TIOL-DDT 1210 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1210 </font><br>
07.10.2009 <br>
Wednesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Benevolent
Board allows duty-paid packing materials into export warehouse, but blatantly
denies export benefits </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBEC's latest Circular states, </font></p>
<blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“As per the provisions of Rule 20 of the Central Excise Rules, 2002, the goods can be removed from the factory without payment of duty to a warehouse from where the goods are allowed to be exported. The Board's Circular No. 581/18/2001- CX dated 29.06.01 prescribes the procedure to be followed for movement of goods to and from export warehouse. The purpose of allowing export warehouse is to facilitate export from the country ” </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Representations have been received from the Trade and the field formations seeking clarification on the issue as to whether or not the duty paid packing material can be allowed to be brought in the export warehouse used for packing of export goods. The clarification has been sought in view of Para 7.2 of the Board's Circular No. 581/18/2001- CX dated 29.06.01 which provides that <strong><font color="#663399">duty paid goods are not permitted to be brought into the warehouse</font></strong>. It has been stated that packing materials are normally procured in small quantities and the suppliers find it difficult to follow the bond procedure. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board has very kindly agreed that duty paid packing material can be brought into the export warehouse, <strong><font color="#663399">but exporter would not be allowed to claim export benefit like rebate for the duty paid on the said packing material</font></strong>. <strong>Pray, WHY</strong>? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 900 amends Circular 581 dated 29.06.2001, to insert the following after Para 7.2: </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“However, an exporter desirous of bringing duty paid packing material required for packaging of other material in the warehouse, may submit a written request to the jurisdictional AC/DC of the Division, who may grant the permission for a period of one year at a time. The exporter will maintain proper account of such goods and shall not claim any export benefit like rebate of duty paid on the said material.” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the one hand in the circular at para 2 it states that the objective/purpose of export warehouses is to facilitate exports, while on the other hand it bars exporters from claiming export benefit of duty paid on the packing materials received by them. When the exporter is required to maintain proper account of such goods, why should the department bar the exporter from claiming export benefit of duty paid on the packing material received by them directly without following the bond procedure? Is it not against the policy of the Government that only goods and services are to be exported but not incidental taxes on such goods and services? If export benefits are disallowed on packing material will it not burden the exporter and impact the price of export goods and thereby the exporters' competitiveness in the world market. Luckily for the exporter the Board did not mention denying drawback claims – or is it included in ‘export benefit'? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe this is intended for purchase of small quantities of packing materials, but should a 21st century Board look like denying even small benefits. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">First of all, the stipulation that <strong>duty paid goods are not permitted to be brought into the warehouse, </strong>is wrong and beyond the scope of Rule 20 of the Central Excise Rules. How can you prevent duty paid goods being brought into the warehouse? Of course what they meant was duty paid packing material. Otherwise every warehouse is an offender as several duty paid goods like telephones, fans, lights, furniture, cars, trucks, computers, pens, paper, cigarettes and a host of other items are brought into the warehouse regularly. If no <em>duty paid </em> goods can be brought into the warehouse, all these items should be banned! But this stipulation had been there for more than a decade! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We often speak so much about the change in mindset from enforcer to facilitator, but the change never comes. Instead of so emphatically stipulating that export benefits will not be allowed to goods exported, which is self contradictory (when you know that goods are exported, how can you deny export benefits, just because some impossible procedure has not been followed?), Board could have graciously allowed cash refund of the duty paid on packaging material, which would not be even a Crore of Rupees in the whole country, but which would have definitely improved the image of the Department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the sentence that <strong>exporter would not be allowed to claim export benefit </strong> is certainly against the avowed policy of the Government. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/excircular900.