TIOL-DDT 1398 · 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 align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1398 </font><br> 09.07.2010 <br> Friday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Special Drive for clearance of pending 4% SAD refund claims – Board's Instructions </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> SAD story of 4% SAD refund claims is turning out to be a long winding soap opera. Notification No. 102/2007-Cus dated 14.09.2007 was issued by the Government with the noble intention of allowing refund of 4% SAD if the importers have paid appropriate sales tax or value added tax subject to the documentary evidences prescribed in the said notification [paragraph 2(e) of the notification]. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However high and noble the intention of the Government may be, the officers in the field (to a certain extent those in the Board as well for the confusing Circulars they issued in this regard) may not necessarily have such noble intentions to allow refunds at face value. This is primarily because of the trust deficit. The psyche of the departmental officer is to view trade and industry with suspicion and this is also contributed to a large extent by nefarious and dubious activities of some from the trade and industry. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the refund claims stagnated in the field, Board issued several Circulars viz., Circular Nos. 6/2008-Cus dated 28.04.2008, 16/2008-Cus dated 13.10.2008 etc with guidelines and instructions to the field formations to speedily process and dispose of the SAD refund claims. Unfortunately, Board has time and again failed to realize that its clarifications, directives and instructions to the field formations are only of academic interest to the officers working in the field and they are honoured more in the breach. But the Board, like the legendary Robert I The Bruce, King of Scotland (his inspiration from a spider's repeated attempts to spin a web when he hid in a cave, ultimately led him to a famous victory over the rampaging English forces), is probably in no mood to give up its efforts in bringing the field formations around. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board believed that in view of its clarifications issued through earlier Circulars, there would not be any difficulty in timely disposal of refund claims (how naïve it was). However, on review of the status of pending refund claims at major Customs Houses as on 31.03.2010, it was noticed that more than 80% of pending claims relate to 4% CVD cases. In view of this, the Board has launched a special drive for clearing the pending SAD refund claims and came out with the following instructions to further simplify the procedure for claiming 4% CVD refunds. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In respect of Accredited Clients registered with Customs in terms of Circular No.42/2005-Customs dated 24.11.2005 (ACP clients), the amount of 4% CVD refund shall be sanctioned in full, on preliminary scrutiny of the following documents: (a) TR-6 Challans (in original) for CVD payment; (b) VAT/ST payment Challans (in original); (c) summary of sale invoices; and (d) Certificate of Statutory Auditor/Chartered Accountant, for correlating the payment of ST/VAT on the imported goods with the invoices of sale and also to the effect that the burden of 4% CVD has not been passed on by the importer to the buyer. The procedure for pre-audit for ACP clients shall be done away with and detailed scrutiny should be done only at the stage of post-audit. The refund claims shall be sanctioned within the maximum time period of 30 days in all such cases. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Submission of sale invoices shall be required only in electronic form (CD or other media) in respect of 4% CVD refund cases and submission of paper documents is accordingly dispensed with. Further, in order to enable timely payment of refund in case of 4% CVD, a system of optional facility of directly crediting the applicant's bank account, through RTGS (Real Time Gross Settlement) or NEFT (National Electronics Funds Transfer) System is being prescribed. This facility is already functioning in Mumbai Customs Zone-II and has been found useful for the trade. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hence, Board has decided to extend this facility on optional basis to all other Customs formations also. Necessary authorisation for payment of refund amount directly to Bank Account may be taken in such cases from the importer/ authorised signatory of the importer in the form annexed to this Circular (as Annexure-I). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some field formations have also raised certain doubts whether the audited Balance Sheet and Profit and Loss Account have to be examined in respect of the current financial year for scrutiny of unjust enrichment aspect. It is stated that a large number of refund claims relating to the current year were held up for want of such verification. Board examined this issue and it has been decided that the field formations shall accept a certificate from Chartered Accountant for the purpose of satisfying the condition that the burden of 4% CVD has not been passed on by the importer to any other person. Further, the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person. Hence, there is no need for insisting on production of audited Balance Sheet and Profit and Loss Account in these cases. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has notified the list of documents required to be filed by the applicant along with the refund claim (illustrative list as mentioned in Annexure II of the Circular is given below). Board clarifies that “Hence, other than these aforesaid documents, no other document would be required in the <strong>normal </strong> course of granting 4% CVD refund”. [<font color="#FF6633">there is no <strong>NORMAL </strong> course of refund in the Department</font>] </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Illustrative list of documents to be filed by applicant along with Application for refund claim in prescribed form (Customs Series Form No.102 <font color="#FF6633">as given in Part 5 of Customs Manual</font>) (<font color="#663399">Will the Board clarify as to Part 5 of which Customs Manual the Board is referring to here?