TIOL-DDT 1602 · 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 1602</font> <br> 05.05.2011 <br> Thursday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Project Imports Regulations - Fresh Instructions </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> C&AG has taken a serious view on the weak monitoring of the Project Imports and on the substantial delay in finalization of Project Imports. Based on the CAG report, CBEC has taken certain decisions: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Finalization of assessments under Project imports should completed within a period of 60 days from the date of submission of required documents by the importer. However, in exceptional circumstances where it is not possible to complete the finalization within the time limit for justifiable reasons, the time limit may be extended by the jurisdictional Commissioner of Customs for such further period as may be decided by him and for the reasons to be recorded in writing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In cases where the importers have not submitted the requisite documents in time, it may be ensured that the bank guarantees are kept alive until finalization of project imports so that resultant delay does not adversely affect the interests of revenue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Commissioners should ensure that in cases where the requisite Statement/documents under Regulation 7 of PIR , 1986 is not submitted in time or submitted incomplete, then necessary action for enforcing bond / undertaking, cash security/ bank guarantees executed in this regard, issue of notice for demand of duty, penalty for non-compliance with the provisions of the Regulations may be initiated against the importer. The adjudicating authority is expected to appreciate the evidence on record including documents submitted, if any, to arrive at a decision whether duty is to be confirmed and/or penalty imposed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Importer and his Custom House Agent should ensure that the provisionally assessed Bills of Entry for the imported goods at the ports other than the port of registration of project imports are finally assessed and audited at the respective ports, and should be submitted along with the documents submitted for finalization of Project Imports. In these cases the concerned Commissioner should ensure that such Bills of Entry are finalized without undue delay. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Jurisdictional Central Excise Commissionerate should ensure that Plant Site Verification, where ever applicable, is completed within 15 days of submission of relevant documents by the importers. However, in cases of Government Departments and Public Sector Undertakings, the requirement of PSV under project imports can be fulfilled by means of issuing appropriate Certificate by the Head of PSU / Government Undertaking in the rank of Chairman / Executive Director. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Proper records of the Contracts registered under Project Imports along with requisite particulars, amendments to contracts, if any, as required under Regulation 5 of PIR shall be maintained by the respective Custom Houses for the purpose of monitoring. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Commissioner of Customs should monitor the pendency of project imports cases and submit a monthly report to the Chief Commissioner of Customs in charge of the Zone, in the prescribed format. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Chief Commissioner of Customs will monitor the pendency and send a quarterly consolidated report of the Zone by 15 th of next month to the Directorate General of Inspection (Customs & Central Excise), New Delhi in prescribed format. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The DGIC&CE will in turn monitor the pendency at All India level, in centralized manner and will report to the Board on a quarterly basis about the progress made in finalization of project imports, trend of compliance etc. and suggest corrective measures to be taken, if any. </font></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_022.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No.22/2011-Customs, Dated : May 4, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Manual filing and processing of bills of entry - Board Wants Stringent Checks </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DRI</strong> has detected several cases in which bills of entry/shipping bills were processed manually or manual clearance was allowed on EDI documents. Such cases have indicated the possibility of illegal import / export of restricted / prohibited goods and substantial loss of revenue to the Government exchequer. These cases highlight the high propensity to commit fraud and duty evasion that is associated with the manual processing of documents at any stage in the clearance process. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, Board has decided that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Only in the rarest of rare and genuine cases manual processing and clearance will be allowed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Data for manual documents is compulsorily entered and transmitted at all locations within the stipulated time period. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Facility of manual documentation should be an exception to the rule of EDI processing and should be withdrawn no sooner EDI processing is possible. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ This authority should be vested in a senior officer of the level of Joint/Additional Commissioner of Customs and it should be closely monitored by the Commissioner of Customs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Data for manual documents should be compulsorily entered and transmitted at all locations within the stipulated time period. For this purpose the Commissioner of Customs shall nominate an officer of the level of Assistant/Deputy Commissioner of Customs to oversee this task and shall closely monitor the same to ensure there is no deficiency in data quality or gap in entry and transmission of data. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ These instructions to be strictly complied with. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Any failure in complying with these instructions will have a revenue angle, and hence inevitable consequences. </font></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/instruction11_012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Instructions in F.No.401/81/2011-Cus.III, Dated : May 4, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP – Export of Samples as baggage </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has amended para 2.31 of the Foreign Trade policy to add, “ “Samples of such items that are otherwise freely exportable under FTP may also be exported as part of passenger baggage without an Authorisation.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now exporters can take bona fide trade samples as part of their passenger baggage. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not045.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 45 (RE-2010)/2009-2014, Dated : May 3, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption to Business Exhibition Service rendered outside India - Exhibition of poor drafting? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TAXING</strong> provisions of cross border services are often confusing for the trade and the officers alike. While, for any service to be treated as export, it is essential that the payment should be received in foreign currency, all services for which payments are received in foreign currency are not treated as export of services. We have a separately defined “Export of service Rules, 2005” which decide whether a particular service is export or not. All taxable services are divided into three categories in these rules and the test for the second category of services is the “ place of performance” of service. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Business Exhibition service falling under Sec 65(105)(zzo) is covered under category two ( Rule 3 (ii)) of Export of Services Rules, 2005). This implies that when this service is performed outside India, and when the payment for such service is received in convertible foreign exchange, it is treated as export of service and the same may be exported without payment of service tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this year's budget, an interesting exemption notification has been issued vide Notification No 5/2011 ST dated 01.03.2011. This notification reads: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In exercise of the power conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, being satisfied that it is necessary in the public interest, so to do hereby exempts the taxable service specified in sub-clause (zzo) of clause (105) of section 65 of the said Finance Act, when provided by an organiser of business exhibition for holding a business exhibition outside India, from the whole of the service tax leviable thereon under section 66 of the said Finance Act. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One wonders why such an exemption is required when the service of holding Business Exhibition outside India is treated as export of service. Even assuming that this notification is required to take care of the cases where the Exhibition is held outside India, by the Indian organisers, but the payment is received in Indian Currency because of participation by the Indian Industrial houses, then the medicine is worse than the disease. That is because even if there is any genuine exporter of this service who is receiving the foreign exchange, such exporter has also been covered under this exemption, with the result, he is not entitled for any CENVAT Credit on the input services/ inputs nor can he claim any export benefits. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">May be a minor amendment that the exemption applies to the cases where only the amount is received in India Rupees would help the genuine exporters. </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">Income Tax </font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether any income of VC Company or fund set up prior to 2007 to raise funds for investment is exempt under Sec 10(23F) - Yes, rules ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Tribunal are - Whether any income of venture capital company or fund set-up, prior to 2007, to raise funds for investment is exempt under section 10(23F) and whether amendment vide Finance Act 2007 restricting the scope of deduction only to income generated from investment by venture capital fund in venture capital undertaking is prospective and not clarificatory. And the verdict goes in favour of the assessee. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FEMA </strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">FERA Violation - Appeal filed under FEMA after abolition of FEMA - High Court cannot condone delay beyond 60 days - HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INTERPRETING</strong> similar provisions contained in the Central Excise Act, 1944, the Apex Court in the case of<em> M/s. Singh Enterprises V/s. CCE reported in</em> <font size="1"><em><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2007/2007-TIOL-231-SC-CX.htm">2007-TIOL-231-SC-CX</a>)</strong></em></font> held that where the statute bars appeal beyond sixty days, the Court cannot condone the delay and entertain the appeal filed beyond sixty days. In the present case, since the appeal is filed beyond 120 days, the High Court cannot condone the delay and consequently, the appeal would be time barred. the appeal filed by the applicant against the decision / order of the Appellate Tribunal dated 18/8/2009 being an appeal filed under Section 35 of FEMA would be subject to the limitation prescribed thereunder. Under Section 35 of FEMA, this Court can condone the delay, not beyond 60 days. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise/Service Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Although appellant, a PSU, does not have mala fides to avail excess credit but since they have contravened provisions of law by taking excess credit, penalty is imposable: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DR</strong> submitted that in the eyes of the department, every assessee is on equal footing. No special treatment has to be given to the public sector undertaking. Their officers may have committed the mistake with an intention to get reward from their higher au thorities. Therefore, the appellants are to be penalized. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrowfor 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><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></p> <p><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>