TIOL-DDT 1615 · 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 1615</font><br>
25.05.2011<br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on Vitrified Porcelain Tiles - On Provisional Assessment</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ANTI</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Dumping Duty on import of Vitrified Porcelain Tiles originating in, or exported from the People's Republic of China (China PR) and United Arab Emirates, was provisionally imposed vide Notification No. 50/2002 dated 02.05.2002. This Notification was valid till 01.11.2002. But by Notification No. 73/2003 dated 01.05.2003, definitive anti dumping duty was imposed, but with effect from the date of provisional anti dumping duty that is 02.05.2002. This notification also expired on 02.05.2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government again freshly imposed the anti dumping duty on the product with effect from 27.06.2008 by Notification No. 82/2008 - Cus dated 27.06.2008. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Was there no dumping between 02.05.2007 and 26.06.2008? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now M/s. Jiangxi Zhengda Ceramics Co. Ltd, China PR (producer) through M/s Foshan Z&D Ceramics Co. Ltd., China PR (exporter) have requested for review of the anti dumping duty and the Government, on the recommendation of the Designated Authority ordered that pending the outcome of the said review by the designated authority, export of Vitrified Porcelain Tiles by M/s. Jiangxi Zhengda Ceramics Co. Ltd., China PR (producer) through M/s Foshan Z&D Ceramics Co. Ltd., China PR (exporter) when imported into India, shall be subjected to provisional assessment till the review is completed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The provisional assessment may be subject to such security or guarantee as the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, deems fit for payment of the deficiency, if any, in case a definitive anti dumping duty is imposed retrospectively, on completion of investigation by the designated authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of recommendation of anti-dumping duty after completion of the said review by the designated authority, the importer shall be liable to pay the amount of such anti-dumping duty recommended on review and imposed on all imports of Vitrified Porcelain Tiles, when exported by M/s. Jiangxi Zhengda Ceramics Co. Ltd., China PR (producer) through M/s Foshan Z&D Ceramics Co. Ltd., China PR (exporter) from the date of initiation of the said review. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_041.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> Notification No. 41/2011 - Cus., Dated: May 23, 2011</strong></font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CCRs
- Amended definition of 'input' w.e.f. 1.4.2011 - Will CBEC clarify?</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> <em><strong>concerned</strong></em> Netizen raises this doubt:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Executives dealing with Excise and Service Tax matters are still not able to digest the interpretation placed by C.B.E.C in extending the CENVAT benefit to <strong>Furniture</strong> and <strong>Stationery</strong> under the amended “input” definition, as clarified vide CBEC Circular No 943/04/2011-CX dated <strong>29th April 2011</strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ While interpreting the amended “input” definition, the exclusion clauses provide for the following </font></p>
<blockquote>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(C) capital goods <strong>except</strong> when used as parts or components in the manufacture of a final product; </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(F) any goods which have <strong>no relationship</strong> whatsoever <strong>with the manufacture of a final product</strong>. </font></em></p>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ If we accept the examples given for <strong>furniture</strong> and <strong>stationary</strong> used in an office within the factory as goods used in relation to the manufacturing business and hence the credit of the same is allowed, all other items which are either machinery nature and consumables like wheels for Hand Trolly (8716 9090), Light fittings (9405 9900), platform ladders (70072900), nuts and bolts (73181500), PVC bars for Cooling Towers (3916 1090), Personal protective Equipments (6116 9200), Argon Gas for emergency repairs in workshop (28042100) etc will become eligible as all these items have indirect nexus in relation to manufacturing in the factory. This is for the reason that clause (C) of exclusion clause will cover only those Capital goods defined under rule 2(a) of Cenvat Credit Rules 2004 for the purpose of these Rules. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is it the intention of CBEC to expand the scope of items not appearing in the Capital goods definition to allow their credit as “input” ? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It may be noted that while clarifying the scope of budget provisions by TRU in their Circular <strong>No D.O.F.No. 334/3/2011-TRU</strong> dated <strong>28th February 2011</strong> it is clarified as under </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 7.1 (a) The definition of “input” contained in rule 2(k) has been revised. The requirement that goods should be used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not has been removed. Henceforth, all goods used in the factory by the manufacturer of the final product, except those specified in the negative list and goods having no relationship whatsoever with the manufacture of final product, would qualify for treatment of inputs .” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the amended “input” definition is read with the DO Letter and above referred CBEC Circular, then by this time assesses might have started availing Cenvat credit on <strong>Furniture, Stationery</strong> and many other items of similar in nature which were hitherto neither covered under <strong>Capital Goods</strong> definition nor <strong>Input</strong> definition. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It appears the example of <strong>Stationery</strong> and <strong>Furniture</strong> given in CBEC circular would have been <strong>classic example</strong> as to how these types of items do not have any “relationship of whatsoever with the manufacture of final product” for making them ineligible for Cenvat credit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the example of items like <strong>Furniture</strong> and <strong>Stationery</strong> given by CBEC are considered to be used in relation to manufacturing business, then there are host of other items which are <strong>more relevant</strong> in nature having relationship with the manufacturing business. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ So far the scope of<strong> input</strong> is relating to the items which are not specified in the definition of Capital goods, but are in the nature of consumables in relation to production machinery, e.g. Lubricants, grease, coolants, etc. But still there are host of other items required to be used in the factory and in the workshop of factory which are in fact <strong>more relevant</strong> than Furniture and Stationery and are required to be used in relation with the manufacture but still not considered as eligible items for Cenvat credit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now in view of the above CBEC Clarification, one should start availing Cenvat on all of such items <strong>also</strong> under <strong>input</strong> route. