TIOL-DDT 1250 · 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 1250 </font><br>
03.12.2009 <br>
Thursday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Permission for export of edible oil in small consumer packs – DGFT Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended Notification No.60 (RE-2008)/2004-09 <em>dated 20th November, 2008</em> read with <em>Notification No.33 (RE-2008)/2004-09 dated 19th August, 2008</em>, <em>Notification No.98 (RE-2008)/2004-2009 dated 17.3.2009</em>, and<em> Notification 04 / 2009-2014 dated 4.9.2009</em>, as amended from time to time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With immediate effect Para 2 (i) of <em>Notification No.60 (RE-2008)/2004-09 dated 20.11.2008</em> stands substituted as following: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The export of edible oils is permitted in branded consumer packs of up to 5 Kgs. subject to a limit of not exceeding 10,000 tons during 1.11.2009 to 31.10.2010. Such exports shall be allowed only from Customs EDI Ports. </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2009/dgft09not018.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 18/2009-2014, Dated: December 2, 2009 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Commissioner sues ITC for damaging his throat. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT </strong>seems Customs Commissioner Deepak Kumar has sued ITC seeking damages worth Rs 1 Crore for allegedly not warning him of the ill-effects of cigarettes, which caused him throat cancer, and eventually took away his speech. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Customs Commissioner took to smoking when he was only 16. And for a long time, the company never carried any warnings on its packs that would inform him about cancer possibilities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He is said to have stated:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Had ITC Ltd not sold the cigarette without appropriate warnings, I would not have become addicted to smoking. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ ITC Ltd sold dangerous and unsafe goods without the appropriate warning. Therefore, my right to health has been violated leading to untold physical and mental agony to me and my family members. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Also, the warning about cigarette smoking being injurious to health came to be printed on cigarette packs only in the mid-eighties, but even this warning failed to inform the consumers about specific health hazards, such as it being a major cause of lung and oral cancer, apart from so many other fatal diseases. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Hence, the warning is not commensurate with the dangers and risks caused to smokers. In fact, it hides more than it reveals. </font></p>
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<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG recommends that Government should introduce appropriate provision in CENVAT Credit Rules to require reversal of CENVAT credit on input services used for written off output services. </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG in its report to Parliament has stated that:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CENVAT Credit Rules, 2004, allows credit on input services used by a service provider for rendering of output service and utilise such credit towards payment of service tax on output service. The amounts billed for by the service provider against customer but not realised are not liable to service tax under the Finance Act, 1994, as the basis for payment of service tax is actual realisation of cost of service. However, where the cost of service billed for became irrecoverable for any reason and the same was written off fully in the books of accounts of an assessee, the CENVAT Credit Rules do not provide for recovery of the input service credit attributable to such write off. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 3(5C) of the CENVAT Credit Rules, 2004, provide recovery of CENVAT credit on inputs contained in final products destroyed or damaged due to natural cause (prior to this recovery was made under Board's circular of 22 February 1995). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>M/s Vodafone India Ltd., (Hutchison Essar South Ltd.), M/s Bharti Airtel Ltd., and M/s Karvy Stock Broking Pvt. Ltd.,</em> in Hyderabad II Commissionerate and M/s Vodafone Essar Cellular Ltd., Ernakulam, M/s Idea Cellular Ltd., and Bharti Airtel Ltd., in Cochin Commissionerate, engaged in rendering of cellular phone services and stock broking services, had fully written off unrealised amount of service charges of Rs. 124.76 crore pertaining to the period from April 2004 to March 2007. The corresponding CENVAT credit of Rs. 2.60 crore, attributable to input services against the above write off was not paid back even though the services to that extent did not suffer service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On this being pointed out (between October 2007/May 2008), the department in respect of assessees in Hyderabad II Commissionerate stated (February/March 2008) that as per rule 3(5B) of the CENVAT Credit Rules, reversal of credit was warranted only when inputs or capital goods were written off fully before being put to use, whereas the input services in the instant cases were already consumed in taxable services and input services, unlike inputs or capital goods being intangible, reversal provisions were not applicable to these. The department in respect of assessees in Commissionerate stated (July 2008) that the restriction of utilisation of CENVAT credit was applicable only if the final service was exempt. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The reply of the department was not acceptable as cases of write off of output services could not be dealt with differently either because the input services were intangible in nature or because such services were already consumed in the taxable services rendered. Since output goods and output services stand on same footing under CENVAT Credit Rules, CENVAT benefits could not be extended to a service on which service tax was not realisable/paid. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reply of the Ministry had not been received (December 2008). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>BPL Mobile Communications Ltd., and M/s Vodafone India Ltd.,</em> in Mumbai Commissionerate of service tax, engaged in rendering cellular phone services had shown an amount of Rs. 142.97 crore as dues pertaining to post paid cellular services billed against customers but not realised for the period 2004-05 to 2006-07. Further, the assessees had fully written off such dues. The corresponding credit attributable to input services against the above write off was Rs. 1.84 crore which was required to be recovered with interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On this being pointed out (May 2008), the department stated (September 2008) that there was no provision in the rules to restrict the CENVAT credit for written off amount. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reply of the department was not acceptable as the assessee had fully written off the amount billed as it had become irrecoverable, therefore, service tax was not payable on those output services and hence credit availed on input services used for such output services was recoverable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reply of the Ministry had not been received (December 2008). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So CAG has recommended that <em>Government should introduce appropriate provision in the CENVAT Credit Rules to require reversal of CENVAT credit on input services used for written off output services.</em> </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will
the Government act or allow the confusion to continue? </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Five years of DDT - We thank Netizens for their kind greetings </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</strong> we tried to individually reply to all the greetings we received on<strong> DDT</strong> completing five years, there is a possibility that we were not able to reply to some of the greetings. Through these columns, <strong>DDT</strong> gratefully acknowledges all the greetings and <strong>DDT</strong> assures the Netizens that with their support and expectations <strong>DDT</strong> will continue to work hard to meet their expectations. Some of the comments for the Message Board were embarrassingly flattering that we had to remove them from our Message Board. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is your column – support us if we are right; correct us if we are wrong. </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"> – Friday's cases</font></strong></font></strong></font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Production of Alcohol based perfumes and pharmaceutical products on job work basis – No cause for paying Service Tax under BAS - view taken by Revenue is not in keeping with legislative intent underlying definition of ‘business auxiliary service' and which was clearly brought out in Board's Circular dated 27.10.2008 – CESTAT sets aside Rs.1.53 Crore demand. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee undertakes the job work of manufacturing alcohol based perfumes and pharmaceutical products for various input-suppliers and discharges State Excise duty. According to them, this activity stood excluded from the purview of “business auxiliary service” inasmuch as it amounts to ‘manufacture' under section 2(f) of the Central Excise Act. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Disallowance of expenditure of professional – matter remanded to give assessee opportunity to prove office expenditure; unexplained amount in bank account – addition confirmed – ITAT by majority </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SINCE</strong> there was a difference of opinion between the Members constituting "A" Bench of ITAT, Kolkata the following question was referred to Third Member. </font></p>
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<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Whether under the facts and in the circumstances of the case, the decision taken by the Ld. J.M. for allowing the appeal of the assessee partly for statistical purposes is justified or the order of dismissal passed by the Ld. A.M. is justified?" </font></em></p>
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<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">When appellant has chosen to deal in clandestine activity, department is left with no alternative but to rely on private records for working out suppressed production and clandestine removal – CESTAT upholds Rs 2.76 cores demand </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MORE</strong> than Twenty-one years it took for the crystallization of the demand. Way back in the winter months of January 1988 the Central Excise officers visited the appellant's factory premises and found a shameful number of un-accounted Tyres and Tubes in the factory premises. Seeing that they had struck something very big, they resumed all the statutory and private records maintained by the assessee and the loose slips lying scattered in the office drawers. </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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