TIOL-DDT 1657 · the untouched capture
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<p><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL-DDT 1657 <br>
</strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22.07.2011 <br>
</font></strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Friday </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty - Appointment of Designated Authority </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Rule 3(1) of the Customs Tariff (Identification, Assessment And Collection Of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, <em>“The Central Government may, by notification in the Official Gazette, appoint a person not below the rank of a Joint secretary to the Government of India or such other person as that Government may think fit as the <strong>designated authority</strong> for the purpose of these rules”. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In exercise of this power by Notification No. 4/95-Cus NT dated, 01.01.1995, the Government appointed the Additional Secretary in the Ministry of Commerce as the Designated Authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. 63/2000 – Cus NT dated 19.10.2000, Government appointed Rathi Vinay Jha, Chairperson of India Trade Promotion Organisation as the DA. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Within two months, by Notification No. 74/2000 – Cus NT dated 12.12.2000, Government superseded Notification No. 63/2000 and again appointed the Additional Secretary in the Ministry of Commerce as the Designated Authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. 11/2011 Cus NT dated 11.02.2011, Government amended Notification No. 74/2000 and made the Joint Secretary in the Ministry of Commerce as the Designated Authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has superseded Notification No. 74/2000 and has appointed <strong>the person</strong> not below the rank of Joint Secretary to the Government of India, Department of Commerce, Ministry of Commerce and Industry, as designated authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Notification does not specify as to who this <strong>person</strong> is! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_048.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 48/2011-Cus NT, Dated: July 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Countervailing Duty on Subsidised Articles - Appointment of Designated Authority </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SIMILARLY</strong> as per Rule 3(1) of the Customs Tariff (Identification, Assessment And Collection Of Countervailing Duty On Subsidized Articles And For Determination Of Injury) Rules, 1995, the Government had by Notification No.3/95 Cus NT dated, 01.01.1995, appointed the Additional Secretary in the Ministry of Commerce as the Designated Authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has superseded Notification No. 3/95 and has appointed <strong>the person</strong> not below the rank of Joint Secretary to the Government of India, Department of Commerce, Ministry of Commerce and Industry, as designated authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Notification also does not specify as to who this <strong>person</strong> is! </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_049.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 49/2011-Cus NT, Dated: July 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior permission under section 281 of Income Tax Act, 1961 to create a charge on assets of business - CBDT Guidelines </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has issued guidelines for granting of prior permission u/s 281 of the I.T. Act, 1961 to transfer or create a charge on the assets of the assessee. </font></p>
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<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The taxpayers should apply in the prescribed form which would be available on the departmental website as well as with the Assessing Officers.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The taxpayer would have to file the form at least thirty days before the proposed date of transaction.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The circumstances under which prior permission u/s 281 should be granted by the Assessing Officers are as follows: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) If there is no demand outstanding and there is no likelihood of demand arising in the next six months, then the permission should be granted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) If undisputed demand is outstanding and there is no likelihood of demand arising in next 6 months, then the tax payer should pay the same along with interest due thereon and then permission should be granted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii) If there is disputed demand outstanding, then the tax payer should obtain stay for the same and indemnify the outstanding demand by way of bank guarantee or sufficient assets or by Department retaining the first charge on the assets proposed to be transferred or on which such charge is being created, to the extent of such demand. Thereafter, the permission u/s 281 would be granted by the A.O. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv) If demand is likely to arise in the next six month, then the A.O. should explore the possibility of action prescribed u/s 281B. </font></p>
</blockquote>
</blockquote>
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<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There would be only one level of intervention i.e. at the level of the range head for granting permission.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The validity of the letter granting permission u/s 281 would be: </font></p>
</blockquote>
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<blockquote>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) One hundred and eighty days from the date of issue of approval, or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) Service of order of attachment u/s 281B whichever is earlier. </font></p>
</blockquote>
</blockquote>
