TIOL-DDT 1120 · 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 1120</font> <br>
28.05.2009 <br>
Thursday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Refund of Terminal Excise Duty (TED) paid on fuel supplied from depot/warehouse of Domestic Oil Companies to EOUs </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="mk:@MSITStore:M:\DDT\Daily%20Dose%20of%20Taxation.chm::/ddt_20051206.htm">DDT 255 - 06 12 2005 </a>, </strong>observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been more than a year since the warehousing facility had been withdrawn for petroleum products and the worst sufferers had been EOUs who used to get their fuel from the depots of oil companies under CT3 without payment of duty. Board had clarified by Circular No. 799/2004 that EOUs can take CENVAT credit. But the Board did not realize that no CENVAT credit is available for most of the petroleum products especially the fuel. Finally it is left to the DGFT to solve the problem and he has solved it rather well. DGFT has decided <strong><font color="#660099">that fuels procured from the depots of domestic oil companies on payment of excise duty by EOU / EHTP / STP / BTP will be eligible for reimbursement in the form of terminal excise duty in addition to drawback rates notified by DGFT from time to time provided the recipient unit does not avail CENVAT credit/rebate on such goods. </font></strong></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8538" target="_blank">DDT 1044 – 03 02 2009</a> , </strong>observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now there is another problem as understood well by the Board. Purchases of fuel from the depots of domestic oil companies are eligible for the deemed export benefits including refund of TED prescribed under para 8.3.1 of FTP. TED benefits are usually granted by the Development Commissioner based on the excise attested invoices as proof of supply and/ or excise attested CT3 form. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But excise officers are refusing to attest invoices and rightly so, because the depots of the Oil Companies are not under their control and they don't issue any excise invoices. The EOUs are running from DC to DC (Development Commissioner, SEZ to Deputy Commissioner, Excise) and nobody is ready to solve their problem. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8661" target="_blank">DDT 1061 – 26 02 2009</a>, </strong> commenting on <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 </a></strong>, observed,</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><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><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><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><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><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><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><font color="#FF6633">Does EOU stand for Excise Officer's Unit? </font></em></strong>And if the duty on an invoice is less than Rs. 5000/-, is it worth all the trouble? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, for the last five years, the EOUs are facing a huge problem in getting the refunds because of the ego clash between Commerce and Revenue Departments. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commerce Ministry which is certainly more friendly (and usually don't treat every businessman as a criminal), has come up with a new solution. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They have added the following at the end of Para 8.3.1(iii) of the HOP. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“For supply of
High Speed Diesel / Furnace Oil from Depots of domestic oil Public Sector
Undertakings under para 8.2(b) of FTP, Terminal Excise duty shall be refunded
on the basis of duty paid certificate issued by <strong><font color="#FF6633">concerned
domestic</font> </strong> oil Public Sector Undertaking in the format given
in Annexure I to ANF 8. <strong>Duty refund will be allowed for quantity
of HSD /Furnace oil procured by EOU / EHTP / STP / BTP, for its production
activities, as certified by concerned DC/Bond authorities.” </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is a very sensible step and should have solved the problem. But maybe the drafting skills of the Revenue Babus have infected the Commerce Babus too. </font></p>
<p><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>After appearing to have solved the problem, they again want a certificate from the Bond Officer. But what they don't understand is that the oil does not come under bond and all these days the Excise Officers were refusing to attest the invoices because the receipt was not under their control. </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>So it is back to Square One – EOUs will not get that refund of Terminal excise duty!</strong></font></p>
<p><font face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn181.htm" target="_blank"><strong><font size="2"> PUBLIC NOTICE NO