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Although the requirement that goods should be used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not has been removed, if we read together the rule 2(k)(i) and exclusion clause (F) of the said rule 2(k) it reads as under </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) all goods used in the factory by the manufacturer of the final product – but excludes, -- (F) any goods which have no relation whatsoever with the manufacture of a final product. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A combined reading of the relevant clauses of the definition of “inputs” the concept of “relationship” of input with the manufacture of final product <strong>still exists</strong> under amended definition. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In view of the above, it is not understood whether the examples of Furniture and <strong>Stationery</strong> given by CBEC is an <strong>error </strong>or it is the intention of the GOVT?. Will CBEC like to clarify the matter to avoid frivolous litigation? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Protectionist pressures on rise, latest G20 monitoring report </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> G20 Monitoring Report released yesterday states, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Over the past six months most G20 governments have put in place more new trade restrictive measures than in previous periods since the crisis. Their restraint to resist protectionism appears to be under increasing pressure. The commitment to roll back export restrictions has not been followed; in fact, new export restrictions are on an increasing trend. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the other hand, a number of measures have been introduced to facilitate trade, especially by reducing or temporarily exempting import tariffs on selected products and by streamlining customs procedures. The pace of removal of previous trade restrictive measures seems to be increasing. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The majority of new investment measures taken by G20 governments eliminated restrictions to international capital flows and improved clarity for investors. Some other measures introduced restrictions. Many emergency measures taken in response to the crisis (for example, rescues of banks and non-financial companies) have been phased out and assets and liabilities resulting from these measures on governments' accounts are being wound down. So far, concerns that the implementation or unwinding of these measures might involve overt discrimination against foreign investors have not materialised. However, global FDI inflows have not recovered to the levels reached in the years preceding the crisis. Continued macroeconomic imbalances in the global economy, weaknesses in governments' fiscal positions and commodity price volatility may undermine governments' commitments to openness to international investment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the policy developments over the past six months, there is a need for increased vigilance in the coming months to prevent protectionism from gaining ground. The persistence of high levels of unemployment, macroeconomic imbalances, rising food prices and geopolitical tensions create conditions that are favourable to growing protectionist sentiment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WTO urges G20 governments to remain united in their efforts to strengthen cooperation so that the multilateral trading system continues to serve them as an insurance policy against trade protectionism. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Keeping trade and investment open has been and continues to be crucial in providing sustainable opportunities for countries to consolidate their emergence from the global crisis, and to promote further economic development. In the current difficult circumstances, the WTO, OECD and UNCTAD must and will continue to act as a catalyst of global co-operation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The multilateral trading system was instrumental in helping governments successfully resist intense protectionist pressures during the recent global crisis. It is vital to preserve and strengthen this system in order to be able to face future crises. Despite the evident economic and systemic benefits of completing the Doha Development Agenda and the continued statements of support by G20 Leaders, the negotiations are currently blocked on the issue of industrial tariffs. Differences in ambition are effectively preventing progress today and put into question the conclusion of the DDA in 2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The multilateral trading system cannot be taken for granted. This is a time, if there ever was one, to think and act in the interests of the system whose benefits we all share. It is time to start looking for a way forward which preserves the objectives and values of the Doha mandate and delivers for all Members by the 8 th WTO Ministerial Conference in December 2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No improvement in enforcement Anti-Bribery Convention</strong>: Meanwhile a report released by Transparency International (TI) shows no improvement in the enforcement of the OECD Anti-Bribery Convention in the past year. Of the 37 countries, there are still only seven countries with active enforcement, nine with moderate enforcement, and 21 with little or no enforcement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to Transparency International, Bribery can add up to 25 per cent to total costs in government procurement. The World Bank says that the cost of corruption is US Dollars 1 trillion a year, and that corrupt money associated with bribes received by public officials in developing and transition countries is between US Dollars 20 billion and USD 40 billion per year. The enormous scale of bribery makes clear why high-level government action to strengthen enforcement is necessary. </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"><a></a><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">Deploying man power, not service under Consulting Engineer - No deliberate suppression - no extended period of limitation: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> deputation of manpower to HPL by the appellant cannot qualify as the service provided by 'Consulting Engineer'. Similarly, the activities undertaken by the appellant as per the agreement dt. 28.10.98, cannot be considered as 'advice', 'consultancy' and 'technical assistance' in nature; Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability for the extended period of limitation. </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 expenditure incurred on glow and neon signs is expenditure on advertisement and publicity or marketing, and if so, it qualifies for deduction as revenue expenditure - YES, rules Delhi HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the High Court is - Whether expenditure incurred on glow signs and neon signs is expenditure on advertisement and publicity or marketing, and if so, whether it qualifies for deduction as revenue expenditure under Sec 37(1). YES is the High Court's answer. </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">SSI Exemption - assessee would also be entitled to the benefit of exemption if brand name belongs to assessee himself although someone else may be equally entitled to such name.: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the Notification, the assessee would be debarred only if it uses on the goods in respect of which exemption is sought, the same/similar brand name with the intention of indicating a connection with the assessees' goods and such other person or uses the name in such a manner that it would indicate such connection. If there is no such intention or that the user of the brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, it would be entitled to the benefit of exemption. </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 Day.</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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