TIOL-DDT 1226 · 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 color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="3">TIOL-DDT 1226 </font></strong><font size="3"><strong></strong></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><br> 29.10.2009 <br> Thursday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether Bagasse, Aluminium/Zinc Dross etc are Excisable Goods? CBEC Clarifies </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXCISABILITY</strong> of bagasse and similar waste products arising during the course of manufacture has been under dispute for a long period of time. There are a number of Tribunal's judgments that being waste, these are not excisable products. Generally, the courts have been taking a view that the waste or refuse or residue arising during the course of manufacture cannot be treated as excisable goods even if such waste fetches some price in the market. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Budget 2008, the definition of “<em>excisable goods</em>” in clause (d) of Section 2 of the Central Excise Act, 1944 was amended by adding an explanation that for the purposes of this clause, “goods” include any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC clarifies that with this amendment in Section 2 (d), bagasse, aluminium/zinc dross and other such products termed as waste, residue or refuse which arise during the course of manufacture and are capable of being sold for consideration would be excisable goods and chargeable to payment of excise duty. It is further clarified that in case the rate of duty in respect of such products is Nil in the tariff or they are exempt from duty in terms of any exemption notification, and if Cenvat Credit has been taken on the inputs which are used for manufacture of dutiable and exempted goods, then in terms of rule 6 of Cenvat Credit Rules, 2004, the assessee is required to reverse the proportionate credit or pay 5% amount. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Field formations are advised to take suitable action for ensuring recovery of duty from the assessees in respect of these goods for the period after the budget of 2008. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the departmental appeal in respect of excisability of bagasse in one such case i.e. <em>Balrampur Chinni Mills Ltd </em> is still (<strong><font color="#FF6633">reportedly</font> </strong> – even Board is not sure!) pending in the Supreme Court, cases prior to 2008 for excisability of bagassee may remain in call book till it is decided by the Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But why did the CBEC wait for more than one and a half years to issue this clarification when the explanation to Section 2(d) was introduced by Section 78 of the Finance Act, 2008 effective from May 10, 2008? Now the field formations will be left with no choice but to invoke extended period for issue of show cause notices beyond the one year period. If these show cause notices fail on the ground of limitation who should take responsibility for loss of revenue to the exchequer. Instead of waiting for requests from the field formations to issue clarifications, why doesn't the CBEC issue clarifications after incorporating such ground breaking changes in the existing law?<font color="#663399"> <strong>Isn't the Circular itself time barred? </strong></font></font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/excircular904.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC CIRCULAR NO. 904/24/2009- CX., Dated: October 28, 2009 </font></strong></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Provisional Anti-Dumping Duty imposed on Phosphorus Pentachloride – How about a Reminder Service?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the basis of the preliminary findings from the Designated Authority, Central Government has imposed Provisional Anti-Dumping duty on imports of Phosphorus Pentachloride originating in or exported from, People's Republic of China. This anti-dumping duty is effective upto and inclusive of April 15, 2010 and payable in Indian Currency. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Soon April 15, 2010 will come and go, but no one really monitors this notification which expires after six months from 16th October 2009. This is a recurring problem which is often highlighted by <strong>DDT </strong>. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>To solve the problem, we tried an experiment. We used a very simple software, a calendar which will remind the things to do on a day when you switch on the computer. When Notifications 39/2009 dated 29th April 2009 (imposing provisional Anti-dumping duty on Nylon Chord fabrics) and 40/2009 dated 29 th April 2009 (imposing provisional Anti-dumping duty on Chloride) were issued, we entered a reminder in our software on 29th April to remind us about the Notifications on 28th October 2009, and when we switched on the computer this morning, it prompted us that these two notifications expired today! </strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Another interesting fact about Notification 39/2009 is that we have very reliable information that the Designated Authority in the Commerce Ministry has already recommended imposition of definitive anti-dumping duty on imported nylon tyre cord fabric from Belarus as the goods were exported from Belarus below the normal value and the domestic industry has suffered material injury. This recommendation was made somewhere in the first week of October 2009, well before the expiry of provisional Anti-dumping duty on 28th October 2009, but still the MOF has not issued the definitive Anti-dumping duty notification or maybe they are still waiting for the official recommendations from MOC. In any case, whatever you do – for your lapses or the Department's, you are bound to be penalised. </font></strong></p> <p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">This, certainly, is not the way to run an Anti Dumping Administration – the world will laugh at us or pity us for our poor tax administration. It is a shame that we cannot simply track our dying notifications. You hire a third rate data entry operator in the Board and he will do the job for you. </font></strong></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_119.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION NO. 119/2009-Cus., Dated: October 16, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti-Dumping Duty on Styrene Butadiene Rubber (SBR) 9000 Series extended </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Designated Authority has initiated a review on continuation of anti-dumping duty on Styere Butadiene Rubber 9000 series originating in, or exported from, Japan, South Korea and the United States of America imposed vide Notification 100/2004-Cus dated September 28, 2004. Based on the request of the Designated Authority, the anti-dumping duty on Styrene Butadiene Rubber imposed vide Notification 100/2004-Cus is extended upto and inclusive of June 27, 2010 unless it is revoked earlier. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_120.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION NO. 120/2009-Cus., Dated: October 16, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export/Import of All Goods Contributing to/from North Korea's Weapons & Nuclear Programs Prohibited </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has issued a notification amending the provisions of Foreign Trade Policy 2009-14 to prohibit export/import of all goods contributing to North Korea's weapons related and nuclear related programs. Paragraph 2.1.2 of the FTP 2009-14 is substituted with the following provision: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Direct or indirect export and import of following items, whether or not originating in Democratic People's Republic of Korea (DPRK), to / from, DPRK is prohibited: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All items, materials equipment, goods and technology including as set out in lists in documents S/2006/814, S/2006/815 (including S/2009/205), S/2009/364 and S/2006/853 (United Nations Security Council Documents) INFCIRC/254/Rev.9/Part1a and INFCIRC/254/ Rev.7/Part 2a (IAEA documents) which could contribute to DPRK's nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior to the issue of this notification, the said provision read as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“2.1.2 Direct or indirect export and import of following items, whether or not originating in Democratic People's Republic of Korea (DPRK), to / from, DPRK is prohibited: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All items, materials equipment, goods and technology including as set out in lists in documents S/2006/814, S/2006/815 and S/2006/853(United Nations Security Council Documents) which could contribute to DPRK's nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes.” </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may be noted that the U N Security Council document S/2009/205 is a letter dated April 14, 2009 from the Sanctions Committee of the U N Security Council on North Korea updating list of items, equipments, goods and technology prohibited from being imported or exported from North Korea. Similarly the U N Security Council document S/2009/364 is a document dated July 16, 2009 which updated designated entities, materials and individuals subjected to the Sanctions of U N Security Council. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further the lnformation Circulars INFCIRC/254/Rev.9/Part 1a and INFCIRC/254/Rev.7/Part 2a from the International Atomic Energy Agency are dated November 7, 2007 and March 20, 2006. It may be noted that Paragraph 23 of U N Security Council Resolution 1874 obliges all States (Nations) to prohibit the supply, sale or transfer to North Korea, and procurement from North Korea of goods listed as per these IAEA documents. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ironically, our FTP did not contain any references to these IAEA Circulars or the new letters from the Sanctions Committee of the U N Security Council from the dates from which these letters became operative. Now the DGFT has ‘ substituted ' the relevant provision in the FTP to incorporate references to these documents of IAEA and Sanctions Committee of the U N Security Council. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What will be the status of the imports/exports of prohibited materials/goods, which were actually barred by these documents during the intervening period? In the absence of any reference to these documents, if any imports/exports of these prohibited goods are undertaken by India to North Korea will it not amount to violating the sanctions imposed by the United Nations? Is the DGFT attempting to give the FTP amendment a retrospective effect by making a substitution of the relevant provision to cover up this glaring lacuna? </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2009/dgft09not017.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT NOTIFICATION NO. 17/2009-2014, Dated: October 27, 2009 </strong></font></a></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"> – Friday'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, 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color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>India USA – DTAA - consideration received towards technology transfer /technical know-how and services connected clearly liable to be taxed as royalty – AAR </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The applicant is a company incorporated in USA having its registered office at San Antonio, USA. The applicant is, inter alia, engaged in the business of supplying advance technology for the manufacture of radial tyres. Being approached by an Indian Company, namely, CEAT Limited, the applicant agreed to grant to the said company a perpetual irrevocable right to use the know-how as well as to transfer the ownership in tread and side-wall designs and patterns required for the manufacture of radial tyres for a lump sum consideration of USA 7 ,10,220 . </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>Appellant collecting Service Tax from customers and asking department head under which same is to be deposited – After a long hiatus, department proffers advise - appellants <em>bona fides </em> proved – no reason to impose penalty u/s 76 of Finance Act, 1994 – CESTAT . </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant had collected the service tax provisionally from their Customers under protest and <em>asked the department several times as to under which head this Service Tax is to be deposited </em>. Finally, the appellant was asked to deposit the said amount collected under the head of Services of Consulting Engineers & Erection and accordingly, the appellant deposited the service tax with the department. </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>Variation in ash contents would depend upon method used and sample-drawing –Benefit of Notification 11/97- Cus extended: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue involved is whether the importer is eligible for the benefit of concessional rate of duty in terms of Notification 11/97- Cus dated 01.03.1997 in respect of ‘Weak Coking Coal' inasmuch as whether the Ash content in the coal imported is less than 12%. </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><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> </body> </html>