TIOL-DDT 1131 · 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 1131</font><br>
12.06.2009<br>
Friday</strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods – Assistant Commissioner to ensure that the goods are so used</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RULE 6 </strong>of the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, reads as:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Recovery of duty in certain cases. </strong>-<font color="#FF6600"> <strong>Where the subject goods are not used</strong></font><strong> </strong>by the manufacturer for the intended purpose, the manufacturer shall be liable to pay the amount equal to the difference between the duty leviable on such goods but for the exemption and that already paid, if any, at the time of removal from the factory of the manufacturer of the subject goods, alongwith interest and the provisions of section 11A and section 11AB of the Central Excise Act, 1944 (1 of 1944) shall apply mutatis mutandis for effecting such recoveries.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, it is amended (the words marked in red above) to read as “The said Assistant Commissioner or Deputy Commissioner shall ensure that the goods received are used by the manufacturer for the intended purpose and where the subject goods are not used”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, how is the Assistant Commissioner to ensure that the assessee uses the goods for the intended purpose? Thank God they did not make the rule to read as, “the assessee shall prove to the satisfaction of the Assistant Commissioner that the goods were used for the intended purpose”. Assessees would have had a tough time <strong><em>satisfying </em></strong>the Assistant Commissioners.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Monthly Return proforma is also changed to include two more columns:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Specified purpose for procuring the goods at concessional rate of duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. Whether the goods used for specified purpose or not. In case of export, specify the quantity exported with details of ARE 1/ARE-2.</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=30&filename=notification/excise/2009/exnt09_14.htm" target="_blank">Notification NO. 14/2009-Central Excise ( N.T. )Dated: June 10, 2009</a></strong></font></p>
<div align="justify">
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Suspected assessees – Withdrawal of facilities and imposition of restrictions – more restrictions</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Notification No. 32/2006 CENT dated 30.12.2006, the department can impose the following punishment on manufacturers, dealers and exporters.</font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 1. Withdraw facility of monthly payment of duty and insist on payment consignment wise.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 2. Disallow payment of duty from Cenvat account.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 3. Suspend the dealers' registration.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 4. Deny self sealing facility for exports.</font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Now such assessees may be required to</font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. maintain records of receipt, disposal, consumption and inventory of the principal inputs on which CENVAT credit <strong>has not </strong>been taken;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 2. intimate the Superintendent of Central Excise regarding the receipt of principal inputs in the factory on which CENVAT credit has or has not been taken, within a period specified in the order and the said inputs shall be made available for verification upto the period specified in the order. Perhaps it is the bureaucrat's business to make business difficult. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2009/exnt09_15.htm" target="_blank">Notification NO. 15/2009-Central Excise ( N.T. )Dated: June 10, 2009</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Anti Dumping Duty on </font></strong><font color="#006600"><strong>Potassium Carbonate – re-imposed</strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Anti Dumping Duty on Potassium Carbonate originating in, or exported from, the European Union, the People's Republic of China, Korea RP and Taiwan, expired on 9th June 2009. On 10 th June this duty is freshly imposed for another five years. This time around the Board was prompt and issued the Notification Just In Time.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Foreign Trade Policy - incentives for Fast Track Companies</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Policy Interpretation Committee in its meeting held on 18.5.2009 decided that incentives for Fast Track Companies will be provided to all cases for grant of redemption of EPCG Authorization issued on or after 1.4.1999 in respect of EPCG Authorization of CIF value of Rs.100 crores or more where export obligation is required to be fulfilled over a period of 12 years, and on or after 1.4.2001 for all other EPCG Authorizations. This will be subject to the condition that the Annual Average Export Obligation imposed on the EPCG Authorization, if any, has been completed in full and the Authorization holder has fulfilled 75% or more of additional Export Obligation in half or less than half of the original Export Obligation Period specified.</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/dgft08cir093.htm" target="_blank">DGFT Circular No. 93 (RE-08)/2004-2009 Dated: June 10, 2009</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">CBEC wants proper maintenance of 335 J Registers which had become obsolete 30 years ago</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A recent letter of the CBEC to the filed states,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has noted the importance of proper maintenance of the <strong>335 J </strong>register in order to monitor the progress of a case right from the time it is booked.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the Board has desired that the 335 J register should be maintained properly and regularly updated by the field formations right from Range Office level to the Commissionerate Headquarters. For each case, full details of the case such as SCN No., O in-O no., Appeal, recovery amount, prosecution etc., must be entered. The Assistant/Deputy Commissioners of the Division and Hqrs Preventive/Anti Evasion wing should verify the proper maintenance of the register on a monthly basis. Further, during inspection of a formation, the inspecting officers should verify the maintenance of the register, and the finding should be given in the Inspection report. Therefore, it is requested that instructions may be issued to the field formations to this effect. A compliance report may also be obtained from Commissionerates under your charge to the effect that 335 J register is being properly maintained/updated in each Range and Division of the Commissionerate as well the Commissionerate Head quarters. Action taken report in the matter may be sent to the Board by 31.03.2009.