TIOL-DDT 1574 · 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 1574 </font><br>
23.03.2011 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Finance Bill Passed by Lok Sabha - Misery Tax withdrawn - Point of Taxation Postponed</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> our Seminar in Mumbai, the CBEC Chairman was rather emotional while defending the Service Tax on health services and said that only centrally air-conditioned hospitals were proposed to be brought under the tax net and not hospitals with air-conditioned operation theatres. Now the Finance Minister has withdrawn the proposed tax, which was termed as a misery tax, though one of our contributors had stoutly defended the tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ms Bhavna Doshi had requested in our Seminar that the assessees should be given some time to understand the ‘point of taxation' and it should be effective after three months. The kind FM has obliged and now this scheme will come into force from 1st July. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping – No more Circumvention</strong>: A new sub-section 1A is being added to Section 9A of the Customs Tariff Act to stipulate that: <em>"Where the Central Government, on such inquiry as it may consider necessary, is of the opinion that circumvention of anti-dumping duty imposed under sub-section (1) has taken place, either by altering the description or name or composition of the article subject to such anti-dumping duty or by import of such article in an unassembled or disassembled form or by changing the country of it origin or export or in any other manner, whereby the anti-dumping duty so imposed is rendered ineffective, it may extend the anti-dumping duty to such article or an article originating in or exported from such country, as the case may be</em>." </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Already the Department is doing this without Government's intervention – if they suspect anti dumping, the goods are detained and cases registered for false declaration and hefty penalties are imposed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Branded Ready Made garments – Industry's agony addressed – partly</strong>! Many in the ready-made garment industry paid visits to consultants immediately after the budget with many questions, but they did not pay them hoping that the levy would be rolled back. Bad Luck – they cannot avoid consultants, who are themselves worried about the new attack on them. We had carried a detailed article on this garment levy and one of the questions posed was about valuation when retail sale price is not printed. Now the FM has clarified that duty can be paid on wholesale price, but later when RSP is affixed, differential duty if any has to be paid. The abatement from RSP has been increased to 55% and by this the FM says that a unit which had an RSP based sale of Rs. 8.9 Crores in 2010-11, will continue to get SSI benefit in 2011-12. The garment and made-up industry has a high incidence of return of unsold stock. The FM has allowed exemption not exceeding 10 per cent of the value of clearances of the unit in the preceding financial year, for the returned goods. Still several issues are pending clarification. Hopefully in the days to come Board will come up with clarifications. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Has Legal Metrology Act come into force</strong>? In the Finance Bill, in several clauses, it had been provided that, <font color="#FF6633"><strong><em>for the words, figures and brackets “Standards of Weights and Measures Act, 1976 (60 of 1976)”, the words and figures “Legal Metrology Act, 2009” shall be and shall be deemed to have been substituted with effect from the 1st day of March, 2011 .</em></strong></font> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the amendment to the Finance Bill in all those clauses substitutes that <em><font color="#FF6633"><strong>"Legal Metrology Act, 2009" shall be substituted with effect from such date as the Central Government may, by notification in the Official Gazette, appoint </strong></font></em>. What happened? Has the Act not come into force? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Time limit for adjudication – <font color="#FF6633"><em>where possible</em></font> returns</strong>: As per the new Section 28 of the Customs Act, the proper officer is required to determine the duty within six months/one year from the date of notice. Now the words, " where it is possible to do so " have been inserted. That means the adjudicating authority has all the time in the world! Similar amendment is made in the Central Excise Act also. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Recovery – Old Sections for Old Cases</strong>: An Explanation is inserted to clarify that recovery proceedings under Section 28 of the Customs Act and Section 11A of the Central Excise Act will continue to be under the old sections for the period before Finance Bill 2011 is enacted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Better periods – Duty on Sanitary napkins reduced</strong>: The Tariff rate on napkins has been reduced from 16% to 5% - maybe they will get an effective rate of 1%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RSP based levy proposed to be extended to commodities where 1% excise duty is levied:</strong> In respect of the 130 items where 1 % excise duty is being levied, RSP based assessment with an abatement of 35 % is proposed to be extended to many of these items to avoid disputes with regard to valuation. Further any waste, scrap or parings arising in the course of manufacture of these items are being exempted from excise levy. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>More relief to manufacturers of goods carrying 1% excise levy:</strong> As a measure of further relief to the taxpayers exclusively manufacturing these items, a simplified regime is proposed with the following procedural relaxations: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) Physical verification of premises would not be necessary for new registrants; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ii) Visits to such units by Central Excise officers would be permitted only with due authorisation as in the case of SSI units; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> iii) They would be required to file only quarterly returns; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> iv) A simplified return format will be prescribed. </font></p>
</blockquote>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> To encourage domestic manufacturers, the following reliefs are being proposed in customs and excise duties: </font></strong></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) To extend the concessional rate of 5 per cent CVD and Nil SAD to parts of all computer printers imported by actual users; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ii) To exempt seven specified parts of personal computers from levy of special additional duty of customs; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> iii) To restore full exemption from excise duty (and CVD) on silicon wafers imported for manufacture of solar cells/modules; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv) To exempt certain types of coking coal imported for the manufacture of iron or steel from customs duty; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> v) To prescribe an unconditional 1 per cent excise duty (and CVD) on mobile handsets including cellular phones in addition to 1 per cent NCCD already leviable; and <br>
<br>
vi) To reduce the basic customs duty from 60 to 30 per cent on CKD kits containing a pre-assembled engine, gear box or transmission assembly, imported for the manufacture of vehicles. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Board will be busy in the coming weeks notifying the FM's commitment to Parliament. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Bungling in Finance Bill? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Eleventh Schedule of the Finance Bill, 2011 proposed to amend the Central Excise Tariff. In heading 2403, for sub-heading 2403 10, tariff items 2403 10 10 to 2403 10 90 and the entries relating thereto, the following shall be substituted, namely:- </font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
