TIOL-DDT 1335 · 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 1335 </font><br> 09.04.2010 <br> Friday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Custom House Agents Licensing Regulations Amended </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has amended the CHALR, 2004. The salient features of the amendments are: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) Regulation 8(1) is amended to reduce the frequency of examination for CHAs from two times a year to once a year . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) After sub-regulation (8) in Regulation 8, sub-regulation (9) is inserted which reads as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(9) Notwithstanding anything contained in these regulations, any person who had passed the examination conducted in regulation 9 of the Customs House Agents Licensing Regulation, 1984, and has not yet been granted license under these regulations, upon declaring successful in a written examination conducted on the following subjects, shall be deemed to have passed the examination referred to in regulation 8 for the purpose of these regulations. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) The Patents Act, 1970 and Indian Copyright Act, 1957; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Central Excise Act, 1944; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Export promotion schemes; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Procedure on appeal and revision petition; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) Prevention of Corruption Act, 1988; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) Online filing of electronic Customs declarations; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) Narcotic Drugs and Psychotropic Substances Act, 1985; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) Foreign Exchange Management Act, 1999 ; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this regard, it may be noted that in a recent judgement of the High Court of Madras - <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2009/2009-TIOL-684-HC-MAD-CUS.htm" target="_blank"><font size="1">2009-TIOL-684-HC-MAD-CUS</font></a></strong></em>, it was held that an examination passed under CHALR, 1984 does not entitle for a licence under CHALR, 2004 as the same cannot be treated as a vested right. The above amendment is probably an attempt to negate this High Court ruling. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) In Regulation 13 relating to the obligations of a CHA, after sub-regulation (n), sub-regulation (o) is inserted which reads as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(o) verify antecedent, correctness of Importer Exporter Code (IEC) Number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board in the Circular No. 9/2010-Cus (see below), has explained this amendment as an attempt to inculcate the Know Your Customer guidelines for CHA so that they are not used intentionally or unintentionally by importers / exporters who indulge in fraudulent activities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) In Regulation 20 relating to suspension or revocation of licence, sub-regulation (2) is amended to stipulate that Commissioner of Customs may suspend the licence within fifteen days from the date of receipt of a report from the investigating authority . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) After sub-regulation (2) thereof, sub-regulation (3) is inserted which reads as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Where a licence is suspended under sub-regulation (2), n otwithstanding the procedure specified under regulation 22, the Commissioner of Customs may, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs House Agent whose licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs House Agent. ” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) In Regulation 22, which relates to the procedure to be followed for suspension or revocation of licence, sub-regulation (1) is amended to stipulate that the Commissioner of Customs shall issue a notice in writing to the CHA within ninety days from the date of receipt of offence report, stating the grounds on which it is proposed to suspend or revoke the licence and requires the CHA to submit his written statement of defence within thirty days . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) After sub-regulation (1), a proviso is inserted which reads as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that the procedure prescribed in regulation 22 shall not apply in respect of the provisions contained in sub-regulation (2) to regulation 20.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii) Regulation 22(5) is amended to stipulate that the Assistant/Deputy Commissioner of Customs shall prepare a report of the inquiry recording his findings and s ubmit his report within ninety days from the date of issue of a notice under Regulation 20(1). ” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ix) Regulation 22 (6) is amended to stipulate that the time limit for submission of CHA's representation to the report prepared by the Assistant/Deputy Commissioner of Customs is reduced from sixty days to thirty days . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(x) Regulation 22 (7) is amended to stipulate that the Commissioner of Customs shall , after considering the inquiry report furnished by the Assistant/Deputy Commissioner of Customs in terms of Regulation 22(5) and after considering the representation if any made by the CHA, pass such orders as he deems fit within ninety days from the date of submission of the inquiry report . </font></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_030.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification. 