TIOL-DDT 1299 · 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 1299 </font><br> 15.02.2010 <br> Monday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Classification of artware / handicraft items and composite goods in Drawback Schedule - CBEC Clarifies</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has been brought to notice of the Board that difficulties are being faced by exporters in classification of articles declared as handicraft/artware items. It has also been brought to notice that divergent practices are being followed in classifying the goods made of different constituent materials in the Drawback Schedule. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that the assessing authorities should normally accept the certificates issued by the Development Commissioner (Handicrafts)/EPCH. A decision to reject the certificate issued by the Development Commissioner (Handicrafts)/EPCH certifying the goods as artware/handicraft should be taken only with the approval of the Commissioner of Customs / Central Excise and after discussions with the certificate issuing authority. The exports should not, in the mean time, be held up. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is further clarified that the relevant headings/sub-headings in the Drawback Schedule for handicraft/artware items include handicraft/artware items with coating/ plating unless specifically provided otherwise. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, whenever a composite article is exported for which any specific rate has not been provided in the said Schedule, the rates of drawback applicable to various constituent materials can be extended to the composite article according to net content of such materials. It may be noted that this Note is applicable only to composite articles for which no specific rate has been provided in the Drawback Schedule and not to articles which fall in one or the other headings/sub-headings of the Drawback Schedule (which could be a residuary heading 'others') and have a drawback rate. Therefore, it is clarified that articles made of more than one constituent material should be classified under a heading/sub-heading of the Drawback Schedule in accordance with conditions (1) and (2) of the Drawback Schedule or if the goods are artware or handicraft items in accordance with condition (3) of the Drawback Schedule as discussed in para 5 above. Once, classification of an article (whether artware/handicraft or other) in a heading/sub-heading of the drawback schedule has been determined, then the drawback rate and cap prescribed against that heading/sub-heading should be applied to the whole article irrespective of the value or weight of different constituents. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_003.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 3 /2010-Cus., Dated: February 12 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 - Centralised Bond - Board proposes on-line, system driven, centralized bond management module </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CURRENTLY</strong>, the right holders are required to give a notice for registration in the manner detailed in the <em>Circular No. 41/2007-Customs dated 29.10.2007</em> to the Commissioner of Customs at any one of the ports where allegedly infringing goods are likely to be imported. The right holder can mention the details of other ports where he suspects that allegedly infringing goods may be imported and where he desires to get protection of his right. The right holders are required to furnish a General Bond with or without security to the Commissioner of Customs [along with indemnity bond] prior to the grant of registration, undertaking to execute consignment specific Bond along with security, as may be prescribed by the Commissioner of Customs at the port of interdiction within three days from the date of interdiction of any allegedly infringing goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has decided to implement an on-line, system driven, centralized bond management module as part of the existing Automated Recordation and Targeting System (ARTS). The main objective of this system is to provide for a single centralized bond with security account that can be used at all ports in India, so that the right holders do not have to rush to different customs formations to execute consignment specific bonds with securities in case of interdiction of allegedly infringing consignments. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The highlights of this module: </font></strong></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Henceforth, the right holders will have the option to furnish either a general bond before registration followed by a consignment specific bond at the port of interdiction of allegedly infringing goods or a centralized bond at the port of registration which will be valid at all ports in India. The general bond and the consignment specific bond, which are off-line, will be in the formats prescribed hitherto as per Annexure-A and Annexure-B to <em>Circular No. 41/2007 - Customs dated 29th October 2007</em>. Alternatively, as stated above, the right holders can furnish a Centralized Bond (which will be a running bond) at the port of registration for an amount sufficient in their judgment, to correspond to value of suspected allegedly infringing goods, all over India, as per Annexure-I. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The right holders exercising the option of a Centralised Bond will have to necessarily furnish a security for an amount equivalent to 25% of the value of the Centralized Bond with the customs formation, where the right holder is registered. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Upon fulfillment of requirements by the right holders, the customs formation, where the right holders are registered, will create an on-line centralized bond account and security account. The system will generate a unique Bond Registration Number (BRN) and the same will be e-mailed to the right holder or his/her authorised representative, whose e-mail id is provided in the notice given by the right holders. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In case the amount of Centralised Bond and the security are not sufficient to cover the value of the goods interdicted, then within three days of interdiction of allegedly infringing goods, the right holders would be required to execute a supplementary bond. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The ARTS is so designed that while the creation of Centralized Bond account, credit (top-up) of the amounts to the bond and the security and cancellation thereof are operated only by the officers of the customs formation where the Centralized Bond is executed, the debit of amounts and re-credit of the amounts pertaining to those debits can be done only by officers at the ports where the allegedly infringing goods are interdicted, The re credit shall be done after verification of the fact that no legal proceedings and dues are pending in relation to the debit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Irrespective of availment of either option i.e. execution of General Bond and consignment specific Bond or Centralised Bond, the rights holders would be required to furnish an indemnity bond in the format prescribed at Annexure-C to the <em>Circular No 41/2007 -Customs dated 29th October 2007</em>. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Additional Director General, Risk Management Division shall inform the actual date of commencement of this new system and will issue separate set of instructions for smooth operation of the centralized bond management module to the Commissioners of Customs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can send your views, comments and suggestions on the draft circular to <a href="mailto:indiacustoms@gmail.com"><strong>indiacustoms@gmail.com</strong> </a>by 2nd March, 2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Netizen asked me the other day as to why the government officers are using private email ids and not the government ones. Maybe the government emails don't work! </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/draft_circular.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Draft Circular in F. No. 305/1/2008-FTT dated: February 10 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">New Look CBI - Director's Action Plan </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBI Director has identified Key Result Areas for formulating the detailed action plans. Some of the tasks, he hopes achieve in 2010, which is going to be the year of transformation for the CBI: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Zero tolerance to corruption and officers of doubtful integrity in the CBI </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ensure that all complainants / witnesses are attended to with promptitude and treated with utmost courtesy </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Registration of only Quality Cases. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Unique techniques of gathering Information, Intelligence, Interview, Interrogation and Innovation to be adopted in each case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Cognizance / acceptance of CBI reports within 30 days; supply copies of documents to accused within 60 days </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Policy of zero adjournments; submission of draft charges and written final arguments </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Aim to achieve conviction rate of more than 70%; compare number of accused persons charge sheeted to convicted; quantum of punishment provided in law awarded by court; prison sentences to run consecutively not concurrently; fine to be more than loss caused. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Prompt action for Plea-bargaining / Pleading Guilty by accused </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">· Streamlining functioning & computerization of Legal and Prosecution Sections in all branches; more than 80% execution of summons and warrants </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Make all 71 newly sanctioned Courts functional by 30.12.2010 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Make CBI website people friendly and CBI Academy website professional for internal use. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ 100% filling up of all sanctioned posts by recruitment, deputation, re-employment, consultant, contract or adhoc.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Multi tasking and computer training of all CBI personnel </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Optimum utilization of human, financial and material resources </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Implement Career Progression Schemes and ensure timely promotion for all CBI personnel. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Annual health check-up and Yoga / Stress management training for all CBI personnel and their families. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Identify and outsource all non- core functions. </font></p> </blockquote> <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><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">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Goods manufactured in Customs bonded area cannot be considered as manufactured in domestic tariff area and would not attract Central Excise duty - Revenue appeal for upholding Rs.1.23 Crores demand rejected : CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> case shows how the Revenue officers at the drop of a hat raise a duty demand of more than One crore and in spite of the adjudicating authority doing justice to the case by dropping the demand the higher ups pursue the case with devotion only to be shown the door. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondents had imported “Pipes” and “Connectors” and welded them for use by M/s ONGC for off-shore oil exploration/exploitation. The department took the stand that process of welding the connectors to the pipes in the Customs Warehouse amounts to manufacture and, therefore, the respondent should have discharged Central Excise duty on pipes, which were connected by welding the connectors. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What followed was a demand notice of Rs.1,23,92,872/-. The Commissioner, Central Excise, Belapur held that the process undertaken by the respondent did not amount to manufacture and, therefore, excise duty is not liable to be paid on the finished goods namely “Casing pipes with connectors” which is the result of welding the connectors and the pipes. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An order which drops a one crore demand is bound to send jitters and this order did so. Resultantly and coupled with the fact that there is no fee for filing an appeal before the CESTAT, a monotonously worded revenue appeal made its way to the CESTAT. </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">Reassessment - when Assessing Officer took a possible view, Commissioner exceeded his jurisdiction in seeking recourse to his power under Section 263 - order sought to be revised must be erroneous in so far as it is prejudicial to the interests of Revenue : High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is now a settled principle that where the Assessing Officer has adopted one of the courses permissible in law or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Assessing Officer is unsustainable in law. In the present case, two views were inherently possible and the assessee therefore, cannot be subjected to the exercise of the jurisdiction under Section 263. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit on pipes used for laying pipeline for transportation of natural gas - Credit is prima facie admissible - Credit is also prima facie admissible on construction service and commissioning and Installation Service - pre-deposit waived : CESTAT. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is a State Government undertaking in Guajrat, engaged in providing the service of transport of goods through pipelines. Three Stay applications have been filed by the appellant on the following issues: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Denial of CENVAT Credit of Rs 44 crores on pipes used for construction of the pipeline by the EPC contractor. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Denial of CENVAT Credit of Rs 63.70 crores on input services like, Construction Service, Commissioning and Installation Service and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Demand of Service tax of Rs. 34.34 crores by classifying the service under the category of Clearing and Forwarding Service, instead of under “Transport of goods through pipeline” </font></p> </blockquote> <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> </body> </html>