TIOL-DDT 1415 · 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 1415 </font><br>
03.08.2010<br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Clean Energy Cess on imported goods - Clean Air.... </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11086" target="_blank">DDT 1395 dated 06.07.2010</a></strong>, on the issue of levy of clean energy cess on imported coal, lignite and peat, it was reported that by virtue of Section 3 of the Customs Tariff Act, 1975, additional duty of customs in lieu of a duty of excise (CVD in common parlance) shall be levied on import of a like article manufactured or produced in India. Further, this aspect of levy of CVD on imports of the said specified goods was also clarified vide paragraph 6 of TRU letter D.O.F. No. 334/1/2010-TRU dated February 27, 2010. CVD on import of the said specified goods would be equivalent to the effective rate of 'clean energy cess' i.e. Rs. 50 per tonne. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An importer called <strong>DDT</strong> and wanted to know whether the importers are liable to pay “customs education cess” on this levy of Rs 50/- per MT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The clean energy cess is collected on imported goods by virtue of the provisions of Section 3 of the Customs Tariff Act, 1975 at the effective rate of Rs 50/- per MT. Though the “excise education cess” component on this Rs 50/- is exempted by Notification Nos 28 and 29 CE dated 22.6.2010, the customs education cess will be applicable on this amount. This can be illustrated by the following example: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let one MT of coal at a value of Rs 20,000/- be imported. Let the basic customs duty rate be 5%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the BCD payable is Rs 1,000/- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Additional duty equal to clean energy cess = Rs 50/- ( education cesses are exempted under Notifications 28 and 29 CE dated 22.6.2010) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total customs duty = Rs 1050/- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Education Cess on total customs duty = 3% on Rs 1050. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, it appears some of the importers are insisting that no education cess is payable on the clean energy cess and hence the customs education cess should be computed only on Rs 1000/- but not Rs 1050/- as it would amount to levy of education cess on clean energy cess which is against the spirit of the clarification issued by the Board vide F.No.354/72/2010-TRU dated 24th June, 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems the Customs EDI System is showing 3% on the Rs.50/- as the central excise exemption notifications could not be fed into EDI by Directorate of Systems.Meanwhile most of the customs houses resorted to collection of Clean Energy Cess manually @ Rs.50 pmt. It seems some Custom Houses are not collecting this 3% on Rs.50/- while some others feel that in the absence of a specific exemption from levy from Customs side, it is to be levied. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the collection of customs education cess on clean energy cess is legally correct, it defeats the purpose of keeping this clean energy cess out of levy of education cess. Therefore, to provide a level playing field to the importers, Board should consider issuing exemption notifications providing exemption to Customs Education Cesses on this levy instead of clarifying that there is no flaw in collection of customs education cess on clean energy cess, with the usual pro-revenue attitude. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GST Implementation Report </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">STAFFING Pattern</font></strong> - (4.9.3) In the Conference it was also pointed out that the staffing pattern in the State Government and CBEC is different. The organizational structure in the State is bottom heavy whereas in the case of CBEC it is the reverse case. Concern was expressed as to how synergy would be established between Centre and States in the GST scenario. As per the data available from some of the States, total number of staff available at Gr. B,C, & D in some of the States is 3-5 times more than the staff available in Central excise & Service Tax Commissionerates in that State. On this point, the Group felt that the best management practices followed internationally is to make the organization officer-oriented with the extensive use of IT infrastructure. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Gradually, the business processes should be IT- enabled and officers at senior level should be able to devote more time on analysis. Therefore, the organizational structure followed by CBEC is found to be better and more effective. In course of time, the States may chose the model that best suits their requirement. </font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The organisation structure of CBEC has become top heavy with the cadre restructuring aimed at only creating more unnecessary posts with the aim of giving promotions. In the present structure, absolutely there is no requirement of having posts of Additional Commissioners and Joint Commissioners who do nothing in head-quarters except adding to the delay as the files will have to be routed through them. Instead of emulating the successful structure followed by the State Governments, ( Bottom heavy and top light, where we find only a few top officials ably administering the tax collections of the State) the report tried to spoil the structure of State Governments by advising them to emulate CBEC model. The report of the group claims their model as effective and is in tune with the best management practices followed internationally, to make the organisation officer oriented. However, the CBEC structure cannot be equated with the international model for the simple reason that they have a very little understanding of the field work - if they are given an ER 1 form or ST 3 form and a test is conducted, many of them would fail to fill the ER 1 / ST 3 returns correctly on their own. The sooner the CBEC stops glorifying their top heavy structure, the better. For god's sake at least please do not spoil the successful State Models with your unwanted theories. </font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The so called better and more effective organizational structure followed by the CBEC is now like this; With cadre review and promotion as the only goal, Sepoys have become Superintendents; many of the inspectors are illiterate; post of Data Entry operators have been abolished and in every building you find at least two- three Commissioners. In a typical State you will find the Staff Strength in the Central Excise and VAT departments like this.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Designation </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">VAT </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chief Commissioner </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">0 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2 </font></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14 </font></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Additional Commissioner </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20 </font></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Joint Commissioner </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4 </font></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DC/AC </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">60 </font></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CTO/Supdt. </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">300 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">600 </font></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DCTO/ACTO/Inspector </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1800 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">700 </font></p></td>
