TIOL-DDT 1156 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#660099">TIOL-DDT
1156</font><br>
17.07.2009<br>
Friday</b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs
Tariff - Amendments to HSN –effective 01.01.2012</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Harmonized System Committee of the World Customs Organization (WCO) has been
working for almost five years on a draft Article 16 Council Recommendation concerning
the amendment of the Harmonized System.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
WCO Council adopted the Recommendation at its annual sessions in June 2009 and
the Recommendation is now being promulgated under the provisions of Article
16 of the Harmonized System Convention. This implies that HS Contracting Parties
have 6 months during which they can object to a recommended amendment.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Recommendation contains 221 sets of amendments. Environmental and social issues
are a major feature of these amendments, particularly the use of the HS as the
standard for classifying and coding goods of specific importance to food security
and early warning data falling within the ambit of the Food Security Information
for Action Programme of the Food and Agriculture Organization of the United
Nations (FAO).</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the same vein, certain amendments would create additional subheadings for the
identification of chemicals and pesticides controlled under the Rotterdam Convention
and ozone depleting substances controlled under the Montreal Protocol.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other
amendments to the HS resulted from changes in international trade patterns.
In this regard, the HS would be simplified by the deletion of more than 40 subheadings
in the nomenclature due to their low volume of trade.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
addition, for purposes of adapting the HS to current trade practices, certain
important products will be separately identified in either existing or new headings.
Where possible, advances in technology are also reflected in the amendments.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One
of the new headings is 9619.00: <b><font color="#FF6633">Sanitary towels (pads) and tampons, napkins
and napkin liners for babies and similar articles, of any material..</font></b></font></p>
<p class=MsoNormal align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>C.EX,
LIES AND AUDIT REPORTS</b></font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para
1.1 of the CAG report on Central Excise for the year 2009-10 (Compliance Audit)
contains revenue analysis with the help of colourful charts and histograms.
Graph 4 contains the comparison of payments made through PLA and CENVAT. </font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Auditors felt that there has been a consistent increase in payment through CENVAT
compared to PLA. For example, the payment from CENVAT account was 109% in 2006-07
and 123% in 2007-08 of the duty paid in PLA. The reasons for such sharp increase
as concluded by the Audit were explained in Chapter III of the report. Before
going to the contents of Chapter III, let us pause for a moment and examine
the growth aspect first.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If
you read the report on the Service Tax, Graph 1 says that the actual receipts
from Service Tax were Rs 38,000 crores in 2006-07 and Rs 51,000 crores in 2007-08.
From where did this service tax come from? How much amount from this service
tax was availed as credit by the manufacturers? Since the CENVAT Credit of service
tax would be availed by the manufacturers for payment of excise duty, without
taking into consideration of the receipts of service tax in cash or eliminating
the service tax credit from the CENVAT Credit, how can one analyse the PLA :
CENVAT ratio and come to the conclusion that the increase in CENVAT payment
is due to mis-use of CENVAT credit? If you submit such faulty report in any
MNC, you are sure to be fired the next morning. But it is ok with Parliament
and CAG.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And
now, have a look at the contents of Chapter III. The Audit attributes the growth
in CENVAT is <i>inter alia</i> due to:</font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Non-payment
of 10% amount on exempted goods, though proportionate credit on inputs used
in exempted goods was reversed.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Non-payment
of 10% amount on Electricity due to availing CENVAT items like lubricants,
paints etc ( which would be a minuscule amount compared to 10% amount)</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Taking
of 100% Credit on capital goods in the same financial year ( the assessee
did not use the credit for payment of excise duty / service tax)</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Delay
in submitting the statement of duty paid in PLA for refund claims in respect
of area based exemption (39/2001), which the department views as only procedural
lapse.</font></p>
</blockquote>
</div>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even
assuming there is increase in availment of CENVAT Credit, can any of the above
cases be held as reason for such increase? </font></p>
<p class=MsoNormal align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Yesterday’s
Supreme Court decision - today in TIOL</b></font></p>
<p align="justify" class=MsoNormal ><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income
Tax – Compensation for land acquisition – enhanced compensation (including interest)
taxable in the year of receipt, even if receipt is on security – Supreme Court</b></font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Supreme Court delivered a landmark judgement on the taxability of additional
compensation received for additional compensation for land acquisition. The
Supreme Court has settled the Law on the issue, though the matter is under dispute
for more than a decade and a half.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We,
in TIOL are proud to bring you this judgement today - with our detailed analysis
– this judgement was delivered yesterday!</font></p>