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<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Once the asset is transferred or charge is created, the taxpayer should submit the documents, in this regard, to the A.O. for his record.</font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2011/it11cir04.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Circular No. 04/2011, Dated: July 19, 2011 </font></strong></a></p>
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<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax under Business Auxiliary Service (BAS) on computer embroidery work carried out on job work - CBEC Clarifies </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has clarified that:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The definition of BAS as provided under Section 65 (105)(zzb) read with Section 65 (19) of the Finance Act, 1994, does not include any activity that amounts to manufacture of excisable goods. It also mentions that excisable goods has the meaning assigned to it in clause (d) of section 2 of the Central Excise Act, 1944 and manufacture has the meaning assigned to it in clause (f) of section 2 of the Central Excise Act 1944. The Supreme Court in the case UOI v Nandi Printers Pvt. Ltd. held that "the mere fact that the rate of duty on printed cartons was NIL by reason of exemption would not make printed cartons non-excisable goods". The Supreme Court again in the case of <em>CCE Hyderabad v Vazir Sultan Tobacco Co. Ltd.<strong> <font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-215-SC-CX.htm">2002-TIOL-215-SC-CX</a>)</font></strong></em> at page 10 has observed that if by virtue of exemption the rate of duty was reduced to NIL the goods specified in the Tariff would still be regarded as excisable. Further the Supreme Court in the case of <em>All India Federation of Tax Practitioners v UOI <strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2007/2007-TIOL-149-SC-ST.htm">2007-TIOL-149-SC-ST</a></font></strong></em><font size="1"><strong>)</strong></font> laid down a test that where goods are specified in the schedule they are excisable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once the activity is a manufacturing activity of goods specified under Central Excise Tariff Act, the said activity is not covered in the purview of BAS. When the activity is not a taxable service, the provisions of Notification No. 8/2005-ST dated 01.03.2005 cannot be applied. The said notification can be applicable only in cases where the activity of the service provider does not amount to "manufacture" within the meaning of clause (f) of section 2 of the Central Excise Act, 1944(1 of 1944) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This clarification was issued in response to a representation made by an assessee who was issued a show cause notice demanding service tax for undertaking this activity. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/circular_garment.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Dy. No.2305/Commr(ST)/2011 , Dated: July 15, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Fake Lottery E-Mails - FinMin Warns </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has come to the notice of Department of Economic Affairs that some Organisations/People are sending e-mails attaching forged certificates issued by Ministry of Finance by using the names of the officers of this Department, to enable people claim awards/lotteries. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Department makes it known to all that the Department of <em>Economic Affairs
does not issue any certificate to enable people to claim any lottery or award;
and therefore any e-mail or any other form of messages, in this regard, should
be ignored. </em></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Facilitating Rupee Trade - Hedging Facilities for Non-resident Entities </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> order to facilitate greater use of Indian Rupee in trade transactions, RBI has decided to allow non-resident importers and exporters to hedge their currency risk in respect of exports from and imports to India, invoiced in Indian Rupees. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Necessary amendments to Notification No. FEMA.25/RB-2000 dated May 3, 2000 [Foreign Exchange Management (Foreign Exchange Derivatives Contracts) Regulations, 2000] are being notified separately. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbicir.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI A.P. (DIR Series) Circular No.3., Dated: July 21, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">How to Spend Rs. 80 Crores - Income Tax seeks Suggestions from Staff </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Finance Minister has approved utilization of 1 percent incremental revenue earned during 2009-10, amounting to Rs. 80.63 Crores. This money has to be utilized for enhancing organizational efficiency, infrastructure and wherewithal of Income Tax Department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Committee has been constituted by CBDT to recommend schemes for utilization of the fund. And the Committee wants suggestions from the staff. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/cbdt_dit.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DIT PR F. No. 3(1)/PR,PP&OL/2011-12 ., Dated: July 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Smuggling by Customs Officers - New <em>Modus Operandi</em> - Board's Instructions on Door-to-door delivery traffic </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RESPONDING</strong> to <strong>DDT's</strong> story yesterday on smuggling by Customs Officers in Thiruvananthapuram Air Cargo, a Customs officer mailed to us – “As rightly stated, now a days, with good pay packet, no one needs to go for all this. But will the 'bosses' allow it? The most greedy are the bosses who come with 'targets'. This is not an isolated incident. It is happening everywhere cleared as ‘door to door' baggage after adjudication. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly Board had issued Circular No. 35/2007 dated 28.09.2007 highlighting this issue. Board had then said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is reported that a single passenger arriving into India brings goods said to be belonging to several other persons as his unaccompanied baggage and that clearance of all such goods was being permitted at some of the airports/Customs station without invoking any penal provisions. Colloquially this is referred to as “door-to-door delivery” traffic. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is reiterated that all the provisions of Customs Act, 1962 and Baggage Rules, 1998 are applicable to unaccompanied baggage as they are applicable to baggage (accompanied), except the free allowance, which is not available for unaccompanied baggage. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hence, it may be ensured by the officers attending to the clearance of the unaccompanied baggage at all customs stations that “bonafide” nature of the baggage is established before allowing clearance. The exceptions relating to various restrictions as provided in Rule 3 (i) of Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993 in respect of baggage, specified goods including consumer electronic items etc., are part of the facilitation measures available to passenger in respect of his personal effects and hence, the same cannot be allowed to be used as means to circumvent the legal provisions applicable to normal imports. All cases of import of unaccompanied baggage other than in the nature of “bonafide” baggage have to be adjudicated for levy of fines / penalties for violation of the Foreign Trade Policy. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please also see</strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6148"><strong>DDT 711 - 03.10.2007</strong> </a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Show Cause Notices by DRI to be Valid Retrospectively</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government is all set to introduce a Bill in the Monsoon Session of Parliament to retrospectively amend Section 28 of the Customs Act to validate Show Cause Notices issued by DRI and DGCEI. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Commissioner of Customs Vs. Sayed Ali & Anr. - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2011/2011-TIOL-20-SC-CUS.htm"><strong><font size="1">2011-TIOL-20-SC-CUS</font></strong></a></em>, the Supreme Court had held that only jurisdictional Customs Officers who will be competent to issue Show Cause Notices. Now the Government is determined to undo the Supreme Court judgement retrospectively. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is reported that DRI alone has issued Show Cause Notices involving duty of over Rs. 7500 Crores and the Government does not want evaders to get benefitted on a mere technical ground of jurisdiction. But then who was responsible for this technical lapse? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why should we have a Supreme Court if its orders are to be undone by retrospective legislation? Why can't the Government pass a law that notwithstanding anything declared by any Tribunal or Court including the Supreme Court of India, the LAW as declared by the Under-Secretary in the Board will prevail? They should also get the Constitution amended to stipulate that no decision of any officer of the Department from Sepoy upwards can be questioned in any court of law. Any person who files a case in any Tribunal or Court should be awarded exemplary fine and eventually we can reduce the huge pendency in the courts as other Government Departments will also get similar laws passed and finally we can close down the Courts. The Executive can then serve this country without inconvenient interference from the Judiciary. </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"> – Monday'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">Limitation - Amount Billed shown in ST-3 return cannot be considered as relevant for purpose of time limit - Time limit of one year to be computed from the ST-3 return showing amount realized: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee did not pay service tax on the amount received as sub-contractor as he was under the belief that the main contractor would have discharged the service tax on the total value. Show Cause Notice was issued demanding service tax from them on the amounts received from the main contractor during the period from 29-09-04 to 03-03-2005. The Show cause notice was issued on 10-03-2006. The lower authorities confirmed the demand and the assessee is in appeal before the CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On behalf of the appellants, it was strongly contested before the CESTAT that the demand was time barred. </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 when assessee gets contract to develop customised software and transfers same to another company for consideration, such transfer of sale contract gives rise to capital gains: ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> Company, engaged in the business of management and financial management consultancy, entered into contract with a company for development of some specific software. The assessee sold the same contract for a consideration to another company. During the reassessment proceedings, the AO took the view that assessee had sold the commercial right to manufacture, produce or process an article or thing and hence the gains arising out of such sale were taxable as capital gain in terms of section 55(2)(a). The CIT(A) affirmed the order of the AO. </font></p>
<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">Anti Dumping Duty should be in Dollar terms: CESTAT </font></strong></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO</strong> bar to fixing anti-dumping duty in dollar terms, but payable /recoverable in Indian rupee. Such action is to be highly warranted in respect of anti-dumping duties. Anti-dumping duty is fixed after a finding that foreign goods are sold at less than their normal value in the Indian market causing injury to domestic producers. The amount of dumping margin is worked out in dollar terms as all aspects of trade are in USD. Section 9A stipulates that anti-dumping duty shall not exceed dumping margin. Thus, the law's intention and purpose is to afford a protection to the domestic industry at rates not exceeding dumping margin and injury margin. Anti-dumping duty should be fixed in dollar terms so that erosion of the quantum of protection does not take place on account of changes in the exchange rate. </font></em></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend. </font></p>
<font color="#FF6633" 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>
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