TIOL-DDT 1663 · 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 1663 </font><br>
01.08.2011 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Legal Metrology Act comes into force from today in Customs Tariff Act </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 57 of the Finance Act 2011, stipulated substitution of the words "Standards of Weights and Measures Act, 1976" with <strong><em>"<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/legal_metrology_act_rules/LM-Notification09.htm">Legal Metrology Act</a></em></strong><em><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/legal_metrology_act_rules/LM-Notification09.htm"></a></em>, 2009" in section 3 of the Customs Tariff Act, 1975 in sub-section (2), in the proviso, in clause (a), with effect from a date to be notified by the Government. Now the Government has notified 1st day of August 2011 as the date for this amendment to come into force. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_053.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 53/2011-CUSTOMS (NT), Dated : July 28 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Legal Metrology Act comes into force from today in Central Excise Act </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SIMILARLY</strong> Section 62 of the Finance Act 2011, stipulated substitution of the words "<em>Standards of Weights and Measures Act, 1976" with "<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/legal_metrology_act_rules/LM-Notification09.htm"><strong>Legal Metrology Act</strong></a>, 2009</em>" in sub-section (1) of Section 4A of the Central Excise Act with effect from a date to be notified by the Government. Now the Government has notified 1st day of August 2011 as the date for this amendment to come into force. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2011/exnt11_19.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 19/2011-CE(NT), Dated : July 28 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">And Medicinal and Toilet Preparations </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SIMILARLY</strong> Section 76 of the Finance Act 2011, stipulated substitution of the words "<em>Standards of Weights and Measures Act, 1976" with "<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/legal_metrology_act_rules/LM-Notification09.htm"><strong>Legal Metrology Act</strong></a><strong>,</strong> 2009</em>" in Explanation III of Schedule to the Medicinal and Toilet Preparations (Excise Duties) Act with effect from a date to be notified by the Government. Now the Government has notified 1st day of August 2011 as the date for this amendment to come into force. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2011/mtp11_001.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 1/2011-M&TP, Dated : July 28 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value reduced for Brass Scrap and Poppy seeds </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has reduced the tariff values of Brass Scrap (all grades) from USD 4294 to USD 4261. Tariff value of poppy seeds is decreased from 2350 USD to 2276. There is no change in the value of other items. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_054.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 54/2011-CUS (NT), Dated: July 29, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty - No Resurrection, But Who is Responsible for Loss of Revenue? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Anti Dumping Duty on imports of certain Rubber Chemicals, namely, MOR, PX13 and TDQ, falling under Chapter 29 and 38 of the First Schedule to the Customs Tariff Act, originating in, or exported from, European Union, People's Republic of China, Chinese Taipei and the United States of America, imposed vide Notification No. 94/2005-Customs, dated the 20th October, 2005 with effect from 7th July 2005. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Notification had expired on 6th July 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government had extended the validity of the notification till 11th May, 2011 by Notification No. 132/2010 - Cus dated 28.12.2010 – more than six months after its death! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, on 11th May 2011, they forgot to extend it and so the notification lapsed. Now the Government has re-imposed the duty with effect from 28.07.2011 for a period of five years. This time there is no resurrection and the duty is imposed prospectively, but was there no dumping and injury during the period from 12th May 2011 to 27th July 2011? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who is responsible for the injury and loss of revenue during this period?</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_067.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 67/2011-Cus., Dated: July 28, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - E-payment Mandatory Soon - But is Customs EDI Ready? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has decided to make e-payment of duty mandatory for the importers paying an amount of Rupees one lakh or more per transaction. Additionally, for Accredited Clients under the Customs Accredited Client Programme irrespective of any amount of duty, the Customs duty will have to be paid through E- payment mode only. <strong>The date from which the E- payment will be made mandatory will be notified separately.</strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DG (Systems) has prepared instructions outlining the procedure for electronic payments. Board wants importers, trade and industry to be provided all assistance so as to help them in adopting the new procedure. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All fine, but is the Indian Customs EDI System (ICES 1.5) ready? Even now the ICES is not able to handle all the Bills of Entry and the system is terribly slow and importers are waiting in queue every day to get their documents through the snail pace of India's Customs electronic bungling. After spending Crores of rupees, the Indian Customs is stuck with a third rate system and importers are the victims. It is learnt that in some Customs stations, they have imposed a quota system for the number of documents that an importer can file, because always there is a long waiting list. Recently in a major city, the e-payment system crashed and nobody had a clue as to what could be done. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Systems in the CBEC is in a terrible mess and needs to be urgently repaired before the whole system crashes and collection of duties would be just impossible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new DG, Systems is taking charge today; we wish her all the best and hope that she would be able to clean up the System. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_033.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 33/2011-Cus, Dated: July 29, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Filing of Balance Sheet in XBRL mode - MOC Clarification </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOC </strong>has permitted filing of financial statements without any additional fee up to 30.11.2011 or within 60 days of their due date, whichever is later. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The verification and certification of the XBRL document of financial statements on the e-forms would continue to be done by authorized signatory of the company as well as professional like Chartered Accountant or Company Secretary or Cost Accountant in whole time practice. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfmca/pdf2011/Circular_57-2011_28july2011.