TIOL-DDT 1680 · 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 1680 </font><br>
26.08.2011 <br>
Friday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Self Assessment in Customs - CBEC Chairman Allays Apprehensions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a letter addressed to the Bombay Customs House Agents' Association, the Chairman, CBEC clarified:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The purpose of the recent amendments in the Customs Act 1962 was to provide a legal and operational framework for significant enhancement in the facilitation performance of Customs by allowing the importers and exporters to do self-assessment of their import/export goods, and by reducing pre-clearance checks based on Risk Parameters. It was also to cast responsibility for correct assessment on the importers/exporters. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The position with regard to implementation of Self Assessment scheme is that the Bills of Entry/Shipping Bills will be self-assessed by the importer/exporter. The ‘Clean Bills of Entry', as I would like to call the ones which would not be hit by the Risk Management System (RMS), would be cleared without any further reassessment by Group Appraisers, and the goods would be cleared after payment of duty on the basis of normal examination norms, as decided by RMS. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Only those Bills of Entry, which are hit by any of the parameters in RMS that will be marked to the Group Appraisers for scrutiny. On scrutiny, if the self-assessment done by the importer is found to be correct, no further reassessment would be needed and the Bill of Entry would proceed with its onward journey. If however, the scrutiny reveals the need for reassessment that will be done after following the due process of law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Thus, the scheme of ‘Self Assessment' not only makes optimum use of EDI in Customs assessment, it also provides the Department an opportunity to extend greater facilitation to the compliant importers and exporters by relying upon self assessment and not resorting to reassessment. Keeping this in mind, the CBEC is currently in the process of enhancing the present level of facilitation by fine-tuning its RMS. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It has been reported that the level of facilitation on an average in the past year in Air, Sea and ICD has been at 60%, 50% and 40% respectively. After detailed study of the situation, the Board has taken a conscious decision to get the interdiction in RMS controlled. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It has been decided to take a slew of measures through which the Risk Managers, both at national and local level will fine tune the RMS, reduce the interdictions and ensure selection of consignments for scrutiny in a better focussed manner. We would like to achieve the facilitation target of 80% for Air Cargo, 70% for Sea Ports and 60% of ICDs in the next six months. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairman added that he would like to have a pro-active role from the Trade in general and the Custom House Agents and freight forwarders in particular. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He says, “From my experience of past thirty seven years in this service, I can tell you on a rough estimate, only about three to four percent of the Trade are the delinquent ones, who resort to Customs commercial frauds. But the dent that they make on exchequer is huge. For a country like ours, we still need customs revenue for our several developmental works. And we need to punish those who break the law. Therefore, the Trade in general and you, the Custom House Agents and freight forwarders in particular, must come upfront and help the customs authorities in identifying the delinquent ones. It will be in your own interest. Much as though we in the administration try to bring reforms through liberalisation and simplification of procedure, instances of detection of big fraud put pressure on us for being more restrictive with more control. <font color="#FF6633"><strong>It would therefore be in your interest to help us make the scheme of ‘Self Assessment' a grand success, by isolating the delinquents amongst the Trade</strong></font>”. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/instruction11_022.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chairman's Letter in D.O. FTS No.122976/2011; Dated August 23, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Welcome Changes in CESTAT - Only for Delhi and Mumbai? No - Applicable for other Benches too </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Circular dated 17.08.2011, it was stipulated that CESTAT Delhi and Mumbai benches would hear short matters and regular matters on all days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12987" target="_blank">DDT1675-18.08.2011</a></strong>, had raised an apprehension that, “ It is not clear whether short matters will be listed every day in Ahmedabad, Bangalore, Chennai and Kolkata”. <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12991" target="_blank">DDT1676-19.08.2011</a></strong> had reported that the Bangalore Bar had sent a representation to the Vice President to extend the beneficial changes brought about in Mumbai and New Delhi to Bangalore also.<strong> DDT</strong> also hoped that the Vice-President would give a clarification soon. And the clarification has come pretty fast. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Circular dated 24.08.2011, it is clarified that: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In Ahmedabad, the DB and Single Member Benches will hear short matters followed by regular appeals on a daily basis.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In Chennai, Kolkata and Bangalore Benches, DB will function from Monday to Thursday and Single Member cases will be listed before both the Members (sitting separately) on every Friday. Short matters and regular appeals would be heard every day. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is heartening to note that the Head of the Tribunal is very responsive. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cestat_circular_02_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT Circular; Dated August 24, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on 1-Phenyl-3-Methyl-5-Pyrazolone – Re-imposed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ANTI</strong> Dumping Duty on 1-Phenyl-3-Methyl-5-Pyrazolone, originating in, or exported from, People's Republic of China was imposed by Notification No. 1/2006-Cus dated 10.01.2006 and would have expired on 09.01.2011. Long before its expiry, on 27.10.2010, the validity of the notification was extended till 30.06.2011. But around 30th June 2011, they were napping, though the Designated Authority woke up just in time and recommended continuation of the anti dumping duty, on 29th June 2011 - just a day before its expiry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has again imposed anti dumping duty on this product, for a period of five years from 24.08.2011. Fortunately, it is not imposed with retrospective effect. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Was there no dumping and injury during the period 01.07.2011 to 23.08.2011? Who is responsible for the injury and loss of revenue? </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_080.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 80/2011- Cus., Dated: August 24, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on Polytetrafluoroethylene - Re-imposed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ANTI</strong> Dumping Duty on Polytetrafluoroethylene, originating in, or exported from, People's Republic of China was imposed by Notification No. 91/2005-Cus dated 17.10.2005, which was superseded by Notification No. 42/2010-Cus dated 05.04.2010, which was to be valid till 16th October 2010. This was extended till 25th July 2011, by Notification No. 29/2011-Cus dated 04.03.2011. So it died on 25th July 2011.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has again imposed anti dumping duty on this product, for a period of five years from 24.08.2011. Fortunately, it is not imposed with retrospective effect.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Was there no dumping and injury during the period 26.07.2011 to 23.08.2011? </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_081.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 81/2011- Cus., Dated: August 24, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">New ICD Notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC </strong>has notified Mathilakam (Thrissur) in Kerala as an ICD for <em>unloading of imported goods and the loading of export goods</em>. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_060.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 60/2011- Cus (NT)., Dated: August 24, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs (Amendment and Validation) Bill passed in Lok Sabha</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ALL</strong> the Show Cause Notices issued by DRI invalidated by Supreme Court, are to be validated by the retrospective law that was passed by Lok Sabha yesterday. For a change, there was a debate for about 80 minutes in the House on various facets of Customs. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bipasha Sandals</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Member observed, “The rules, as they stand, say that ‘used personal effects' are free ….. perhaps the reason that actor Bipasha Basu walked through the green channel happily a few days ago, expecting that her sandals, purse and sunglasses qualified. If that was her supposition, it wasn't an unreasonable one; but it isn't a supposition shared by the Customs officials at Mumbai airport, always ready to grab the headlines by fining or detaining a celebrity or two. Basu was eventually fined Rs.12,000 and sent on her way. Why? Because her sunglasses and handbag and sandals were top-of-the line brands, their face value took them over Rs. 25,000, the duty free allowance. ……… </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Transparent Customs: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another Hon'ble Member said, “The customs department should be made more sophisticated and its personnel should have more training. The policy of transfer of customs officers should be followed meticulously to make the customs transactions more transparent”. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ingenuity of the business community: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yet another Member said, “The ingenuity of the business community and the corporate sector has gone up so much that they want to hoodwink the law somehow or the other, by utilizing their genius. If it were to be a moral aspect or the ethical aspect, and legitimately if the business community or the person who is engaged in imports were to pay the customs duty as per the customs duty and tax rules, all this is not necessary. But unfortunately, human intelligence is being put to use more for the evil than for the good. Always, a businessman tries to avoid as much tax – whether it is customs duty or income tax or the others – as possible; but if the corporate sector or the business community were fair, there is no need for us to bring in so many legislations time and again. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I request the business community and the corporate sector also to be reasonable, to maintain ethics and values so that at least what is provided in the Act is adhered to. If the officer were to put the assessment wrongly, then I can understand. But they want to utilize each and every word, the technical aspect, the meaning of it; they interpret it and then try to avoid the tax”. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Corruption under the table: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Member wanted severe action to be taken against the officers who are indulging in corruption. Whenever we go to the airport, we see ‘customs duty point'. Next to that, we see ‘negotiation point' also. It is not ‘on the table' negotiation; but it is ‘under the table' negotiation. We have to curb corruption in the Customs Department and the Central Excise Department. For this purpose, all the vacancies that exist in the Customs Department and the Central Excise Department should be filled up immediately. Additional posts must be created for this purpose. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Minister of State in The Ministry Of Finance (Namo Narain Meena) replied to the debate and said that taxation laws require action to be taken for recovery of duty not paid correctly. On 18 th February, 2011, hon. Supreme Court in the case of Sayed Ali and Anr held that only such a Customs Officer who has been assigned the specific functions of assessment and re-assessment of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2 (34) of the Act is competent to issue notice under Section 28 of the Act. However, Customs Officers of DRI, etc. were not specifically assigned the assessment powers given to jurisdictional Customs Officers. Hence, on the basis of the Supreme Court order, on this technical ground, a large number of notices would get invalidated thereby adversely impacting huge revenue. For the future, the Government has taken remedial steps with effect from 6th July, 2011 by issue of a notification. The Customs (Amendment and Validation) Bill, 2011 will validate notices issued earlier. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The minister also answered several questions raised by the members: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Computer network of customs either slow or not working</strong>. To some extent, I agree with the hon. Member and we have upgraded our system. This is largely due to the teething problems that we are having but at the same time, we have round the clock helpline to assist the customers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Special Valuation Branch:</strong> The SVB checks against under valuation so that correct duty is charged. The questionnaire is a transparent method to get information if importers do not have any information. It is not mandatory. The functioning of SVB is already under review. It is being examined as to whether it can be brought under one Directorate for a more professional approach. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Baggage allowance of Rs. 25,000 is less:</strong> This is reviewed regularly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The customs laws are cumbersome and clearance takes too much of time:</strong> In this year's Budget, we have introduced self-assessment of customs duty by importers and exporters. Further, almost 60 per cent goods are cleared without examination, based on self-assessment. At airports, over 98 per cent passengers go through Green Channel without customs intervention. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Vacancies in the Department: </strong>'Yes', there are a few vacancies and the cadre restructuring is under consideration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Minister concluded, “In the end, I would like to say that this House will appreciate that no one is disputing that proper customs duty must be paid. The Government only wants that those who have not paid duty correctly should not benefit from a technicality”. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Statutory Recognition to SFIO </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> proposes to give statutory recognition to Serious Fraud Investigation Office (SFIO). Besides, powers such as treating its investigation report as a report filed by a Police Officer, giving SFIO power to issue letter of requests (Letter Rogatory) in cases involving companies having business/interests outside the country and definition of the term “fraud” along with its punishment are also proposed to be included, subject to due approvals, in the revised Companies Bill for strengthening its enforcement framework. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Minister of State in the Ministry of Corporate Affairs R.P.N. Singh informed this in the Lok Sabha yesterday. </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">Customs </font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Detention of Goods - No Time Limit for issue of detention order - detained goods to be released within six months if no Show Cause Notice issued: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DETAINED</strong> goods are to be released within six months if no Show Cause Notice is issued, but what happens if no detention order is issued at all? Nothing! There is no time limit for issue of detention order.. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Interest Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether interest earned on trade advance given by credit institution for purchase of machinery, which suffers delays in delivery, is covered by definition of 'interest' u/s 2(5A) - NO, rules Madras HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> is a Finance Company. It received interest on the advance made to the manufacturer in respect of the purchase of goods in relation to the Hire Purchase/lease agreement entered. AO observed that the advances made for the purchase of the goods amounted to loan and advance and hence, the interest earned was liable to be Interest Tax. The issue before the Bench is - Whether the interest income earned on advance given by a credit institution towards purchase of machinery for which the delivery is delayed, is covered under the definition of “interest” as defined u/s 2(5A). NO, rules the High Court. </font></p>
<p><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>When
deduction on account of bank charges are available, therefore, whether
the charges are for local cheque discounting or outstation, does not make
any difference – Deduction allowable from assessable value for the
period prior to 01.07.2000: CESTAT </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"> appellants
are the manufacturers of cocoa and cocoa products, chocolates etc. In the
price-lists filed for the period April 1994 to December 1996 they claimed
deduction on account of equalized freight, additional sales tax, turnover
tax, transit insurance, octroi and cheque discounting charges. While finalizing
these provisionally approved price lists, the deductions were denied by
the jurisdictional authorities.</font></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="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend. </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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