TIOL-DDT 1319 · 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 1319 </font><br>
16.03.2010 <br>
Tuesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Manufacture on Job Work Basis - Board seeks Opinion from Field Formations </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FIELD</strong> formations have represented to the Board stating that as per the present provisions, in case a manufacturer receives certain inputs for job work from another manufacturer and produces a final product using other inputs from his ownership, provisions of Rule 6(3) of CENVAT Credit Rules, 2004 are applied in such cases in respect of final products manufactured by a job worker availing exemption under<strong><em> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/post2000/etariff86_214.htm" target="_blank">Notification No. 214/86-CE dated 25.03.1986</a>. </em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was further stated that the above provisions do not appear to be reasonable as goods manufactured by job worker suffers duty at the hands of the principal manufacturer. Therefore, it has been recommended that the benefit of Rule 6(6) of the CENVAT Credit Rules, 2004, may be extended for clearances under the said job work notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of this reference from the field, Board desires to know the practice followed with respect to such clearances in the respective Zones and solicits considered opinion/views on the issue supported by legal provisions, judicial pronouncements etc along with details of any SCN/appeal pending on this issue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It appears that the officers in the field have worked overtime to defeat the very purpose and premise of Notification 214/86-CE as amended. Such a devious interpretation by some officers in the field has probably resulted in enormous paper work for a certain section of officers in the field (as well as the assessees), who would have otherwise lost their sanity in mindless litigations on this issue but for their steadfast approach to rule of law, resulting in this appeal to the Board to find a workable solution to avoid unwarranted paper work. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But isn't the issue settled in favour of the assessee in the following among other cases? </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. STERLITE INDUSTRIES <strong>- </strong></em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2005/2005-TIOL-305-CESTAT-MUM-LB.htm" target="_blank">2005-TIOL-305-CESTAT-MUM-LB</a></strong></em></font> </p>
<p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. ESCORTS LTD -</font></em><strong><em><font size="1" face="Verdana, Arial, Helvetica, sans-serif"> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2004/2004-TIOL-72-SC-CX.htm" target="_blank">2004-TIOL-72-SC- CX</a> </font></em></strong></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/job_work_267.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Letter F. No. 267/12/2010-CX.8, Dated: February 18, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Brass Scrap increased and poppy seeds decreased </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has increased the Tariff Value of Brass Scrap from US Dollars <strong>3732</strong> to <strong>3801</strong> per MT. The tariff value for poppy seeds is decreased from 4640 to 4256 Dollars. All other items remain unchanged. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/tariff_value.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO. 20/2010-CUSTOMS ( N.T. ) Dated: March 15, 2010</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Deadline for duty free import of specified goods meant for LCAP extended </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> deadline for duty free import of specified materials and goods listed at S. No. 18 of Notification No. 39/96-Cus as amended which are meant for Light Combat Aircraft Programme (‘LCAP') of Ministry of Defence has been extended till December 31, 2018. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This deadline would have expired on March 27, 2010. Fortunately, Board issued an extension way before the expiry of the deadline. Unfortunately, many of the anti-dumping notifications are not so lucky to get extensions well before their expiry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, the said notification was also amended to include the Assistant Director of Aeronautical Development Agency as one of the certifying officers. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_032.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 32/2010–Cus, Dated : March 11, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Skimmed Milk, Baby Food, Butter Oil etc exempted from Basic Customs Duty </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Government has amended S. No. 3 of Notification No. 21/02-Cus granting exemption from basic customs duty for goods falling under Chapter 0402 10 and 0402 21 00 (skimmed milk, baby food etc) upto an aggregate of thirty thousand metric tonnes of total imports of such goods in a financial year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hitherto, the said goods were subjected to a basic customs duty of 5% upto an aggregate of ten thousand metric tonnes of total imports and the quantity cap therein (at erstwhile S. No. 3) was inclusive of all the goods falling under 0402 21 00 listed at S. No. 3A of the said Notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, with the current amendment, the quantity cap for goods of Chapter 0402 21 00 listed at both S. Nos. 3 and 3A of the said notification is delinked whereby, goods falling under Chapter 0402 21 00 would hereafter be allowed exemption from basic customs duty upto an aggregate of thirty thousand tonnes and further a concessional rate of 5% would be available for another ten thousand tonnes. Whether it is intended or due to a result of a slip up will depend on how quick a corrigendum is issued by the Board to sort this out. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 21/02-Cus is further amended to provide exemption from basic customs duty for white butter, butter oil, anhydrous milk fat etc falling under Chapter 0405, upto an aggregate of fifteen thousand metric tonnes of total imports of such goods in a financial year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This exemption/concessional rate as per the latest amendments shall apply to such quantity of imports for which an importer holds a Tariff Rate Quota Allocation Certificate issued by the EXIM Facilitation Committee in the Directorate General Of Foreign Trade in accordance with the procedure as may be specified by the EXIM Facilitation Committee in the Directorate General Of Foreign Trade from time to time through a Public Notice. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_033.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 33/2010–Cus, Dated : March 11, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZs - New Consolidated List of Authorized Operations for Developer/approved Co-Developer </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Commerce Ministry has further expanded the list of authorized operations and notified a consolidated list of authorized operations which can be undertaken by a Developer/approved Co-Developer by default from the date of notification of the SEZ. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DC's/UAC's may allow Developer/approved Co-developers duty free goods and services for these default authorized operations from the date of notification of the SEZ. These authorized operations will, however, continue to be subject to the various guidelines issued by Government from time to time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Approval Committees while approving goods and services for such default operation may look into the actual requirement of the SEZs for such operations. For other authorized activities, not contained in the notified consolidated list, Developer/co-developer will have to obtain prior approval of Board of Approval through the <strong>concerned</strong> DC. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins050.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZ Instruction No. 50, Dated: March 15, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">'Cab