30/2010-Cus(N.T.), Dated: April 8, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Board's Clarifications to Field Formations with regard to Issue of CHA licences </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CERTAIN</strong> field formations expressed their difficulties to the CBEC in issuance of CHA licences for eligible persons and also in implementing the provisions of CHALR, 2004. After consulting the field formations and holding a meeting with the Chief Commissioners of Customs having jurisdiction over major Custom Houses and an internal meeting of the Board, the following clarifications are issued: </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Minimum number of CHAs required in a Customs station: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CHALR, 2004 do not provide for any restrictions on the number of CHAs. Board is of the view that no restriction should be placed on the number of CHAs operating in the Custom Houses and the market forces should govern the number of proficient and qualified persons required to carry out the job of CHA commensurate with the volume of import / export cargo. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Employment of person by a CHA: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has clarified that the DC/AC concerned may ensure that individuals involved in any fraudulent activity (i.e., individuals suspended or blacklisted or denied permission to work in any section of the Custom House) shall not be allowed to be employed by a CHA for transacting business with Customs. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Suspension or revocation against CHAs operating on ‘C' form intimation basis: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that action may be initiated against a CHA who operates under Form ‘C' intimation at other Customs stations, by the Commissioner of Customs who issued the license even for violations of CHALR by such CHAs at other Customs stations. However, such action would either be limited to a particular Customs station where a violation has been noticed or action against the CHA in general, applicable at all Customs stations where the CHA operates depending upon the gravity of the violations. When CHA licence is suspended, all ‘G' and ‘H' cards issued in r/o that licence would become non-operational. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Know Your Customs (KYC) norms for identification of clients by CHAs: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the context of increasing number of offences involving various modus operandi such as misuse of export promotion schemes, fraudulent availment of export incentives and duty evasion by bogus IEC holders etc., Board has decided to put in place the Know Your Customer (KYC) guidelines for CHAs so that they are not used intentionally or unintentionally by importers / exporters who indulge in fraudulent activities. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_009.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 9/2010-CUS, Dated : April 8, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Manufacture - Once a machine is fixed, embedded or assimilated in a permanent structure, movable character of machine becomes extinct– Supreme Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> litigation on what amounts to manufacture under Central Excise, is as old as the Act itself. In spite of exhaustive treatises by the Supreme Court on the subject, the issue keeps propping up with boring regularity. Is it so difficult to define manufacture ? The major tax Acts do not concisely and precisely define what they propose to tax – thus the terms income , goods , manufacture , service are always prone to litigation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once again the Supreme Court had to deal with the issue of manufacture in a case decided yesterday. As usual, we bring you to case today.</font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <strong>Breaking News</strong> </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">PM's Kin Investigated by DRI? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> appears that a relative of the Prime Minister is being investigated by the Directorate of Revenue Intelligence. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An Amritsar based rice mill, in which a close relative of the PM is a partner, was raided by DRI. It appears that containers stuffed with rice from the mill and meant for export to Canada and Syria was seized at Ludhiana ICD for having mis-declared them as basmati rice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In response to the media reports, the PMO issued a terse press release as follows: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“The Prime Minister has come to know of a press report that certain export transaction of a relation of his is being looked into by the Directorate of Revenue Intelligence. Neither the Prime Minister nor his office was aware of this matter till their attention was drawn to the report. The PM wishes to state emphatically that the probe into the transaction would proceed in accordance with the law and the laid down procedures without let or hindrance.” </font></em></p> </blockquote> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Prevention of Torture Bill, 2010 - Investigating agencies beware - If an alleged offender even loses his tooth you may spend ten years in jail </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Cabinet yesterday approved a proposal to introduce the Prevention of Torture Bill, 2010 in the Parliament. This is a step towards ratification of the Convention against Torture and Other Cruel, Inhuman and Degrading Treatment or Punishment adopted by the United Nations General Assembly on 9th December, 1975 [resolution 3452(XXX)]. India had signed the Convention in October, 1997. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The bill defines <em>‘torture'</em> as Whoever, being a public servant or being abetted by a public servant or with the consent or acquiescence of a public servant, intentionally does any act which causes:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) grievous hurt to any person; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) danger to life or health (whether mental or physical) of any person, </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">is said to inflict torture. