TIOL-DDT 1532 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1532 </font><br>
19.01.2011<br>
Wednesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Handicraft and Artware - Please Obey Board</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_003.htm" target="_blank"><strong>circular No.03 /2010- Cus dated 12.02.2010</strong></a>, the CBEC had clarified that: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ the assessing authorities should normally accept certificates issued by the Development Commissioner (Handicrafts) / EPCH certifying the goods as artware/ handicrafts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A decision to reject a certificate issued by the Development Commissioner (Handicrafts)/ EPCH should be taken only with approval of the Commissioner of Customs / Central Excise and after discussions with the certificate issuing authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Exports should not, in the mean time, be held up. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
Consignments of artware and handicrafts should be classified in the Drawback
Schedule in accordance with condition (3) of the Drawback Schedule which
provides that all artware or handicraft items shall be classified under
the heading of artware or handicrafts (of constituent material) as mentioned
in the relevant chapters of the Drawback Schedule irrespective of their
classification under the HSN. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However Moradabad Handicrafts Exporters Association and Export Promotion Council for handicrafts ( EPCH ) informed that following issue of this circular, certificate from EPCH / Development Commissioner (Handicrafts) is being asked for each and every consignment of artware and handicrafts. Consignments not having such certificates are necessarily examined. Further, at some field formations certification by EPCH / Development Commissioner (Handicrafts) on invoices is not accepted. Certification only on the body of the shipping bill is insisted citing the Board circular No. 56/99- Cus dated 26.08.1999. <font color="#FF6633"><strong>[Issued in entirely a different context]</strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was also represented that lamps/lanterns predominantly made of glass are not considered as handicrafts and exporters are not allowed to use the word ‘handicraft' in the description while filing shipping bills for these items even when certificates of Development Commissioner (Handicrafts) certifying these goods as handicraft are submitted. As a result, exporters are deprived of the benefit of FPS which is available only on artware/handicrafts. Further, at some field formations, in case of artware or handicraft item made of more than one constituent material, drawback is either allowed on constituent materials separately or is allowed only on one of the constituent materials. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has examined the matter and re-clarifies that: </font></strong></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Certificate from EPCH / Development Commissioner (Handicrafts) should not be asked for all consignments of Handicrafts/artware as a routine but only in cases of doubt. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Certification of EPCH / Development Commissioner (Handicrafts) on invoices may be accepted notwithstanding anything contained in the Board circular No. 56/99- Cus dated 26.08.1999. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Certification on photographs may also be accepted and the exporter, if required, may use the certified photograph for subsequent export consignments of that product. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Further, every consignment which does not have Development Commissioner (Handicrafts)/ EPCH certificate, need not be examined. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Normally, packages/shipments selected by the EDI system for examination only should be examined unless there is some intelligence suggesting fraud/misuse. If there is a doubt on such examination about the goods being artware/handicraft, certificate from Development Commissioner (Handicrafts)/ EPCH may be asked for. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As clarified by the Board vide circular No. 3/2010- Cus dated 12.02.2010, certificates issued by EPCH /Development Commissioner (Handicrafts) should normally be accepted and a decision to reject them should be taken only with approval of the Commissioner and after discussions with the certificate issuing authority. Exports should not, in the mean time, be held up. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Alignment of Drawback Schedule with the customs tariff is not applicable to artware / handicraft items. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ If the export items such as lamps/lanterns are artware/ handicraft items, they should be classified as artware/ handicrafts in the specific headings provided for artware/handicraft items of iron, glass, brass, iron and steel etc. in various chapters of the Drawback Schedule irrespective of their classification in the Customs Tariff / HSN and irrespective of whether there are other headings, covering those products more specifically, in the Drawback Schedule elsewhere. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As clarified by the Board vide <em>circular No. 3/2010- Cus dated 12.02.2010</em>, artware or handicraft article made of more than one constituent material should be classified as if it is made of that constituent material which predominates in it by weight. Once classification of such article in a heading/sub-heading of the drawback schedule has been determined, then the drawback rate and cap prescribed against that heading/sub-heading should be applied to the whole article irrespective of the value or weight of different constituents. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once the Board issues a beneficial Circular, perhaps the field gets active in designing ways to deny the benefits. And the wise officers in the field invariably succeed, for they know that there is no punishment for disobeying the Board. A Chief Commissioner addressing his staff said, “ <em>the Board may say so many things, but you have to protect your job – they will not come to your aid when there is a vigilance case or Audit objection</em>”. An Additional Commissioner told his staff, “<em>I know at least 25 ways that we can fix an EOU , when he comes for a registration </em>” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the State VAT Department, the lower level officers take the Commissioner's instructions as the ultimate law, much above the Act and the Supreme Court. No VAT officer will ever dream of not following the LAW laid down by the Commissioner. Why then this blatant disobedience by the Central Revenue Officers? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC should consider opening a CELL to ensure that its instructions and Circulars are obeyed by the field. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_007.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC
