TIOL-DDT 1498 · 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 1498</font> <br>
01.12.2010 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT Completes Six Years!</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/images/ddt6yrs.gif" alt="Legal Corner Icon" width="132" height="150" hspace="5" border="0" align="left"><strong>BY</strong> itself, completing six years of non-stop run, does not seem to be an achievement, but looking back on the road traversed, it was certainly not a smooth ride - there were enough road-blocks, blind alleys, speed breakers and dead-ends to dampen one's spirits but on the way we picked up a large number of friends, cheerleaders and of course an equal number of acidic critics, mostly Departmental Officers, sharply divided into two classes. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> is grateful to all the Netizens and the Revenue Boards for making<strong> DDT</strong> possible. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And in a couple of days <strong>DDT</strong> will come out with its <font color="#663399"><strong>1500<sup>th</sup></strong></font> edition. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CE – CENVAT Credit - <em>Maruti Suzuki </em> - partly dissented with - referred to Larger Bench</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> recent times the decision of the Supreme Court Maruti Suzuki Limited Vs. Commissioner of Central Excise – </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2009/2009-TIOL-94-SC-CX.htm" target="_blank">2009-TIOL-94-SC-CX</a></strong>,</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> has
been one of the most understood and misunderstood judicial decisions and
certainly one of the most cited decisions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Supreme Court has not agreed with a part of the Maruti judgement and referred the issue to a Larger Bench. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Referring to the Maruti case, the Supreme Court said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“The effect of the afore-mentioned decision is that in order to fall within the ambit of the term "inputs" within the meaning of Rule 2(g) of the 2002 Rules, the goods must be (i) used in or in relation to the manufacture of the final product, whether directly and indirectly, and whether the said goods are contained in the final product or not, (ii) covered within the six categories of goods enumerated in Rule 2(g) and (iii) used within the factory of production. We are constrained to observe that while the subject goods must qualify the first and third parts of the definition, viz. the specific part and location of use, as enumerated in the said judgment, but to confine the goods only to the inclusive part of the definition that is to the six categories of goods mentioned therein may fall foul of the definition of the word "inputs" in Rule 2(g) of the said Rules. Prima facie, we are of the view that the legislature did not intend to restrict the definition of "inputs" to only those six categories.”</em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For referring the case to a Larger Bench, the Supreme Court said, “ it appears that by employing the phrase "and includes", legislature did not intend to impart a restricted meaning to the definition of "inputs" and therefore, the interpretation of the said term in Maruti Suzuki Limited (supra), may require reconsideration by a larger bench”.</font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this landmark judgement of the Supreme Court today. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong>Breaking News</strong>.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Quantity discounts, bonus quantities, etc. cleared without payment of duty under MRP based assessment - CBEC Clarifies </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Latest Board Circular states,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“A larger bench of CESTAT in the case of Indica Laboratories Vs CCE, Ahmedabad - </em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2007/2007-TIOL-713-CESTAT-AHM-LB.htm" target="_blank">2007-TIOL-713-CESTAT-AHM-LB</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> has held that quantity discount, bonuses etc , <font color="#FF6633"><strong>are applicable </strong></font>for the valuation of goods under section 4 of the Central Excise Act, 1944 and not in case of goods valued under Section 4A. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The party has appealed against the said order before High Court of Gujarat. However, no stay has been granted by the High Court against the said order of the larger bench of tribunal. You may accordingly take necessary action as per the order of the larger bench of tribunal <strong>to protect the revenue interests</strong>”. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal delivered this decision on 21.05.2007 – and the Board is now alerting the field – after three and a half years!!! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How can anybody protect the Revenue Interests now? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once in a Blue Moon they find a favourable order from the Tribunal, which is not stayed by the High Court and they celebrate it after three years. But what happens in hundreds of cases, which are favourable to assessees, which are not stayed by High Courts, especially the refund cases? DO they ask the field formations to implement such orders?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact there are adjudicating officers in the field who have no shame3 to write in their adjudication orders that the matter has not reached finality as the Department has gone in appeal and so the benefit of the Tribunal order will not be allowed. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/excircular938.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 938/28/09-CX; Dated November 29 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Brass Scrap decreased</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has decreased the Tariff Value of Brass Scrap from US Dollars 4241to 4204 per MT. The tariff value of poppy seeds is now 3215 US Dollars. There is no change in the tariff value of other items. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_099.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO.99/2010-CUSTOMS (N.T.) Dated: November 30, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Inclusive Development With Consolidation of Public Finances, Financial Stability, Employment Generation - FM </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNION</strong> Finance Minister, Pranab Mukherjee said that economic policies need to be designed in such a manner that the redistributing process does not feed off the public finances and the growth process itself is not hampered. To achieve this objective, inclusive development needs to be combined with consolidation of public finances, financial stability, employment generation and economic growth. The Finance Minister was delivering the inaugural at the two-days International Conference on ‘Economic Policies for Inclusive Development'. The Finance Minister said that some of the aforesaid competing concerns could be addressed through an optimal policy mix, which should also be one of the discussion priorities of this international conference. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Minister said that India has experienced a fairly long period of rapid economic growth and since 2003-04; there has been a further step up in India's GDP growth rate with the economy moving to a high trajectory growth rate of 8.5% to 9% per annum. He said that India's economy has become remarkably resilient to both external and domestic shocks. He said that it has not only recovered rapidly from the global economic downturn but also took the monsoon failure last year in its stride and is now showing robust growth. The Finance Minister said that 11th Five Year Plan endorsed a need for inclusive growth to ensure equality of opportunity for all. He said that a multipronged strategy was adopted that included rapid growth for reducing poverty and creating employment opportunities, improving access to essential services in health and education especially for the poor, empowerment through education and skill development and creating employment opportunities supplemented by the Mahatma Gandhi National Rural Employment Guarantee Scheme. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Secretary, Ashok Chawla delivering the welcome address said that though Indian economy has shown resilience in past many years as far as its GDP growth is concerned yet it faces the challenge of high inflation especially food inflation. Chawla said that the Central Government has taken various anti inflationary measures to contain the inflation especially the food inflation at reasonable and acceptable level. He said that higher agriculture growth would not only help in achieving food security but also in containing food inflation. He said that the Government has accorded high importance to financial inclusion to cover the entire gamut of financial services and to ensure that gains of growth reach to the maximum number of people at large. </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"> – 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">Central Excise</font></strong> </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Manufacture and clearance of ‘sterilized atraumatic needled sutures' – Suture consisting of a curved metallic needle with a piece of thread firmly attached to its wider end is a surgical appliance, classifiable under Chapter 90.18 – Matter Remanded - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> Range Officer certifies from time to time that impugned goods are exempted from payment of duty by virtue of certain Notification, it cannot be said that appellant had acted with intent to evade payment of duty – Matter remanded to Commissioner to consider eligibility of exemption under S. No. 267 of Notification 6/02-CE based on documentary evidence produced and also to consider plea of limitation for demand covered by first show cause notice based on documentary evidence adduced – Matter pertaining to penalty on Managing Director also remanded. </font></p>
<p align="justify"><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 271B - Whether penalty is imposable even when assessee is under bona fide belief that its income is tax exempt? - NO, says ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BEFORE</strong> the AO, it was submitted that operations of the assessee were based on the principle of mutuality, which envisages number of persons getting together to constitute funds for a stated common purpose and the excess funds which are not required for that purpose shall be retained for similar application in subsequent years. Thus, the surplus contribution retained was not regarded as taxable profit of the mutual concern. The AO did not agree with the submission of the assessee and levied penalty. CIT( A) affirmed the view of the AO. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Tribunal is - Whether penalty is leviable even when assessee is under bona fide belief that its income is tax exempt. NO, 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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Since
biris are not fit for human consumption, duty has to be necessarily remitted
in terms of Rule 21 of CER, 2002 – stand by department that the appellant
did not take proper care of the stock to avoid destruction of biris by
insects is not legally proper – Appeal allowed with consequential
relief: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> the
department, receiving an application for remission of duty is an anathema.
Strange it may seem but the field formations fail to understand that no prudent
and honest manufacturer would like to suffer losses of his finished goods
and file frivolous applications seeking remission of duty as made available
under the Central Excise law. After all, the goods have been either lost
or destroyed by natural causes or by unavoidable accident OR for that matter
have been found as unfit for consumption or for marketing. Both are separate
situations but the Department finds it useful to read one into another and
deny the claim for remission.</font></p>
<p align="justify"><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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