TIOL-DDT 1655 · 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 1655 </font><br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>20.07.2011 <br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Wednesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Brings in new ER-1 Form With Hardly any Change - Education Cess and SHE Cess Merged? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified new ER-1 and ER-3 Forms. ER-1 is the monthly return for production and removal of goods and other relevant particulars and CENVAT credit and ER-3 is the quarterly return to be filed by SSI Units. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is not really known why the CBEC had to change these forms, because there is hardly any change. Assessees who pay more than Rs. 10 Lakhs duty will anyway file the returns electronically; so it is only the small manufacturers who will have to get the new forms printed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the new ER-1, in Sl.No. 8 - <strong>Details of CENVAT credit taken and utilized </strong>; there is no column for Secondary and Higher Education Cess - there is only one column for Education Cess. Has the Board merged Education Cess and SHE Cess? Even in the Instructions at the end of the form, SHE Cess has been omitted. In Sl. No. 12 of the instructions, the other duties are specified. Even here there is only Education Cess and no SHE Cess. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does it mean that the two cesses are merged? If so, it is a good gesture. In fact they could simply make it as the duty inclusive of cesses. If the duty is 10 percent, it can be shown as 10.3 percent inclusive of the two cesses. That will save a lot of work and unnecessary accounting confusion. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Board seems to have forgotten one simple aspect - As per Rule 3(7)(b) of the CENVAT Credit Rules, the Credit of SHE Cess can be used only for payment of SHE Cess. Now how are they going to monitor this when the two cesses are clubbed in the return? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Column for “Credit utilized for payment of amount in terms of Rule 6 of the CCR”, is omitted. CAN CENVAT CREDIT BE USED FOR PAYMENT OF 5 PERCENT AMOUNT AS SPECIFIED UNDER RULE 6(3)(i) OF THE CENVAT CREDIT RULES? </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/exnt11_16.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 16/2011-CENT, Dated: July 18, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New Registration For Existing LTUs - Registration with Assistant Commissioner/Superintendent </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Notification No. 20/2006-Central Excise (N.T), dated the 30th September, 2006, in case a new factory or service provider or input service distributor or first or second stage dealer of a unit in LTU becomes liable to be registered, the application shall be made before the Chief Commissioner of the LTU. Now the Government has amended this notification to make registration under Central Excise before the Assistant Commissioner/Deputy Commissioner and under Service Tax before the Superintendent in the LTU. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2011/exnt11_17.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 17/2011-CENT, Dated: July 18, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Utilizing Refunded SAD for Duty Payment (DEPB) Extended by Two Months </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> Circular No 27/2010-Customs, dated 13.08.2010,provided the facility of manual filing of Bill of Entry for utilizing the amount of re-credited 4%CVD(SAD) refunds for payment of duty in case of re-creditedDEPB/ Reward Schemescripsupto30.12.2010. However several representations have been received from trade and industry to extend the timeup to30th June, 2011 for using re-credited 4%CVD(SAD) amount inDEPBas they have not been able to utilize the re-creditedDEPB/ Reward Scheme scripswithin the stipulated time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Circular No.11/2011-Customs, dated 24.02.2011, Government had extended this time till 30.06.2011. Still there are representations that the trade could not use this facility within the stipulated time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So a benign Government has now extended it till 15.09.2011, with a rider that no further extension shall be given. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_030.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 30/2011-Cus., Dated: July 19, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export Warehousing - Tijara of Alwar district included </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Circular No. 581/18/2001-CXdated 29th June, 2001, CBEC has specified places where warehouses may be established.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Representations have been received from the trade to include Tijara Tehsil of Alwar District in the state of Rajasthan in the list of places mentioned in the said Circular. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is of the view that extension of the facility of export warehousing toTijara Tehsil of Alwar District in the state of Rajasthan would facilitate the trade and industry and so it is included the list. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Circular had been amended about 15 times and new places are added. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The places where warehouses may be established and registered are:- </font></p>
<blockquote><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Ahmedabad, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Bangalore, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Kolkata, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Chennai, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Delhi, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Hyderabad, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Jaipur, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Kanpur, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Ludhiana, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Mumbai, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. The districts ofPuneandRaigadin the state of Maharashtra, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. The district of EastMidnaporein the state of West Bengal, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. The district ofKancheepuramin the state ofTamilnadu, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. The district of Indore in the state of Madhya Pradesh, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. ThetalukaAnkleshwarin the district ofBharuchin the state of Gujarat, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16. NaviMumbai in the district of Thane in the state of Maharashtra, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. Sholinghurin the district of Vellore in the state ofTamilnadu, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18. Bidadiin the Bangalore Rural District, Karnataka, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19. Thedistrict ofThiruvallurin the state ofTamilnadu, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20. The district of Gautam Budh Nagar in the state of Uttar Pradesh, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21. The district of Nagpur in the state of Maharashtra and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22. The Tehsil of Tijara of Alwar district in the state of Rajasthan </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the list is interesting - it basically covers the places, which have no ports; understandably so. But the list has cities like Chennai, Kolkata and Mumbai, which have ports. And the list does not cover port cities like Kochi, Mangalore, Vizag etc., </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why? </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/excircular949.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 949/10/2011-CX, Dated: July 19, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on deputation of ONGC officers in Directorate General of Hydrocarbons - CBEC Clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REPRESENTATION</strong> has been received seeking clarification on applicability of service tax under Manpower Recruitment and Supply service in respect of employees sent on deputation by ONGC to Directorate General of Hydrocarbons (DGHC).