TIOL-DDT 1162 · the untouched capture
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<p><font size="3"><strong><font color="#660099" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1162 </font><font face="Verdana, Arial, Helvetica, sans-serif"></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong>27.07.2009 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit formula unsuited for clearances from 100% EOU / EHTP / STP to DTA when exempt from levy of VAT/Sales Tax – Rule 3(7) (a) of CCR 2004 requires an amendment </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> a 100% EOU / EHTP / STP clears goods into DTA , duty is liable to be paid in terms of proviso to Section 3(1) of the Central Excise Act, 1944 read with Notification No. 23/2003-CE as amended.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, as per this notification, for instances where the goods cleared into DTA are exempt from payment of Sales Tax or VAT, the additional duty of customs leviable under Section 3(5) of Customs Tariff Act, 1975 shall be included while calculating the aggregate duties of customs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The relevant portion of Notification No. 23/2003-CE which stipulates this position is extracted below. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Column 4 against S. No. 2 of the Notification 23/2003-CE dated 31.03.2003 reads as follows: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“In excess of the amount equal to the aggregate of duties of customs leviable on like goods, as if,- </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the duty of customs specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), read with any other notification in force was reduced by 50%, and </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) no additional duty of customs was leviable under sub-section (5) of section 3 of the said Customs Tariff Act: </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#660099">Provided</font> </strong><font color="#660099"><strong>that while calculating the aggregate of customs duties, additional duty of customs leviable under sub-section (5) of section 3 of the said Customs Tariff Act shall be included if the goods cleared into Domestic Tariff Area are exempt from payment of sales tax or value added tax .” </strong></font></font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per this proviso, if the goods cleared into DTA are exempt from payment of sales tax or VAT or if such clearances are not liable to Sales Tax/VAT as in the case of stock transfers, then for the purpose of calculating the aggregate duties of customs, the additional duty of customs leviable under Section 3(5) of the Customs Tariff Act, 1975 shall also be included. This is all the more reinforced by the decision of the Larger Bench of CESTAT in<em> Moser Baer India Ltd</em> </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2009/2009-TIOL-1058-CESTAT-DEL-LB.htm"><strong><em>2009-TIOL-1058-CESTAT-DEL-LB</em></strong></a>.</font> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But is this element of additional duty of customs leviable under Section 3(5) of Customs Tariff Act, 1975 available as credit for the recipients of inputs and capital goods from 100% EOU / EHTP / STP in terms of CENVAT Credit Rules, 2004? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The answer is NO for the simple reason that the proviso to Rule 3 (7) (a) of CCR provides for a formula whereby the recipients of inputs and capital goods shall avail credit of duty paid by the 100% EOU unit/ EHTP / STP in terms of S. No. 2 of Notification No. 23/2003-CE dated 31.03.2003 as amended. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The formula for availment of credit is as follows: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Credit shall be equal to X multiplied by [{( 1+BCD /200) multiplied by ( CVD /100)}]] where X denotes the assessable value. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the purpose of calculating the credit availability, only the elements of BCD and CVD are considered but not the additional duty of customs leviable in terms of Section 3(5) of the Customs Tariff Act, 1975. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This will only increase the cost of the finished goods cleared from DTA as the portion of additional duty of customs paid by the 100% EOU / EHTP / STP will not be available as credit for the DTA unit even though it is available as credit if such duty is paid on like goods imported into India subject to other restrictions as imposed in CCR , 2004. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the above difficulty faced by the recipients of goods from 100% EOU / EHTP / STP , CBEC is requested to take note of this anomaly and come up with a suitable amendment to this formula and ensure that CENVAT chain is not hindered or broken due to this lacuna. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">We survived the Economic Meltdown because of Bank Nationalisation - Pranab </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Addressing an INTUC meeting, Finance Minister Pranab Mukherjee said, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ We survived the economic meltdown because of this step. In the world's leading countries, the finance sectors have crashed but we are still surviving because we nationalised our banking sector. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Market economy cannot be the only end of economic reforms. Unbridled market economy is not the right thing. It cannot be the panacea for our economic problems. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Unless the purchasing power of the working class is raised, the country cannot prosper. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ So our main aim is to eradicate poverty. We have the National Rural employment Guarantee Act ( NREGA ). We will introduce similar schemes to raise the purchasing power of the poor people so that companies' productions are unaffected by lack of demand. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Pranab Babu, the big Indian Private Sector Banks like ICICI , HDFC , Axis etc., did not fail and they are not nationalised! So nationalisation alone could not have been the reason. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And Madam Gandhi Sr. nationalised the Banks more for political reasons than economic. Certainly she could not have visualised the economic turmoil that was to take place forty years later. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">VAT is that again? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VAT</strong> is levied at every stage of production. Like the cap-and-trade carbon regime now being constructed, a VAT is a liberal politician's delight: It taxes everything, but opaquely. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Liberals oppose a VAT because it is regressive and conservatives oppose it because it is a money machine, but a VAT might come when liberals realize it is a money machine and conservatives realize it is regressive. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will a person or institution looking for a place to invest $1 billion seek opportunities in the United States, where policy decisions are deliberately increasing taxes, debt, regulations and the cost of energy, and soon will increase the cost of borrowing and hiring? Or will the investor look at, say, India. It is the least urbanized major country - 70 percent of Indians live in rural areas, 50 percent on farms — so the modernizing and productivity-enhancing movement from the countryside to the city is in its infancy. This nation of 1.2 billion people has a savings rate of 25 to 30 percent, and fewer than 20 million credit cards. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Which nation, India or the United States, is apt to have the higher economic growth over the next decade? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Source: ethiopianreview </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Museum in Goa – CBEC's poor PR? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first of its kind – the Customs Museum was inaugurated by the FM in Goa on Saturday. Saturday being a holiday, CBEC's PR wing was also enjoying a holiday – there was absolutely no news coming from them. Such a mega event and the CBEC has no news about it! Today they will perhaps come out with a news handout. Maybe they don't understand the concept of stale news. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT doesn't seem to be part of the museum. The museum should have a section for CESTAT which will certainly have historic value in the ages to come. The present CESTAT President is from Goa and we understand that the President has not been invited for the inauguration of the museum. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC should activate its PR wing and ensure that its good deeds do get media coverage. </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">– Tuesday'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>Central Excise</strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 6 of CCR , 2004 – when sawing is not a process employed in the manufacture of particle board, dust which arises cannot be called ‘saw dust' so as to bracket it as exempted excisable goods – CESTAT waives pre-deposit and orders stay. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The by-product, which is said to have been formed at the last stage of the manufacture of particle boards is a dust, but certainly not “saw dust” inasmuch as sawing is not one of the processes mentioned in the account of “manufacture” given in the show cause notice. </font></p>
<p align="justify"><strong><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax/service matter </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Officer accused of accepting a bribe of Rs. One Lakh – Entire Pension withheld - degree of proof required in departmental enquiries is that of a preponderance of probabilities and not proof beyond a reasonable doubt – penalty upheld – High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘Where two views on the evidence are possible, the Tribunal or the Court should not substitute its view for that of the enquiry officer' is well accepted by the Supreme Court in a large number of cases. </font></p>
<p><strong><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs – Bail - Merely because there is a serious offence against the respondent, it cannot be a ground for cancellation of bail – DRI petition dismissed: Delhi High Court</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circumstances when bail can be recalled: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Where the accused has misused the liberty granted to him.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Where accused has attempted to tamper with the evidence.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Where he has attempted to influence the witnesses.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) Where there is a possibility of the accused to abscond and, therefore, there is a possibility that the accused may not be available for trial. </font></p>
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<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="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p>
<p><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>
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