TIOL-DDT 1530 · the untouched capture
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<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1530
</font><br>
17.01.2011 <br>
Monday </strong></font></div>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Brass Scrap and poppy Seeds 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 4320 to 4224 per MT. The tariff value of poppy seeds is decreased from 3445 to 3382 US Dollars. There is no change in the tariff value of other items. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cnt.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO.01/2011-CUSTOMS (N.T.) Dated: January 14, 2011</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Is a Product Whose Sale is Prohibited by Law, Excisable? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> excisability, two conditions are mandatory, movability and marketability. Now if the sale of a particular product is prohibited by law, can the product be excisable? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court answered this question in a detailed judgement delivered on 14.01.2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The product in question is “physician sample of medicines” and as per the Drugs Act, sale of physician sample is prohibited. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court looked at the purpose and object of the two Acts and noted that, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The main object or real purpose of the Drugs Act, 1940 and Rules made thereunder, is to regulate the manufacture of drugs in order to maintain the standard or quality of drugs for sale and distribution as a drug. Therefore, any requirement or condition imposed by the Drugs Act and Rules made thereunder, is in furtherance of its above stated object of regulating and maintaining the quality of Drugs. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The primary object of the Central Excise Act is to raise revenue by imposing duty on goods that are manufactured. In other words, the scope of the Act extends to the event of manufacture of goods, for the levy of excise duty. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held that; </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These two Statutes and the Rules made thereunder, operate in entirely two different fields having different objects, purposes and schemes. The conditions or restrictions contemplated by one statute should not be lightly and mechanically imported and applied to fiscal statue for non levy of excise duty, thereby causing a loss of revenue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, the prohibition on the sale of Physician Samples intended for distribution to medical practitioners as free samples by Rule 65 (18) of the Drugs Rules shall have no bearing or effect upon the levy of excise duty under the Act, since excise is a duty on manufacture, duty is payable whether or not goods are sold. Excise duty is payable even in case of free supply, since sale is not a necessary condition for charging duty under the Act.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court referred to a large number of its own decisions on ‘excisability' and ‘manufacture'. These are land mark decisions which a student of excise cannot afford to miss. When you find the time, do read the following judgements. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. CCE vs. Acer India Ltd <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2004/2004-TIOL-81-SC-CX-LB.htm" target="_blank"><font size="1">2004-TIOL-81-SC-LB </font></a></strong></em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Province of Madras vs. Boddu Paidanna and Sons – <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-269-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-269-SC-CX </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Indian Cable Co. Ltd. vs. CCE -<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-59-SC-CX.htm" target="_blank"> <strong>2002-TIOL-59-SC-CX </strong></a></font></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Union of India vs. Delhi Cloth and General Mills - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-12-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-12-SC-CX-LB </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Union Carbide India Ltd. v. Union of India - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-70-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-70-SC-CX</font></a> </strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Bhor Industries Ltd. vs. Collector of Central Excise, Bombay - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-38-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-38-SC-CX </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Hindustan Polymers v. CCE - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-287-SC-CX-LB.htm" target="_blank"><font size="1">2002-TIOL-287-SC-CX </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. A.P. State Electricity Board vs. CCE, Hyderabad - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-376-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-376-SC-CX </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Triveni Engineering & Industries Ltd. v. CCE - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-14-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-14-SC-CX</font></a> </strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Union of India v. Sonic Electrochem (P) Ltd., - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-212-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-212-SC-CX </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. ITC Ltd. v. Collector of Central Excise, Patna - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2003/2003-TIOL-39-SC-CX.htm" target="_blank"><font size="1">2003-TIOL-39-SC-CX</font></a> </strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. Cadila Laboratories (P) Ltd v. CCE, Vadodara -<strong> <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2003/2003-TIOL-01-SC-CX.htm" target="_blank">2003-TIOL-01-SC-CX</a></font></strong> </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. Hindustan Zinc Ltd. v. CCE - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2005/2005-TIOL-39-SC-CX-LB.htm" target="_blank"><font size="1">2005-TIOL-39-SC-CX </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. Dharampal Satyapal v. CCE -<strong> <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2005/2005-TIOL-75-SC-CX-LB.htm" target="_blank">2005-TIOL-75-SC-CX-LB</a></font></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. Moti Laminates (P) Ltd. v. CCE - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-24-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-24-SC-CX</font></a></strong> </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16. Union of India v. Delhi Cloth & General Mills Co. Ltd. - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-12-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-12-SC-CX-LB </font></a></strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. Gujarat Narmada Valley Fertilizer Co. Ltd. vs. Collector of Excise and Customs - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2005/2005-TIOL-89-SC-CX-LB.htm" target="_blank"><font size="1">2005-TIOL-89-SC-CX</font></a></strong> </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18.