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 900/20/2009- CX Dated: October 6th , 2009. </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No mails from CBDT </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT in a Press Release states, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Information has been received from several quarters that people are receiving electronic mails informing them of their income-tax refunds and seeking their credit card details. The e-mail is sent from the following or similar mailing addresses – </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><<a href="mailto:lhxbkw@accounts.net">lhxbkw@accounts.net </a>> </strong>or <strong>< <a href="mailto:cvhfvs@accounts.net">cvhfvs@accounts.net</a>> </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that the Income Tax Department does not send e-mails regarding refunds and does not seek any information regarding credit cards of taxpayers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxpayers are, therefore, cautioned that they should not respond to such mails and if they do so it would be at their risk and responsibility. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tax Growth unabated </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Has the recession bypassed India? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Net direct tax collections during first six months of the present fiscal (up to September 2009) stood at Rs.1,52,625 crore , up from Rs.1,47,197 crore in the same period last fiscal, registering a growth of 3.69 percent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Growth in Corporate Taxes was 5.55 percent (Rs.1 ,00,572 crore as against Rs.95,283 crore), while Personal Income Tax (including STT , and residual FBT and BCTT) grew at 0.38 percent ( Rs.51,897 crore as against Rs.51,700 crore). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Net collections during the month of September 2009 continued to be positive at Rs.64,737 crore compared to Rs.62,788 crore during September 2008; while growth in Securities Transaction Tax (STT) also remained positive at 0.79 percent during April-September 2009 ( Rs.3,207 crore as against Rs.3,182 crore) compared to the corresponding period last fiscal.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<br>
Advance tax collections showed a net growth of 2.15 percent up from a negative growth of 6.17 percent in the first quarter (June) in the present fiscal compared to last year. During the second quarter, the net growth in advance tax was 6.21 percent. Particularly, corporate advance tax registered a growth of 12.24 percent during the second quarter, up from a negative growth of 3.44 percent in the first quarter. India.Inc is doing well? </font></p>
<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"> – Thursday's cases</font></strong></font></strong></font></p>
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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>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Third Party Administrator providing health insurance claim services, makes payments to hospitals – liable to deduct TDS – High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TPA</strong> is responsible for making the payment to the hospital for rendering the medical service to the policy holders. The TPAs enter into an agreement with the hospitals for the aforesaid purpose. It is not necessary as to when the services are required to be provided by the TPA . Services can also be said to have been provided if they are provided through someone else on the request of the TPA . Indeed the TPA is given unbridled power in this regard. This would be in the nature of TPA taking over a part of the work of the insurance company. The TPA who is the authority or the person to pay the amount to the hospital is required to deduce the tax at source under section 194J </font></p>
<p><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>Service rendered by DISCOM under ‘outright contribution scheme' through their electrical engineers to consumers of electricity falls within the ambit of “taxable service” viz. Consulting Engineer Service under section 65(105)(g) of Finance Act, 1994 – CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> issue is whether the appellant – company, successor to Maharashtra State Electricity Board ( MSEB ) , was rendering taxable service in the nature of “Consulting Engineers service” to the consumers of electrical energy during the period of dispute (April 2000 to March 2005). </font></p>
<p><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>Suppression not shown to have been indulged with intent to evade payment of duty, however suppression <em>ipso facto </em>would render vessel liable to confiscation under section 111 of Customs Act – Penalty u/s 112 imposable – ONGC ordered to make pre-deposit - CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At the outset, the appellants argued that upon confiscation, the vessel vested in the Central Government and came under their control and, therefore, there is no question of pre-deposit of any duty amount under section 129E of the Customs Act. The Bench rejected this argument by noting - <em>“We were told at the bar that <strong>the vessel had sunk in Indian Designated Waters as early as in 2005. </strong> Anybody who claims the benefit of waiver of pre-deposit of duty under section 129E on the ground of the subject goods being under government control should prove that the goods are actually under such control. <strong>There is no evidence in this case of the vessel being under the control of the Central Government. </strong> Therefore, the question whether pre-deposit of duty should be dispensed with in this case requires to be argued out.” </em></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>
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