TIOL-DDT 1196 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1196 </font><br> 14.09.2009 <br> Monday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Additional Commissioners of Customs & Central Excise – Who appointed them? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> 30th July, 2009 the CBEC issued a Notification in F.No.A.32012/20/2006-Ad.II, the opening para of which reads as, </font></p> <blockquote> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The President of India is pleased to grant the Non-Functional Selection Grade (NFSG) in the Pay Band-4 with Grade Pay of Rs.8,700/- [corresponding to pre-revised pay scale of Rs.14,300-18,300] to the following officers of IRS(C&CE) in Junior Administrative Grade in the Central Board of Excise & Customs ..... </font></strong></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The list contained 144 names who were all Joint Commissioners and suddenly they all became Additional Commissioners! Who appointed them? Does a Joint Commissioner on getting the NFSG scale become an Additional Commissioner? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 2(b) of the Central Excise Act, </font></p> <blockquote> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"Central Excise Officer" means the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), <strong>Additional Commissioner of Central Excise, </strong> Joint Commissioner of Central Excise, Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise or any other officer ..... </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Additional Commissioner is by statute a Central Excise Officer. But shouldn't he be appointed by somebody? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Look at some of the Orders issued by the Board in 2009. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/cbecorder160_2009.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Office Order No. 160/2009 Dated, the 23rd July, 2009 </strong></font></a></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The President of India is pleased to order that the following officers of the IRS (C&CE) in the grade of Deputy Commissioner (Grade-V), be <strong><font color="#FF6633">promoted to the grade of Joint Commissioner</font> </strong> of Customs and Central Excise (Grade-IV) in Pay Band-3 with Grade Pay of Rs.7,600 [in the pre-revised pay scale of Rs.12,000-16,500], on ad-hoc basis, with effect from the date of assumption of the charge of the post as per the posting indicated in Column-4 of the Table below against the name of the officers so promoted xxxxxxxxx </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/cbecorder138_2009.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Office Order No. 138/2009 Dated, the 30th June, 2009 </strong></font></a></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The President of India is pleased to order that the officers of the IRS (C&CE) in the grade of Assistant Commissioner, whose names are mentioned in the Annexure (S. No.1 to 510), be <strong><font color="#FF6633">promoted to the grade of Deputy Commissioner</font> </strong> (Grade-V) of IRS (C&CE) in Pay Band-3 with Grade Pay of Rs.6,600 [in the pre-revised pay scale of Rs.10,000-15,200] in the Central Board of Excise & Customs, on ad-hoc basis, with effect from the date of assumption of the charge of the post. The officers being promoted through this Order shall assume charge of the post of Deputy Commissioner in the same office in which they are currently posted. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Assistant Commissioner and Deputy Commissioner perform the same functions, but from Assistant Commissioner to Deputy Commissioner, it is a promotion. Similarly Joint Commissioner and Additional Commissioner perform the same functions but from JC to ADC it is not a promotion. The President has only given them a higher scale. Then how can they assume charge as Additional Commissioners? Who appointed them as Additional Commissioners? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is our problem? Isn't it purely a Departmental affair? No, It is a public affair. As per law, the Additional Commissioner is a Central Excise officer and somebody can discharge the functions of an Additional Commissioner including that of adjudication, only if he is properly appointed to that post. All the officers who are functioning as Additional Commissioners without being appointed to the post are perhaps functioning illegally. We don't know whether the appointment of Additional Commissioner is a closely held Departmental Secret. Netizens will remember that the Kolkata Bench of CESTAT had thrown out many cases, because there were no notifications giving additional charge to Commissioners! What would be the fate of orders passed by Additional Commissioners? </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appeals filed by Department – Urgent need for constituting panel of Advocates </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6139">DDT 710 </a></strong>we reported about the pathetic state of affairs in handling appeals filed by the Department before the CESTAT and High Courts and how the Department hit upon a brilliant idea of hiring retired senior officials of the Department to represent Revenue's cases before the Tribunals. But at the same time we also highlighted the uncivilized and callous approach of the field formations in hiring these retired officials and the treatment meted out to them. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hitherto, we also reported the pathetic state of affairs in providing logistic support to the departmental representatives, who fight pitched battles with brilliant advocates representing the assessees, matching their wits albeit with limited or no resources. While this is one of the main reasons for Revenue losing its cases in the CESTAT, majority of the cases are lost by the Revenue due to very poor drafting of appeal memorandums by the field officers which either lack clarity in statement of facts or contain faulty grounds of appeal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apart from this, there are also instances where the appeals are filed with unsigned authorizations from the Committee of Chief Commissioners or Committee of Commissioners. Many a time the accompanying authorizations are signed by subordinate officers who are not even competent to file appeals as per the statute. There were many instances where CESTAT had come down heavily on the Department for its callous approach in filing appeals. Many appeals were even dismissed on these simple but technical issues. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has to take a fresh approach to solve this malaise afflicting departmental appeals filed before the Commissioner (Appeals) and Appellate Tribunal. At the outset, CBEC should consider empanelling advocates who are well versed in the indirect tax domain at the Zonal level. This would be in addition to the existing practice of handing over high revenue cases to the Special Counsels who are retired senior department officials. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every zone should have a panel consisting of minimum ten advocates with a fixed tenure of three years. They should be paid adequate remuneration consisting of fixed and variable component, for the services rendered by them. In fact there are many retired departmental officers who are practising as advocates. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC should not forget the famous quote ‘If you pay peanuts you get monkeys' while deciding the remuneration to be paid to these advocates. Their status in the panel should be reviewed and extension granted for a further period of three years based on their performance which has to be evaluated very objectively. Performance evaluation of an advocate should also include peer reviews of other panel members. In case if the performance of one or more advocates is below par, other eligible advocates should be empanelled in their place. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As soon as the Committee of Commissioners or the Committee of Chief Commissioners decides that a case is fit for filing an appeal (this is a statutory function of the Committees and the advocates cannot have a say whether an appeal can be filed at all), the Commissioner should forward the case file to one of the advocates on the panel without discriminating amongst the advocates on the panel ensuring adequate work for all the advocates on the panel. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The advocate who is entrusted with the case file should be allowed to draft the appeal memorandum in consultation with the Commissioner, incorporate additional inputs if any from the Commissioner and file the appeal before the Commissioner (Appeals) or the Appellate Tribunal as the case may be. The advocates should argue the cases before the Appellate Authorities to the best of their abilities. In the Tribunals they should be ably assisted by the Departmental Representatives or the Special Counsels, while at the Commissioner (Appeals) level they should be assisted by the Range Officer in charge of the assessees. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Fighting Crimes Related to Corruption - suggestions </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI's National Seminar National Seminar on 'Fighting Crimes Related to Corruption' resulted in the following suggestions/comments </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Government is committed to reforming the Criminal Justice System. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Bring about legislation to include statutory remedy to enable confiscation of properties belonging to convicts under the Prevention of Corruption Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Delays in grant of prosecution sanctions against public servant is perceived in many quarters that these provisions contribute to a climate of impunity where the requisite sanction is either delayed or denied by the higher executive authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There is a need to have a vertical division of all Courts from Trial Court to Supreme Court into Criminal Justice Branch and Civil Justice Branch. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Start imposing deterrent costs against those deliberately or indifferently delaying trial. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Judges should employ Management techniques of planning, organizing, controlling and managing various aspects of court work and also adopt latest technology. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Speedy trial is a constitutional right under Article 21 of Indian Constitution. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Mindset that the crimes related to corruption are like any other conventional crime needs to be changed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Discharge petitions not to be entertained after framing of charges. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Number of Special Courts to be increased, delaying tactics of defence to be stalled and delay in prosecution sanction to be reduced. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Adoption of FBI model for carrying out undercover operations by Anti Corruption Agencies by creation of necessary legal frame work. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Adequate training to judicial officers/ prosecutors/ investigators, expert assistance of Chartered Accountants in DA case investigation and recording of statements of the major witnesses u/s 164 Cr. P.C. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Compliance of CVC advice be made mandatory for the government departments/ PSUs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Empowering of institution of CVOs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Enactment of Witness & Victim Protection legislations to give due protection to the witnesses and victims. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ White Collar Crimes need to be given equal if not more importance than crimes against human body. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There is a need for a comprehensive legislation for CBI. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Periodical seminars of Special Judges, Prosecutors and Investigators be organized at Regional level to identify the road blocks to faster investigation and trial and take remedial measures. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Special Judges and prosecutors to be trained on appreciation of scientific evidence viz. electronic/digital evidence. </font></p> </blockquote> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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"> – 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 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color="#663399" 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>Meaningful interpretation to be given to provisos contained in section 11AC of the CEA, 1944 – since appellant has already reversed the CENVAT credit and paid interest, penalty imposable u/s 11AC is 25% of duty – CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE </strong>recently reported the Tribunal decision in <em>R.R.Oomerbhoy Pvt. Ltd. vs. CCE, Aurangabad <strong><font size="1">(</font></strong><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2009/2009-TIOL-1394-CESTAT-MUM.htm"><strong>2009-TIOL-1394-CESTAT-MUM</strong></a><strong>)</strong></font></em> where the Bench held that since the provisions of section 11A(2B) of the CEA, 1944 <strong><em>prohibit issuance</em></strong><strong><em> </em></strong>of show cause notice for demanding duty under sub section (1) of section 11A, there is no question of determination of duty under sub-section (2) and consequently invoking section 11AC is erroneous. This decision has, it is learnt, already ruffled quite a many feathers in the department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Be that as it may, the present order in all likelihood is also heading in the same direction. </font></p> <p align="justify"><font color="#663399" 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>TDS - payments made to Hong Kong-based law firm - are legal services covered under 'technical services' u/s 9(1)(vii) or it is professional service covered under Sec 44AA or S 194J? - Legal services are technical services and payments are liable to TDS as India had no DTAA with HK at that time: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DO legal services fall within the definition of 'technical Services' as per Explanation 2 to Sec 9(1)(vii) of the Income Tax Act? </strong>If we go by the Special Bench decision in the case of Mahindra & Mahindra Ltd it is technical service and is very much covered under Sec 9(1)(vii) and even DTAA between India and the UK. However, the counsel in this case argues that the legal service is covered under Sec 44AA as the Legislature has used the legal, medical, engineering or the profession of accountancy as different from technical consultancy. He further referred to section 194J to contend that the fees for professional services has been separately mentioned as distinct from fees for technical services. Referring to E <em>xplanation </em>to section 194J he submitted that "fees for technical services" has been defined to have the same meaning as in <em>Explanation-2 </em>to section 9(1)(vii). He further relied on the judgment of the Madras High Court in the case of <em>Skycell Communications Ltd. and Another vs. DCIT <strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2003/2003-TIOL-240-HC-MAD-IT.htm">2003-TIOL-240-HC-MAD-IT</a>)</font> </strong> to </em>contend that the technical services should not be mixed with legal services. </font></p> <p align="justify"><font color="#663399" 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>Duty free goods imported by STPI unit installed in MTNL premises for testing and possible sale – STPI scheme misused – exemption not allowed – confiscation, duty and penalty upheld – even foreign supplier penalised for abetment: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">STP unit in software technology park is allowed to import the goods as specified in this notification free of duty for the purpose of development of software, data entry and data conversion, data processing, data analysis and controlled data management call centres services for export out of India and this exemption is subject to the conditions specified in the notification. </font></p> <p align="justify"><strong><font color="#663399" 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 align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </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>