Moriroku UT India (P) Ltd. vs. State of Uttar Pradesh and Ors - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2008/2008-TIOL-45-SC-CT.htm" target="_blank"><font size="1">2008-TIOL-45-SC-CT</font></a></strong> </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this important judgement today. Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11944" target="_blank">Breaking News</a></strong> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Valuation of Physician Sample - pro rata - A Tricky Issue </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VALUATION</strong> of physician sample has been a tricky issue for many years and had been doing the rounds in Tribunals and Supreme Court quite often. The Supreme Court judgement which we are carrying today also had a valuation issue apart from excisability. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is it worth so much complication and litigation? Drug manufacturers give a very small part of their product as free samples to doctors and the cost of these samples is any way included in the final cost of the drugs and excise duty paid accordingly. Should the government demand its pound of flesh on these small quantities distributed to doctors free? Why can't the government simply exempt these samples? The Revenue lost would be insignificant. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">A New Way to Avoid Income Tax - Start a Political Party </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DO</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> you know how many political parties exist in India? At least the Election Commission of India has nearly 1200 registered political parties – one party had its office in a tea shop, while another did not have even that for an address. Most of them never participated in an election! But, then why these parties? There is an income tax exemption for donations to political parties! One of these registered political parties spent about Rs. Three Crores on jewellery and shares. You can even register a party and later sell it for a premium – in black. Democracy in Action! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI Raids - Customs Men Go Slow </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Customs Officers in Mumbai Customs are not a happy lot with CBI raiding many of them and intruding into their private lockers and investigating their private investments. It seems on Friday Customs officers observed a ‘work to rule' and refused to clear consignments beyond their hours of duty. Why should anyone work beyond duty hours especially when CBI is not sympathetic towards the hard work and come hunting? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who loses? The Trade of course!</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"> - Tuesday's cases</font></strong></font></strong></font></p>
<p align="justify"><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">Central Excise </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Remission
of duty - Appellant reversing Cenvat credit and filing application for
remission of C.Ex duty – later claiming refund based on CESTAT LB
decision in Grasim Industries
and before passage of order by the Commissioner granting remission of duty – such
claim cannot be denied on the ground that the order of the Commissioner
laying down reversal of Credit has not been challenged – Matter remanded:
CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> facts of the case are that the appellants
applied for remission of duty under Rule 21 of the Central Excise Rules
2002 for the goods which were unfit for home consumption and marketing.
The appellants reversed the Cenvat credit involved on inputs used for manufacture
of these goods, on which remission was claimed, on 25.7.2006 and 13.11.2006.
Later on, relying on the decision of the Larger Bench of the CESTAT in
the case of <em>Grasim Industries Vs. CCE Indore - </em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><em>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2007/2007-TIOL-135-CESTAT-DEL-LB.htm" target="_blank"><strong>2007-TIOL-135-CESTAT-DEL-LB</strong></a>)</em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> wherein
it was held that reversal of credit on inputs is not required as per law
, the appellants filed refund claims of the Cenvat credit reversed by them
on 25.7.2006 and 13.11.2006. </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 32(1)(ii) - Is assessee, Hindustan Coca Cola, entitled to depreciation on 'goodwill' for which it paid to bottlers for marketing and trading reputation, territory knowhow, distribution network and customer database? - Yes, rules Delhi High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the High Court are - Whether assessee is entitled to depreciation on goodwill which conveys a positive reputation built by a person / company / business concern over a period of time and is an ‘intangible asset' which includes, along with other things, any other business or commercial rights of ‘similar nature' and whether where two views were possible and when the assessing officer had accepted one view which was a plausible one, the commissioner was empowered to apply section 263. And the answer to the first question is YES, and for the second questions is NO. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Department's contention that since appellant has not claimed ownership of gold same cannot be redeemed to him is not sustainable as section 125 of Customs Act - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> case booked by the Directorate of Revenue Intelligence has a chequered history and owes its origin to the events that unfolded at the Mumbai airport in the winter month of October, 1992. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The short facts of the case goes thus - Shri Yakub Ibrahim Yusuf, the appellant (who has appeared in person before the CESTAT) was intercepted at N.I.P.T., Module-II, Mumbai on his arrival from London to Mumbai by Air India flight AI-132 while he was carrying 25 kgs of gold. The 25 kgs. of gold was found in two black colours boxes in the brief case alongwith foreign currency of market value of Indian Rs. 6,54,830/-. The appellant stated before the DRI officers that the gold carried by him belongs to one Shri Illiyas Patel, Smt. Memuda I.Patel, Smt. Munira M. Laly and her two minor sons, Master Shohil M. Laly and Master Faiyaz M. Laly (five persons). In their statements recorded, Shri Illiyas Patel, Smt. Mamuda Illiyas Patel and Smt. Munira M. Laly stated that the gold carried by Shri Yakub was not belonging to them and they were not carrying any foreign currency for payment of Customs duty. </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 align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></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"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p>
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