</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Clarifies:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The activity of ONGC of providing its staff on deputation to DGHC for a remuneration in the form of reimbursement from DGHC, is chargeable to service tax under 'Manpower Recruitment or Supply Agency's Service' in terms of Section 65 (105) (k) of the Finance Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As per Section 65 (68) of the Finance Act, Manpower Recruitment or Supply agency means any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to any other person. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In the said definition the key words are, any person; directly or indirectly; in any manner; and temporarily or otherwise. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It thus appears that organisations that make available their staff to other entities would be covered under the said definition. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The motive for providing such manpower is of no consequence. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The requirement for taxability is that the person should be engaged in an activity that is covered under Section 65 (105)(k) ibid. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The volume of activity undertaken or the presence or absence of the profit motive is irrelevant. </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/circular_ongc.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Letter F No. F. No.137/35/2011 - Service Tax., Dated: July 13, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No Prosecution of Nominee Directors of FIs and Banks </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NORMALLY</strong> Directors nominated by Government in Companies are generally exempted from prosecution. This facility is now extended to nominee directors on behalf of Public Financial Institutions, Financial Institutions and banks on the board of companies. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfmca/pdf2011/Circular_47-2011_14july2011.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOC General Circular No. 47/2011-Cus., Dated: July 14, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No Profit Companies Can Hire High Cost Managers </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present, listed companies and their subsidiaries companies, which are not having profits or having inadequate profits, have to seek approval of the Government for payment of remunerations exceeding Rs. 4 lakh p.m. even to professional managerial person, who has no interest in the capital or any relation with the directors of the company.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this condition is waived subject to the condition that is the manager </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Is not having any direct or indirect interest in the capital of the company or its holding company or through any other statutory structures at any time during last two years before or on the date of appointment and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Is having a graduate level qualification with expert and specialized knowledge in the field of his profession. </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfmca/pdf2011/Circular_46-2011_14july2011.pdf"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOC General Circular No. 46/2011-Cus., Dated: July 14, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>India US Strategic and Economic Partnership - Hillary-Pranab Meet </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><strong><img src="http://www.taxindiaonline.com/RC2/image/stories/Hillary_Pranab.jpg" alt="Legal Corner Icon" width="219" height="173" hspace="5" border="0" align="left"></strong></font>UNION</strong> Finance Minister Pranab Mukherjee said that India gives high importance to India-US Strategic and Economic Partnership. He was speaking on the occasion when an official US delegation led by the US Secretary of State, Hillary Clinton called on him, yesterday. He stated that India is carrying its reforms agenda further by making major change in the tax sector - involving both direct and indirect taxes. Mukherjee said that in the field of direct taxes, efforts are on to make Direct Tax Code (DTC) effective w.e.f. 1st April, 2012. In field of indirect taxes, efforts are also on to build a consensus among all the stakeholders including state governments to make Goods and Services Tax (GST) effective at the earliest. He said that Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) are expected to finalize the guidelines of Infrastructure Debt Fund soon, which would help in expediting investment, by the US companies in India. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Speaking on the occasion, US Secretary of State Hillary hoped that the relationship between India and US in the field of trade, infrastructure investment, business, defence and strategic matters would be further strengthened. She said that US India have excellent working relationship especially in field of economic and financial partnership. She said that India can play a major role in enhancing regional economic cooperation and optimizing the large potential available in this region. She specifically mentioned that India can play a major role in the economic development of Afghanistan. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The US delegation consisted of Robert O' Blake, Asstt. Secretary, Daniel B. Poneman, Deputy Secretary, Energy, Elizabeth Littlefield, Head of Overseas Private Investment Corporation among others. The Indian delegation included among others Meera Shankar, India's Ambassador to US, R.S. Gujral, Revenue Secretary and Dr. Kaushik Basu, Chief Economic Advisor. </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 align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><strong><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>Central Excise </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Limitation - Initial burden is on Department to prove that there is short levy of duty on account of fraud, collusionetc,- Limitation on taking Credit twice on same invoice - Matter remanded: HC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> initial burden is on the Department to prove that there is short levy of duty on account of fraud, collusion or any wilfulmis-statement or suppression of facts, or any of the conditions mentioned in the provision and thereafter the burden shifts on the assessee, once the Department can produce to show material that the appellant is guilty of. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether
when assessee transfers distribution business against commission which
is allowed as business expenditure, Revenue is right in treating same commission
income as income from other sources in case of assessee - NO, says High
Court </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">assessee
was carrying on business of distribution of Acer products, such as computers,
laptops, desktops, etc for about two years. It incurred heavy losses. The
assessee company decided to transfer the distribution to M/s. “SIL”, for
which M/s. Acer India Pvt. Ltd. had also consented, by virtue of a written
agreement between the assessee and SIL. The distribution of the products
was to be taken over by SIL on certain terms and conditions, including payment
of commission on sale at the rate of one per cent. The assessee offered the
commission income gained from its business as ”business income” and set off
the same against the business losses incurred in the same business. The AO
treated the income of the assessee from commission as income from other sources
and declined to set off against the brought forward business losses. The
CIT called for the comments of the AO under Rule 46A. The CIT(A) allowed
the Assessee's appeal. The Tribunal dismissed the Revenue's Appeal. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Provisional release of seized goods - The guideline that value of bank guarantee shall not exceed twice amount of duty not to apply to a case involving a serious fraud: High Court </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Petitioner, obviously, cannot rely on the guidelines contained in the Manual to the effect that the value of the bank guarantee shall not exceed twice the amount of duty since that part of the guidelines is not to apply to a case involving a serious fraud. In this view of the matter, the basis on which the Petitioner has claimed a benefit under the guidelines contained in the Manual is without any foundation. No case for interference under Article 226 of the Constitution is made out. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT</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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