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MCA Circular No. 57/2011-Cus, Dated: July 28, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Export of Non-Basmati Rice - Allocation Stayed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Delhi High Court has stayed the allocation with a direction that, “no allotment shall be made till the next date of hearing” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This order was delivered in the Office of DGFT at 3.00 p.m. on 27th July, 2011, by which time the allocation of quantities for export of rice had already been made vide Trade Notice No. 13 of 27th July, 2011. Since the process of allotment was already completed by the time the interim order had been received, DGFT is seeking further directions in the matter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meantime, operation and implementation of the allocation made in terms of Trade Notice No. 13 of 27.07.2011 is stayed in view of the order passed by the High Court and will be subject to outcome of the case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is how Government Departments should respect the orders of the higher Courts and not frustrate them. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=329&filename=notification/dgft/2010/dgft_trade_notice_14_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Trade Notice No. 14/2011 Dated : July 29, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No Gifts to shareholders during Annual General Meeting (AGM) </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">KEEPING</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the principle of good corporate governance in view, it has been decided that no company shall offer any other thing except tea, coffee, soft drinks and snacks etc in the AGM. As a courtesy to the shareholders, the same may be made available before the start of the meeting. Any other gifts, food coupons or gift coupons and other enticement shall be treated as misconduct on the part of board of directors of the company. The directors of such companies shall be liable to pay back the cost of such expenses to the company and shall also be liable for the penal action as provided under section 168 of the Companies Act for not convening the AGM properly as required under section 166 of the Companies Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The MOC has requested views/comments/recommendations on the above proposal.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Duty Evasion - Microsoft Imposed 2 Crores Penalty - Abetted Under-valuation? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> bad WORD is evasion; OUTLOOK is abetting evasion; Duty, interest and penalty are in EXCEL; POWERPOINT is about under-valuation; ACCESS found resellers and WINDOWS crashed in the Settlement Commission. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a major jolt to Microsoft and major Indian Computer firms, the Customs won a major fiscal victory. CMC, Dell, HCL, Sonata, Redington, Wipro,TCS – all major names in the Indian Computer scene – among them, they paid a whopping Rs. 257 Crores in Customs Duty with interest, in a duty evasion case in import of Microsoft software. Microsoft and the top computer firms conceded the demand and approached the Settlement Commission for waiver of penalty and prosecution. The Commission imposed a penalty of Rs. Two Cores on Microsoft and a personal penalty of Rs. 10,000 on the Chairman of Microsoft India, apart from a penalty of Rs. 2.81 Crores on the other firms. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some quotes from the Commission's lengthy order: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It, therefore, leaves no doubt in our minds that splitting of the transactions into two and raising two separate invoices, one for the software, which was raised only for the purpose of paying fractional Customs duty, and the other, which is the one that reflects the actual transaction value and not paying Customs duty on this value was nothing but intentional. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ All this leads us to conclude that the splitting of the invoices and thus evading payment of duty on the full value of the software was intentional. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The ground of technological changes put forth by Microsoft is thus nothing but camouflage. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It is, therefore, evident that the resellers in collusion with MCIPL, MOPL and MRSC intentionally adopted the aforesaid modus-operandi of splitting the invoices and evading payment of duty on the full value of the software. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Microsoft have thus abetted with the main applicants and have rendered themselves liable to penalty as abettor. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ MCIPL, who are co-noticees in all these cases have rendered themselves liable to penalty under Section 112(a) as abettor. It goes without saying that besides the companies, the individuals are also liable to be held responsible for their acts of commissions and omissions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It is not convincing how the Chairman of the company could still be not aware of anything at all or that the matter was related only to the day-to-day activities with which he was not concerned. To pose ignorance is thus only a camouflage. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ By their acts of commission and omission they have rendered themselves liable to penalty. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the penalties are only about two percent of the duty, the indictment of intentional evasion and abetting evasion, against Microsoft, is damning to the giant world software leader and most probably this case will go the High Court, if not for the amount of penalty, for the amount of strictures. Shut down all WINDOWS and restart again. It may work! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you this order tomorrow. </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"> – Tuesday's cases</font></strong></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><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">Service</font></strong> <font color="#663399"><strong>Tax</strong></font> </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Vivisection of Turnkey Contracts – ROM
against Larger Bench decision – ROM Applications misconceived and devoid of merit - Dismissed: CESTAT LB </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the face of the record means an error, which strikes on mere looking and does not need long-drawn-out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. </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 interest on interest redeposited along with original sum in bank is also entitled for concessional tax rate u/s 115H - NO, rules Madras HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee originally made investment in Bank out of the funds brought by him from abroad. Periodically, the assessee renewed the matured deposits along with the interest amount. The interest accrued thereon on the interest portion of the deposit was also taken as foreign investment eligible for concessional rate of tax in the returns filed for the A.Y 1996-97. </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">Undervaluation
of software - Splitting of value into two transactions and non payment
of Customs Duty on major part - Penalty - Intentional evasion - Microsoft
and Nine resellers imposed penalty: Settlement Commission </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> intelligence developed by the Mumbai Zonal Unit of DRI indicated that Microsoft packaged software imported by various dealers, appointed by Microsoft Corporation, was undervalued at the time of Customs clearance. The importers had under declared the prices of such software to Customs and submitted invoices with suppressed prices only for Customs purposes. For the purposes of actual transactions and remittance to Microsoft Corporation, another set of invoices was prepared, which accompanied separate shipments of documents termed as software licences. These documents were either cleared from Customs by filing a separate bill of entry under chapter 49.07, availing 'Nil' duty benefit under notification no. 21/2002 dated 01.03.2002 or were simply forwarded to the dealers by email or the amounts actually invoiced were remitted by the dealers without the knowledge of Customs. No duty of Customs was paid on such amounts of invoiced price. </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><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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