TIOL-DDT 1314 · the untouched capture
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<p align="justify"><font size="2"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1314 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>09.03.2010 <br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Relevant
Date for Payment of Interest – Rule inconsistent with Act! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION </strong>11AB of the Central Excise Act, 1944 provides for payment of interest on delayed payment of duty. As per Section 11AB, where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay the duty as determined under sub-section (2), or has paid the duty under sub-section (2B), of section 11A, shall, in addition to the duty, be liable to pay interest at such rate as notified by the Central Government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This provision further stipulates that this interest is payable from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For e.g. if a manufacturer does not pay the duty for the month of February, 2010 by the 5 th of March, 2010 (or 6 th if being paid electronically), then as per the above provision, the interest will have to be computed and paid from April 1, 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Rule 8(3) of Central Excise Rules, 2002 reads as follows: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“ <em>If the assessee fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under section 11AB of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount” (emphasis supplied) </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This sub-rule refers to the phrase ‘due date' and the interest is payable starting with the first day after ‘due date'. As per Rule 8(1), the ‘due date' for payment of duty is 5 th of the following month (or 6 th in case of electronic payment). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, if we apply the provisions of Rule 8(3) to the above example, the relevant date for payment of interest would be 6 th March, 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fortunately or unfortunately, the field formations are following the provisions of this sub-rule and collecting a higher amount of interest. While a majority of the assessees are paying up higher amounts of interest blissfully unaware of the provisions of the Act, some are disputing the same citing the inconsistency in the provisions of the said sub-rule with that of the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope that the Board brings in a suitable amendment to Rule 8(3) of CER retrospectively by way of amendments to Finance Bill, 2010 before it is enacted into law and generously allow retrospective refund of higher amounts of interest illegally collected from gullible assessees. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Corrigendum issued to Notification No. 17/2010-ST </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</strong> No. 17/2010-ST dated 27.02.2010 was issued to exempt the taxable service of providing packaged or canned software, intended for single use and packed accordingly, for the purpose of providing the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products, from levy of service tax, subject to the following conditions, namely:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(i) document providing the right to use such software, by whatever name called, if any, is packed along with the software; </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(ii) the importer has paid the appropriate duties of customs on the entire amount received from the buyer ; and </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(iii) the benefit under notification No. 31/2010– Customs dated the 27th of February, 2010 is not availed of by the importer. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now a corrigendum is issued to Notification No. 17/2010-ST to replace the words “the buyer” with “him” in clause (ii) of the said Notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After this correction, clause (ii) of the said Notification will read as follows: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“ <em>(ii) the importer has paid the appropriate duties of customs on the entire amount received from him ” </em></font></p>
</blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Who is this ‘ him' that this corrected clause refers to? Does it refer to the importer himself? </strong></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2010/stnot10_018.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Corrigendum Notification No. 18/2010 - Service Tax, Dated: March 2, 2010 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Scheme for Collection of Direct and Indirect Taxes – Reporting and Accounting of March transactions - RBI's Instructions to Banks </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI</strong> had earlier issued instructions to the Banks vide Circular DGBA.GAD.No.H- 7417/42.01.029/2008-09 dated February 25, 2009 advising the procedure to be followed for reporting and accounting of collection of Direct Taxes (CBDT) and Indirect Taxes (CBEC) and transactions of Departmentalised Ministries at the Receiving/Nodal/Focal Point branches of the banks for the Financial Year 2008-09. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government of India has decided that the date of closure of Residual Transactions for the month of March 2010 be fixed as April 15, 2010 for the Financial Year 2009-10. In view of the ensuing closing of Government Accounts for the financial year 2009-10, the Banks are directed to reiterate the instructions to their branches regarding introduction of special messenger arrangements at their receiving branches (situated locally) from the second fortnight of March 2010. Receiving branches not situated locally should also adopt special arrangements such as courier service etc from the second fortnight of March 2010 for passing on challans/scrolls etc to the Nodal/Focal Point branches so that all payments and collections made on behalf of Government towards the end of March are accounted for in the same financial year. The branches may also be instructed to take all necessary steps to ensure that the arrears, if any, are cleared before March 15, 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards reporting of March 2010 transactions by Nodal/Focal Point branches in April, the branches are advised to follow the procedure as outlined in the <strong>Annexure </strong> to this Instruction<strong>. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To sum up, the Nodal/Focal Point branches will be required to prepare separate sets of scrolls, one pertaining to March Residual Transactions and another for April Transactions during the first 15 days of April 2010. The Nodal/Focal Point branches should also ensure that the accounts for all transactions (revenues/tax collections/payments) are effected at the receiving branches upto March 31, 2010 in the accounts for the current financial year itself and are not mixed up with the transactions of April 2010. Also, while reporting transactions pertaining to March 2010 upto April 15, 2010, the transactions of April 2010 should not be mixed up with “March Residual Transactions." </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_notification.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI/2009-10/340 DGBA.GAD.No.H. 7083/42.01.029/2009-10, Dated: March 4, 2010 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Failure under RTI Act – CE Officers may have to pay Rs. 1 Lakh Compensation </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a landmark decision, the Central Information Commission recently ordered proceedings to be initiated under Section 19(8)(b) of the RTI Act against Central Excise Officers of Raipur Commissionerate for compensation of Rs. 1 lakh to the applicant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CIC noticed that the CPIO, Md. Israil had not responded to the appellant's RTI-applications. Appellant received no reply from the AA too as his 1st-appeals, dated 29.09.2009 against deemed refusal of his RTI-applications, were rejected by AA, Sri Raj Kumar on the ground that the appellant had demanded the direction to be issued to Commissioner, Central Excise, Raipur, who was senior in rank to the AA. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commission held that the AA as well as the CPIO has failed to discharge their obligations under the RTI-Act. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/pk_agrawal.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>P K Agrawal Vs Central Excise, Customs & Service Tax, Raipur - Appeal Nos. 859&860 </strong></font></a></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 align="justify"><font 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"><strong><font color="#663399">Customs </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exemption under Notfn. 21/2002-Cus – Imported waste paper allegedly not used for manufacture of Newsprint – Extended period cannot be invoked because there may not be an intention to evade payment of duty when the appellant is eligible for the benefit of such duty as CENVAT Credit – CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> department alleged that the appellant had not satisfied the conditions annexed to the notification in the sense that the waste paper was not used for manufacture of newsprint and, therefore, demanded duty of Rs.45,72,898/-. The same was confirmed along with imposition of equivalent penalty and a penalty of Rs.5 lakhs on the Managing Director. A redemption fine of Rs.40 lakhs was also imposed on the goods already cleared by the appellants. </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>Income tax – Transfer Pricing – CIT invokes powers u/s 263 as AO fails to probe international transactions with AEs – Case is to be transferred to TPO for more than Rs 5 Cr international transactions but if it is less, AO can take cognizance and investigate – CIT order sustainable: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Assessee is in the business of exports and local trading of various products, including readymade garments. It files return of income but the AO issues a notice u/s 143(2). Assessee replies to the show cause notice and the assessment order is passed. But the CIT invokes powers u/s 263 on finding that the AO has failed to investigate the assessees international transactions with its overseas Associated Enterprise (AE) and also in allowing various commissions and brokerages. </font></p>
<p align="justify"><font 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>Deemed credit on yarn/fibre under Notification 6/2002-CE(NT) is admissible to the non-composite mills procuring grey fabric – Delhi HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondent assessee is manufacturer of processed fabrics from the grey fabrics procured from the market. Revenue sought to deny the deemed credit on yarn / fibre under Notification 6/2002 CE(NT) dated 1 st March 2002 to the respondent on the ground that grey fabric is not referred to in the table of inputs specified in the Notification. The CESTAT had allowed the deemed credit to the respondents and the revenue was in appeal before the High Court with the question of law whether the Tribunal was right in allowing deemed credit in respect of the fibre/yarn used in the grey fabric which was an indirect input in the assessees final product-processed fabric. </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 DDT </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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