TIOL-DDT 1550 · 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 1550 </font><br>
15.02.2011 <br>
Tuesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Commerce Minister Announces Further Export Incentives </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TO</strong> enhance competitiveness for products which are labour intensive, technology intensive and value added, the Commerce Minister has announced further export incentives for <strong>more than 600 products w.e.f 01.01.2011</strong> for sectors viz. Agriculture, Chemicals, Carpets, Engineering, electronics and plastics. The salient features of these incentives are:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Market Linked Focus Product Scheme (MLFPS): 335 New Products</strong> incentivised under MLFPS at 8 digit level, eligible for benefits @ 2% of FOB value of exports to 15 specified markets. <strong>71 new products</strong> of Chapter 63 – Textile Made ups at 8 digit level for exports <strong>to EU (27 Countries) under MLFPS</strong> have also been incentivised @ 2% of FOB value of exports. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Focus Product Scheme (FPS): 147 products</strong> incentivised for <strong>Bonus Benefits (additional 2%)</strong> under FPS at 8 digit level, henceforth eligible for benefits @ 4% or 7% of FOB value of exports to all markets. <strong>57 New products</strong> incentivised under FPS at 8 digit level, eligible for benefits @ 2% of FOB value of exports to all markets. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Special Focus Products: 1 product</strong> (Egg powder) incentivised as Special Focus Product at 8 digit level, eligible for benefits @ 5% of FOB value of exports to all markets. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Vishesh Krishi and Gram Udyog Yojana (VKGUY): 6 New products </strong>(Castor Oil Meal – Defatted Variety and Instant Coffee) incentivised under VKGUY at 8 digit level, eligible for benefits @ 5% of FOB value of exports to all markets. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Procedural Simplifications: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In order to make filing and issuance of IE Code hassle free with minimum human interface between the applicant and the Regional Offices, an <strong>additional facility of filing “on-line” application for obtaining IEC</strong> is being introduced. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The scope of <strong>Advance authorization for Annual Requirement is being enlarged to allow a maximum of five authorizations in a licensing year (instead of only one at present)</strong> for the product(s) falling within the same product group . This facility shall be helpful for exporters having multiple manufacturing units, located in one place or having common port of import. This will be useful for all sectors and particularly so for the sectors like Engineering, Textiles, Chemicals etc. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Technical characteristics / quality etc of certain specified items of imports shall be required to be declared at the time of clearance of import consignment and not at the time of filing application (current stipulation) for <strong>annual advance authorization to Regional authority. By this facility, the exporter shall have the flexibility to import the relevant inputs, without the need to approach the Regional authority of DGFT to amend the authorization for clearance of such consignment. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The period to fulfill the export obligation under advance authorization scheme 36 months from the date of issuance of the authorization. However this period is shorter for products being manufactured from certain duty free imported inputs, which are sensitive from domestic angle. In such cases, the period for fulfillment of export obligation is presently counted from the date of clearance of first import consignment even when a number of consignments have been cleared in different dates. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Notifications, Public Notices and Circular about the above changes are discussed in the following paras. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Access to duty free inputs based on actuals to manufacturer of pharma products through Non-Infringing process - FTP Amended </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the existing Para 4.1.3 Foreign Trade Policy (FTP), <em>“Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) ”. This has been amended to read as, “ Advance Authorisation can be issued either to a manufacturer exporter or a merchant exporter tied to supporting manufacturer(s). However, advance authorisation under paragraph 4.7A of HBP. v1 (for pharmaceutical products manufactured through Non-Infringing (NI) process) shall be issued to Manufacturer exporter only .” </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Advance authorisation scheme allows access to duty free inputs required to manufacture the export product. Inputs and its quantities are allowed either as per Standard Input Output Norms (SION) or ad hoc norms, based on average consumption data of the relevant industry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are certain manufacturing processes covered under Process Patents. Therefore, benefit of SION or ad hoc norms for such products (which are still under Process Patent, but product patent of which has expired) cannot be availed by manufacturer, other than the Patent holder. Such manufacturer, who wish to manufacture and export the product through a Non-infringing (NI) Process may require inputs and input quantities, other than that prescribed as per existing norms (SION or adhoc norms). Hence it has been decided to: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Incorporate a new provision as paragraph 4.7A in HBP v1, within the scope of advance authorisationscheme, to allow this facility to pharmaceutical sector, subject to fulfilment of certain specified conditions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Further, since this facility shall be available to manufacturer exporters only and not to the merchant exporters tied to supporting manufacturer, paragraph 4.1.3 of FTP has been amended as stated above. </font></p>
</blockquote>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not022.htm" target="_blank">DGFT Notification No. 22/2009-2014 (RE- 2010) </a>and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn029.htm" target="_blank">Public Notice No. 29 /2009-2014 (RE- 2010) Dated: February 14, 2011 </a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Restriction on export of Cotton yarn - DGFT Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXPORT</strong> of cotton yarn was restricted by Notification No. 14(RE-2010)/2009-14 of 22.12.2010 and therefore its export is now permitted under licence to be issued by DGFT. Vide Policy Circular No. 07(RE-2010)/2009-14 Dated: 22.12.2010, it was informed that the Government has put a quantity ceiling of 720 million Kgs. for export of cotton yarn during the year 2010-11(i.e. upto 31.03.2011). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subsequently, through Notification No. 18(RE-2010)/2009-14 of 24.01.2011, export of cotton yarn by manufacturers who manufacture and export cotton yarn exclusively out of imported raw cotton was exempted from the restriction imposed on export of cotton yarn subject to a certificate from the jurisdictional Central Excise Authority certifying that the yarn has been manufactured exclusively out of the imported raw cotton. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has now clarified that the quantity ceiling of 720 million Kgs. for export of cotton yarn during the year 2010-11 shall not be applicable on following: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Export of Cotton Yarn manufactured exclusively out of imported raw cotton.