Sec' Asks IAS Officers to Introspect </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a hard hitting letter addressed to all Chief Secretaries of States/Union Territories and a separate letter with similar contents to Secretaries of all Ministries/Departments of Government of India, the Cabinet Secretary of India reminded them that the disturbing incidents of the recent past calls for a serious introspection by Civil Servants and the urgent need to ponder over the manner in which their duties are discharged by fulfilling their responsibilities and the need to refurbish their image. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He said that the Civil Servants are appointed on the basis of a fair and open competition. They must respond in full measure to the faith that citizens have reposed in them and meet their hopes and aspirations of good governance. Integrity, honesty, objectivity, impartiality, transparency, accountability and devotion to duty are the core values which civil servants should cherish and these should form an integral part of the decisions and actions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He stressed that the issue of corruption needs to be addressed fairly and squarely and the Government's policy of zero tolerance for corruption must be implemented fully and effectively. Preventive vigilance should be strengthened and transparency must be introduced in decision making and in all the systems. Stringent action must be taken against officers found guilty and disciplinary proceedings must be expedited. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He further advised that Civil Servants need to stand by and uphold the core values and senior officers must set an example and mentor their colleagues. The Civil Services must work wholeheartedly to provide good governance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He requested the Chief Secretaries and the Secretaries to share these sentiments with all other officers and resolve to serve the nation and the citizens in a committed manner. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Such rhetoric only symbolizes tokenism which otherwise does not yield any concrete results. It is common knowledge that Civil Servants are neither Civil nor Servants. Another unfortunate remnant of British Raj which has neither re-invented itself nor lived upto its potential in Modern India. </font></strong></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/DOPT_Letter_11017.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cabinet Secretary D.O. Letter Nos. 11017/04/2010-AIS-III Dated: March 3, 2010 </font></strong></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><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">Reimbursement of advertisement expenses from raw material supplier is not a consideration flowing directly or indirectly from buyer – Not includable in assessable value: CESTAT. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondents are manufacturers of film rolls. They purchase film rolls from Konica and after slitting and packing, sell the same in market on payment of central excise duty on the price charged to the buyers. They also receive certain amounts from Konica, the supplier of the film, towards reimbursement of advertisement expenses. It is the case of revenue that the advertisement charges are to be treated as additional consideration flowing directly or indirectly from the buyer to the assessee. </font></p>
<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"><br>
Credit availed Acetone sent to job work for blending with Ethyl alcohol and subsequently denatured spirit is cleared to assessee on payment of duty – whether credit rightly availed on Acetone – Stay granted of 'a little short' of One crore demand and out-of-turn hearing fixed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant, a manufacturer of Ethylene Glycol sent denaturant viz. Acetone to Ethyl Alcohol manufacturers for the job work of blending Ethyl Alcohol with Acetone during the material period. The job worker supplied the denatured spirit to the appellant on payment of duty. They (job worker) did not take Cenvat credit of duty paid on Acetone, which was supplied by the appellant. The denatured spirit received from the job worker was used as input in the manufacture of Ethylene Glycol, which was subsequently removed on payment of duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question arose as to whether Cenvat credit of the duty paid on Acetone, which was procured by the appellant and supplied to their job worker, was admissible to the appellant under the provisions of Rule 4(5) read with definition of “inputs” given under Rule 2 of the Cenvat Credit Rules, 2004. This dispute made its way into a show-cause notice and eventually the Commissioner, Central Excise, Pune -III held against the appellant and confirmed the duty demand of Rs. 97.67 lakhs and imposed an equivalent penalty. </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">India-Swiss DTAA - Applicant proposes to enter into cost contribution pact with non-resident Group Co for basic R&D - also, to pay coordination fee - it is neither business income nor fee for technical services - it is also not royalty as no right or right to use is conferred on applicant but coordination fee is taxable as royalty in India: Advance Ruling </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Applicant is incorporated in India. It belongs to a Swiss Group of Cos. It proposes to enter into cost contribution agreement with ABB Zurich undertaking basic R&D activities and also pays 'Coordination fee' for coordinating the research efforts with the research centres and all the participating group entities. Whether payments made to the non-resident Group Co amount to royalty or fees for technical services. Whether it is business income as per Article 7 of the DTAA. Whether it is mere reimbursement of expenditure incurred towards the R&D. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today is Chaitra Sukladi, Ugadi, Gudi Padava, Chetti Chand, Navreh and Sajibu Cheiraoba – greetings from DDT </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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