TIOL-DDT 1363 · 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 1363</font><br> 20.05.2010<br> Thursday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise Superintendents get Adjudication Powers </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBEC has granted powers of adjudication on Superintendents of Central Excise. They can now adjudicate cases involving a duty up to one lakh rupees in individual SCNs.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They would be eligible to decide cases involving duty and/or <em>CENVAT credit</em> upto Rs. 1 Lakh in individual SCNs. They would be eligible to decide cases involving wrong availment of <em>CENVAT credit</em> upto a monetary limit of upto Rs. 1 Lakh. They can also adjudicate Show Cause Notice proposing only imposition of penalty under Rule 26 and 27 of the Central Excise Rules, 2002 or Rule 15 and 15A of the <em>CENVAT Credit</em> Rules, 2004. But they cannot adjudicate on excisability of a product, classification, eligibility of exemption, valuation and cases involving suppression of facts, fraud etc. </font></p> <blockquote> <p align="justify"><strong><em><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why are they given powers to adjudicate only Central Excise cases? What about Service Tax and Customs? Maybe that will be given soon. </font></em></strong></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the Commissioners to redistribute the pending cases. And now here is a joke from the Board. The Circular says, “The jurisdictional Commissioners should ensure that the work regarding re-allocation of pending cases, issuance of corrigendum to the Show Cause Notices, transfer of relevant files and records, etc., should be completed <strong><font color="#663399">within a month</font></strong>. A compliance report in this regard should be sent by the Commissioner to the zonal Chief Commissioner, who in turn, should submit a report to the Board by <strong><font color="#663399">1.6.2010</font></strong>, certifying that all the work regarding re-allocation of cases has been completed.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this circular is dated 18th May and the Board wants the redistribution to be completed within a month and then a compliance report to be sent. But the compliance report should be send by 1.6.2010 (within 12 days)! It is because they give such impossible instructions that the instructions receive scant respect in the field. Now since the report cannot be sent by 1.6.2010, it will not be sent even by 1.6.2011. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/excircular922.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 922/12/2010-CX., Dated: May 18, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise Valuation - Cost of return fare - not includible - CBEC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has come out with an assessee friendly clarification. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In<strong><em> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/excircular827.htm" target="_blank">Circular No. 827/4/2006 dated 12th April 2006</a></em></strong>, Board had clarified that the cost of return fare of vehicles was to be included in the value. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal has in case of <em>DCW Ltd. v. CCE</em> - <strong>(<em><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2007/2007-TIOL-2028-CESTAT-MAD.htm" target="_blank">2007-TIOL-2028-CESTAT-MAD</a></font></em>)</strong> held that “where onward freight was not includible in the assessable value of the excisable goods, there was no question of return freight being included in the assessable value.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, the tribunal has in case of <em>Haldia Petrochemicals Limited Vs Commissioner of Central Excise Haldia</em> <strong>(<em><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2009/2009-TIOL-360-CESTAT-KOL.htm" target="_blank">2009-TIOL-360-CESTAT-KOL</a></font></em>)</strong> held that in case where the transaction value of the goods being cleared is available at the factory gate value will be determined in accordance with Section 4(1)(a) of the Central Excise Act,1944 without any reference to Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The appeal filed by the department against this order of the tribunal has been dismissed by the Supreme Court vide its order in Civil Appeal D No 9262 of 2009 dated 12th August 2009 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal has in case of <em>Commissioner of Central Excise Vadodara-II Vs. Gujarat Fluorochemicals Ltd.</em> <strong><em>(<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2009/2009-TIOL-608-CESTAT-AHM.htm" target="_blank">2009-TIOL-608-CESTAT-AHM</a></font>)</em></strong> followed the aforesaid order in case of Haldia Petrochemicals. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Board has accepted the order of tribunal in case of Haldia Petrochemicals . And it is clarified that cost of return fare of vehicles is not required to be added for determining value. All the pending cases may be decided in accordance with the aforesaid decision of the Tribunal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the field and other concerned will accept the Board circular. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/excircular923.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 923/13/2010-CX., Dated: May 19, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Classification of rice parboiling machinery - CBEC clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has been brought to the notice of the Board that classification of Rice parboiling machinery is being disputed in certain jurisdictions. Two tariff headings under consideration for its classification are 8419 or 8437. It has been represented by the Rice Mill Machinery Manufacturers Association that the practice so far followed by the department was not to charge excise duty for many years but suddenly it has been sought to charge duty on these machines by proposing classification under heading 8419. The matter has been examined by the Board. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that Rice parboiling machinery and drier which are essentially for use in conjunction with the rice mill will merit classification under heading 8437. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/excircular924.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 924/14/2010-CX., Dated: May 19, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income tax - Widening of existing road - Infrastructure under Section 80IA </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has clarified that widening of an existing road by constructing additional lanes as a part of a highway project by an undertaking would be regarded as a new infrastructure facility for the purpose of Section 80IA (4)(i). However, simply relaying of an existing road would not be classifiable as a new infrastructure facility for this purpose. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2010/it10cir04.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Circular No. 4/2010, Dated: May 18, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise - Electronic return - Now mandatory for more categories </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MORE</strong> categories of assesses, paying duty of more than ten lakhs rupees, are brought under mandatory electronic return filing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.The Annual Information Statement required under Rule 12(2)(a) of the Central Excise Rules. (ER 4) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Monthly return filed by EOUs (ER 2) </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2010/exnt10_20.