TIOL-DDT 1255 · 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 1255 </font><br>
10.12.2009 <br>
Thursday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No
Export Duty on clearances to SEZ, Export Duty can be levied only under
Customs Act, not SEZ Act: High Court </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue is now settled - at least at the High Court level. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a landmark judgement the Gujarat High Court has with high erudition and lucidity explained the concepts and demolished every theory advanced by Revenue. Wonder why the highly intelligent Revenue officers can't think like this? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The moot question for consideration is as to whether the levy of export duty on goods supplied from the Domestic Tariff Area to the Special Economic Zone is justified under law. Dealing with this question, three important aspects are to be borne in mind :- </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Whether export duty can be imposed under the provisions of the Customs Act, 1962? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Whether Export Duty can be levied under the provisions of the Special Economic Zones Act, 2005? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Whether export duty can be imposed under the Customs Act, 1962 by incorporating the definition of the term 'Export' under the SEZ Act, 2005 into the Customs Act, 1962? </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court answered all the above questions in the negative. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court's views were exactly as propagated by <strong><font color="#FF6633">TIOL</font> </strong> in our various editorials, articles, DDT and the writ filed by me in the AP High Court. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are happy to bring you this landmark judgement today. This, by no means, is the end of the story – the Government will take the matter to the Supreme Court. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7556"><strong>Export to SEZ - Commerce Ministry's clarification - It's still not export! </strong></a></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7545">Is Export duty payable by DTA units for supplies to SEZs? If at all payable who is liable to pay? </a></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7515">Export duty on SEZ clearances: Dear FM, Please take a decision quickly </a></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7656">TIOL DDT 921 </a></strong></font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=10064">Breaking News</a> </strong> for the High Court Order </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Leviability of duty on capital goods cleared after being put into use for over 10 years – CBEC clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> clarifies that in view of specific provisions under Rule 3(5A) of the CENVAT Credit Rules, 2004, if the capital goods, on which CENVAT credit has been taken, are cleared as waste and scrap, even after a period of 10 years, an amount equal to the duty leviable on the transaction value for such capital goods cleared as waste and scrap, would be payable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Proviso to rule 5 reads as, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided also that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output service shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the Cenvat Credit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So if the capital Goods are removed after ten years, there is a 100% deduction, but now the Board clarifies that if they are removed as scrap, duty on the transaction value has to be paid. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Moral of the story: Don't remove them as scrap – but remove them as such! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/excise_instructions_leviability_duty.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC F.No.267141/2009-CX8 Dated: December 07, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Supreme Court asks Government why prostitution cannot be legalised if they cannot curb it. Will there be service Tax? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY</strong>, the Supreme Court asked the government, "When you say it is the world's oldest profession and when you are not able to curb it by laws, why don't you legalise it? You can then monitor the trade, rehabilitate and provide medical aid to those involved in the trade." </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once this is legalised, perhaps Service tax can be levied and prostitutes will be asked to issue invoices when they receive payments and may be even subject to Audit. Let us hope they will not be asked to provide a sample of the service they provide and let us hope there would be no issues on valuation of services – like what will they do where the consideration received is not wholly or partly consisting of money? And will the pimps be liable to pay service tax under Business Auxiliary Service? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What would be the status if a foreign prostitute who has no office in India comes to India on business – will the client be liable to pay the tax? And what would be the position if an Indian prostitute does business abroad? Will it be export of services? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the expenditure of hiring a prostitute for a client be allowed as business expenditure under the Income Tax Act?</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Provisional Anti Dumping Duty on Synchronous Digital Hierarchy Transmission Equipment </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> the recommendations of the Designated Authority, the Government has imposed provisional anti dumping duty on import of all kinds of Synchronous Digital Hierarchy Transmission Equipment originating in or exported from, People's Republic of China. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_132.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 132/2009-Cus., Dated: December 8, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Launch of the new WCO Data Model: Optimizing data exchange for enhanced facilitation </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> World Customs Organization (WCO) has announced the launch of the latest version of its Data Model; a global solution for optimizing electronic data exchange. Version 3 of the Model represents a significant development as it will act as an enabler for improved management of cross-border transactions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Kunio Mikuriya, Secretary General of the WCO, said, “ <em>Launching this latest version of the Data Model is a great step forward in terms of trade facilitation, the use of modern communication and information technologies, and the implementation of a Single Window environment. It also opens up new perspectives for networking on coordinated border management, an important building block for Customs in the 21 st Century </em>.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Version 3 of the Data Model optimizes the electronic treatment of data by providing a whole-of-government set of data and data structures including requirements for cross-border regulatory agencies (Customs, agriculture, environment protection, etc.) controlling export, import and transit. This results in stability and predictability for business-to-government and government-to-government data exchange, and saves costs and time for all stakeholders. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Taking <em> on board current Single Window developments and innovations, the Model offers traders a simplified interface with Customs and multiple government agencies. The launch of version 3 will ensure that Customs remains one of the leaders in the field of border security and trade facilitation </em>,” added Michael Schmitz, WCO Director of Compliance and Facilitation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The WCO has worked closely with the United Nations to align the Model on the core component library of the UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT). </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise Inspectors/Superintendents to get pay parity with CBI - CAT Cuttack </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> grievance of the applicants before the CAT was that they were entitled to the pay scale of Rs. 2000- 3200 with effect from 1.1.1986 and Rs. 6500- 10500 with effect from 1.1.1996, which was granted to Inspectors of CBI/ AAOs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAT, Cuttack has directed the Government to pass a reasoned order within sixty days on this issue. If the Government's order is in favour if the Inspectors, the officers who are by now Superintendents and Assistant Commissioners will get arrears for over 24 years! </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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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"><font color="#663399">CESTAT</font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tribunal has inherent power to dismiss an appeal for non-prosecution, but it cannot be merely on account of absence of an appellant on a solitary occasion; Tribunal has only four – five branches in India and it is expensive and difficult for all appellants to attend at all times, especially when there are several adjournments; High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Tribunal presently has its benches only at four or five places in India. An appellant who on account of his place or residence or business being far away from the place of sitting for the Tribunal may not except at a high cost be able to attend the hearing especially when as we know that the matters are adjourned for several times. In such an event, if the appellant files on record his submissions in writing, the Tribunal must decide the appeal on merits on the basis of the said submissions. In that case, the Tribunal would not have a power to dismiss the appeal. </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>conversion of marble blocks by sawing into slabs and tiles and polishing amounts to "manufacture or production of article or thing" - entitled to benefit of Section 80IA – If it is held to be not manufacture, it may affect Central Excise Duty - Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> numerous judgments of the Court, it has been consistently held that the word "production" is wider in its scope as compared to the word "manufacture". Further, Parliament itself has taken note of the ground reality and has amended the provisions of the Income Tax Act, 1961 by inserting Section 2(29BA) vide Finance Act, 2009. The word "production", when used in juxtaposition with the word "manufacture", takes in bringing into existence new goods by a process which may or may not amount to manufacture. The word "production" takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. The original block does not remain the marble block, it becomes a slab or tile. In the circumstances, not only there is manufacture but also an activity which is something beyond manufacture and which brings a new product into existence. </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>“Bird scaring service at airport” – not security agency service - CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FROM</strong> the definition, it is clear that the activity of bird scaring does not fall under the purview of the activities of the security agency. If an activity or a service is not covered under a particular service it cannot be taxed. Other operations provided by the Security agency cannot be considered as the services rendered by the Security agencies. </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more <strong>DDT</strong></font></font></p>
<p align="justify"><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></font></p>
<p align="justify"><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font></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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