TIOL-DDT 1423 · 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 1423</font><br> 13.08.20 <br> Friday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs- Raw Silk and machinery for currency printing exempted </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RAW</strong> <strong>silk:</strong> Raw silk of grade 3A and above imported by National Handloom Development Corporation up to an aggregate quantity not exceeding 2500 metric tonnes in a financial year, exempted from Customs Duties. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Printing Machinery:</strong> Plant or machinery or equipment, related to sachet packaging, embossing, debossing; manufacture of e-passport; inspection and processing of banknotes imported by or on behalf of Security Printing and Minting Corporation of India Limited (SPMCIL), exempted from Additional Duty of Customs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are also exempted from SAD. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2002/ctariff02_021.htm" target="_blank"><em><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 21/2002-Customs, dated the 1st March, 2002 is amended. </font></strong></em></a></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_080.htm" target="_blank">Notification No. 80/2010-Cus., Dated: August 10, 2010</a> and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_081.htm" target="_blank">81/2010-Cus., Dated: August 10, 2010</a> </font></strong></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAG Slams DG, Valuation </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> latest CAG Report states that none of the objectives for setting up the DGOV database <font color="#FF6633"><em><strong>were</strong></em></font> achieved. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate General of Valuation (DGOV), Mumbai was established in the year 1997 to assist the Board in policy maters concerning valuation. To carry out this task, the DGOV had to develop a comprehensive real time electronic database of imported and exported goods which would fulfill the following objectives:-. </font></p> <blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">++ The assessing officers would have instant access to the data to check for cases of undervaluation/overvaluation; </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">++ Check abuse of export incentive schemes and valuation frauds; </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">++ Monitor sensitive commodities which were prone to undervaluation; </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">++ Maintain a central registry of special valuation (SVB) cases; </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">++ Provide assistance to the Board for fixation of tariff value and transfer pricing; </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">++ Monitoring of valuation risk component of risk management system (RMS) under Indian Customs Data Interchange System (ICES); </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">++ Generating valuation alerts, publishing valuation bulletins and resolving valuation disputes. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Given the multiple uses of the database, completeness of data was a prerequisite for doing any reliable analysis.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG found that the import/export data was incomplete and could not be used as the base data for any realistic analysis. The value of imports and exports for the total transactions captured in the DGOV database for the customs tariff heading 71 was way below the actual trade figures reported by the Ministry of Commerce and Industries on the DGFT website. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG concluded that it was not possible to use the DGOV data for any meaningful analysis as only a small portion of the total data was being captured. Therefore, none of the objectives for setting up the DGOV database were achieved. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAG Recommendation :</strong> <font color="#FF6633"><em>the database of international trade should be kept updated, especially with the DPCC data, so that it can be utilised for the various purposes for which it has been created. This can also enable sharing of data with other tax authorities for detection of cases of duty evasion</em></font>. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAG Recommendations </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">CUSTOMS</font>:</strong> CAG has recommended, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ The department must implement the ICES in DPCC to mitigate the risk of undervaluation and overvaluation of these sensitive commodities. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Prescription of norms for physical examination of goods cleared by the SEZ units adhering to the RBI requirements and to prevent any loss of revenue </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ambiguity in the notification may be clarified so that ‘gold coins' can be classified as a unique item subjected to a specified rate of duty. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Government should introduce a provision in the SEZ rules to consider sales by DTA units to SEZ units, on foreign exchange payments, as ‘imports' by SEZ units for the purpose of calculating NFE. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Government may consider introducing a suitable provision in the SEZ rules to prescribe a minimum value addition by the SEZ units to bring them at par with the EOUs, thereby providing a level playing field. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The department should institute a suitable control mechanism to get assurance on the reliability of the data furnished in APRs and ensure their timely submission. </font></em></p> </blockquote> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">EXCISE </font></strong></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ The Government may consider amending the Act and the Rules to have a uniform system for assessment of medicines irrespective of their being cleared as physician samples or for trade. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ To check against undervaluation of ayurvedic and homeopathic medicines and consequent revenue loss, the Government needs to bring these commodities under MRP based assessment (section 4A) </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Government may ascertain the reasons for increasing incidence of duty payment by cenvat credit, take necessary corrective action and use cenvat to PLA ratio as a risk factor based on which internal audit/ investigation may be undertaken. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Government may rationalise the present rates of abatement based on the various changes that have taken place in the rates of taxes. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Government may amend the enabling Rules, to levy duty on products cleared free of duty under the guise of quantity discount, bonus scheme, etc. but which have MRPs printed and are sold in the market at MRP and are otherwise assessed under MRP based (section 4A) assessments. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Penal provisions should be included in the Drugs (Prices Control) Order, 1995 to ensure that the manufacturers of pharmaceutical products pass on the benefits of duty reduction to the consumers. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Government may monitor the pendency of adjudication cases, e specially cases pending for more than five years and issue instructions to commissionerates to investigate the reasons for such long pendency. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <font color="#FF6633">The Government may consider integrating the excise and service tax returns to mitigate the risk of evasion of duties/tax more so as the environment of all tax administration is becoming e-enabled, especially post introduction of ACES (Automation of Central Excise and Service Tax) </font></font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The NPPA should review all cases of prices of pharmaceutical products where MAPE was required to be restricted to the prescribed cap and recover the excess amount charged by the manufacturers of such pharmaceutical products. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG = Comptroller and Auditor General of India </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SVB = Special Valuation Branch </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DPCC = Diamond Plaza Customs Clearance Centre </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NPPA = National Pharmaceutical Pricing Authority </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MAPE = Maximum Allowable Post Manufacturing Expense </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Source: CAG Reports 11 and 15 of 2010-11. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - High Court upholds constitutional validity of Section 14A </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Bombay High Court yesterday delivered a landmark judgement in the appeal against the Special Bench Order of the ITAT in the now famous <em>Daga Capital</em> case - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=39&filename=legal/itat/2008/2008-TIOL-509-ITAT-MUM-SB.htm" target="_blank"><font size="1">2008-TIOL-509-ITAT-MUM-SB</font></a></strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court held that provisions of sub sections (2) and (3) of Section 14A of the Income Tax Act 1961 are constitutionally valid; The provisions of Rule 8D of the Income Tax Rules are not ultra vires the provisions of Section 14A, more particularly sub section (2) and do not offend Article 14 of the Constitution. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL</strong> once again brings you this 'yesterday's judgement today' </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong>BREAKING NEWS</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="#FF6666" size="5">tiol</font> <font color="#006600">– Monday's cases</font></strong></font></strong></font></p> <p><strong><font color="#663399" 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">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rebate – Education Cess – AC's order denying rebate of Cess not challenged – same issue cannot be re-agitated – Writ jurisdiction not to be exercised in favour of a petitioner, who is guilty of an abuse of process: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> petitioner (i) did not contest the correctness of the determination made by the Deputy Commissioner of Central Excise on 30 November 2004 and thereafter rejecting the claim for rebate on the payment of education cess; (ii) Moved an application on 20 December 2005 despite the rejection made on the earlier occasion on the same issue; and (iii) Suppressed the material circumstance of the rejection of the earlier application. In these circumstances, this Court in the exercise of its jurisdiction under Article 226 would be duty bound to correct what would otherwise have been a manifest failure of justice originating in an abuse of the process of law by Ispat. The challenge by Ispat to the order dated 30 November 2004, addressed before the Court in a petition filed on 6 March 2010, suffers from unexplained delay. Apart from the reasons, which we have already indicated, we do not consider it appropriate to exercise the Writ jurisdiction under Article 226 in favour of a petitioner, who is guilty of an abuse of process and of unexplained delay. </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">Sec 40(a)(ia) - Merely because certain business expenses are capitalised, assessee is not barred from claiming same as revenue expenditure: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> simple issue before the Tribunal is - Whether if certain business expenses are capitalised, the assessee is barred from claiming the same as revenue in nature. Whether depreciation @ 100% is allowable on the expenditure incurred on purely temporary structures such as wooden structure, false ceiling, painting etc. on leasehold premises. </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">Second SCN alleging suppression - CESTAT required to pass reasoned order – Approach of Tribunal very cursory - Matter remanded: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> approach of the Tribunal in this particular case has been very cursory. In fact, in a matter the like this, if the facts are involved pertaining to suppression of material and second show cause notice has been issued, the entire factual matrix had to be considered in order to give a finding with regard to validity of the second show cause notice issued by the Assistant Commissioner. In the absence of there being any application of mind on this issue, the Tribunal could not have allowed the appeal of the assessee by merely relying on the Apex Court's decision. The Tribunal could not have passed such an order by merely referring to a precedent and dispose of the matter without laying any foundation for the same in the form of narrating the facts and giving reasons and only by relying on the basis of the facts narrated and the contentions urged by the counsel. </font></p> <p align="center"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ivlnnm.gif" alt="Legal Corner Icon" width="128" height="160" hspace="5" border="0" align="center"></font></strong></p> <p align="center"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/happy-independence-day-india.jpg" alt="Legal Corner Icon" width="600" height="400" hspace="5" border="0" align="center"></font></strong></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements </font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p> <font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">H</font><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ave a</font> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nice Weekend</font></font> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to </font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></strong></p> </body> </html>