TIOL-DDT 1495 · 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 1495</font><br> 26.11.2010 <br> Friday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Recording of Statement under Customs Act - Supreme Court allows presence of Advocate </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a landmark order delivered day before yesterday, the Supreme Court has permitted the presence of an advocate during interrogation under Section 108 of the Customs Act. The Supreme Court directed that the interrogation, if any, of the petitioner under Section 108 of the Customs Act, 1962, in connection with file No. DRI/GRU/INV-02/2010-11, be conducted in the presence of his advocate, who would be entitled to stay at a visible but beyond hearing distance, from the place of interrogation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While making the presentation before the Parliamentary Committee on Finance on behalf of <strong>TIOL</strong>, I had submitted to the Hon'ble MPs;- </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any gazetted officer of the customs office is empowered to summon people to record their evidence and under the laws of India, a statement given before a customs officer is a valid piece of evidence. It is not like a statement given before a police officer which is not evidence. So, this summons and recording of statement power is very often misused. There are lot of allegations of people being summoned and beaten up and statements obtained. The next day they go and retract the statement. They are again called by summons and beaten up till they do not retract the statement. If they retract the statement after a month or two, the courts and higher appellate authorities take a view that ‘you did not retract your statement in time; so it is an after-thought, so the statement stands'. And the statement given before a customs officer is a very valid piece of evidence. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Hon'ble Chairman of the Standing Committee was surprised and he said, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I did not know about this aspect. I am surprised that a person who is recording the evidence is also, in a way, the prosecutor. In case of Police, they are not allowed to record the evidence because it is not acceptable in a court of law. The Police have to approach the Magistrate to record the evidence. Why is it that there is no third agency involved in this case? You have talked about the disadvantages of the present system. I am quite surprised as a common citizen that the Custom people have been allowed this authority whereas the Police have not been allowed to do so. Both are trying to prosecute the people whom they consider to be guilty. Let me know the background and whether there is any legal solution for this. Apart from prohibiting a Custom officer from recording the evidence, we should say that such and such person should be present at the time of recording the evidence or something like that. I f you have got any suggestion to ensure that this third degree method is not employed of if it is employed, their evidence is not accepted, please submit. You can send this information after due consideration, in writing. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We also added:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The experience has been that people are beaten up and usually police officers are badly accused of and publicised, as using third degree. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This provision has been made in the law assuming that the customs officers do not have lathis; they are not trained to beat people without the press seeing them. So, they get evidence by questioning or by other means. Third degree was believed to be not employable by the customs officers. But the experience is that in every case where the statement has been obtained,as the only evidence, the statement has always been obtained under duress, threat and pure unadulterated third degree. The courts have come to the rescue of some of these people some times. If the summoned person is a smuggler or he is a fraud or he is an evader, he has to be punished. It is okay. But he has to be punished within the law made by the Hon. Parliament of India. If I believe, somebody has evaded tax, I cannot beat him up; I cannot torture him. There are provisions under the law to bring him to punishment. The evidence has to be gathered by documents. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A leading lawyer recently wrote to us, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a result of grant of evidentiary value for the statement recorded by the Customs and Excise officers, in any investigation, more emphasis is laid on recording statements, rather than collecting more corroborating evidences. This also leads to cases of extraction of statements under duress, though many such instances go un-complained for fear of consequences. Various degrees and methods of duress are often used by the officers to record confessional statements. It is usual for the investigating officers to recover substantial sums even during investigation, that too even when CENVAT credit was available, the assessees would be forced to pay in cash, which by itself would prove the existence of coercion and duress. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It really beats logic as to why any sane person would give a voluntary statement that he has smuggled and evaded. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court order comes in as a whiff of fresh air into the congested corridors of Customs offices. This order may not be universally applicable and maybe meant only for the applicant, but it still opens a new door for the harassed victims of misused power to record statements. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2010/2010-TIOL-98-SC-CUS.htm" target="_blank">2010-TIOL-98-SC-CUS</a></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please also see</strong> Summons under Central Excise – Presence of a lawyer <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9058"><strong>DDT 1115 - 21.05.2009</strong></a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Transport of Goods by Rail - Indian Rail vs Indian Revenue - Exemption to expire on 31 December - Will Didi get an extension? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SINCE</strong> 2009, the Finance Ministry had been trying to levy Service Tax on transport of goods by Rail, but Madam Mamata Banerjee had been scuttling their efforts. We were told that a CBEC Member called on a Railway Board Member to work out the details of collecting the tax. The Railway Board Member told him, “we don't recognise this tax”. And he was right! His Minister got the tax put on hold. The exemption for this tax is to expire on 31 December 2010, which means that from 1 January 2011, the Railways will have to pay this tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Railways is in no mood to pay. It seems yesterday Didi Mamata met Dada Pranab and asked for extension of the exemption till 31 March 2011. The FM is known to be a very obliging person and he cannot certainly turn down the request of his illustrious colleague with whom his party has to face an election in his home state soon. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exemption is bound to be extended, but let us hope our babus do it before it lapses on 31 st December.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please also see</strong></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>1. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9548">DDT 1180 – 21.08.2009 </a></strong></font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9601">DDT 1187 – 01.09.2009 </a></font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9607">DDT 1188 – 02.09.2009 </a></font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11035">DDT 1387 – 14.06.2010 </a></font></strong></p> </blockquote> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI Arrests Central Excise Supdt accepting a bribe of Rs. 30,000 out of a bargained Rs. 5 Lakhs!</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> central Excise Superintendent demands a bribe of Rs. 5 Lakhs and had been allegedly paid an installment of Rs. 1 Lakh. Imagine, there were days when they used to accept Rs. 500. Inflation and greed has caught up and the huge hike given by the Pay Commission is no restraint. But the CBI caught up with our officer while accepting the second installment of Rs. 30,000. Now he is remanded to CBI custody till 29 November. The next 15 years of his life is gone and it is very rarely that an officer who is caught red handed escapes conviction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tax officials should know that the assessees are not smalltime pick-pockets and you can't win by harassing them, but they feel short changed when you make their lives miserable and then expect them to pay you. If you want money that you are not entitled to, beg; but don't use your official power to demand – one day CBI will get you! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">India's Foreign Exchange Reserves - Are we selling our resources and services for a currency of diminishing value? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> RBI Governor D. Subba Rao was asked a question, “<em>Should India continue to accumulate USD and follow US interest rate policies? In the name of earning export dollars, maybe we are selling our resources and services for a currency of diminishing value. ” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subba Rao replied:</font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To deal with sudden stops and reversals of capital flows, a certain level of foreign exchange reserves is necessary. However, India does not have a policy of actively accumulating reserves as a measure of self-insurance. Any accumulation of reserves is partly an incidental by-product of our exchange rate policy which is to check undue volatility in the foreign exchange market so that the exchange rate reflects the underlying macroeconomic fundamentals. Incidentally, the increase in our reserves also reflects valuation changes. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In this context, it is also important to note that </em><strong><em><font color="#663399">our foreign exchange reserves comprise not just dollars but also other hard currencies such as the euro and the sterling pound [and] also gold. </font></em></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 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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export Clearances not to be reckoned for computing aggregate value of clearances under SSI notification : CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> department, after scrutiny of records and connected enquiries, issued a show-cause notice on 12.12.2006 under the proviso to section 11A(1) of the Central Excise Act alleging inter alia that the assessee had cleared the specified goods for home consumption in excess of the limit prescribed under the relevant notifications and consequently they are not entitled to claim SSI benefit. It was alleged that the cartons (packing materials) manufactured by the assessee and cleared to exporters without payment of duty were liable to be treated as clearance for home consumption on account of the fact that the goods were not directly exported from the factory of production and, therefore, the provisions of Rule 19(1) were not attracted . It was alleged that such clearances were liable to be treated as ‘clearances for home consumption' and included in the aggregate value of clearances for the purpose of computing the exemption limit under the SSI notification. </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">Whether, for allowability of expenditure, head of income is to be considered and deduction cannot be allowed under different head merely on basis of nature of income? - Yes, 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 allowability of expenditure has to be considered under a particular head of income and the deduction cannot be allowed under different head merely on the basis of nature of income. YES, says the Tribunal. </font></p> <p align="justify"><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">Job work - Merely because waste and scrap were not returned, CENVAT cannot be denied in its entirety : CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> short issue is that the respondent assessee had obtained the requisite permission from the jurisdictional authorities to remove cenvatted inputs from their factory to a job worker and clear the finished products directly from the premises of the job worker on payment of duty. Incidentally, the assessee did not bring back from the job worker the waste and scrap that was generated during the processing of finished goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue has taken a view that the ENTIRE credit taken on the inputs is inadmissible and the adjudicating authority denied the credit and confirmed the demand along with interest and penalty. </font></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> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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> </body> </html>