TIOL-DDT 1480 · 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 1480</font><br>
03.11.2010<br>
Wednesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Concessional rates of duty for imports from ASEAN Countries - Brunei Darussalam added to list</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">GOVERNMENT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> had notified concessional customs duty on imports from Malaysia, Singapore and Thailand vide <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_153.htm" target="_blank">Notification No. 153/2009-Cus dated 31st December 2009</a></strong></em> in accordance with provisions of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009, published in the <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2009/cnt09_189.htm" target="_blank">Notification No. 189/2009-Customs (N.T.), dated the 31st December 2009</a></strong></em>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Later Vietnam, Myanmar and Indonesia were added to the list and now Brunei Darussalam is also added.</font></p>
<p align="left"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_115.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO. 115/2010-CUSTOMS Dated: November 01, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Concessional Rate of Duty for Crude Import from Brunei Darussalam </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">GOVERNMENT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font> has fixed an effective Customs Duty rate of 3 per cent adv for Crude Petroleum oils and oils obtained from bituminous minerals when imported into India from Brunei Darussalam.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is subject to the condition that the importer satisfies the AC/DC of Customs that the goods are of the origin of Brunei Darussalam, in accordance with provisions of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009. </font></p>
<p align="left"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_116.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO. 116/2010-CUSTOMS Dated: November 01, 2010</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Duty on Electricity cleared from SEZs – DOC wakes up a little late </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Department of Commerce (SEZ Section) has issued an instruction that “ in order to implement the <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_091.htm" target="_blank">Custom Notification No.91/2010, dated 6.9.2010</a></strong></em>, it has been decided that operation of Rule 47(3) of SEZ Rules, 2006 is kept abeyance w.e.f. 6.9.2010 till further orders .” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 47(3) of the SEZ Rules, reads as,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Surplus power generated in a Special Economic Zone's Developer's Power Plant in the SEZ or Unit's captive power plant or diesel generating set may be transferred to Domestic Tariff Area on payment of duty on consumables and raw materials used for generation of power subject to the following conditions, namely:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a)proposal for sale of surplus power received by the Development Commissioner shall be examined in consultation with the State Electricity Board, wherever considered necessary: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that consultation with State Electricity Board shall not be required for sale of power within the same Special Economic Zone; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) norms for production of a unit of power shall be approved by the Approval Committee;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c)sale of surplus power to other Unit or Developer in the same or other Special Economic Zone or to Export Oriented Unit or to Electronic Hardware Technology Park Unit or to Software Technology Park Unit or Bio-technology Park Unit, shall be without payment of duty; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d)for sale of surplus power in Domestic Tariff Area, the Unit shall obtain permission from the Specified Officer and the State Government authority concerned; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e)duty on sale of surplus power to the Domestic Tariff Area shall be as provided for in this rule. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Department of Commerce has kept the above rule in abeyance w.e.f 6.9.2010 to give effect to the Customs Notification No. 91/2010, but the Customs Notification 91/2010, has actually notified concessional rates of duty for electricity cleared from SEZ to DTA. And the duty on electricity cleared from SEZ to DTA was imposed with retrospective effect from June 26, 2009, by Finance Act 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the DOC is keeping the rule in abeyance wef 6.9.2010, when the duty is imposed wef 26.06.2009. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Too many laws, too many officers and compounded confusion! </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins067.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MOC, Department of Commerce Instruction No. 67; Dated October 28 2010. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Real Estate in Air - Jet Lite's 256 Crores case to be heard by CESTAT on 16.11.2010</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CESTAT had in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-854-CESTAT-DEL.htm" target="_blank"><font size="1">2010-TIOL-854-CESTAT-DEL</font></a></strong>, ordered a pre-deposit of Rs. 100 Crores. On writ petition, the Delhi High Court in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-619-HC-DEL-ST.htm" target="_blank"><font size="1">2010-TIOL-619-HC-DE-ST</font></a></strong> reduced the pre deposit to Rs 60 crores and Rs 10 Crores Bank Guarantee. On appeal, the Supreme Court did not grant any relief and asked JET LITE to pay the amounts as directed by the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT has now directed that the case be heard finally on 16.11.2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Misc. Order No. ST/105/2010, Justice R M S Khandeparkar , President recently passed the following order. </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On perusal of the order passed on 20.08.2010 by the Hon'ble High Court of Delhi and the order dated 27.09.2010 passed by the Hon'ble Supreme Court, copies of which have been placed on record disclose that the Hon'ble High Court of Delhi had modified the Tribunals order to the extent that if the Petitioner were to deposit sum of Rs.60 crores and furnish bank guarantee for a sum of Rs.10 crores by 25.09.2010, then the Tribunal is required to proceed with the appeal and finalise the matter by the end of November 2010 and for that purpose the parties were directed to appear before the Tribunal on 27.09.2010 for fixing a clear date for hearing of the appeal and that the Tribunal is not expected to adjourn the matter at the instance of either of the parties. The appellants approached the Hon'ble Supreme Court against the said order. However, the petition in that regard was dismissed by the said dated i.e. 27.09.2010. But at the request of the learned Counsel for the appellants, the Hon'ble Supreme Court has granted eight weeks time to deposit the amount in terms of the order passed by the High Court of Delhi. Apart from grant of the extension of period to deposit the amount no other modification has been made in the order passed by the High Court of Delhi. Considering the same, the Tribunal is required to dispose of the appeal by the end of November, 2010. In order to enable the Tribunal to dispose of the appeal in terms of the said direction it will be necessary to hear the matter at earliest. The matter, therefore is directed to be listed for final hearing on 16.11.2010, first on Board, with a clear intimation to the parties that the hearing of the matter would not be adjourned under any circumstances. </font></em></p>
</blockquote>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Transfer of Used Capital Goods by SEZ units - DOC Instructions - No Unilateral Decisions by Development Commissioners </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DEPARTMENT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> of Commerce has been receiving a number of representations especially from IT/ITES SEZ units about their requests for transfer of capital goods from their STPI units to their newly formed SEZ units. In one case, the DC concerned [please note, not the <em><strong>concerned</strong></em> DC] permitted the transfer subject to no income tax benefits being availed by the SEZ unit, permitted the STPI unit de-bond and issued the requisite sanction for transfer of the goods from STPI to SEZ. After nearly five months of the issuance of the LOA, the permission sanctioned to the SEZ unit was cancelled on the ground that such a transfer is not permitted. In other cases, the request for transfer was not approved. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the DOC clarifies that there are no provisions in the SEZ Act / Rules preventing such a transfer of goods. The only deterrent for transfer of such goods is not getting the exemption under the Income Tax Act when the value of the used goods exceed 20% of the total capital goods installed by the unit in a year. Instruction No.11 [Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9106" target="_blank"><font size="1">DDT 1122 - 01.06.2009</font></a></strong>] is reiterated wherein detailed guidelines have been prescribed for transferring of used/second hand capital goods from DTA including from an EOU/EHTP/STP/BTP unit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DOC requests that all the DCs may kindly follow the instruction prescribed in this regard. If DCs have any doubts, they should refer the cases to DoC but they should not take unilateral decisions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the difference between the Department of Commerce and the Department of Revenue. The DOC will allow what is not specifically prohibited while the DOR will not allow even what is clearly given. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">What is not specifically barred by law may be regarded as impliedly allowed by it.</font></strong></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins068.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MOC, Department of Commerce Instruction No. 68; Dated October 28 2010.</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Enhancement in CIF / FOB values and revalidation of advance authorisations - HOP Amendment </font></strong></p>
