Jurisprudentiol – Tuesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Valuation of Physician Samples – Assessee paying duty on basis of Board Circular dated 01.07.2002 in spite of the said Circular having been amended on 25.04.2005 – No mens rea established so as to call for imposition of penalty u/s 11AC – Revenue appeal dismissed - CESTAT

THIS appeal is preferred by the Revenue against the order of the Commissioner (Appeals) who held that in the facts and circumstances of the case the penalty cannot be levied on the respondent under section 11AC of the Central Excise Act, 1944.

The facts of the case are that the respondent is a manufacturer of medicaments and while discharging central excise duty on physician samples manufactured for loan licensees the valuation was done on the basis of 110% of the cost of production.

Income Tax

DTAAs - non-resident assessees provide satellite transponders on lease to telecasting and telecom companies for uplink & downlink of TV programmes and data transmission - Can such lease be treated as transfer of 'right to use' for scientific equipment? Can payments be treated as royalty? - ITAT Spl Bench holds payments made to non-resident Cos are royalty, taxable under I-T Act as well as DTAAs

GOING by the rapid-fire growth of the Television industry in India, it can safely be said that all TIOL Netizens are users of twin services - the broadcasting and the bandwidth services. All of us consume and relish them as fruits of modern Information and Communication Technology (ICT). But have we ever thought of the process involved in beaming these signals either to our Televisions or computers? Most of us never had a chance to split our hair over this issue! But this is exactly the million-dollar issue involved in the present case decided by the ITAT Special Bench last Friday. The question before the bench was that whether the transponders located at geostationary satellites (also known as communication satellites) can be treated as scientific equipment? (The transponders are utilised for beaming TV signals in 'foorprint area' and also internet for data transmission). Is there any process involved for the broadcasting companies to uplink and downlink signals for telecasting programmes? If that is so, can the payments made for hiring transponders by Indian broadcasting and telecom companies be treated as 'royalty' income within the meaning of clause (vi) of Explanation 2 to Section 9(1)(vi) of the Income Tax Act and also the relevant Double Taxation Avoidance Agreements (DTAAs) for the non-resident assessees? Are such royalty payments made to non-resident providers of transponders taxable in India?

Customs

Demurrage charges – as per the detention certificate issued by the Customs, the detention was not due to any fault or negligence on the part of the importer – In such cases, the customs alone has to pay the demurrage charges for the period covered in the certificate – for rest of the period, the importer is liable to pay the demurrage charges – High Court

THE issue has passed through many rounds of litigation. The petitioner company imported Bearing Seamless Tubes valued at USD 310/MT, filed Bill of Entry and sought for clearance of the said goods under Duty Exemption Entitlement Scheme which was rejected by the Customs and the value was also enhanced to USD 1800/MT.

See our columns Tomorrow for the judgements