TIOL-DDT 1695 · 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 1695</font><br>
19.09.2011 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DEPB to Drawback - Overall Impact - Less duty Forgone</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REVENUE</strong> Secretary RS Gujral and CBEC Chairman Dutt Majumder on 16th September outlined the contours of the new DEPB–merged Drawback Scheme. The Federation of Indian Export Organisations has welcomed the new scheme. The FIEO President Ramu Deora said that even if the new drawback rates are little less, the saving on account of transaction time and cost will offset the disadvantage as Duty Drawback benefit will directly be credited to exporters' bank account while DEPB involves paper work and the same is subject to VAT as well on its sale/purchase. The FIEO Chief added that exporters are by and large happy with the announcement. He also appealed to exporters to continue with their good work in promoting exports, as he is confident that they will be financially better off under new scheme. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Chairman of CII, Karnataka said that withdrawal of DEPB Scheme could not have been more ill timed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The general highlights of the Scheme as already reported by us (and of course rest of the media) are: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The 2835 items under drawback and 2130 items under DEPB will be merged into the new Drawback with around 4000 items.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There will be a minor reduction in the present drawback rates due to reduction in Customs and Excise duties on petroleum. There will however be a cap of ten percent on reduction of rates.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Since there will be a substantial reduction in the new drawback rates compared to the existing DEPB rates, as a transitional measure, the drawback rate will be capped at 5.5% for one year, which may be reviewed next year.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ AIR for passenger cars.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ No value cap where the duty drawback is less than or equal to 3 percent. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL </strong>spoke to CBEC Chairman Dutt Majumder, who said that the overall impact would be that the duty foregone would be less. The Chairman informed that the scheme would be notified latest by 23rd September and after that the Revenue Secretary and the Chairman would interact with trade chambers, so that the scheme is smoothly launched on 1st October. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems earlier 60 percent of the DEPB benefits were for the Engineering sector including auto, chemicals and Pharma sectors. Bajaj Auto, Hero Motors, Reliance, Dr. Reddy's etc, maybe some of the affected megacorps. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Directorate of Drawback to regain lost glamour ?</strong> With over 1100 items migrating from DEPB to AIR of Drawback, the Directorate of Drawback is sure to regain some of its lost glory, with long queues of hopeful applicants for consideration of All India Rates. Even the workload in the Customs will increase with more drawback payments to be made. Is the CBEC ready for this additional work or will payments be delayed? Maybe they can get a few more posts under the proposed cadre review for this work. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mandatory e-filing of Central Excise Returns in ACES - CBEC wants assistance to be provided. ACES Ready? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> notes that from 01.10.2011, assessees have to file their returns electronically. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ ER-1 Return, filed under Rule 12(1) of the Central Excise Rules, 2002, will have to be electronically filed irrespective of the duty paid in the preceding financial year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ ER-2 Return, filed by 100% EOUs under Rule 17 of the Central Excise Rules, 2002, will be required to be filed electronically irrespective of the duty paid in the preceding financial year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ ER-3 Return, filed under the provisos to Rule 12(1) of the Central Excise Rules, 2002, will be required to be filed by the concerned assessees including SSI units electronically irrespective of the duty paid in the preceding financial year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ ER-4 Return (Annual Financial Information Statement), filed under Rule 12(2) (a) of the Central Excise Rules, 2002 will continue to be filed electronically by the assessees who are not exempted from filing such statement by a notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ ER-5 and ER-6 Returns, pertaining to principal inputs filed under Rule 9A of the CENVAT Credit Rules, 2004, will continue to be electronically filed by the assessees who are not exempted from filing such declaration/return by a notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ ER-7 (Annual Installed Capacity Statement) filed under Rule 12(2A) (a) of the Central Excise Rules, 2002, has to be filed by all assessees electronically. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ ER-8 Return, to be filed under the proviso to Rule 12(1) of the Central Excise Rules, 2002, by assessees availing the exemption under Notification No.1/2011-CE dated 01.03.2011 has to be filed electronically. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a large number of assessees may be required to file Central Excise Returns electronically as a result of the above changes, Board requests the field that they (assessees) may be provided all assistance so as to help them in adopting the new procedure. How are the field officers going to help if the ACES doesn't work, when they themselves do not know what to do. Incidentally, the Circular is addressed to all the Chief Commissioners, but a copy is not marked to the DG, Systems. We hope the DG Systems and his ACES are ready to implement this.