TIOL-DDT 1247 · 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 1247 </font><br> 30.11.2009 <br> Monday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exchange Rates for December 2009 - Notified </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBEC has notified the rate of exchange of conversion for Imported Goods and goods for Export for the month of December, 2009. Notification No. 158/2009-Cus.,(N.T.), Dated: October 28, 2009 is superseded. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2009/cnt09_174.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification NO. 174/2009-Cus.,(N.T.), Dated: November 26, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No more bonded warehouse for diamonds - transitory arrangements </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> clarifies:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The scheme of ‘Setting of Private/ Public bonded warehouses for import and re-export of cut & polished/ coloured gem stones, rough diamonds' , was in operation vide Board's circular No. 28/98-Cus dated 24.04.1998 and clarification issued vide circular No. 47/99-Cus dated 27.07.1999. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of withdrawal of the scheme for setting up private/public bonded warehouse for diamonds and gemstones from Foreign Trade Policy 2009-14, no new private/public bonded warehouse license can be allowed for bonding of diamonds and gemstones for import and export. Further, such a facility can also not be allowed for non-dutiable goods in term of section 57 of the Customs Act, 1962. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a transitory arrangement for the existing warehouses to surrender the bonding license, a period of three months is granted from the date of issue of this circular. For this three months period, diamonds and gemstones may be deemed as dutiable goods for the purpose of regulatory control and the procedure of ex-bonding of dutiable goods shall be followed. However, bonding of these goods shall not be allowed in the existing warehouses. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Difficulties, if any, in implementation of these instructions, may be brought to the notice of the Directorate General of Export Promotion. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2009/cuscir09_031.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Circular No. 31/2009-Cus; Dated: November 24, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on chartering of Aircrafts - CBEC clarifies </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has been brought to the notice of the Board that many non-scheduled operators engaged in the business of giving the right to use the aircraft to its customers (Chartering of aircraft) are not paying service tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Board clarifies that, “ With effect from 16.05.2008, service provided to any person by any other person in relation to supply of tangible of goods including machinery , equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances is taxable service under Section 65 (105)(zzzzj) . Chartering of aircrafts by a client only confers him with the right to use the aircraft and the owner of the aircraft in such case does not transfer right of possession. As to whether effective control over the aircrafts is transferred or not would be a question of fact to be determined in each case. Where the crew is also provided by the owners of the aircraft as in a wet lease of aircraft effective control is not transferred.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the field officers to examine the facts of each case of aircraft leasing in their jurisdiction and take action to recover tax wherever due. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2009/aircraft.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Dy.No 20/Comm (ST)/2009 , Dated: February 09, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Foreign Trade Policy - Agarbattis- handicrafts not chemicals </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended Appendix 2 of the Handbook of Procedures Vol.I by which “The product “Agarbattis”, <strong>presently </strong> appearing under the jurisdiction of Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council (CHEMEXCIL) under Sr. No. 2 of Appendix-2 of HBP Vol.I is hereby removed from the jurisdiction of Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council (CHEMEXCIL) and allocated under the jurisdiction of Export Promotion Council for Handicrafts (EPCH) appearing under Sr. no. 10 of HBP Vol. I.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Incidentally ‘presently' does not mean, ‘at present'; it actually means, ‘in the immediate future'. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2009/dgft09pn020.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice No. 20/20009-14; Dated: November 23, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Dubai Crisis - No earth Shaking Impact on Indian economy - Pranab </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FINANCE</strong> Minister Pranab Da feels that the Dubai debt crisis will not have "earth shaking" impact on the country's economy. "The full impact of the Dubai debt crisis is yet to be assessed, but there is no need to press the panic button', he said. "First of all, the amount is small and secondly, the exposure of our banking systems to the Dubai financial systems is limited." He, however, said that "some adverse effect" will be there initially on the stock markets, as was felt on Friday. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier, the RBI Governor said that the impact of the crisis is yet to be assessed and he had sought reports from the Indian Banks on their exposure to Dubai World. When the reports of the crisis first emanated and the stock markets in Asia and the world over reacted negatively, the Commerce Minister was the first to jump the gun and state that Dubai World's debt crisis had no impact on the Indian economy. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The statement coming from the FM is contradictory. On the one hand, it is said that it does not have any earth shaking impact on our economy and on the other hand it is mentioned that the impact of the debt crisis in Dubai on Indian economy is yet to be assessed. What about the thousands of Indian workers in Dubai and their remittances to Kerala and other parts of the country? Kerala's FM expressed his concern over the fate of workers hailing from Kerala while the Minister for Overseas Affairs Vayalar Ravi says that there is nothing to worry. </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"> – 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 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 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" 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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>Assessee escapes duty liability of Rs. 9.6 Cr - CESTAT holds there is no infirmity in differential duty paid in November 2006 based on price escalation clause for period April to August by utilizing Credit available in month of Nov 2006 – Apex Court decision in <em>SKF India </em>delivered a week later </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CLEARANCE</strong> of iron ore pellets to sister concern by paying duty on value arrived in terms of Rule 8 of Valuation Rules, 2000 – No infirmity in differential duty paid in November 2006 after considering price escalation for the period April to August 2006 by utilizing CENVAT Credit available in November 2006 since differential duty liability crystallized only in November 2006 – Impugned order not sustainable, liable to be set aside. </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>90% of service income is to be excluded from profit of business for computing deduction u/s 80HHE; 90% of other income to be excluded for purpose of determining profit of business; Computer software – capital or revenue expenditure? - Functional test to be applied; Interest u/s Sec 234D has no retrospective application: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> the assessee acquires a computer software or for that matter the licence to use such software, he acquires a tangible asset and becomes the owner thereof Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the point of view of its utility to a businessman and how important an economic or functional role it plays in his business. Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the point of view of its utility to a businessman and how important an economic or functional role it plays in his business. </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>Eligibility of credit of service tax paid on outward freight – CESTAT adjourns case till stay application of Revenue against Larger Bench decision in <em>M/s ABB Ltd & Ors </em></strong></font> <font color="#FF6633" size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-830-CESTAT-BANG-LB.htm">2009-TIOL-830-CESTAT-BANG-LB</a></strong></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> is disposed of by Karnataka High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> controversy surrounding the availability of CENVAT credit of service tax paid on outward freight for transportation of goods refuses to die. This hydra headed monster rears its head again and this time the controversy is stoked by the Chennai Bench of CESTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This adjournment by the CESTAT to await the outcome of a stay petition before the High Court will certainly set a wrong precedent. If all the cases before the various benches of the CESTAT were to be adjourned this way on the pretext that either the Revenue or the assessee has appealed against a particular decision on a given issue before a higher judicial forum, then proceedings in CESTAT will come to a grinding halt. </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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="3">It's <font color="#FF0000" size="2">DDT's</font> <font color="#FF6633" size="2">sixth</font> <font color="#999999" size="2">birthday</font></font></strong></font><em><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>.</strong></font></em> </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>