TIOL-DDT 1300 · 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 1300</font><br> 16.02.2010 <br> Tuesday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Carriage of domestic cargo on international flights - CBEC extents facility to Private Airlines </font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">BY</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/1999/cuscir015.htm" target="_blank"><strong>Circular No.15/99-Customs dated 22.3.1999</strong></a></em>, Board had extended the facility of carriage of domestic cargo between domestic airports on international flights to Air India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now private airlines also want this facility. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has noticed that initially when the facility was first extended, Air India was the only airline that was undertaking carriage of both international and domestic cargo. However, now a number of other private airlines have also started providing such a service. Therefore, it was felt that the facility of carriage of domestic cargo in international flights between two domestic airports may be allowed to other private airlines as well, subject to fulfilment of certain safeguards so as to prevent any misuse. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board has decided to allow domestic private airlines as well as M/s. Air India and Indian Airlines, <font color="#FF6633"><strong>[are they not merged?]</strong> </font>to carry domestic cargo between domestic airports on their international flights subject to the fulfilment of the following conditions: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Separate space shall be assigned by the airlines or custodian in the cargo complex / area of the airport for receipt and storage of domestic cargo till these are delivered or dispatched. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Domestic cargo will be received by the airlines in the designated area during the normal working hours of Customs at the respective airport. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) The containers/ Unit Load Devices (ULDs) used for carrying the domestic or international cargo shall be clearly marked or coloured or strapped, for its identification, distinction at the time of loading/ unloading, transportation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Domestic tags shall be prepared for identification of the domestic cargo with separate colour coding. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Loading or unloading of domestic cargo in any international flight/ aircraft shall be carried under the supervision of Customs officers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) Domestic and international cargo will be loaded separately, and shall be carried in hold area onboard the aircraft distinctly identifying these cargoes. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) On arrival of the domestic cargo, at the destination airport, the airlines shall make necessary arrangements to deliver the domestic cargo. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii) In respect of transhipment of international cargo by airlines, they shall be required to execute necessary bond and bank guarantee as prescribed vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2001/cuscir78.htm" target="_blank">Circular No.78/2001-Customs dated 7.12.2001</a></strong></em>. Further, those persons who fulfill the threshold limit of annual transshipment volume specified shall be exempt from the requirement of furnishing bank guarantee as specified <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2005/cuscir05_045.htm" target="_blank">Circular No.45/2005-Customs dated 24.11.2005</a></strong></em>. Accordingly, no separate bond or bank guarantee shall be required in respect of domestic cargo. In addition, transshipment procedure as specified in Board's <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2007/cuscir07_06.htm" target="_blank">Circular No. 06/2007-Cus dated 22.01.2007</a></em></strong> may be strictly adhered to. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Jurisdictional Commissioner of Customs are requested to implement the above said procedure, while permitting the facility of carriage of domestic cargo between domestic airports on international flights by private airlines as well as M/s Air India and Indian Airlines. Difficulties, if any, experienced while implementing the above matter may be taken up for appropriate action with the Board. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_004.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 4/2010-Cus., Dated: February 15, 2010. </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s Air India? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Excise and customs Department is somehow obsessed with the title M/s. All Show Cause Notices to assessees begin with M/s. ABC Ltd is ...... Even in the clarification given above, Air India is referred to as M/s Air India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s is actually a short form of Messrs, which is a plural of Mr. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The term M/S is generally placed before the names of partnership firms to indicate that it is firm comprising several partners and is not a sole proprietorship. For example M/s Dhariwal & Co indicates that the firm has partners other than Mr. Dhariwal and so it is a plural of Mr. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Customs and Central Excise Department mistakenly use it for public and private limited companies. These companies are treated as an artificial person and they are not a plural of Mr. So the title M/s is not suitable for them. You find hundreds of cases relating to M/s ONGC Ltd; M/s IOCL Ltd and M/s Reliance Industries Ltd – none of these are Messrs. But looks like the practise has caught on and cannot be changed now as everyone from range officer to Board and from Tribunal to Supreme Court are hooked on to M/s. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Brass Scrap decreased and poppy seeds increased </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has decreased the Tariff Value of Brass Scrap from US Dollars 3597 to 3555 per MT. The tariff value for poppy seeds is increased from 4392 to 4760 Dollars. All other items remain unchanged. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO. 11/2010-CUSTOMS (N.T.) Dated: February 15, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">PAC dismayed at distortion of facts by revenue secretary </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Public Accounts Committee (PAC) on Friday regretted that the revenue secretary sent a distorted summary to the prime minister to forgive a collector involved in a scam of Rs 140 million. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A telecom sector company was allowed a refund of central excise duty for the period of January 2001-2005 although the incidence of that had already been passed on to the consumers. This caused a refund of duty/tax of Rs 140 million during May and July 2005. This lapse was pointed out to the department in June 2006 and the Board in August 2006. The PAC constituted a sub-committee to look into the matter and ensure recovery of the amount in question. PAC Chairman was of the view that the PM did not know that the summary contained false information. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This happened in Pakistan last week as reported by Pakistan's daily Times. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">After Crises: Assessing Costs and Benefits of Financial Liberalisation</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY</strong> the Reserve bank of India organised the 14th C.D. Deshmukh Memorial Lecture which was delivered by Lord Adair Turner, Chairman, Financial Services Authority, UK on ‘After the Crises: Assessing the Costs and Benefits of Financial Liberalisation'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Lord Turner said, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Twice in the last 15 year the world economy has been hit by financial crises which have imposed huge economic harm – first the Asian financial turmoil of 1997 and then the developed world financial crisis of 2007-09. The precise nature of these crises differed, but there were underlying common features which need to be understood if we are to learn lessons and build a safer global financial system for the future. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Both crises were preceded by a rapid growth in the scale of financial activity relative to the real economy. The Asian crisis followed a period of rapidly increasing short-term capital flows and related foreign exchange trading. The crisis of 2007-09 followed an explosion of financial innovation and trading in credit securities and credit derivatives. And across the last three decades throughout the whole world the scale of increased financial activity relative to the real economy has been striking. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A dominant conventional wisdom of economy theory and policy – the Washington Consensus as it was labelled – has assumed and asserted that this increase in the financial intensity of the economy is beneficial, driving a more efficient allocation of capital, imposing discipline on inappropriate policies and enabling investors and users of funds to hedge risk better. But this theory has shown to be severely deficient, failing to take account of the inherent potential of financial markets to be subject to self-reinforcing herd and momentum effects, with periods of irrational exuberance followed by sudden and contagious panics. Short-term capital flows can under some circumstances be harmful: and complex financial innovation in developed countries has produced few demonstrable benefits and resulted in an increased risk of financial instability. John Maynard Keynes's insight that increased market liquidity can bring disadvantages as well as benefits needs to be rediscovered. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the aftermath of these crises it is therefore essential for economists and policy-makers carefully to assess the benefits and disadvantages of different categories of financial liberalisation, rejecting the over simplistic ideology which asserted that limitless liberalisation in all financial markets is always beneficial. The challenge for policy makers is that a more thoughtful analysis provides no simple and universally applicable answers - liberalisation and increased market liquidity may well be beneficial in some markets but harmful in others. </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is much easier to proceed in life with a clear and simple set of beliefs which provides immediate answers to all specific answers. But we are more likely to achieve good economic results if we live the real world of complex trade-offs and of economic relationships which are true up to a point and in some circumstances but not in others . </font></em></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"> – Wednesday'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">Theoretical shortage of inputs – CENVAT credit liable to be reversed – As Penalty u/s 11AC of CEA, 1944 is upheld submission of limitation considered - No error apparent on record - ROM application rejected: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant has filed the present Rectification of Mistake Application against the said order on the ground that while passing the order the Bench had failed to consider the submission made by the appellants with regards to invocation of extended period. The Revenue representative submitted that as the Bench had confirmed the penalty on the appellants under section 11AC, it implies that while passing the order, the Tribunal has considered the facts of mis-statement/suppression by the appellants. </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">An expenditure incurred for securing shares per se is a 'capital expenditure' and never Revenue expenditure'; Same court judgement in same assessee's case not followed, per incuriam; interest receivable but not received is income; Fee for consultant is revenue expenditure – deductable – Tribunal's conclusion perverse: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EVEN</strong> on the accepted legal principles, a 'debt' is an expression well known in legal parlance and is an amount which is a legal obligation which if not discharged will give rise to a claim in favour of the creditor. An expenditure in the nature of 'capital expenditure' straight away goes out of the purview of section 37 of the Act unless the amount fully qualifies in terms of the other statutory provisions and in the instant case, in terms of section 36[1][vii] of the Act, there is no question of 'written off irrecoverable debts' which claim inevitably fails and the matter does not warrant interference even for a remand. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sales Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Loan transaction of imported crude among PSU oil Companies - simple barter or loan; not sale: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> case the oil refinery situated in the State of Tamil Nadu delivered crude oil by repayment of loan to another oil Company situated in another State by shipment, even then it was not a sale and by no stretch of imagination, it could be treated as a sale in the State of Tamil Nadu. When the oil refinery at Chennai receives crude oil after this particular discharge at ports in other States, still there would be no purchase by the refinery situated in Tamil Nadu under the Tamil Nadu General Sales Tax Act, 1959. </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> </body> </html>