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Now what is this 335 J register? What is 335 and what is J?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the good old days when administration was more organised and there were no computers to complicate matters, office administration was strictly by the Rule book. It seems when a Junior IAS officer was informed that a tiger has just entered his office, he immediately asked his PA to get the OPM – the Office Procedure Manual. It seems this manual had answers to all the problems an officer could face and he could get over any problem by just reading from the Manual – that is if he is fast enough in finding the solution in the manual before the tiger eats him up. Likewise there is a Railway Manual which visualises all complications and takes care of all situations and is written in a language with no ambiguity and the duties and functions of each employee from gang-man to general manger were specified. More on the Rail manual some other time.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And so there was a Tobacco Excise Manual, which was a masterpiece on running the Excise administration. What the modern computer data entry could not do, the registers prescribed under the TEM, (short for Tobacco Excise Manual) could do successfully. Even now if they can revive the TEM and computerise it, the Central Excise administration will run far better.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this 335 J refers to Para 335 J of the TEM. It pertained to maintenance of a Register for offences and Penalties. This register was to be maintained in the Range, Division and Collectorate. Tobacco Excise was abolished in 1979 and technically the TEM also died in 1979. But it took the Board a whole ten years to declare the official death. In 1989, the Board brought out a Basic Manual of Instructions and officially declared that TEM was dead. This Manual had a para 215(vii) for maintenance of a Register of offences and penalties. In 2001 Board brought out another Manual and this hastily patched up shabbily written Manual does not make any mention about the register at all.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now in 2009, Board wants proper maintenance of the 335 J Register, which actually died in 1979, was declared dead in 1989. It is pathetic that officers at the highest level do not know what is happening in the field.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Do you think any Commissioner or Chief Commissioner will point out to the Board that there is no such register and it is stupid to ask for proper maintenance of a Register that does not exist? No, they would have all sent compliance letters that the register is now being properly maintained.</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/exciseletter_212.htm" target="_blank">CBEC Letter F.No.212/05/2007- CX.6 dated 27.02.2009</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Customs officers suspended again – container smuggling</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> Delhi about 16 Inspectors and Superintendents have been suspended following
the DRI's seizure of garments and electronic goods hidden in containers declared
to contain printed books. Netizens may recall TIOL had carried the news a
couple of weeks back and two officers were suspended at that time. Since
44 more such containers were detected and examination report was given even
before the containers had landed, it was certain that some more heads would
roll. But what is quizzing for an inquisitive brain is that although the origin
of the fraud and the detection of the modus operandi happens to be Kolkata
Customs but Kolkata Chief Commissioner and the CBEC topbrass still appear
to be productively engaged in deliberating over the 'concerned issue' rather
than the issue concerned! In
customs, now everything without human hindrance except physical examination
and that is where frequent frauds are reported. It seems the posting tenure
for an officer in ICD is three months. WHY?</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">–Monday'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 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">FERA</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Imposing penalty on the proprietorship concern as well as on the proprietor would amount to punishing the same person twice for the same contravention. – High Court</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> the proprietorship concern is found guilty and penalty is imposed on it, that penalty should be presumed to have been imposed on its proprietor and, therefore, no separate penalty could be imposed on the proprietor as has been done in the present case.</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">Non-Compete Fee paid by assessee to promoters not cost of acquisition for computing long term capital gains: ITAT by Majority</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO</strong> reason to allow deduction of Rs 24,24,50,000/- paid as non competing fees towards cost of acquisition of shares or towards cost of improvement of shares and as a permissible deduction for computing capital gain arising on sale of shares. The payment in question has no nexus with the shares and can by no stretch of imagination be treated as cost or cost of improvement of shares.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Service Tax</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Collecting the Service Tax and not depositing it to the treasury – penalty justified - CESTAT</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> contention of the appellants that the reversionary authority has no power to impose penalty as original authority has opted not to impose any penalty is not convincing as there is a clear violation of payment of service tax on their part.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Monday for the judgements</font></strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend.</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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