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Punishment for obtaining Statements by force:</font></strong> Where the public servant tortures any person- for the purpose of extorting from him or form any other person interested in him, any confession or any information which may lead to the detection of an offense or misconduct; </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">shall be punished with imprisonment of either description for a term which may extend to <em>ten years</em> and shall also be liable to fine. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the most important aspect that has to be noted by the public servants is what constitutes “grievous hurt” and how do you define it. It is not how the officer who subjects an alleged offender to torture or we as a common man understand it. “Grievous Hurt” should be understood as defined in Section 320 of the Indian Penal Code, 1860. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per this provision, the following kinds of hurt only are designated as "grievous" </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">First. - Emasculation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Secondly. - Permanent privation of the sight of either eye. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thirdly- Permanent privation of the hearing of either ear. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fourthly. - Privation of any member or joint. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fifthly. -Destruction or permanent impairing of the powers of any member or joint. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sixthly. - Permanent disfiguration of the head or face. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Seventhly. - Fracture or dislocation of a bone or tooth. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Eighthly. - Any hurt which endangers life or which causes the sufferer to be during the space of twenty days in severe bodily pain, or unable to follow his ordinary pursuits. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So even a small fracture or dislocation of a bone or tooth would amount to grievous hurt. Also any hurt which causes the sufferer to be during the space of twenty days in severe bodily pain, or unable to follow his ordinary pursuits is a grievous hurt. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong><font color="#FF6633">Therefore,</font></strong></em> think before you beat an alleged smuggler or any offender – he may end up in a hospital bed for twenty days complaining severe bodily pain. Forget even slapping him – he may lose his tooth; instead of him, you may land up in jail! </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"> – Monday's cases</font></strong></font></strong></font></p> <p><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">Income Tax </font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Interest on Bank Deposits and other advances cannot be treated as income from export business to be eligible for exemption under Section 10A: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a 100% EOU engaged in manufacture and export of tools, dies and moulds and has been claiming exemption under Section 10 A of the IT Act. For the AY 2001-02 and 2002-03, the assessee received income in the form of interest on bank deposits and other advances. The AO denied the exemption under Sec 10 A to the other income, be treating the same as income from other sources. The same has been confirmed by the CIT(A). </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">Non-excisability of Zinc Dross declared by Apex Court in case of Tata Iron & Steels Co. Ltd remains - Pre-deposit waived of Rs.4 crores and stay granted: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ALTHOUGH</strong> it is an admitted fact that every prudent manufacturer would like to minimize waste for it is not commercially viable, Revenue seems to think otherwise and is always at logger heads with the assessee trying devious ways to recover Central Excise duty on the same. This is in spite of the fact that there are settled decisions holding that this waste is not excisable. Either it will be an amendment to the definition of “excisable goods” or for that matter an entry in the Central Excise Tariff. Unfortunately, more pressing issues are usually missed in this adventurism. </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">Refund of duty paid on goods cleared on strength of CT 2 certificate due to lack of understanding between range superintendents – duty paid cannot be treated as paid under protest nor assessment can be treated as provisional - rejection of refund on ground of time bar upheld: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</strong> seeking a clarification from the Superintendent, Uran Range , the Superintendent, Dehradun, directed the appellant to pay duty on the goods supplied against the CT 2, which was paid by the appellant. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Just because in case of clearances at nil or concessional rate having been made by an assessee against a CT-2 certificate produced by the customer and the customer has executed a bond, the assessment of duty at the assessee's end does not become provisional. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the CESTAT has dismissed the appeal. </font></p> <p align="justify"><em><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Moral of the story: Don't oblige the Range Superintendent and pay duty. </font></strong></em></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements </font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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>