Circular No. 7/2011 – Cus; Dated: January 18, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EPCG Scheme - DGFT Clarifications </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DGFT has clarified a number of issues relating to EPCG Scheme, raised at a recent meeting of the Port Officers. Some of the important clarifications are: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Vehicles imported under EPCG – Issue of ‘No Objection Certificate </strong>': The vehicles imported against EPCG authorizations issued prior to 31.03.2007 can be allowed for conversion / disposal after issuance of EODC; completion of five years from date of import; and there is no DRI /CBI case against the subject authorization . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The vehicles imported against EPCG Authorizations issued on or after 01.04.2007 can be allowed after fulfillment of export obligation, i.e. after complying with the ‘Actual User Condition' as per Para 5.4 of FTP. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the capital goods for which exemption has been granted from maintenance of annual average export obligation under Para 5.7.6 of HBP.Vol.I , can be allowed after fulfillment of export obligation and on completion of five years from the date of import of the said Capital Goods. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether 10% restriction is applicable on import of spares on 100% export obligation also </strong>: Para 5.2 of FTP allows import of spares without limit of 10% subject to 100% export obligation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether EODC can be issued against an individual licence in case of pending investigation by CBI/ DRI in respect of other licence (s) of the firm/company? </strong>:This depends on the gravity of the allegations. Therefore, decision in such cases should be taken by Head of Office, depending upon the merits of each case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether
EODC can be issued in cases in which vehicles were not registered as tourist
vehicle upto 31.08.2008 as per Policy Circular No. 7 dated 07.05.2008?</strong>:
EODC can be issued without insisting for registration of such vehicles
as tourist vehicles under the provisions of Circular No. 7 dated 07.05.2008,
in such cases in which complete documents for fulfillment of export obligation
were submitted on or before 30.06.2008 and in which the complete export
obligation had been fulfilled but EODC could not be issued due to minor
discrepancies or on technical grounds. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir012.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT CIRCULAR NO. 12/( RE-2010) 2009-14, Dated: January 17, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Shock to Software Industry - Software Exports - Infosys Stuck with 400 Crore IT Demand </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EVEN</strong> President Obama is scared of Bangalore, as it is taking away American jobs. The Indian Software Industry is our pride and is a global leader. But a recent demand of about Rs . 400 Crores by the Income Tax Department has shaken the Software Industry. The demand pertains to income generated by Infosys employees working at clients' sites abroad. Software exporters have to invariably post employees abroad as clients ask for on-site staff to coordinate and provide technical support. But the Income Tax Department does not consider this as an eligible deduction under Section 10A / 10B and slapped the demand on Infosys. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is sure to lead to protracted litigation as demands to other Software giants will only be a matter of time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Infosys and others are on a strong wicket as a little known software company has already won the battle for them in the ITAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the case of <em>Meridian Enterprises Computing Solutions P Ltd - </em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=39&filename=legal/itat/2010/2010-TIOL-132-ITAT-MUM.htm" target="_blank">2010-TIOL-132-ITAT-MUM</a></strong></em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">,
the ITAT had held in similar circumstances that the assessee is entitled
for deduction u/s 10A / 10B of the Act. In this case, the Company had only
one employee and they actually hired professionals for the onsite work. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe CBDT should take a decision on this issue before it snowballs into a major litigation in every bench of the Tribunal. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ramalinga Raju Files Review Petition For Bail </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SATYAM</strong> founder Ramalinga Raju has filed a Criminal Review Petition in the Supreme Court for review of the order of the Supreme Court cancelling the bail granted to him by the Andhra Pradesh High Court. The Supreme Court had allowed the appeal filed by CBI and cancelled the bail granted by the High Court. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last month I had seen Ramalinga Raju appearing before the Economic Offences court. A frail looking Raju walked in slowly and sat on a wooden bench along with other accused of various criminal charges. Every person in the court room had a visible expression of sympathy for the poor man. I had once attended the AGM of Satyam Computers where Raju was the handsome hero, anywhere near whom I could not hope to get. Now here was the same Raju sitting just behind me on a wooden bench as an accused and I am allowed a better seat by virtue of being an advocate. Many feel that if Raju has to be in jail, most of our businessmen and politicians richly deserve to be in jail too, but some of them are running governments! And Raju is in jail for more than two years!!! </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 align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"></font>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Manufacture of goods containing alcohol - Activity outside purview of levy of Service Tax under Business Auxiliary Services: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants
manufacture excisable ‘P or P medicines' falling under sub-heading 3003.10
of the Central Excise Tariff. In addition they manufacture the impugned goods,
namely, Waterbury's compound, Listerine mouthwash and Coolmint Listerine
Mouth wash on job work basis for M/s Pfizer Ltd. The impugned goods contain
alcohol and are hence not excisable under the Central Excise Act, 1944. However,
they are chargeable to duty under the Medicinal & Toilet Preparations
(Excise Duties) Act, 1955 (MTPA). Duty under the MTPA is levied by the Central
Government but collected and appropriated by the State Governments. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department is of the view that this activity attracts Service Tax under the category ‘Business Auxiliary Service'. </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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sec 32 - Whether assessee is entitled to depreciation on assets of a unit which was not used in business for a long time but was a part of block of assets - YES, rules Delhi High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issue before the High Court is - Whether assessee is entitled to depreciation on assets of a particular unit which was not used in business for a long time. Whether when such assets are part of the block of assets, it is open to Revenue to question its use in the business. And the verdict goes against the Revenue. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Order passed by Commissioner of Customs (Appeals), reviewed by officers having no jurisdiction in matter - Revenue appeal not maintainable: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is an interesting case where the Revenue in its hurriedness to file an appeal against an order of the lower appellate authority first got the order reviewed by the jurisdictional Commissioner forgetting that such orders are to be reviewed by a Committee of Commissioners. So it did just that. Unfortunately the Committee that signed the review order was not the one that was supposed to be legally constituted in terms of the Notification issued by the Central Government u/s 129A of the Customs Act, 1962. The end result of this fiasco was that the appeal was dismissed by the CESTAT. </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"><strong><font color="#FF6666">Until Tomorrow with more DDT </font></strong></font></p>
<p align="justify"><font color="#FF6666"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></strong></font></p>
<p align="justify"><font color="#FF6666"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to </font></strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></strong></p>
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