TIOL-DDT 1484 · 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 1484</font> <br>
10.11.2010 <br>
Wednesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Policy and operational issues relating to IT SEZs - DOC Instructions</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Department of Commerce (SEZ Division) has issued instructions regarding various issues relating to IT SEZs.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Shifting of units to SEZ : The spirit of the SEZ Act & Rules is that the investment for infrastructure development in the SEZ has to be new. The transfer of used goods/business is only with respect to the SEZ Units. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ DTA sale by IT SEZ Unit : In the SEZ scheme, there is neither an export obligation on a unit nor there is ban on DTA sale. However, they must achieve NFE positive earnings within five years of the commencement of the commercial operations failing which action may be taken as per the provisions of relevant rules and instructions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Shifting of Unit from one SEZ to another : there is no objection in-principle to the shifting the unit from one SEZ to another. However, all such proposals are required to be placed before the Board of Approval for its consideration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Broad banding of IT/ITES SEZs to include Hardware also: While the Letter of Approval being issued to IT/ITES SEZs has been broad' banded to include electronic hardware also and further manufacturing/ assembling of, electronic equipments must also be allowed in such SEZs. Further Hardware units may require production of components and the same must be allowed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
Testing laboratory for tyres in IT SEZ set up by L&T: It was decided
that setting up of a unit for testing of tyres in an IT SEZs may not be
allowed as the process may involve setting up separate facility totally
unrelated to IT and would require measures to check pollution also. Therefore,
they may be asked to undertake the physical testing activity outside the
SEZ while the test data can be processed in the SEZ unit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ SEZ online project : About the SEZ online software being developed by M/s. NSDL, it was stated that the agency has agreed to post one executive each to work with all the seven Zonal DCs. Services of these executives can be utilised by all DCs including STPI Directors to address the day to day problems faced in operating the software developed by M/s. NSDL. The suggestion of STPI Directors to arrange hand holding for customs staff of the zone was also accepted. </font></p>
</blockquote>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department
of Commerce (SEZ Division) <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins070.htm" target="_blank">F.No.12/4/2010-SEZ
dated 09 November 2010 </a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Doing Business in India - Still a nightmare? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INDIAN</strong> Economy may be booming and the likes of Obama may be wooing us, but the fact remains that 'doing business in India is still a bad proposition. According to a survey 'Doing Business 2011', by World Bank, even Pakistan, Sri Lanka and Bangladesh are better places to do business. India ranks <font color="#FF6633"><strong>134</strong></font> among 183 nations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are the vital statistics for India.</font></p>
<table border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td><p align="left"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Starting a business (rank) </font></strong></font></p></td>
<td><p align="right"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">134 </font></strong></font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Procedures (number) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time (days) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">29 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cost (% of income per capita) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">56.5 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Minimum capital (% of income per capita) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">188.8 </font></p></td>
</tr>
<tr>
<td><p align="left"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dealing with construction permits (rank) </font></strong></font></p></td>
<td><p align="right"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">177 </font></strong></font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Procedures (number) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">37 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time (days) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">195 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cost (% of income per capita) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2143.7 </font></p></td>
</tr>
<tr>
<td><p align="left"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Registering property (rank) </font></strong></font></p></td>
<td><p align="right"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">94 </font></strong></font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Procedures (number) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time (days) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">44 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cost (% of income per capita) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.4 </font></p></td>
</tr>
<tr>
<td><p align="left"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Getting credit (rank) </font></strong></font></p></td>
<td><p align="right"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">32 </font></strong></font></p></td>
</tr>
<tr>
<td><p align="left"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Protecting investors (rank) </font></strong></font></p></td>
<td><p align="right"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">44 </font></strong></font></p></td>
</tr>
<tr>
<td><p align="left"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Paying taxes (rank) </font></strong></font></p></td>
<td><p align="right"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">164 </font></strong></font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Payments (number per year) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">56 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time (hours per year) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">258 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total tax rate (% of profit) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">63.3 </font></p></td>
</tr>
<tr>
<td><p align="left"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Trading across borders (rank) </font></strong></font></p></td>
<td><p align="right"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></strong></font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Documents to export (number) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time to export (days) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cost to export (US$ per container) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1055 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Documents to import (number) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time to import (days) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cost to import (US$ per container) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1025 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Closing a business (rank) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">134 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time (years) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cost (% of estate) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9 </font></p></td>
