TIOL-DDT 1405 · 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 1405 </font><br> 20.07.2010 <br> Tuesday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Warehousing Permission to Storage Tanks Mounted on a Vehicle - Board's Instructions</font></strong></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Brief History:</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> appears that the withdrawal of warehousing provisions to petroleum products in the year 2004 is still causing headaches to the Board as well as the field formations. After withdrawal of these facilities vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2004/exnt04_17.htm" target="_blank">Notification No. 17/2004-CE (NT) dated 4th September, 2004</a></strong></em>, Board was seized with representations from oil companies and field formations on certain procedural hassles. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequent to this, Board issued clarifications vide <em>Circular No. 804/1/2004-CX, Dated: January, 4, 2005</em> to address the concerns of the oil companies and the field formations. In this circular, with regard to export warehousing of petroleum products, it was clarified that the facility of removal of petroleum products without payment of duty for export warehousing continues to be available vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2001/exnt01_46.htm" target="_blank">Notification No. 46/2001-CE(NT) dated June 26, 2001</a></strong></em> and the conditions, procedures, class of exporters and places of warehouses under Rule 20(2) of Central Excise Rules, 2002 for export warehousing of excisable goods as specified vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2001/excircular581.htm" target="_blank">Circular No. 581/18/2001-CX dated June 29, 2001</a></strong></em> were to govern the same.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, to address the specific issue of <u>supply of Air Turbine Fuel to foreign bound aircrafts , Board in Circular dated January 4, 2005 clarified that ATF cleared for export warehouse may be allowed to be stored in the intermediate storage tanks subject to condition that such intermediate storage tanks are used exclusively for storing export goods</u>. The details of such intermediate storage tanks including their physical location in the concerned installation should be intimated to jurisdictional Central Excise officer. Accordingly, paragraph 6.1 of the Circular dated June 29, 2001 was amended. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, it was clarified therein that <u>in view of difficulties in installing separate tanks at the airports, mixed storage of duty paid and non-duty paid goods at Aviation Fuel Station (AFS) at airports may be allowed subject to the condition that a tank-wise regular account shall be maintained about the receipt and discharge of duty paid and non-duty paid stocks of ATF</u>. Accordingly, the following sub-para was added to paragraph 6 of Circular dated June 29, 2001:</font></p> <blockquote> <p align="justify"><em><strong><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">"6.3 The Commissioner of Central Excise having jurisdiction over the warehouse may permit the registered person of the warehouse to store duty paid excisable goods or duty paid imported goods along with non duty paid excisable goods in the warehouse subject to conditions, procedure and manner of payment of duty prescribed by him" </font></strong></em></p> </blockquote> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Current problem: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now it appears that this paragraph 6.3 has given scope to an ingenious solution from a specific field formation (which Board has not named for obvious reasons) and Board is not happy with this development. It has come to the notice of the Board that this field formation has granted “<strong>on wheel bonding facility</strong>”, thereby permitting the assessee to receive, store and dispatch bonded duty paid ATF in Mobile Refuelling Tanks (<font color="#663366"><strong>is it duty paid or non-duty paid. If it is duty paid ATF what is the problem and what is ?</strong></font>) and that this permission was granted in terms of paragraph 6.3 of Board's <em>Circular No. 804/1/2005-CX dated January 4, 2005</em> and the purpose of the assessee seeking such permission appears to avail the facility of non-duty paid supplies to international flights. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(Ironically, paragraph 6.3 of Circular dated January 4, 2005 does not deal with this issue, but paragraph 6.3 of Circular dated June 29, 2001 which was newly incorporated through Circular dated January 4, 2005 is what the Board is probably referring to here. Too many issues, too many circulars and a whole lot of confusion.) </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">References were also received from other field formations to clarify this issue (<font color="#663399"><strong>probably word of allowing ingenious facility by one Commissioner would have spread like wild fire</strong></font>). </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board's Solution: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After examining the issue Board clarifies that paragraph 6.3 of the <font color="#FF6633">said Circular</font> empowers the jurisdictional Commissioner to permit the registered person of the warehouse to store duty paid goods along with non duty paid goods in the warehouse subject to the conditions, procedure and manner of payment of duty as prescribed by the Commissioner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The provisions of the circular nowhere allows storage of goods in mobile tanks. Further, it is stated that such “on wheel” facility has an <font color="#CC3333">inherent danger of pilferage/theft</font> of non-duty paid goods and resultant revenue loss. It has also been noted that in any case, the registered person of the warehouse can avail the facility of clearance of goods under rebate for supplies to international flights, which are non-dutiable. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the above, it is clarified that any such facility granted by field formations is improper and not in accordance with the Board's circulars issued in this regard. The field formations are directed to immediately withdraw such facility, if any, granted in their respective jurisdictions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board also <font color="#FF6633"><strong>requests</strong></font> the field formations to <u>advise the assessees to avail the option of rebate under Rule 18 of Central Excise Rules for supply of duty-free fuel </u>to foreign bound aircraft. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">For supply of duty-free fuel to foreign bound aircraft, how can the facility of rebate under Rule 18 be allowed? Instead why not encourage the assessees to follow the provisions of Rule 19 of Central Excise Rules, 2002 as well? </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is there no inherent danger of pilferage/theft in immobile tanks? </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/cxinstruct03.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Letter F.No.267/27/3/2001-CX8 (Pt.I)., Dated: 14th July, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Can Permission be withdrawn without a notice? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the above Circular, Board had asked the field formations to immediately withdraw such facility. Now can this be done without a notice to the assessee? Invariably the field officers are going to give an order immediately without issuing a notice and it will be challenged and litigation for the next few years is assured. In a case which we will report tomorrow, the Department issued a clarification to an assessee that Service Tax was not payable. Later there was a change of mind and the Department withdrew this clarification and issued notice demanding tax. The High Court held that withdrawal of the letter without notice is not valid and so the consequent notice was also invalid. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Poor subsidizing Rich? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> seems hardly anyone pays Income Tax. Politicians are the richest citizens and they know how to live without paying taxes. A former Tax official said, “This is a system of the elite, by the elite and for the elite, it is a skewed system in which the poor man subsidizes the rich man.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When a Member of parliament tried to pay tax, the tax collectors refused to take the money, not wanting to rock the boat. Most economic activity takes place in the shadows. Merchants - the most vociferous opponents of a value-added tax, because it would require documentation - make up a fifth of the economy, but carry 6 percent of its tax burden.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this country, no one asks, “How did you get that flat?” “If you don't have income, fine, but then don't go and get into a Land Cruiser.” </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A former Supreme Court Judge blames what he calls moral decay in society, in which “respect for rules has fallen, merit has been forgotten and cheating has become a way of life. Today, corruption has broken all records.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sounds familiar? This is what the New York Times reported yesterday about Pakistan. </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"> – Wednesday'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">Sec 57 - Legal expenses incurred by assessee, a lessee of Mumbai Port Trust, in defending proposed enhancement of rent before HC and SC are allowable business expenditure: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the Tribunal is - Whether, expenses incurred by the assessee, who is a lessee, in defending proposed enhancement of rent with a view to avoid future recurring outflow of funds, are revenue expenses or capital. And the answer is REVENUE. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">SCN mandatory before demand - Letter directing payment is an appealable order – High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee sought a clarification whether service tax was liable. The Department informed that it was not. Later wisdom dawned on the Department that the clarification was wrong and it reversed its decision and asked the assessee to pay the tax immediately as the previous communication was ab intitio void . The assessee was not impressed and rushed to the Tribunal which quashed the second letter. Department is in further appeal before the High Court. The officer must be cursing himself for having given a clarification that there was no tax liability. </font></p> <p><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">On one hand, Commissioner says that activity engaged is not manufacture u/s 2(f) of the CEA, 1944 and hence <em>CENVAT credit</em> is not available - On other hand, CCE proposes recovery of amount paid u/s 11D – self contradiction is writ large - Prima facie case - Stay granted: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ONE</strong> always wonders whether the adjudicating authority who errs on the side of Revenue and confirms demands of crores of rupees ever bothers to keep track of the survivability of his order at the hands of the appellate authorities. If they are, it is good for everyone.But this Stay order, in particular, should be taken note of by all concerned, the adjudicating authority included! </font></p> <p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p><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>