TIOL-DDT 1496 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">TIOL-DDT 1496 </font></strong><br>
<strong>29.11.2010 <br>
Monday </strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Two exemption Notifications, which one should assessee choose? - Two clarifications from Board, which one should assessee choose? </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>answer to the first question maybe rather easy, but the answer to the second question is rather tricky. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the first question, the Board had clarified that the assessee can choose the one beneficial to him. Now comes the second question- More than two years after the first clarification, Board now says the assessee has no choice! Confusing? But that is how the Government's tax system works. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Look at the issue:- </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The period of dispute is from 7.12.2008 to 6.7.2009. During this period while one<strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2004/etariff04_029.htm" target="_blank"> Notification No. 29/2004-CE</a></em></strong> as amended granted full exemption to certain items of Textile Sector without any condition, the second <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_59.htm" target="_blank">Notification 59/2008-CE</a></strong></em> prescribed a concessional rate of duty of 4% on these items, (with the benefit of CENVAT Credit.) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The dispute was with regard to whether an assessee can avail the benefit of either of the above said two notifications whichever is beneficial to him or he is bound to avail the unconditional exemption under <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2004/etariff04_029.htm" target="_blank">Notification No. 29/2004-CE</a></em></strong>, as amended, during the period under dispute in terms of the provisions of section 5A(1A) of the Central Excise Act, 1944. [to brush up our memory, this provision reads as, <strong><em><font color="#FF6633">For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.</font>]</em> </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has taken the opinion of the Law Ministry and this noble ministry has clarified that<strong><font color="#FF6633"> in view of the specific bar provided under sub-section (1A) of section 5A of the Central Excise Act, the manufacturer cannot opt to pay the duty under <em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_59.htm" target="_blank">Notification 59/2008-CE dated 7.12.2008</a></em> and he cannot avail the CENVAT Credit of the duty paid on inputs. </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The good Board has accepted the opinion of the Law Ministry and has directed the field formations to decide pending cases accordingly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board has forgotten the clarification given by the Board (TRU) in DO Letter 334/1/2008-TRU - dated 29th February, 2008, wherein it was clarified that the rate beneficial to the assessee would have to be extended. Of course Board can say that that clarification was issued in a different context. If<strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_59.htm" target="_blank"> Notification No. 59/2008</a></em></strong> cannot be availed, why was the Notification issued? Should the assessee suffer for the Board's mistake? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT had covered this issue extensively. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In<strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8262" target="_blank">DDT 1007 08.12.2008</a></strong>, while reporting this <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_59.htm" target="_blank">Notification No. 59/2008</a></em></strong>, <strong>DDT</strong> said, "Now there may be certain goods which will attract nil rate of duty as well as 4% duty by two different notifications, but of course the assessee will have the choice."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8287" target="_blank">DDT 1010 12.12.2008</a></strong> , <strong>DDT</strong> covered a different aspect of this <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_59.htm" target="_blank">Notification No. 59/2008</a></em></strong>- where the Department sought to collect 4% duty and deny the full exemption. We then referring to the TRU clarification stated, "Fortunately you don't need <strong>DDT's</strong> advice. The Board itself clarified on this situation."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9275" target="_blank">DDT 1146 03.07.2009</a></strong>, while highlighting the plight of a textile exporter, we said, <strong><font color="#FF6633">" While the ingenuity of the jurisdictional excise authorities in invoking provisions of Section5A(1A) in such cases is commendable, their utter disregard for TRU DO letter which clarifies that an assessee is free to choose a notification which is beneficial to them, is despicable.</font></strong> <font color="#663399"><strong>DDT hopes that the good Board will be considerate towards these exporters and come out with a suitable clarification on this issue very soon. "</strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After
the anomaly was solved by making the duty under <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2004/etariff04_029.htm" target="_blank">Notification
No. 29/2004</a></strong></em> also at 4%, in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9406" target="_blank">DDT
1158 21.07.2009</a></strong> , we asked, <strong><font color="#FF6633">"<em>Now
with this budget, this problem is solved by amending the said notification
by <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2009/etariff09_11.htm" target="_blank">Notification
11/2009-CE</a>. But what about the intervening period i.e. from 07.12.2008
to 06.07.2009 . CBEC should clarify </em>"<em>.</em></font></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Board has clarified now- that the assessee would not get the benefit, just because Board made a mistake. Heads you lose.....? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apparently, the Law makers in the Board did not know about Clause 1A of Section 5A, when they fixed nil rate of duty and 4% duty for the same goods by <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2004/etariff04_029.htm" target="_blank">Notifications 29/2004</a></em></strong> and <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_59.htm" target="_blank">59/2008</a></strong></em>. If they were aware of its implications, they could not have fixed two rates with one of them being NIL. It is clearly a mistake of the Board and assuming that there would be such mistakes, TRU clarified that the beneficial notification has to be allowed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now another clarification from another section of the Board says <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_59.htm" target="_blank">Notification No. 59/2008</a></strong></em> cannot be availed! And that too two years after the controversy started. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> would like to add that it is not against the latest clarification, which is absolutely right, but it is not right for a Revenue Board to mislead its assessees by issuing two notifications, advising them that they can choose any one and after two years to clarify that they have no choice. When you have made a mistake, why can't you admit it and allow the benefit- after all, the coffers are not going to be emptied by allowing this small benefit to a few assessees for a short period of seven months. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the revenue babus can use their enormous intelligence and wisdom to help the assessees instead of denying them benefits, this country will prosper and more revenue will come in, which will help in paying the babus the fat salaries they get. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/excircular937.htm" target="_blank"><strong>CBEC Circular No. 937/27/2010 - Cx [F. NO. 52/1/2009- CX.1 Pt)], Dated 26.11.2010 </strong></a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Casual Nature in which Court Proceedings are treated by Customs - Madras High Court </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JUSTICE</strong> Sudhakar of the Madras High Court, in a recent order, expressed his anguish at the casual nature that proceedings of the High Court are treated by the Commissioner of Customs. Even after 2 years and 11 months, the Department has not filed a counter and nobody appears for the Department. With too many Departmental Counsels now being posted, nobody knows who represents the Department. In fact one Counsel told the Court that no officer of the Department is responding to their calls. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Judge observed, "The Central Board of Customs and Excise should take note of the situation and issue suitable direction to the respective Chief Commissioners to ensure proper representation in Court proceedings ."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Justice Sudhakar is a very soft-spoken and highly courteous judge and that must be the reason why his comments are very mild and suggestive- and he has a lot of experience in practicing indirect tax laws as an advocate, but the fact remains that the attitude of Customs has irked even such a judge. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once in a while the Tribunal and the High Courts do send copies of their orders to the Chairman, CBEC to rectify the lapses and improve the system. But does anybody read these orders in the Board and do anything in this regard? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why does the Department treat court cases with this kind of contempt? </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><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2010/2010-TIOL-764-HC-MAD-CUS.htm" target="_blank">2010-TIOL-764-HC-MAD-CUS </a></em></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Apply Accounting Standards Uniformly- FM tells CAs </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ADDRESSING</strong> the 42<sup>nd</sup> Annual Conference of Southern India Regional Council of the Institute of Chartered Accountants of India (ICAI) at Kochi, Finance Minister Pranab Mukherjee asked Chartered Accountants to apply Accounting Standards uniformly and assist in presenting the true picture of the financial health of the company while ensuring accountability in all aspects. He said that standardizing of the accounting practices help in mitigating the problem of information asymmetry between various stake holders such as managers, owners and creditors. He said, while managers have the incentive to be more forthcoming on good news about the company's performance and prospects, they may want to hold back bad news. But the accountants as information intermediaries between managers and shareholders need to identify and recognise losses at an early stage, thereby mitigating asymmetry in information. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="4">tiol</font><font color="#006600">- Tuesday's cases</font></strong></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"></font><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">Valuation- Related person - Each of parties involved should have an interest, whether direct or indirect in business of the other : Supreme Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> short question before the Supreme Court in these Revenue appeals is whether M/s. Kwality Ice Cream Company on the one hand and Brooke Bond Lipton India Limited - (BBLIL) on the other (which later merged with Hindustan Lever Limited - HLL) are treated to be related persons for computing assessable value of ice cream manufactured by M/s. Kwality Ice Cream and as to whether duty should be demanded from M/s. Kwality Ice Cream on the basis of the price at which BBLIL sold the said product from its depot. What is of importance is certain interdependence and reciprocity beyond the relationship of either a distributor or manufacturer so as to consider as to whether the parties are `related persons' </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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">Sec 50 - Whether depreciation for previous year not claimed by assessee has to be mandatorily allowed in computation of profits arising out of slump sales? - NO, says ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue is - Whether depreciation for the previous year not claimed by the assessee has to be mandatorily allowed for making the computations of profits arising out of slump sales. NO, says the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Customs </font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Machine for injection moulding of soles out of synthetic polymeric materials like PVC is prima facie classifiable under CTH 8477 10 00 and not under CTH 8453 20 00 and is subject to anti-dumping duty at the rate of 174% adv. : CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is a Stay application seeking waiver of pre-deposit and stay of recovery in respect of Anti-dumping duty demanded by the lower authorities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The original authority ordered for recovery of Anti-dumping duty at the rate of 174% ad valorem in terms of notification no. 39/10-Cus dated 23.3.10, from the appellant in respect of a machine imported by them under EPCG. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more DDT </font></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice DAY. </font></p>
<p align="justify"><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">vijaywrite@taxindiaonline.com </a></font></p>
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