</tr>
<tr>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">clerks/assistants </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4000 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1000 </font></p></td>
</tr>
</table>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Now if we are targeting the same assessees under GST, how are we going to integrate these two sets of officers?</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Frustrated Superintendents - Irresponsive Board and GST </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> are many Superintendents on the verge of retirement and who are eagerly waiting for that much awaited promotion and they can't wait for GST – their anguish is - why can't the Board fill up the vacant posts? Since the day we carried the news of the GST report, we are getting anxious calls and mails from concerned superintendents who are worried that their only hope of a promotion is receding. When there are clear vacancies, what prevents the Board from promoting these officers – and they don't get a rupee benefit – they have already reached that scale. Board's priorities seem to be different. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Provisional Anti Dumping Duty on PVC Flex Film </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> the recommendations of the Designated Authority, the Government has imposed anti dumping duty on PVC Flex Film originating in, or exported from, People's Republic of China. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The anti-dumping duty imposed, is be effective up to and inclusive of the 29 th day of January, 2011 [which can be extended by the government at its sweet will]</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_079.htm" target="_blank">NOTIFICATION NO. 79/2010-CUSTOMS Dated: July 30, 2010</a></font></strong></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please Obey our Orders - Board requests CCs</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is not only in technical matters that the field officers are defiant and flout Board orders with contemptuous impunity, but also in administrative matters like transfer of officers. By a Letter dated 9th July, 2010, Board had taken a <font color="#FF6633"><em>serious view</em></font> of the non-compliance of its orders. The <font color="#FF6633"><em>concerned</em></font> Chief Commissioners were requested to ensure that the transferred officers are relieved by 13th July and a compliance report be sent to the Board by 15th July.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 26th July, Board finds that many officers are yet to be relieved. Board has again taken a <font color="#FF6633"><em>serious view</em></font> and requested the CCs to relieve these transferred officers latest by 2nd August.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What will happen if they are not relieved? Board will again take a <font color="#FF6633"><em>serious view</em></font>! In the last fifty or more years, the only thing that the Board has done against its disobedient field officers is, taking a serious view.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the Board cannot make its senior officers obey the transfer orders, why can't the Board order that the transfer orders take effect from so and so date and on that date the transferred officers are deemed to be relieved and they cannot attend their old offices. The transfer order should be ipso facto a relieving order and any officer working in the office after the deemed relief and his boss should be liable for disciplinary action. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you can't discipline your own officers, how are you going to collect all that revenue? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/compliance.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC JS(Admn) DO F No. C-50/42/2010-Ad.II Dated: July 26, 2010</strong></font></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 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"><strong><font color="#663399">Central Excise </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Clandestine Removal – except for a statement from an employee no substantial evidence produced – Tribunal was right in allowing appeal – no question of Law</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is apparent that the Tribunal has taken into consideration all the relevant facts and evidences, including the evidence which has been ignored by the Commissioner, namely the report of the Technical Engineer. In the light of the aforesaid facts, considering the fact that except for the statement of the authorized signatory there is no other evidence to substantiate the allegation of clandestine removal, it cannot be stated that the Tribunal has committed any legal error so as to warrant interference. In the circumstances, no question of law much less a substantial question of law can be stated to arise out of the impugned order of the Tribunal </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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Can a JV claim deduction for expenses even if one of JV partners withdraws and contract being executed by other partner - NO, 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 expenses of a joint venture can be claimed as deduction if the JV is legally alive but one of the partners has withdrawn and the work of the venture is being continued by the other partner. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service tax can be levied on the service portion involved in the execution of a works contract only after 1/6/2007 and not prior to 1/6/2007 – Apex Court's dismissal of departmental SLP in Daelim case is upon appreciation of merits of the Tribunal's decision and hence is a binding precedent – Revenue appeal rejected: CESTAT by a majority. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> view taken in Daelim case and consistently followed by co-ordinate Benches in numerous subsequent cases including Diebold Systems is still binding on co-ordinate Benches. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The works contract was executed long before 01/06/2007, during which period such contracts were not exigible to service tax. Works contract came to be taxable only w.e.f. 01/06/2007. The 46th Amendment to the Constitution was made with intent to enable the States to levy sale tax on the sale component of a works contract. It had a direct bearing on entry 54 of State List of the VII Schedule to the Constitution. It has no such bearing either on Entry 97 (residuary entry) or on Entry 92C (service tax) of the Union List. The 46th Constitutional Amendment did not purport to enable the Central Excise authorities to levy any tax on the service component of a works contract. </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>
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