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 20/2010-CX., (N.T.), Dated: May 18, 2010 </font></strong></a></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. First Stage Dealer or Second Stage Dealer required to file quarterly return under Rule 9(8) of the <em>CENVAT Credit</em> Rules. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Information relating to Principal inputs, to be filed by manufacturers annually and monthly (ER 5 and ER 6) </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2010/exnt10_21.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 21/2010-CX., (N.T.), Dated: May 18, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rebate on export of unmanufactured tobacco – Complicated formula </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NEXT</strong> time you hire a consultant or lawyer for your Central excise work, be sure to check up whether he has a sound knowledge of mathematics. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC has notified rebate for exports of Unmanufactured tobacco, bearing a brand name, falling under tariff heading 2401 and chewing tobacco falling under tariff item 2403 99 10 and on which duty of excise has been paid under section 3A of the Central Excise Act, 1944. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The extent of rebate is ‘monthly average rate of rebate per pouch' subject to a ‘maximum amount of rebate per pouch'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this ‘monthly average rate of rebate per pouch' is <strong>D</strong> divided by <strong>Q</strong>, where, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>D</strong> = Total duty paid for a month for the packing machines used for manufacture of Chewing Tobacco or Unmanufactured Tobacco of the Retail Sale Price which has been exported </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Q</strong> = Total quantity of pouches manufactured from said machines in the month </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>Explanation1 .-</strong></em> For the removal of doubts, it is hereby clarified that for the purposes of calculating <strong>D</strong> and <strong>Q</strong>, all packing machines used for manufacture of goods of said Retail Sale Price which has been exported, shall be taken into account whether the goods manufactured from said machines have been cleared for export or for other clearances. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>Explanation2 :-</em></strong> Total duty paid for a month shall include the duty paid by utilisation of cenvat credit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ‘maximum amount of rebate per pouch' means the amount of rebate calculated in the following manner:- </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Duty payable per machine per month as provided in <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2010/etariff10_16.htm" target="_blank">Notification No 16/2010 – CE dated 27th February, 2010</a> divided by Total number of pouches deemed to be produced per machine as per rule 5 of the said rules”. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Very simple – try getting the rebate! </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2010/exnt10_22.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 22/2010-CX., (N.T.), Dated: May 18, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Renting of Immovable Property – Home Solutions wins again </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> are informed that once again Home Solution Retail (I) Ltd. in W.P. (C) No. 3398 of 2010 has obtained stay from the High Court of Delhi vide its order 18.05.2010 from payment of service tax on renting of immovable property. However, stay has not been granted on services in relation to renting. In other words, the Delhi High Court has given a stay on payment of service tax on renting per se only. It may be clarified that this stay order is applicable only to the said petitioner i.e. Home Solution . It is also to be noted that the said stay order does not in any way affect liability to pay service tax on all other assessee who have not obtained the stay in their favour. </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"> – Friday'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">Customs </font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Valuation – assessment made purely on basis of LME Bulletin without any corroborative evidence of contemporaneous import, not valid: Supreme Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO</strong> details of any contemporaneous imports or any other material indicating the price notified by the LME had either been referred to by the adjudicating Officer in the adjudication order or such material was placed before the Tribunal at the time of hearing of the appeal. Learned counsel for the Revenue has not been able to controvert the said observations by the Tribunal. In that view of the matter no fault can be found with the order passed by the Tribunal setting aside the additional demand created against the assessee. </font></p> <p><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">Capital gains vs business income - Frequent sale and purchase of shares in short period with motive to earn profit is a case of short term capital gains and not business profit: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> is an individual and a Director in a few companies. All the companies were involved in the business of trading of shares. For the impugned year assessee filed return of income declaring business income as ‘NIL' and showing short term capital gain. Considering the volume, frequency and investment in the share trading business the AO took the view that the short term capital gain should be taxed as business income. CIT(A) also affirmed the view of the AO. Before the Tribunal the assessee argues that she is a high net worth investor having substantial capital. Assessee further pleaded that many of the transactions are delivery based transaction and the principles established by the ITAT in the case of <em>Gopal Purohit vs. JCIT <strong>(<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=39&filename=legal/itat/2009/2009-TIOL-319-ITAT-MUM.htm" target="_blank">2009-TIOL-319-ITAT-MUM</a></font>)</strong></em> will apply to the facts of the case and further submitted that volume, frequency and other factors did not effect the nature of income.</font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback repaid with interest by assessee for not realizing export proceeds within time – Since RBI gave ex-post facto extension of time for recovery of export proceeds and assessee having realized them within the stipulated time period, refund of drawback amount repaid earlier with interest allowable – Revenue also directed to pay interest @6% for not sanctioning refund amount in time: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, a garment exporter, exported consignments of garments under 37 shipping bills under claim for drawback. The drawback of Rs. 14,58,368/- was sanctioned to them. Since they did not realize the export proceeds within the first six months, they sought an extension of time for realization of export proceeds. In the meanwhile they repaid the drawback amount with interest @ 24% per annum totaling Rs. 22,15,103/- (inclusive of drawback amount) on 16.06.1999. </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><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>