TIOL-DDT 1442 · 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 1442 </font><br>
10.09.2010 <br>
Friday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption to specified goods imported for Common Wealth Games and Government's Flip Flops </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOING</strong> by the media reports in the recent past, it appears that the entire blame for delay in execution of several projects related to Common Wealth Games, 2010 was laid at the doorstep of the Organizing Committee of the Common Wealth Games, 2010 and other executors of the various projects like CPWD, New Delhi Municipal Corporation etc. It is another matter that there were also serious allegations of corruption and nepotism in awarding contracts for execution of these projects. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While some of the blame may rest with these project executing authorities and the OC, CWG, since a majority of goods and equipment required for execution of some of the projects related to CWG are being imported, the exclusion of suppliers/contractors/ vendors/sub-vendors for the purpose of allowing benefits of exemption <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_031.htm" target="_blank">Notification No. 31/2010-Cus dated 27.02.2010</a> </strong></em>also proved to be a major stumbling block in shaping up the CWG venues on time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may be noted that the Central Government has vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_013.htm" target="_blank">Notification No. 13/2010-Cus dated 19.02.2010</a></strong></em> exempted certain specified goods viz., sports goods, sports and fitness equipments, arms and ammunition, doping control equipment, satellite phones/GPS and other communication equipments, video/plasma screens, electronic score board display, timer devices, furniture and fixtures, power generation and distribution systems, air conditioning equipments, food stuff, energy drinks, pharmaceuticals etc imported by the Organizing Committee of the Common Wealth Games, 2010, National Sports Federations or participating athletes, from basic customs duty and additional customs duties subject to the conditions prescribed in the said notification. Unfortunately, this notification did not include suppliers/contractors etc for the purpose of exemption benefits when it was first issued. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As these importers were denied the benefits of the exemption notification by the field formations and doubts were expressed as to whether they were actually eligible for the exemption benefit under the said notification, Board vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_026.htm" target="_blank">Circular No. 26/2010-Cus dated August 9, 2010</a></strong></em> clarified that suppliers/contractors/vendors appointed by the OC, CWG would not be eligible for the benefit under the said notification. Board further advised that the provisions of Foreign Trade Policy or any other Acts or exemption, if any, in this regard, will apply as per the instructions/circular issued by DGFT and concerned Departments from time to time. The OC, CWG was advised to take up these matters with DGFT and concerned Departments and sort out the issues well in advance before arrival of consignments, who have since issued requisite clarifications. Board also advised the field formations to speedily clear consignments meant for CWG 2010 by appointing a nodal officer for the purpose. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_028.htm" target="_blank">Circular No. 28/2010-Cus, dated August 13, 2010</a></strong></em>, Board issued further instructions to facilitate speedy clearance of certain specified goods in consultation with Prasar Bharti, Ministry of Sports and Youth Affairs and OC, CWG and specified certain conditions and procedures to be followed by OC, CWG or Prasar Bharti with regard to the import of the said specified goods. It may be noted that the issue involved was again with regard to the eligibility of contractors/vendors/sub-vendors for the benefit of exemption<em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_013.htm" target="_blank">Notification 13/2010-Cus</a></strong></em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally, Central Government realized its folly of not allowing the benefit of the said exemption notification to the suppliers/contractors/vendors/sub-vendors of OC, CWG and made an amendment vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_084.htm" target="_blank">Notification No. 84/2010-Cus dated August 27, 2010</a></strong></em> to include these categories of importers in the eligible list of importers. Likewise, the suppliers/contractors/vendors/sub vendors of Prasar Bharti or of broadcasting rights holders were also included in the eligible list of importers to claim exemption benefits subject to certain conditions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The moot point is how the Finance Ministry could assume that the actual imports of some of the specified goods required for the execution of the projects will be solely imported by the OC, CWG or the various National Sports Federations. After all, Suresh Kalmadi & Co are at the helm only to run the show and not execute the projects on the ground. It is common knowledge that it is the contractors/vendors/sub vendors who actually undertake the work allotted to them by the OC, CWG/National Sports Bodies etc and not Suresh Kalmadi & Co. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Time limit for filing I-T Returns in ITR-V Forms Electronically Extended</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Board of Direct Taxes has extended the time limit for filing ITR-V forms relating to income tax returns filed electronically (without digital signature) for the assessment year (AY) 2009-10 up to 31st December 2010, or 120 days from the date of filing, whichever is later. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Since many taxpayers have either not filed their ITR-V or have filed it with the local Income Tax office and ITR-V is accepted only at the Centralized Processing Centre (CPC), Bengaluru by ordinary or speed post, CBDT says that this is a final opportunity being given to such taxpayers to regularize their income tax returns. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Taxpayers who have filed their returns electronically for AY 2009-10 on or after 1st April 2009 and have not filed the ITR-V to the CPC may mail it by ordinary post or speed post at Post Bag No.1, Electronic City Post Office, Bengaluru – 560100 (Karnataka). Taxpayers who have filed their ITR-V with the local Income Tax office may again mail their ITR-V to the CPC. Those taxpayers who have earlier mailed their ITR-V, but have not received the acknowledgement e-mail from the CPC, may re-mail their ITR-V to the CPC. <br>
<br>
It is reiterated by CBDT that the ITR-V form should be mailed to the CPC only at the above address by ordinary post or speed post. Taxpayers should note that no other place or form of delivery will be accepted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Taxpayers may also note that without acknowledgement of the ITR-V from the CPC it would not be possible for the Income Tax Department to process the income tax returns or issue any refunds there from, as these would be treated as not having been filed with the Department. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the bottom line is file the return as directed and get an acknowledgement or you can forget your refund claims for good.</font></strong></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/press_release_sept09_10.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Press Release No.402/92/2006-MC (40 of 2010)., Dated: September 9, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Supreme Court Upholds Department of Custom's Order of Duty Demand of worth Rs. 40 Crore Against M/S Pernod Ricard India Private Limited </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<strong>IN</strong> a significant case relating to Customs Valuation, a recent judgement dated 26.07.2010 of <strong>the Honourable Supreme Court has confirmed the duty demand against a leading importer of Whiskeys</strong>, M/s Pernod Ricard India Private Limited (earlier known as <strong>Seagram India</strong> Private Limited). The case pertains to imports between 1994 and 2001 involving duty evasion of about <strong>Rs 40 Crores. M/s Seagram would thus have to deposit this entire amount now. But this is only the tip of the iceberg. In addition finalization of provisional assessments on imports </strong>of the goods by M/s Seagram from 2001 is likely to result in significant revenue to the government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Modus Operandi - Undervaluation:</strong> The case pertains to import of Concentrates of Alcoholic Beverages (CABs) of Scotch Whiskeys at <strong>highly undervalued rates</strong> by M/s Seagram from the exporter - M/s Joseph E Seagram and Sons Ltd., Scotland . Both the importer and exporter are wholly owned subsidiaries of Seagram Company Ltd. Canada. The CABs so imported were diluted and bottled for introducing four different types of Scotch Whiskeys in the Indian market, namely, <strong>100 Pipers, Passport, Something Special, International Malt</strong> (Royal Stag; Oaken Glow; Blenders Pride and Imperial Blue). The declared prices at which the CABs were imported by M/s Seagram were suppressed and were much lower (by as much as 50%) vis-à-vis the prices of similar and comparable Scotch CABs imported by others. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The importer also <strong>blatantly misdeclared quantity of whiskey imported for certain consignments</strong> with the intention to evade duty. <strong>In fact, the Bills of Entry had white ink marks and overwriting indicating a deliberate misdeclaration</strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Litigation History:</strong> The demand was initially raised following an extensive investigation by the Directorate of Revenue Intelligence (DRI) through two Show Cause Notices (SCN) that were issued in December 2000 and January 2001. The notices demanded the short paid duty besides proposing penalty on the party <strong>and its top office bearers</strong> in India . After issuing of the SCNs, the notices were adjudicated by the Commissioner of Customs, Inland Container Depot Tughlakabad. After availing the appellate remedies before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), the matter finally went to the Supreme Court. The Hon'ble Supreme Court has in the recent order completely vindicated the stand of the department on the valuation issues.” </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sounds familiar isn't it? Well, this is the press release dated September 9, 2010 from the Finance Ministry on the now famous Supreme Court judgment in Seagram's Customs Valuation case which<font color="#FF6633"> TIOL</font> reported on July 26, 2010 (refer <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2010/2010-TIOL-54-SC-CUS.htm" target="_blank"><font