TIOL-DDT 1551 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1551</font><br> 17.02.2011<br> Thursday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Guidelines for availment of input combination for pharmaceutical products manufactured through Non Infringing (NI) process - DGFT Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TRADE</strong> and Industry belonging to Pharmaceutical sector and the Pharmaceutical Export Promotion Council have been representing before Department of Commerce that neither the Standard Input Output Norm (SION) notified for the pharmaceutical products nor the ad hoc norms ratified for such products by DGFT, allow them the actual requirement of inputs for manufacture of drugs (particularly the APIs) through Non Infringing (NI) process. So they have been requesting for inputs combinations based on actual consumption for such products. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT clarifies that “Once a SION has been notified for a product based on all Industry average or the ad hoc norm for the product is ratified, inputs and the corresponding quantities are allowed as per SION or ad hoc norms only and no additional quantity of input (irrespective of actual consumption) is allowed. Hence the manufacturer of pharmaceutical products through NI process, are not entitled for actual wastage than that of all Industry average of wastage norms (SION) or ad hoc norm, irrespective of the country of export.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However DGFT has decided to incorporate a new provision to allow this facility to pharmaceutical sector subject to fulfillment of certain specified condition and documentation. Accordingly Notification No. 22 dated 14.02.2011 and Public Notice No.29 dated 14.02.2011 have been issued, detailing the new provision. (Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12084" target="_blank">DDT 1550 – 15 02 2011</a></strong>) </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir019.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 19/(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">Prohibition on export of onion - Exemption for export of Bangalore Rose onions and Krishnapuram onions - RAs can issue licences </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THROUGH</strong> Notification No.19(RE-2010)/2009-14 of 10.2.2011, export of Bangalore Rose onions and Krishnapuram onions was placed in the “Restricted” category, so as to allow its export under licence subject to Minimum Export Price (MEP) of USD 1400 per Metric Ton. (Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12079" target="_blank">DDT 1549 – 14 02 2011</a></strong>) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To facilitate early issue of licences, it has been decided that intending exporters of Bangalore Rose and Krishnapuram onion may seek such licence from their respective Regional Authorities rather than come to Headquarter office of DGFT at Delhi. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir021.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 21/(RE-2010)/2009-14 Dated: February 15, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Bagasse - Excisability – Board Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXCISABILITY</strong> of bagasse and similar waste products arising during the course of manufacture has been under dispute for a long period of time. There are a number of Tribunal's judgments that being waste, these are not excisable products. Generally, the courts have been taking a view that the waste or refuse or residue arising during the course of manufacture cannot be treated as excisable goods even if such waste fetches some price in the market. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Budget 2008, the definition of “excisable goods” in clause (d) of Section 2 of the Central Excise Act, 1944 was amended by adding an explanation that for the purposes of this clause, “goods” include any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC in No. 904/24/09-CX dated 28.10.2009 directed to keep the cases of the Excisability of bagasse for the period prior to the budgetary changes of 2008 in call book till department's appeal is decided in the case of Balrampur Chinni Mills Ltd . (Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9865" target="_blank">DDT 1226 – 29. 10. 2009</a></strong>) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Board informs that the Department's appeal has been dismissed by the Supreme Court and the Board wants the cases before 2008 to be taken out and decided as per the Supreme Court's judgement. Board hastens to clarify that the judgement will not have effect after the budgetary changes of 2008 when the definition of the “excisable goods” was amended in the Central Excise Act. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/excircular941.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 941/02/2011-CX.,Dated: February 14, 2011. </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Jute Products Imported from Bangladesh Exempted </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has exempted Jute products falling under heading 6305 of the First Schedule to the Customs Tariff Act when imported from Bangladesh, from the whole of the additional duty of customs leviable under sub-section (1) of section 3 of the Customs Tariff Act. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_008.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 8/2011-Cus., Dated: February 14, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Brass Scrap and poppy Seeds </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has decreased the Tariff Value of poppy seeds from 3317 to 3313 US Dollars. The new Tariff Value for Brass Scrap is 4372. There is no change in the tariff value of other items. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO. 12/2011-CUSTOMS (N.T.) Dated: February 15, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Renting - The Ping Pong - Case Referred to Larger Bench of High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PLEASE</strong> see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12013" target="_blank">DDT 1540 – 01.02.2011</a></strong> and <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12042" target="_blank">DDT 1544 – 07.02.2011</a></strong> for Round No. 1 to 10 of the case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Round 11: Advocate Rakesh Chitkara sent us this commentary on what happened in the Delhi High Court on 15th February, 2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Division Bench consisting of Chief Justice Dipak Misra & Justice Sanjiv Khanna in Delhi High Court finally took the decision to constitute a larger bench in view of the complexities involved and importance of the litigation involving Service Tax on renting of industrial and commercial property. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench consisting of the CJ had in December queried on the issue of handicap of “binding precedent” set by another Division Bench of the same co-ordinate court of same strength. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ASG informed the High Court that the SLP filed in the main Home Solution- 2009 case had been admitted by the Hon'ble Supreme Court, which had also stayed the interim orders passed by High Court granting stay pursuant to budgetary changes that validated the quashed provisions and that Supreme Court had also requested the High Court to decide the matter expeditiously. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Ganesh, Sr. Counsel essentially raised four principal grounds challenging the validity of provisions of Sec. 65 (106) (zzzz) and other related Section. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I. Letting of immovable property is mere transaction and not a service as held by the Hon'ble High Court in the case of Home Solution Pvt. Ltd ., and thus, per se renting is not a service in view of paragraph 35 of the earlier judgment of Home Solution ; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">II. Levy of Service Tax u/s 65 (105) (zzzz) is directly and squarely covered by Entry 49 of List-II and is not under 92C and that the levy of service tax under Entry 97 of List-I itself is not brought under operation. Therefore, the same is not covered by the said list; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">III. Levy of Service Tax on property is under legislative competence of the State and not the Centre; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IV. Imposition of tax on renting within the Constitutional scheme cannot be levied by both Centre as well as State. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Ganesh also argued that this Hon'ble High Court in order passed on 14.12.10 had referred to the paragraph No. 35 of the earlier 2009 order that the renting per se is not a service which is taxable. Hence the said judgment in entirety will have the binding effect on the present Division Bench. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was then the turn of the ASG Mr. A. Chandiok. Ably assisted by Sr. Govt. Counsel Mr. Mukesh Anand, he marshaled his arguments thus: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Parliament by the present legislation has not per se taxed renting of immovable property and language contained in Sec. 65 (105) (zzzz) as amended in 2010 would show that the word “in relation to” has been amended and its activity as well as the temporary renting to use of the immovable property by renting is taxable within the meaning of Sec. 65 (105) (zzzz) and hence does not suffer from legislature incompetence; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ SLP filed against the 2009 judgment of Home Solution has been admitted by the Hon'ble Supreme Court. Hence, the observations made in the earlier judgment cannot have a binding effect over this Hon'ble High Court in subsequent writ petition; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In the earlier writ petition only circular was under challenge and not the section and therefore, the said judgment is not binding upon the Hon'ble High Court; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Only the Centre is competent to levy the tax and not the State in terms of List –I and hence, the State Legislature is not competent in that sense as has been referred to by the petitioner. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CJ thereupon queried whether the precedent value of the 2009 judgement stood wiped out just because the Supreme Court had granted leave to the UOI, having come in appeal against the High Court's orders? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Affirmative</strong>, asserted ASG. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Ganesh tried arguing “humbly and respectfully” that this Division Bench was competent to adjudicate and there was no need for a larger bench. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There seemed a lingering doubt whether the fresh final order is legally defensible, if differed, by another division bench of the same co-ordinate court on the touchstone of judicial discipline. The Bench seemed to have made up its mind after detailed presentations. So it directed constitution of a larger bench to re-assemble next Tuesday, the 22 nd instant. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will keep you updated. </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"> – Friday'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">Service Tax</font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessee reimburses their employees coaching fees paid by them from their own pocket to service provider for coaching services received outside India – No Service Tax – CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is clear that if the employer hires and outside coaching for imparting training to its employees and the payment thereof made by the employer to such coaching centre then the service availed by the employer shall be liable to pay service tax. In this case, it is factual position that the coaching has been availed by the employees in their individual capacity and payment thereof made by the employees to the coaching centre directly. The employer has reimbursed the coaching fees to the employees only. </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 sum paid as compensation for occupation of premises after expiry of lease and for repair and damages can be treated as sum received as payment for transfer of tenancy rights - NO, rules Calcutta High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HE</strong> issue before the High Court is - Whether sum paid as compensation for occupation of a premises after the expiry of the lease and for repair or damage to the premises by the tenant can be treated as an amount received by way of consideration for transfer of any tenancy right. And the High Court's answer is NO. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export - Refund of unutilized Credit - services used ‘in relation' to manufacture are entitled for credit - CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is common sense that bank charges, courier and clearing charges and other professional service charges, computer maintenance, clearing charges, insurance charges are incurred by an assessee in or in relation to the manufacturing of the final products; On any input service, which is used in relation to the manufacture of final products, the appellant is eligible to avail the CENVAT credit and if such CENVAT credit cannot be utilized by him for discharge of Central Excise duty or output service, he becomes eligible to claim the refund from the authorities. </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 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> </body> </html>