</tr>
<tr valign="top">
<td colspan="4"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">" Smoking tobacco, whether or not containing tobacco substitutes in any proportion </font></p></td>
</tr>
<tr valign="top">
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 11 </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Water pipe tobacco specified in Sub-heading Note to this Chapter: </font></p></td>
<td> </td>
<td> </td>
</tr>
<tr valign="top">
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 11 10 </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hukkah or gudaku tobacco </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kg </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">60% </font></p></td>
</tr>
<tr valign="top">
<td><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 11 90 </font></strong></p></td>
<td><p><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Other</strong> </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kg </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">60% </font></p></td>
</tr>
<tr valign="top">
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 19 </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other </font></p></td>
<td> </td>
<td> </td>
</tr>
<tr valign="top">
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 19 10 </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Smoking mixtures for pipes and cigarettes </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kg. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">360% </font></p></td>
</tr>
<tr valign="top">
<td> </td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Biris: </font></p></td>
<td> </td>
<td> </td>
</tr>
<tr valign="top">
<td><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 19 </font></strong></p></td>
<td><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Other than paper rolled biris, manufactured without the aid of machine </font></strong></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 12 per thousand </font></strong></p></td>
</tr>
<tr valign="top">
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 19 29 </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 30 per <br>
thousand </font></p></td>
</tr>
<tr valign="top">
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2403 19 90 </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kg. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">60%”; </font></p></td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You will observe that there are two headings <strong><font color="#FF6633">2403 19</font></strong>. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Directorate of Income Tax (Expenditure Budget) created </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> President of India has approved creation of a new Directorate of Income Tax (Expenditure Budget), under Central Board of Direct Taxes with immediate effect. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate of Income Tax (Expenditure Budget) will act as the Nodal Authority in respect of all Budget matters for the Grant No.42-Direct Taxes and will perform all work related to the management of Expenditure Budget under this grant </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The new Directorate will be headed by a Director of Income Tax (Expenditure Budget), who will be an officer of the level of Commissioner of Income Tax and will be located in New Delhi. The Directorate will function under the administrative control of the Director General of Income Tax (Logistics), New Delhi and will be attached to the office of CBDT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The new Directorate shall have two divisions which would be headed by officers of the rank of Additional Commissioners of Income Tax who would perform the functions assigned to them by CBDT.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2011/it11not015.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO 15/2011, Dated: March 18, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SION norms for Product Group 'Engineering Product' at S. No.C-514 changed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has made certain amendments to the Hand Book of Procedures in relation to SION norms for C-514. The existing description of export item has been changed as under: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>Existing description</em></strong>: Non-Alloy Steel Bars & Rods (including rounds, flats, hexagons, octagons, wire rods, cold twisted deformed bars, thermo mechanically treated reinforcing bars etc.) Angles, shapes and sections (including beam, joists, channels, special profiles etc.), Plates/ Sheets / Strips/Wide coils, Blooms / Billets / Slabs/ Ingots…... 1000 kgs </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>Modified description :</em></strong> Non-Alloy Steel Ingots/Blooms / Billets / Slabs…1000 kgs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the input side the number of inputs have not changed, but quantity permitted in respect of some inputs has been reduced. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn041.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 41 /(RE-2010)2009-2014 Dated: March 18, 2011 </font></strong></a></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">Refund of deposit made prior to issue of Show Cause Notice - Pending appeal in Tribunal no ground for not granting refund - Refund ordered with interest: High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> only defence raised by the learned Government Advocate is that it was due to the pendency of the appeal that the amount was not refunded. Section 11-BB of the Central Excise Act casts a statutory duty on the respondents, to refund the amount within a period of three months. The statutory period of three months for refund the amount has already expired. A writ in the nature of mandamus is issued directing the respondent to refund the amount of Rs.5,05,759/- along with interest at the rate of 6% interest per annum with effect from 07.12.2009 till the date of payment. </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">Income
tax - Whether loss from Future & Option transactions for AY 2004-05
are speculative in nature and same cannot be set off against non-speculative
business profits in view of clause (d) of Sec 43(5) - NO, it can be: ITAT</font></strong></p>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>key
issue before the Tribunal is - Whether the loss from F & O transactions
for A.Y. 2004-05 are speculative in nature and cannot be adjusted against
the non-speculative business profit as clause (d) of proviso to section 43(5)
is inserted prospectively w.e.f. A.Y. 2006-07. The other issues are - Whether
the expenses incurred on speculative transactions cannot be allowed to be
set off against the profit / loss of non-speculative business and Whether
while computing the book profit, the provision for diminution in the value
of investments is to be reduced.</font></div>
<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">Interim order passed by Commissioner(Appeals) is not an order passed u/s 128A of Customs Act, 1962 – appeal against such order is not maintainable before CESTAT: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN </strong>interim order was passed by the Commissioner(Appeals) in an appeal filed by the respondent against Order-in-original passed by the Additional Commissioner of Customs. Incidentally, the respondent had moved the High Court for implementation of the impugned interim order of the Commissioner(A) and the High Court had directed that the order be implemented unless the department obtained stay of the said order from the Tribunal. Revenue has, therefore, filed an application (and appeal) before the CESTAT seeking a stay from the operation of the said Interim order. </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>
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