size="1">2010-TIOL-54-SC-CUS</font></a>). <font color="#FF6633">TIOL</font> spreads i nformation at the speed of light, while Finance Ministry's press release comes at a snail's pace. But why a press release was issued out of the blue by the Finance Ministry highlighting only this Supreme Court judgment is really surprising, considering the fact that the Supreme Court has delivered several landmark judgments in the recent past which have major tax implications. </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Entertainment Tax can be levied only on future IPL matches says Mumbai High Court</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RECENTLY</strong>, Mumbai High Court disposed of a Public Interest Litigation challenging the Maharashtra Government's grant of exemption from levy of entertainment tax on IPL matches held last summer (March/April 2010). The Court was also seized of the matter regarding the propriety of a Union Minister holding positions in a sports organization and conflict with the Code of Conduct for Ministers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court, based on the decision of the State Government in withdrawing the exemption earlier granted to sports activities way back in 1964 and its decision to levy entertainment tax on future IPL matches, held that the State Government cannot be directed to collect any tax retrospectively. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards Code of Conduct for Ministers and their role in sports organizations, the High Court observed that this is an issue which should be best left to the wisdom of the concerned authority who is in charge of framing and regulating such Code of Conduct. The High Court further observed that Ministers being ‘Trustees' of the people of this Country, they should recuse/preclude from taking any decisions which are in conflict with the interest of the people. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For more on this interesting PIL, 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="#FF6633" size="5">tiol</font><font color="#006600"> – Monday'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">Income Tax - Sec 37 - PSC for oil exploration - Site restoration is integral part of petroleum operations which include exploration - Although expenditure propvision for such activities not allowable u/s 37 but to be considered while computing income u/s 115JA: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CRUDE</strong> oil is a precious resource for any country. To extract it, India has also come out with National Exploration Policy. Under this policy, all production sharing contracts (PSC) were approved by the Parliament. The issue before the Tribunal is - <strong>Whether site restoration is a part and parcel of petroleum operations which do not include oil exploration and development. The next question is whether the provision of expenditure made for site restoration can be said to be unascertained liability. Is the assessee eligible to claim it u/s 37(1) or the PSC being a special arrangement, the site restoration expenditure is to be considered while computing income u/s 115JA. </strong></font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs – Settlement Commission - orders of the Settlement Commission are amenable to writ jurisdiction – Settlement Commission required to pass reasoned orders – High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>THE</strong> Petitioners are 100% Export Oriented Unit (EOU), engaged in the manufacture of Vegetable extracts U/Chapter 13 of the Central Excise Tariff Act. The Petitioners being 100% EOU are required to obtain permission from Development Commissioner for clearing their goods to Domestic Tariff Area (DTA). They are required to pay Excise duty in the case of DTA clearance as per section 3 of Central Excise Act, 1944 and Customs Act and in any other law for the time being in force. The goods cleared by the Petitioners are oleoresin covered under tariff items chapter heading 1301.10. At the relevant time the duty liable to be paid by the Petitioners was : 30% basic Customs duty + 16% CVD + 04% SAD. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">If there is any conflict between Tribunal's decision and Board's clarification, former will prevail – existence of sugar and distillery divisions as two distinct units within same factory would not ipso facto disentitle assessee – availment of duty paid on Molasses for payment of duty on Sugar not barred: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> THE</strong> assessee was engaged in the manufacture of sugar, molasses, rectified spirit, denatured spirit and Extra Neutral Alcohol (ENA) during the material period. They had two divisions, namely Sugar Division and Distillery Division. In the Sugar Division, sugar was manufactured and cleared on payment of duty. Molasses, a by-product, was removed from the Sugar Division, on payment of duty, to the Distillery Division where it was used in the manufacture of rectified spirit (exempted final product), denatured spirit (dutiable product) and ENA (dutiable product). Separate MODVAT accounts were maintained in the two divisions. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Monday with more <strong>DDT</strong> </font></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice <strong>weekend</strong> and <font size="4">Happy<em> <strong>'Eid'</strong></em> and
<em>'Vinayak Chaturthi'</em></font></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"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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