181/( RE:2008)/2004-2009, Dated: May 26, 2009 </font></strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is vacant Land? SEZ Rules amended </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 7(2) of the SEZ Rules, “The identified area shall be contiguous and vacant and it shall have no public thoroughfare.” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Proviso reads, “Provided that the Board may relax any or all of the conditions, except the condition regarding identified area to be a vacant land” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what is vacant land? Can it be considered vacant if there is a port or a structure in it? This was a dispute raised last year when it was noticed that certain SEZs notified already had some structures in them. So it became necessary to define ‘vacant land'. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now it is defined as ‘the land where there are no<font color="#FF6633"> <em><strong>functional</strong></em></font><strong> </strong> ports, manufacturing units, industrial activities or structures in which any commercial or economic activity is in progresses' </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So if there is a <em><strong><font color="#FF6633">non-functional</font> </strong></em> port or a structure (maybe a temple) in the identified area, it can still be declared as an SEZ ! </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some other minor changes have also been made in the SEZ Rules. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also see our story <strong><a href="http://www.taxindiaonline.com/RC2/print_story.php?newsid=8058">SEZ Rule: EGoM decides 'Vacant' land also includes raised structures; Essar Steel and Mundra Port SEZs ' issues stand settled </a>, </strong>which we carried on 25.10.2008 </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=259&filename=sez/sez_notification/amendment_2009_II.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Department of Commerce Notification Dated: May 20, 2009</strong></font></a></p>
<p align="center"> </p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs duty exemption on import of drug for treatment of H1N1 Influenza </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has issued an exemption order dated 21.05.2009 for duty free import of one million capsules of Tamiflu 75 mg ( Oseltamivir Phosphate) being imported on behalf of the government by M/s Roche India Ltd. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As part of the effort to create the buffer stock of drug, Oseltamivir Phosphate used for treatment of H1N1 Influenza, Government of India has decided that drug would be imported by M/s Roche India Ltd to supplement the stock manufactured in India. The buffer stock is to be maintained by M/s Roche India Ltd on behalf of the Government for supply to Government only. The Customs duty exemption order has been issued on the recommendation of the Department of Health and Family Welfare. </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="4">tiol</font><font color="#006600" size="2">– Friday's
cases</font></strong></font></strong></font></p>
<p><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>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>An expenditure which is deductible under Income Tax is towards a liability actually existing at the time, but setting apart money which might become expenditure on happening of an event is not expenditure allowable under law: ITAT Special Bench </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>It</strong> is not necessary for the Commissioner of Income-tax to make further enquiries before cancelling the assessment orders of the Assessing Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Assessing Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. Unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, an Assessing Officer is not only an adjudicator but is also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. </font></p>
<p align="justify"><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section 80 of Finance Act, 1994 - Ignorance of law cannot be accepted as a reasonable cause for failure to pay service tax. Any tax is a compulsory levy and, therefore, a new levy is raised by the Government only with prior notice to the public - CESTAT. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This awareness of law is further evidenced by the fact that they paid all the penalties imposed on them by the Assistant Commissioner. The appellant might have had their own reasons for such payment. It, however, cannot be denied that they were aware of the penal provisions. Yet another factor to be recognized in this context is that the appellant did not choose to claim the benefit of section 80 in answer to the show cause notice issued by the Assistant Commissioner. That show cause had proposed penalty under section 76 also. </font></p>
<p align="justify"><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Oil giant pleads financial hardship – Tribunal directs M/s HPCL to pay Rs.3.5 Crores as pre-deposit in Naphtha case. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Goods supplied to M/s RCF in terms exemption notification 6/2006-CE as amended by notification 48/2004-CE and not being put by M/s RCF for the intended purpose viz. manufacture of fertilizers – Onus is upon M/s HPCL to ensure that goods are exclusively used for manufacture of fertilizers - Duty liability cannot be resisted by M/s HPCL – condition of following CT-2 procedure done away with when notification 6/2002-CE was amended by notification 48/2004-CE and this position continues in Notification 6/2006-CE. </font></p>
<p><strong><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns tomorrow for the judgements </font></strong></p>
<p><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT </strong></font></p>
<p><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day. </font></p>
<p><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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