<p class=MsoNormal align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Corruption
is all pervasive – AICTE Secretary arrested by CBI</b></font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Central Bureau of Investigation has arrested the Member Secretary, All India
Council for Technical Education (AICTE) and a middleman for demanding and accepting
a bribe of Rs. five lakhs from the complainant.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CBI has registered a case on the basis of complaint of an owner of Engineering
College in Andhra Pradesh. A Middleman had asked him for a bribe of Rs. 20 lakhs
on behalf of Member Secretary of All India Council for Technical Education (AICTE)
for inspection & approval of his college and had agreed to accept Rs. Five
lakhs as the first instalment.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Based
on this complaint, a trap was laid in the early morning of 16.07.2009. During
the trap proceedings the middleman and Member Secretary, AICTE, Delhi were arrested
while demanding and accepting the bribe of Rs. Five lakhs as the first instalment.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Searches
have been conducted at the office premises of the Member Secretary, AICTE, New
Delhi & his residence at Hyderabad and at the residence of the Middleman
at Ongole, Andhra Pradesh. A cash of Rs. Nine lakhs have been recovered from
the Delhi residence of Member Secretary, AICTE. Incriminating documents relating
to bank accounts and properties recovered during searches are being scrutinized
for further investigation.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CBI has also registered a case against Chairman, All India Council for Technical
Education (AICTE), Advisor, AICTE, Dy. Director, AICTE and Regional Officer,
AICTE, New Delhi.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
AICTE is the Apex Body for recognition of Engineering and Technical Colleges
and its Chairman and Member Secretary are reputed professors – and now we know
that they are also prone to corruption.</font></p>
<p align="justify" class=MsoNormal ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Wherever
there is discretion, there is scope for corruption. And the scope is never wasted!</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">–</font></strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Monday's cases</strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"></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 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><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central
Excise </b></font></p>
<p align="justify" ><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Exports
– Refund of AED(T&TA) on inputs – entitled - a beneficial circular has to
be applied retrospectively while oppressive circular has to be applied prospectively
– High Court </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>It </strong>must be held that even though the clarification about refund of additional duty
of excise (T&TA) was issued on 22.3.2007, it was to be applicable to all
the pending cases and therefore, its application cannot be restricted only to
future.<b> </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Both
these circulars clearly show that the Board had seriously considered the provisions
of the rules, representations and demands of the trade and industry and had
come to conclusion that benefit of refund can be given under the rules. </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income
Tax</b></font></p>
<p align="justify" ><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Cooperative
society – trading stock in godown - Commission income not eligible for
exemption: SC</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>TO
</b>give a boost to the cooperative movement in the country, Cooperative Societies
have always been exempted from the income tax. However, the exemption is conditional
and certainly not blanket in its effect. Only that income which is earned from
storage, warehousing and facilitation of marketable commodities is exempted.
And the relevant Section is Sec 80P(2)(e) of the 1961 Act. Its predecessor Section
under the I-T Act, 1922 is Section 14(3)(iv) of the 1922 Act. However, storage
of goods as part of trading activities is not exempted and this is what has
been confirmed by the Apex Court in the instant decision. </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs</b></font></p>
<p align="justify" ><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Redemption
Fine – Duty is payable even if the confiscated goods are not redeemed – If benefit
is given to another assessee illegally, the Court cannot perpetuate illegality
– High Court </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
issue really stands concluded considering the Coordinate Bench Judgments of
this Court in <i>Commissioner of Customs Vs. Wockhardt Hospital and Heart Institute</i>,
reported in<font size="1"> <b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2006/2006-TIOL-115-HC-MUM-CUS.htm" target="_blank"><em>2006-TIOL-115-HC-MUM-CUS</em></a></u></b></font>
and the judgment in <i>Bombay Hospital Trust Versus Commissioner of Customs
(ACC) Mumbai</i> <b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2006/2006-TIOL-170-HC-MUM-CUS.htm" target="_blank"><em><font size="1">2006-TIOL-170-HC-MUM-CUS</font></em></a>.</u>
</b>Apart from that, the legislature has made it clear that even if the goods
are released on payment of fine, such person is also liable to pay duty and
charges thereon. The fine payable to get possession of the goods under section
125 is distinct and different from the duty of goods which are to be imported
or exported. It is the nature of recompense to the state for goods which are
vested in it and on sale would have realized the value of the goods and from
that to recover the duty which is unpaid as also fine. </font></p>
<p align="justify" ><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See
our columns Monday for the judgements</font></strong></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Monday with more <strong>DDT</strong></font></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice Weekend.</font></p>
<p align="justify"><font color="#FF6666" 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>