<p align="left"><strong><font color="#003300" size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has amended second sub-paragraph of paragraph 4.21 of HBP, Vol. 1. </font></strong></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">Existing Sub-paragraph </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amended Sub-paragraph </font></strong></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, in case of advance authorisations issued prior to 27.8.09 under the FTP, 2004-09, the following conditions shall apply for any enhancement in the value of the authorisation: </font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Wherever, exports are subsequent to 27.8.09, enhancement in CIF/FOB values shall be subject to a minimum value addition (VA) of 15% for that component of exports. </font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Wherever, the exports are prior to 27.8.09, enhancement of CIF/ FOB value shall be subject to a minimum Value addition of 15% or the V.A.declared in the original Advance Authorization application, whichever is lower. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, in case of advance authorisation(s) issued prior to 27.8.2009 under the FTP, 2004-09, the following conditions shall apply for any enhancement in the value of the authorisation: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Wherever exports are on or subsequent to 27.8.09, enhancement in CIF / FOB values shall be subject to a minimum value addition (VA) of 15% or the value addition prescribed in Appendix 11B, whichever is lower, for that component of exports. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Wherever exports are prior to 27.8.09, enhancement in CIF / FOB values shall be subject to a minimum value addition (VA) of 15% or the value addition prescribed in Appendix 11B, or the VA declared in the original advance authorisation application, whichever is lower </font></p></td>
</tr>
</table>
<p align="left"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Effect of this amendment: </font></strong></p>
<blockquote>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Ambiguity in treating exports made on 27.8.2009 has been removed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Value addition as prescribed in Appendix 11B has also been included both in part (i) and (ii) of this sub-para.</font></p>
</blockquote>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly sub-paragraph of paragraph 4.23 of HBP v1, is also amended. </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">Existing Sub-paragraph </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amended Sub-paragraph </font></strong></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of revalidation of advance authorization issued prior to 27.8.2009, it should be ensured that value addition is maintained at 15% (and as per details mentioned in para4.1.6 of FTP) or as stipulated in the advance authorization, whichever is higher. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of revalidation of advance authorization issued prior to 27.8.2009, it should be ensured that value addition (VA) is maintained at 15% (and as per details mentioned in para 4.1.6 of FTP) or as stipulated in the advance authorization, whichever is higher. However, for advance authorisations for products with VA as per Appendix 11B, the Value addition shall be as per the VA stated in Appendix 11B or as stated in Advance Authorisation, whichever is higher.” </font></p></td>
</tr>
</table>
<p align="left"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Effect of this amendment:</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It incorporates the Value Addition of a specific product as stated in Appendix 11B. There is no other change.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn014.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 14/2009-2014 (RE-2010); Dated November 02, 2010. </font></strong></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"> – Thursday'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">Customs</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Nigerian Passenger trying to export huge quantities of medicine purchased with unaccounted foreign currency - retention of passport not illegal; confiscation upheld - High Court</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> would be relevant to note that the Respondents were not dealing with any Indian National but a National of a foreign country who was illegally trying to take goods out of India as and by way of personal baggage in commercial quantities; It is also pertinent to note that the Petitioner had brought in foreign currency to the extent of US $ 52,250 on his previous visit which ended on 4/4/2008. The said amount has not been accounted for except stating that he had made the purchases of medicines and other items out of the said currency. The learned counsel for the Petitioner was not in a position to account for such a huge amount of foreign currency. This court cannot lose sight of the fact that such amounts are usually diverted for illegal purposes i.e. towards the purchase of banned items like drugs, and therefore, the said fact would also be one of the relevant considerations whilst adjudicating the above Petition. </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 32 - Can assessee-society claim depreciation on capital assets on which it has claimed deduction for costs as application of money? - Does it amount to double deductions? - YES, it is not allowable, says 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 the AO is right in denying depreciation on capital assets whose costs were allowed as application of income by the assessee-society in the previous year - Whether allowance of depreciation would amount to double benefits. YES, says the Tribunal. </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">Valuation – LPG (domestic) Cleared in Bulk from refinery - Matter referred to Larger Bench - CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> dispute in the present case relates to the valuation of LPG (domestic) SH 2711.19 cleared in bulk from the appellant's factory (refinery) to Oil Marketing Companies (OMCs), namely, Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL) and Indian Oil Corporation Ltd. (IOCL) during the period from June 2002 to December 2004. </font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></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"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p>
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