. </font></p>
<p><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/excircular889.htm" target="_blank">CBEC Circular NO. 889/09/2009- CX ., Dated: May 21, 2009 </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEPB ONLINE - ERROR 96 </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEPB</strong> Scheme has been made on-line since October, 2005 wherein the on-line data flowing through Electronic Message Exchange System between Customs and DGFT & vice-versa, requires validation at the Customs end. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of any change at the time of issuance of DEPB Scrip by the Regional Authority (RA), which is different from that of the parameters in the shipping bill (as transmitted by Customs), all such DEPB cases are reflected as “Error 96” cases and are required to be examined and sent as Flag ‘M' by the DGFT Headquarters to the Customs authority for acceptance of the same on-line by them for clearance of the import consignments against the said DEPB Scrip. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Representations have been received from trade and industry that because of “Error 96” cases on account of change in Serial Number of the DEPB Entry by the RA concerned, a number of DEPBs are not being honoured for clearance at the Customs end. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After discussing the issue with Revenue, DGFT has decided:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) In case the DEPB Entry Serial Number is changed by the Regional Authority, thereby reducing or retaining the DEPB rate at the same level as that endorsed in the shipping bill, the matter need not be brought before DEPB Committee, and such DEPBs will be sent with Flag ‘M' by DGFT Hqrs and accepted by the Customs authorities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) In case DEPB entry Sl. No. has been changed by Customs authorities (by way of an amendment sheet) subsequent to issuance of Shipping Bills, then if the DEPB rate is either reduced, remains the same or is increased because of such subsequent change, the matter shall not be referred to DEPB Committee and such DEPBs will be sent with Flag ‘M' by DGFT Hqrs . and accepted by the Customs authorities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) In case DEPB rate increases due to change in DEPB Sl. No. by R.A. (without any amendment of shipping bill(s) by Customs authority), RA shall refer all such cases along with details and required documents to DEPB Committee for a decision, before issuance of DEPB . </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, for cases wherein the entitlement/ rate increases due to subsequent amendment of Shipping Bills by Customs authority, all the Regional Authorities shall henceforth use “remarks” column available in application software to endorse the specific Customs amendment letter number and date as to facilitate NIC officials at DGFT Hqrs . to identify all such “Error 96” cases, to enable DEPB Committee to take an early decision to forward such cases for validation on regular basis to DG (System) with Flag ‘M'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let's hope the CHAs understand these changes. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft08cir091.htm" target="_blank"><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Policy Circular NO. 91 (RE-08)/2004-2009 Dated: May 21, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Errors in ST 3 form – will someone rectify? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When ST 3 from was amended in March 2009, we wrote in DDT 1074: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“An officer told <strong>DDT</strong> recently that those who prepare these forms do not seem to understand the requirements of the field formations. For example, the present ST 3 form has monthly columns for Service tax payable, and it does not have the "Total" column at the end of the table. To get the total figures, the six months figures should be added by the officers for each return and imagine the work load considering the huge assessee base. In fact, some of the assessees even understood the importance, condoned our babus ' ignorance and on their own added the total column at the end of the table. Isn't it elementary?” </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, an assessee tells <strong>DDT </strong> that from the present ST 3 form, the department cannot verify whether the CENVAT Credit on Education Cess / Secondary Education Cess is used respectively for payment of the same on output service. As per Rule 3(7) (b) of CENVAT Credit Rules, 2004, credit of Education Cess can be used for payment of education cess only. Similarly, credit of SHE Cess can be used only for payment of SHE Cess only. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present ST 3 form, in the table given under <strong><font color="#FF6633">“ 5B . CENVAT Credit taken and utilized”</font>, </strong>the Education Cess and SHE Cess have been merged and a single column is given. Thus, by looking at the return, nobody can find out if credit of education cess is used for payment of SHE Cess or <em>vice versa. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, to rectify this, a few more columns should be added which makes the return more complex. Why should the return be made so difficult? Why should we have single return for all? (Service providers who are liable to pay service tax, service receivers who are liable to pay service tax and input service distributors who distribute credit) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why can't they follow Income Tax model, specifying different ST returns for different categories? Say one form for service providers, one for service recipients and one for input service distributors? </font></p>
<p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">Jurispruden</font><font color="#FF6633" size="2">tiol</font><font color="#006600" size="2">– Thursday's
cases</font></strong></font></strong></font></p>
<p align="justify"><font color="#660099" 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 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 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 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></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rule 9 of CER , 2002 – De-registration - When appeals are pending, it cannot be said that there were enforceable dues to the government as on the date of surrender of registration certificate – Tribunal. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Simply put, the department's argument was that although M/s Milton Polyplas (India) Pvt. Ltd. had surrendered their registration certificate, the department had not cancelled the same and hence the premises continued to remain registered in their name and there could not be two registrants for the same premises! </font></p>
<p align="justify"><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Question of Law pending before HC – ITAT should have waited for High Court decision before deciding identical case for another assessment year - ITAT here has failed to apply its mind as required and therefore, very purpose of putting Section 158A in statute book has been frustrated: Bombay HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus salutary provisions made by the Parliament to put an end to unnecessary litigation and to reduce number of cases required to be followed in letter and spirit, have been defeated in the present matter. The Parliament expects the authorities empowered under the said provisions to act in accordance with the spirit of the provisions made the ITAT here has failed to apply its mind as required and therefore, the very purpose of putting Section 158A in the statute book has been frustrated. It is clear that in view of the scheme of Section 158A , it would have been proper for it to wait till the question of law is adjudicated by the Hon'ble Delhi High Court in the appeals pending before it. </font></p>
<p align="justify"><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Undertrial in NDPS case does not return to jail on completion of Interim Bail – DRI to apprehend and put back in jail bail jumpers: Delhi HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Court is also not satisfied with the explanation that <strong>the DRI cannot itself take steps to ensure that undertrials involved in serious offence under the NDPS Act, upon their jumping the bail granted to them, are apprehended and put back to the jail. </strong> If this explanation were to be accepted by this Court it would mean that the system of prosecuting offenders for grave offences under the NDPS Act will stand severely challenged since the presence of the accused at the trial cannot be ensured. </font></p>
<p align="justify"><strong><font color="#660099" 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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