</tr>
<tr>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recovery rate (cents on the dollar) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16.3 </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to the report,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">India implemented 18 business regulation reforms in 7 areas. Many focused on technology—implementing electronic business registration, electronic filing for taxes, an electronic collateral registry and online submission of customs forms and payments. Changes also occurred at the subnational level. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One study looked at India's gradual elimination of the bureaucratic industrial licensing system known as the “license raj.” It shows that the effect on manufacturing output, employment, entry and investment varied across Indian states, depending on the institutional environment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A survey in India found that fewer users paid bribes to accelerate e-government services.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Complications – Board solutions?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RECENTLY</strong> Member (Cus & EP) of CBEC, SK Goel chaired a meeting of the Customs Consultative Group in Mumbai. We bring you some of the queries raised and the Member's crisp replies. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Q: Non-Availability of Appraising Officers/Dy. Commissioners:</strong> Since the appraising officers are also assigned work related to attending court cases etc. many a time they go to court and remain there the full day for 2 to 3 days. This causes undue hardship to the importers. Appraisers who are assigned the current appraising activity should not be allocated the work relating to attending the court cases. May be a team of experts be allocated for the court related work. </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A:</strong> Chief Commissioner of Customs, Mumbai-I explained that the officers conversant with the case are required to assist the Departmental Counsels in order to ensure that facts of the case/departmental standpoint is correctly brought to the notice of the Court. There are instances wherein the Courts have directed that conversant officers should be present during the course of hearing. However, orders indicating the alternate officer who shall attend to the work during the absence of officer holding a regular charge have been issued to take care of such eventualities. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Q: Bill of Entry does not show CVD.</strong> In case imports have been completed prior to fulfillment of Export Obligation & thereafter DFIA has been made transferable, the following problems are faced: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a)Against transferable DFIA when Bill of Entry (BE) is submitted to Customs, all duties including CVD are calculated and are shown as “Foregone”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b)As per para 4.2.6 of FTP & Para 4.36A of Hand Book of Procedures against transferable DFIA, while duties, etc. are exempted, CVD has to be paid through TR6 challan. Therefore, in BE while CVD is shown “Foregone”, the same is paid separately through TR6 challan. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For claiming CENVAT against payment of CVD under transferable DFIA, both copies of BE & TR6 challan are submitted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Central Excise authorities raised objections towards claiming CENVAT for the CVD paid through TR6 challan on the ground that BE has shown CVD as “ Foregone” </font></p>
</blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A: </strong>DG (Systems) promised to examine the software and carry out necessary changes, if needed, on priority. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Q: Time taken for Customs Clarifications from CBEC:</strong> It takes minimum 2-3 weeks to even months and at times goods are held at the port for want of such clarifications. The clarifications should be issued in time bound manner and should not take more than 2-5 days even if consultation is required from another ministry. </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A:</strong> R eferences received from field formations and trade are being attended to timely. However, no timeline can be fixed in this regard due to the complexities involved. </font></em></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"> – Thursdya'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">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Confiscation of Indian Currency - The Tribunal has totally misdirected itself in setting aside confiscation without referring to statements recorded or why retraction of statements has to be considered - Department's appeal allowed - Bombay High Court</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Tribunal has erred in recording a finding that the conditions mentioned in Section 121 of the said Act, in so far as the seizure of the Indian Currency is concerned, have not been fulfilled. The statement as recorded of the Respondent under Section 108 of the said Act is a material piece of evidence against the Respondent for contravention of the provisions of the said Act, in so far as, the amount of Rs.2,27,100/ is concerned. </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">If agricultural land is not cultivated for long time, whether it changes characteristics from agri to non-agri land - Whether assessee is eligible for exemption for gains on transfer of such land? - YES, says High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the HC is - if assessee does not cultivate its agricultural land for longer period, whether the land changes its characteristics from agriculture to non-agriculture - Whether Tribunal is correct in exempting the gains arising on transfer of such land. YES, rules the High Court . </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">Recovery of duty short paid on capital goods removed as such – As per CESTAT decision in Geeta Industries case if depreciation is allowed on value of capital goods and proportionate credit sought to be reversed, it would tantamount to payment of duty on value, which is contrary to LB decision in Modernova Plastyles case – Matter placed before President for advice - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> hearing both sides, in the instant case, the Single Member bench observed that the decision of Delhi Bench in Geeta Industries case may be contrary to the decision of Larger Bench in the case of Modernova Plastyles Ltd. It was further observed that if any depreciation on the value of capital goods is allowed and reversal of proportionate credit is sought, it would tantamount to payment of duty on a value which is arrived after allowing depreciation and in turn nullify the decision of Larger Bench which held that credit has to be reversed irrespective of whether capital goods were cleared as such or after usage. </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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