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/excircular955.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 955/16/2011-CX., Dated: September 15, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exchange Rates - Change in Swiss Francs </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Exchange Rates for Swiss Franc as notified by Notification No. 62/2011-Cus NT dated 26.08.2011, were: </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">For Imported Goods: <font color="#006600">58.90</font></font></strong> - For Export Goods: <strong><font color="#006600">57.15</font></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now they are changed to:</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">For Imported Goods : <font color="#006600">55.07</font></font></strong> - For Export Goods: <strong><font color="#006600">53.58</font></strong></font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_066.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 66/2011-CUSTOMS (N.T.), Dated : September 16, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Monetary Limits for Appeals - CBDT keen to continue litigation in old cases </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> Instruction No. 3/2011 dated 09.02.2011, CBDT has fixed monetary limits for filing appeals in the Tribunal, High Courts and Supreme Court. The Delhi High Court had dismissed appeals filed prior to this date and the Supreme Court had held that the Circular does not ipso facto apply to the old cases. [Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13124" target="_blank">DDT 1685 - 05.09.2011</a></strong>] Board has asked the field formations to file<font color="#FF6633"><strong> review petition in High Court pointing out the observations</strong></font> of the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the CBDT, acting on suggestions received, advises that instead of filing review petitions, recall petitions may be filed, because there is a time limit of 30 days to file a review petition, whereas there is no such limitation to file a recall petition. Board advises the officers to file either a review petition or a recall petition as suggested by Sr. Standing Counsel in a particular case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board also clarifies that as per Board's letter dtd 24/08/11, the decision not to file SLP due to smallness of tax effect was conveyed. However since appeal to High Court was filed as per the relevant Instruction applicable at the time of filing, review / recall petition in such cases is also to be filed where tax effect is less than Rs. 4 lacs, if filing appeal to High Court was permissible as per Instruction applicable at the time of filing. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2011/dit_letter.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Letter No. DIT(L&R)-I/NZ/SLP/393/2011/5091,Dated: September 16 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxing the Millionaires - Buffet Rule </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TODAY</strong> US President Obama is to announce a new tax plan called the “Buffet Rule”, under which he is asking the Americans earning more than a million dollars a year pay at least the same tax rate as middle-class earners to help reduce the soaring budget deficit. The plan would replace the complicated alternative minimum tax, which was enacted decades ago to ensure that the wealthy paid at least some income tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently addressing the US Congress, Obama said, “Right now, Warren Buffett pays a lower tax rate than his secretary, an outrage he has asked us to fix; We need a tax code where everyone gets a fair shake and where everybody pays their fair share.” </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Gift in Rupees by Resident Individuals to NRI close relatives </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> resident individual can now make a rupee gift to a NRI/PIO who is a close relative of the resident individual [close relative as defined in Section 6 of the Companies Act, 1956] by way of crossed cheque /electronic transfer. The amount should be credited to the Non-Resident (Ordinary) Rupee Account (NRO) a/c of the NRI / PIO and credit of such gift amount may be treated as an eligible credit to NRO a/c. The gift amount would be within the overall limit of USD 200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) for a resident individual. It would be the responsibility of the resident donor to ensure that the gift amount being remitted is under the LRS and all the remittances under the LRS during the financial year including the gift amount have not exceeded the limit prescribed under the LRS. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir017.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Circular No. 17/RBI., Dated: September 16, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">And Loans too</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> resident individual can now lend to a Non resident Indian (NRI)/ Person of Indian Origin (PIO) close relative [means relative as defined in Section 6 of the Companies Act, 1956] by way of crossed cheque /electronic transfer, subject to certain conditions: </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir018.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Circular No. 18/RBI., Dated: September 16, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Repayment of loans of Non-resident close relatives by residents </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHERE</strong> an authorised dealer in India has granted loan to a non-resident Indian in accordance with Regulation 7 of the Notification No. FEMA 4/2000-RB, such loans may also be repaid by resident close relative (relative as defined in Section 6 of the Companies Act, 1956), of the Non-Resident Indian by crediting the borrower's loan account through the bank account of such relative. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir019.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Circular No. 19/RBI., Dated: September 16, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Meeting of Medical expenses of NRIs close relatives by Resident Individuals</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHERE</strong> the medical expenses in respect of NRI close relative (relative as defined in Section 6 of the Companies Act, 1956) are paid by a resident individual, such a payment being in the nature of a resident to resident transaction may be covered under the term “services related thereto” under Regulation 2(i) of Notification No. FEMA 16 /2000- RB dated May 3, 2000. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir020.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Circular No. 20/RBI., Dated: September 16, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">WTO Public Forum from Today </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> WTO Public Forum is an annual event that provides a platform for public debate and discussion across a wide range of WTO issues and activities. Since 2001, more than 8,000 representatives from civil society, academia, business, the media, governments, parliamentarians and inter-governmental organizations have attended the Public Forum. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This year's forum to be held from 19th September will focus on four core themes: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Food security: what role can trade play in ensuring food security?
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Trade in natural resources: how does trade affect the sustainability of natural resources?
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ “Made in the World”: more and more products are “Made in the World” rather than “Made in the UK” or “Made in France”. How does measuring trade flows in added value terms affect the way we analyse international economics and conduct trade policy? </font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ What next for the international trading system?</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>
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<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><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">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Multifunction printers and copiers - Valuation guidelines and certifying by chartered Engineer - Commissioner's Standing Order and Instruction Note Upheld: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> impugned circular is only an inter-office communication upon which the petitioners have no right to challenge. <em>The courts have always ruled that the administrative orders issued by the Governmental authorities are not open to scrutiny under Article 226 of the Constitution of India. </em>The concern for issuance of the impugned Standing Order is also an innumerable concern and such concern cannot be ignored while discussing the precautionary principle. The Supreme Court held that the statutory authorities must anticipate, prevent and attack the causes of environmental degradation. When there are threats of serious and irreversible damage, lack of scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. </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 expression 'full value of consideration' used in marginal notes of Sec 50C means that value adopted by stamp duty authority is sacrosanct, if AO wants to substitute it with FMV of property, positive material is sine qua non - Yes, rules ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE questions before the Bench are</strong> - Whether expression “full value of consideration” used in marginal notes to section 50C, means that value adopted by stamp valuation authority is sacrosanct, and if the AO wants to replace that value with “fair market” value of the property then positive material is sine qua non; Whether without any positive material AO has power to refer the matter to the DVO under section 142A for ascertaining the actual capital gain and whether in case of investment AO has discretion to refer the matter under section 142A to DVO for determination of fair market value of property. And the verdict goes in favour of the assessee. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Ownership of goods has no relevance - Element of freight and transit insurance is not includable in the assessable value - CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MERELY</strong> because the assessee has arranged for the transportation of the goods along with transit insurance, it does not lead to the conclusion that the place of removal has been shifted from the factory gate to the buyer's premises. The ownership of goods has no relevance in so far as transit insurance of goods is concerned and the delivery to the carrier at factory gate is delivery to the buyer and element of freight and transit insurance is not includable in the assessable value. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rent-a-Cab services - Service Tax can be demanded from proprietary firm that was floated by dissolving partnership firm - Appeal dismissed: CESTAT</font></strong></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"> brief
facts of the case are that during the course of Audit of <em>M/s Sahara India
Commercial Corporation Ltd. (M/s SICCL)</em> it was found by the department
that M/s Fast Track Travels had provided Rent-a-cab Service to M/s SICCL
and collected service tax through the invoices. The invoices did not indicate
service tax registration number of service provider. It is alleged by the
department that M/s Fast Track Travels had suppressed the facts of taxable
service provided by them and its value from the department with intent to
evade service tax. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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