TIOL-DDT 1209 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><b><span style='font-family:"Verdana","sans-serif"; color:#663399'><font size="3">TIOL-DDT 1209</font></span></b><br>
06.10.2009 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP – As CBEC sees it </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>new Foreign Trade policy was announced on 27 th August 2009. The policy is not worth the paper it is printed on unless accepted/ratified by Customs. After a month of announcing the Policy, the Board has now come out with a Circular explaining the salient features. The Department of Revenue had issued notifications Nos. 91/09- Cus to 103/09- Cus all dated 11.9.09, 104/09- Cus & 105/09- Cus both dated 14.9.09, 109/09- Cus dated 24.9.09, 23/09-CE(NT) dated 25.9.09 and 112/09- Cus dated 29.9.09 to implement the Policy and the Handbook. </font></p>
<p align="left"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>I. New schemes. </strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(1)
Status Holder Incentive Scheme (SHIS) : </strong>Under the scheme, Status
Holders are entitled to incentive scrip @1% of FOB value of export of goods
of certain specified sectors made during 2009-10 and during 2010-11. Notification
No. 104/2009- Cus dated 14.9.2009 has been issued to operationalize the SHIS
. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(2)
Agri -Infrastructure Incentive Scrip (AIIS). </strong> This was part of the
Vishesh Krishi and Gram Udyog Yojana ( VKGUY ) scheme. A new name has been
given to such scrips in the Policy. The scrips issued under the scheme would
be allowed for import of specified agri -equipments with actual user condition,
as was the case earlier. One important change is that now, transferability
of the scrips amongst status holders has been permitted for import of cold
chain equipment only without breaking the actual user condition . Notification
No. 94/2009- Cus dated 11.9.2009 has been issued to operationalize the scheme.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(3)
Zero duty Export Promotion Capital Goods (EPCG) Scheme </strong>: The scheme
is applicable to certain specified sectors and will be valid up to 31.3.2011.
Notification No. 102/2009- Cus dated 11.9.2009 & Notification No. 101/2009-
Cus dated 11.9.2009 have been issued to operationalize Zero Duty EPCG Scheme
and Zero Duty EPCG Scheme for Common Service Providers. </font></p>
</blockquote>
<p align="left"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>II. Changes in the existing Export Promotion schemes </strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(1)
Duty Free Credit Entitlement (DFCE) scheme and Target Plus Scheme (TPS) :
</strong>The exporters of the marine sector have been allowed to import 36
additional items, specified in list 50 of notification No. 21/2002- Cus against
the scrips issued to them under TPS and DFCE schemes vide DGFT Policy circular
No. 03/2009-14 dt 27.8.09. The notification Nos. 53/2003- Cus dated 1.4.2003,
32/2005- Cus dated 8.4.2005 and 73/2006- Cus dated 10.7.2006 issued under
DFCE scheme and TPS have been amended vide notification No. 105/2009- Cus
dated 14.9.2009 in this regard. There are no other changes in the schemes.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(2)
Served From India Scheme (SFIS): </strong>There is no change in the scheme.
Notification No. 91/2009- Cus dated 11.9.2009 has been issued to operationalize
the scheme under the new Policy. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(3)
Vishesh Krishi and Gram Udyog Yojana (VKGUY): </strong>There is no change
in the scheme Notification No.95 /2009- Cus dated 11.9.2009 has been issued
to operationalize the scheme under the new Policy. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(4) Focus Market Scheme (FMS): </strong> There is no change in the scheme. Notification No. 93/2009- Cus dated 11.9.2009 has been issued to operationalize the scheme under the new Policy. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(5) Focus Product Scheme (FPS): </strong>There is no change in the scheme. Notification No. 92/2009- Cus dated 11.9.2009 has been issued to operationalize the scheme under the Policy </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(6) Advance Authorization Scheme: </strong>Notification Nos. 96/2009- Cus and 99/2009- Cus both dated 11.9.2009 and 112/09- Cus dated 29.9.09 have been issued to operationalize the Advance Authorization, Advance Authorization for Annual requirement and Advance Authorisation for deemed export schemes respectively under the new Policy. There are several major changes. The new customs notifications have been aligned with the provisions of the Policy and the Handbook. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 4.5 of the Handbook provides that the duty free material imported or procured against an authorisation can be taken to the project site as per the provisions of the ANF-4A and the DOR guidelines in this regard. This provision has been implemented vide condition (xi) of the notification No 112/09- Cus dated 29.9.09. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under para 8.3(c) of the Policy, it has been provided that, exemption from payment of Terminal Excise duty (TED) shall also be available for supplies made by an Advance authorization holder to a manufacturer holding another Advance authorization if such manufacturer, in turn, supplies the resultant product(s) to an ultimate exporter in terms of para 8.3(c) of the FTP. Notification No. 44/01-CE has been amended vide 23/09-CE(NT) dated 25.9.09 to incorporate the above change. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(7) Duty Free Import Authorization ( DFIA ) Scheme: </strong>The scheme has been operationalized in the new Policy vide notification No. 98 /2009- Cus dated. 11.9.2009. The following changes have been made in this scheme in the new Policy / customs notification:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) The duty free replenishments imported under the scheme cannot be transferred to the units located in areas, which are availing the area specific exemptions of Central Excise Duty. ( para 4.34 of Handbook refers). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The period to re-export the defective and unfit for use materials imported under the advance authorization scheme has been lowered from the existing period of three years to six months. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The period for evidence of discharge of export obligation has been extended to 60 days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(8) Export Promotion Capital Goods ( EPCG ) Scheme </strong>: The scheme has been operationalized in the new Policy vide notification Nos. 100/2009- Cus , 101/2009- Cus ., 102/2009- Cus and 103/2009- Cus . all dated 11.9.2009, with certain changes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(9) DEPB Scheme: </strong>There is no change in the scheme except that the notification mentions the date upto which it will be valid viz. 31.12.10 . Notification No. 97/2009- Cus dated 11.9.2009 has been issued to operationalize the scheme under the new Policy </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>III. Deleted Schemes </strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Hi-Tech Products Export Promotion Scheme ( HTPEPS ) has been deleted in the new Policy. The products covered under the said scheme have been shifted to the Focus Product scheme (FPS). </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2009/cuscir09_026.htm" target="_blank">CBEC Circular No. 26 /2009-Cus. Dated 30th September, 2009. </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FEMA - Advance Remittance for import of Services </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present limit for advance remittance for all admissible current account transactions for import of services without bank guarantee was raised from USD 100,000 to USD 500,000 or its equivalent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has now clarified that this is not applicable for a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would continue to be required. </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=280&filename=notification/rbi/2009/rbi09cir010.htm" target="_blank">Circular No. 10/ RBI ., Dated: October 5, 2009 </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Issue of Bank Guarantee on behalf of service importers – RBI instructions </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Banks are allowed to issue guarantees in favour of a non-resident service provider, on behalf of a resident customer who is a service importer, for an amount up to USD 100,000 or its equivalent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With a view to further liberalise the procedure (other than in respect of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments) for import of services, it has been decided to increase the limit for issue of guarantee by AD Category-I banks from USD 100,000 to USD 500,000. Accordingly, AD Category-I banks are now permitted to issue guarantee for amount not exceeding USD 500,000 or its equivalent in favour of a non-resident service provider, on behalf of a resident customer who is a service importer. </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=280&filename=notification/rbi/2009/rbi09cir011.htm" target="_blank">Circular No. 11/ RBI ., Dated: October 5, 2009 </a></strong></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> <font color="#006600">Wednesday' s cases </font></strong></font></p>
<p align="justify"><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 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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" 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color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SEZ </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Director,
STPI, not an officer of the Government of India, not eligible to be appointed
as Development Commissioner of SEZ – appointment quashed – High Court </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">30 SEZs in Andhra Pradesh are now without a Development Commissioner as the AP High Court has quashed the appointment of the Director, STPI as the Development Commissioner for these SEZs . </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is the scope of Quo warranto ? </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who is a Government Officer? </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please wait till tomorrow for this interesting judgement. </font></strong></p>
</blockquote>
<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>Deletion
of Sec 10A (9) vide Finance Act 2003 - benefits of deletion not available in
AYs prior to 2004-05 - BPO -assessee not eligible for Sec 10A benefits as its
ownership changed hands when relevant Section was on statute book : ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION
10A (9)</strong> comes into play when there is a change in the ownership of the assessee
company with more than 50% voting rights transferred. The Finance Minister while
presenting a Budget terms it as illogical and deletes this Section. But the
moot question before the Tribunal is - whether it being clarificatory in nature,
will also apply to cases of previous years? And the verdict has gone against
the assessee as when the Sec 10A benefits were claimed by the assessee, Sec
10A (9) was very much on the statute book, and the AO has failed to apply his
mind to the issue. While upholding the invocation of CIT's powers u/s 263, the
Tribunal remanded the issue to the AO to also examine whether the alternate
plea of the issue can be accepted. </font></p>
<p align="justify"><font color="#663399" 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>Lowering, laying, jointing and testing GRP pipes for Gujarat Industrial Development Corporation ( GIDC ) is taxable service as GIDC is a corporation primarily undertaking development of infrastructure for industries – CESTAT orders pre-deposit of Rs.50 lakhs . </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE
</strong> appellants were engaged in the activity of lowering, laying, jointing
and testing GRP pipes (manufactured by the appellant) at the customers' site
during the material period. They undertook such activity for the benefit of
numerous customers namely <em>M/s Videocon Narmada, Birla Copper, IVRCL Infrastructure,
Gujarat <strong>Industrial </strong> Development Corporation ( GIDC ), Surat
Municipal Corporation and Vizag Municipal Corporation. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In respect of the aforesaid service rendered to the first three parties, the appellants paid service tax. In respect of the other customers, they did not pay service tax. </em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></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" target="_blank">vijaywrite@taxindiaonline.com </a></font></p>
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