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</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Export of Value Added Special Yarn and Technical Yarn by the original manufacturers of such yarn. </font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Export of Cotton Yarn by the 100% Export Oriented Units(EOUs) in the cotton yarn sector. </font></p>
</blockquote>
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<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir020.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 20 (RE-2010)/2009-14 Dated: February 14, 2011. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Advance Authorisation for Annual Requirement - HBP Amended </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended para 4.24A of Handbook of Procedures, Vol. 1, 2009-2014(RE 2010), by which: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.The exporter shall have the flexibility to import the relevant input(s), without the need to approach the Regional authority of DGFT to amend the authorisation, for clearance of such consignment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The exporter can avail upto 5 Advance Authorisations for Annual requirement, per port of import, per product group. Earlier the exporters were permitted only one Authorisation per port of import, per product group. </font></p>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn030.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 30/2009-2014 (RE- 2010) Dated: February 14, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP – Export Obligation Period under Advance Authorization/DFIA Schemes. – DGFT Amends Appendix 30A </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Appendix 30A related to “Export Obligation Period for specified inputs” is amended. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Export Obligation Period (EOP) for the products stated in Appendix 30A shall be counted from the date of clearance of individual import consignment by Customs authority for this purpose, following changes have been made: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Column 3, the heading has been changed from “Export Obligation Period” to “Export Obligation Period from the date of clearance of each import consignment by Customs authority”. Accordingly, the description against each input has been modified giving only the EO period. However, neither the import items (6 in all) nor their descriptions have been altered.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The products are Spice, Drugs , Penicillin and its salts, Tea, Coconut Oil, Silk in any form. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn031.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 31/2009-2014 (RE- 2010) Dated: February 14, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Prize Money from Coco Cola - Spam Mail - FinMin Alert </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has come to the notice of the Ministry of Finance, Department of Revenue that some unscrupulous persons are sending e-mail messages to innocent internet users calling upon the recipient to deposit/remit a facilitation money of Rs.38,892/- in order to obtain the prize money of USD 491000 from the Canadian Coco-Cola company. The said unscrupulous persons are fraudulently using the name of Finance Minister and of Smt. Renu Jain working as a Director, Department of Expenditure in the Ministry of Finance on the purported letter head of Ministry of Finance, Department of Revenue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The general public is advised not to take cognizance of any such letter or e-mail received from unscrupulous persons claiming to have backing of the Ministry of Finance or any of its officers. It is further clarified that no officer of any of the Departments in the Ministry of Finance has been authorized to sign any letter whatsoever either on behalf of the Department of Revenue, Ministry of Finance or any of the organizations in the Ministry for certifying receipt of demand drafts/cheques in respect of the above mentioned prize money from the Canadian Coco-Cola Company or any other company. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you have an email id, you are sure to receive such mails – Please delete them immediately. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Employees' Grievance in IT Department - Chairman Concerned </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A petition was received by the CBDT Chairman from the widow of an Inspector that she was not paid gratuity and leave encashment. On the directions of the Chairman, the issue was settled within 24 hours. In another case, a medical bill pending for more than two years was settled within two days, but only after intervention by the Chairman. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairman is shocked over the insensitivity, gross apathy and indifference and wants such issues to be settled within 15 days. </font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From the Chairman's Desk </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Judicial Corruption - MP says Supreme Court Judge took Bribe! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Congress MP says that he was witness to a Supreme Court judge accepting a bribe of Rs 36 Lakhs in 1994 to get cancellation of a bar licence revoked. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"I plead and plead very strongly that very strong action should be taken to restore the sublime position that the judiciary enjoys in our constitution," said V R Krishna Iyer, former Supreme Court judge.</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"><font color="#663399"><strong>Service Tax</strong></font> </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mandap Keeper - contract of a Mandap keeper with its customer, even if it involves catering service, is a contract of service not a contract for sale - cost of food cannot be deducted: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">the contract of the Mandap keeper with its customers is to allow use of Mandap with all its facilities like decoration, lighting, stage, music, catering service etc. for some consideration for organizing some official, social or business function. The catering service provided is a service incidental and ancillary to the service in relation to use of Mandap and though it involves supply of food and beverages, it is essentially a service contract, not for sale of food and beverages. Thus the contract of a Mandap keeper with its customer, even if it involves catering service, is a contract of service not a contract for sale: there was no sale contract in the Appellant's contract as Mandap keeper for the purpose of levy of service tax under Finance Act, 1994 and therefore exemption Notification No. 12/03-ST is not available to the Appellant. </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">Whether interest on delayed payment by manufacturer to jobworker is admissible deduction u/s 80IB only if it is treated as business income for undertaking - YES, rules High Court Full Bench </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE issue before the High Court is - Whether interest earned by assessee on delayed payment by tyre manufacturers is admissible deduction under Sec 80IB only if it is treated as business income for the undertaking. Other issue is - Whether manufacture of rubber compound on jobwork basis for tyre companies as intermediate product is eligible for deduction u/s 80IB. And the answers to both the questions are YES. </font></p>
<p align="center"><font color="#FF0000"><strong><font size="3" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow is a Holiday</font></strong></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Thursday for the Judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Thursday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Time. </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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