</font>) </strong></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. Document evidencing payment of the Special Additional Duty (SAD). </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Invoices of sale of the imported goods in respect of which refund of the said SAD is claimed. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Certificate from a statutory auditor / CA who certifies the final accounts in respect of correlation of VAT payment, payment of 4% SAD amount and unjust enrichment as prescribed in Board's Circular No.6/2008-Customs dated 28.4.2008 and 16/2008-Customs dated 13.10.2008. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Copy of the Consignment Sale Agreement (in case of sale through consignment agents / stockists). </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Self-declaration / Affidavit (for e.g. in case of submission of invoice in soft form in lieu of paper documents, in case of fulfillment of the doctrine of unjust enrichment to the effect that the applicant has not passed on the incidence of 4% SAD to any other person). </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Any other document considered necessary in support of the claim (<font color="#663399">this last one is the trump card often used by the field officers to trouble and harass the claimants. It is very mysterious as to why Board ends up giving this kind of leeway to the field formations and thereafter lament that the field officers are not sanctioning refunds in time. Probably, Board should stop generalizing in this fashion and be specific regarding documentation required for sanctioning refund claims. Compare this list with the documentation prescribed in paragraph 2(e) of the Notification and netizens may see for themselves that the real fault for the delay in sanction of refund claims lies not with the field formations but with the Board</font>). </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board desires that the Commissioner of Customs shall personally monitor all cases of 4% CVD refund claims pending for more than 30 days so as to ensure that these are disposed of within the overall time limit of three months. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Probably, Board is oblivious to the fact that some Commissioners and Chief Commissioners warn their subordinate officers that they have to worry about their career first rather than follow Board's instructions and go on a refund spree. </font></strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>To tighten the noose around errant field officers, Board should have considered inclusion of applicability of provisions of Section 27 and 27A of the Customs Act, 1962 to these refund claims by suitably amending the said notification, so that any unwarranted delay in refund claims would have forced the field officer to shell out interest (which would obviously be recovered from his pocket at a later stage). </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also see our reports on this refund saga in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6082" target="_blank">TIOL-DDT 701 18.09.2007</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7230" target="_blank">TIOL-DDT 854 29.04.2008</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7540" target="_blank">TIOL-DDT 902 07.07.2008</a>, <a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8005" target="_blank">TIOL-DDT 970 14.10.2008</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11060" target="_blank">TIOL-DDT 1391 30.06.2010</a>. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see the story Indian Customs: The SAD Refund Circus! contributed by a hapless netizen </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(please give hyperlink to </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">http://www.taxindiaonline.com/RC2/print_story.php?&newsid=9890) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_018.htm" target="_blank">CIRCULAR NO. 18/2010-Cus., Dated: July 8, 2010 </a></strong></font></p> <p align=justify style='text-align:center'><font size="2"><b><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif">Lawyers can love and kill – in Court</font></b></font></p> <p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> jilted lover, also a lawyer, chose the hallowed precincts of the Karnataka High Court to kill a lady lawyer. Love or the lack of it is said to be the reason for the murder. Even as stunned lawyers looked on, outside Court Room No.4, the assailant used a small knife to slit the throat of the young lady lawyer – blood gushed out of and she died almost instantly. The assailant also stabbed himself, but may survive to face prosecution. This gory incident took place yesterday afternoon.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Definitive Anti Dumping Duty on import of Diethyl Thio Phosphoryl Chloride imports from China </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Government has imposed definitive anti-dumping duty on imports of Thio Phosphoryl Chloride falling under Chapter 28 or 29 or 38 of the First Schedule to the Customs Tariff Act, 1975, originating in, or exported from, People's Republic of China based on the recommendations of the Designated Authority. The anti-dumping duty on the said imports shall be levied for a period of five years (unless revoked, superseded or amended earlier by the Government) from the date of imposition of the provisional anti-dumping duty, i.e. June 22, 2009 and this shall be payable in Indian currency. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_047.htm"><strong>NOTIFICATION NO. 74/2010-Cus., Dated: July 7, 2010 </strong></a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT amends condition for export of Guar to European Union </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has substituted the entry at S. No. 65A in the Notification No. 16 (RE-2008)/2004-2009 Dated 26 June, 2008 with regard to export of: </font></p> <blockquote> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“Guar gum refined split' (Chapter 1302 32 20) and ‘Guar gum treated and pulverized' (Chapter 1302 32 30) subject to the fulfilment of the following restriction:- </em></font></p> <p align="justify"><em><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Guar gum exports to European Union, originating in or consigned from India and intended for animal or human consumption, allowed subject to issue of Health Certificate by authorized representative of Ministry of Commerce & Industry, Government of India i.e. Shellac & Forest Products Export Promotion Council (SHEFEXIL), Kolkata accompanied by the original analytical report of testing of Penta Chlorophenol (PCP) issued by Vimta Labs, Hyderabad, certifying that the product does not contain more than 0.01 mg/Kg. of Penta Chlorophenol (PCP) on sampling done by the authorized representative of the competent authority.” </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2009/dgft09not050.htm" target="_blank">DGFT NOTIFICATION NO. 50/2009-2014, Dated: July 6, 2010 </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Online transmission of DES (Advance Authorization), EPCG and DEPB authorization at 33 ICES </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> view of Customs' readiness to accept online transmission of DES (Advance Authorization), EPCG and DEPB authorization at 33 ICDS & CFS's, DGFT has directed its RA's to note that for all the newly added ports, the said authorizations issued w.e.f. 10.7.2010, will be communicated online to Customs for necessary processing at their end. It may be further noted that for all DEPB Shipping Bills issued w.e.f. 10.07.2010 from these ports, applications will have to be filed mandatorily in EDI mode. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2009/dgft09cir037.htm" target="_blank">DGFT POLICY CIRCULAR NO. 37/2009-2014, Dated: July 7, 2010 </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Adjudicating Authorities Notified for DRI cases </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified adjudicating authorities for several cases where show cause notices have been issued by the DRI, including the mega customs case against Hewlett Packard. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_053.htm" target="_blank">Customs Notifications 53/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_054.htm" target="_blank">54/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_055.htm" target="_blank">55/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_056.htm" target="_blank">56/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_057.htm" target="_blank">57/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_058.htm" target="_blank">58/2010-Cus (NT</a>), <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_059.htm" target="_blank">59/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_060.htm" target="_blank">60/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_061.htm" target="_blank">61/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_062.htm" target="_blank">62/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_063.htm" target="_blank">63/2010-Cus (NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_064.htm" target="_blank">64/2010-Cus(NT)</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_065.htm" target="_blank">65/2010-Cus(NT)</a> all dated July 7, 2010 </strong></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 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"></font><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 - Are forward contracts covered u/s 43A - Can losses arising from such contracts be claimed as deduction for computing taxable income - YES, says ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the Tribunal is - Whether forwards contracts are covered under section 43A and whether losses arising from such contracts can be claimed as deductions in computing taxable income. The second issue is that whether an assessee can be held liable for a deferred tax liability on a retrospective basis by reason of amendment u/s 115JB and be subject to interest u/s 234B. And the third issue is - Whether the payments made towards creation of a reserve set aside for ascertained capital expenditure can be deducted while computing book profits u/s 115JB. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise/Customs/Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Issuance of an addendum after passing O-in-A by Commissioner (Appeals) – Board Circular dated 16.12.1999 prohibits issuance of corrigendum/addendum by adjudicating authority and is not relevant in the present context – Revenue appeal rejected: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Commissioner (Appeals) passed some Orders-in-Appeal on 31.08.2007. After more than five months of issuance of this order, he issued an Addendum on 21.02.2008. Revenue is appalled with such an addendum issued by the Commissioner (Appeals). Their main concern is that since the appeal period in respect of O-in-A dated 31.08.2007 received on 30.10.2007 got over on 29.01.2008, the Commissioner (A) had erred in passing such an addendum. </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>Inputs found short between physical stock taking and book stocks – Demand of CENVAT Credit - Case not hit by proviso clause (a) to s.35B(1) of the CEA, 1944 – Appeal maintainable: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> show-cause notice was issued to the appellant for contravention of the provisions of Rule 10 of the Central Excise Rules, 2002 and Rules 3 and 9(5) of the CENVAT Credit Rules, 2004 alleging that they have failed to maintain proper accounts of the finished products and of the CENVAT inputs resulting in the short payment and in availing of inadmissible CENVAT credit in respect of the quantity of the finished products and CENVAT inputs respectively found short at the time of the stock-taking conducted by the appellant. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Monday with more DDT </font></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>