TIOL-DDT 1705 · 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 1705 </font><br>
03.10.2011 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No Jail - Only Bail in Customs and Excise Offence Cases </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ONE</strong> more weapon in the armoury of overzealous Customs and Central Excise officers, is just gone. On several occasions, unsuspecting victims are threatened with arrest and jail by officers of the Department and extortionist officers use jail as a threat to collect money. NO MORE! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court, in a landmark order on Friday (which we carried on Saturday), held that offences under the Central Excise Act, 1944, besides being non-cognizable, are also bailable. The Supreme Court also held that as in the case of offences under the Central Excise Act, 1944, offences under Section 135 of the Customs Act, 1962, are bailable and if the person arrested offers bail, he shall be released on bail. Please see </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2011/2011-TIOL-95-SC-CX-LB.htm" target="_blank">2011-TIOL-95-SC-CX-LB</a></strong></font> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This may be shocking to some Departmental officers who would feel absolutely powerless, but as the Supreme Court explained, <em>the main object of the enactment of the said Act was the recovery of excise duties and not really to punish for infringement of its provisions. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember the Pune hotelier Avinash Bhosale, who was arrested by Mumbai DRI as he was walking out through the green channel on charges of smuggling. Since it was late night the DRI officials decided to keep him in a police lock-up and afford themselves a sound sleep. But given the 'stature' of the offender, it was not possible for him to spend a night in a police lock-up. So, he managed to get himself produced before a night magistrate who granted him bail. Next day the predictable happened. The DRI sleuths came under heavy attack of criticism for taking preposterous decision to hand him over to the local police. The DRI took the matter to the Bombay High Court, which quashed the bail. Avinash Bhosale appealed to the Apex Court, which held that the offence was bailable and the night magistrate was after all right. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is a bailable offence</strong>? Apart from the definitions, which created all this confusion, there is nothing like a non bailable offence that is an offence for which a bail cannot be given at all. High Courts and Sessions Courts have rather unfettered power to grant bail. So non bailable would mean an offence for which the arresting officer cannot give bail. Then who should grant bail? Obviously, a court! Now as per the latest order of the Supreme Court, in Customs and Excise cases, the arresting officer has to give the bail. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Now, What</strong>? Certainly, the Government is not going to like this and will not keep quiet. THEY WILL CHANGE THE LAW. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL</strong> had covered this issue extensively. The following links would make interesting reading. </font></p>
<blockquote>
<p align="justify"><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong>1. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3237">CAN A CUSTOMS/CENTRAL EXCISE OFFICER ARREST WITHOUT WARRANT? </a> DDT 295 </strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">2. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3252">WHAT HAPPENS AFTER THE ARREST? BAIL?? </a>DDT 297 </font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">3. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5228">CUSTOMS OFFENCE IS BAILABLE - NO NEED FOR ANTICIPATORY BAIL - IF ARRESTED, THE ACCUSED SHALL BE ENTITLED TO BE RELEASED ON BAIL IMMEDIATELY : BOMBAY HC </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">4. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5229">MUMBAI HC SAYS CUSTOMS OFFENCE IS BAILABLE </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">5. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6171">BHOSALE A FREE MAN - SC DECLARES ALLEGED CUSTOMS OFFENCE AS 'APPARENTLY' BAILABLE! IS THE APEX COURT RIGHT? </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">6. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6352">IS AN OFFENCE UNDER CUSTOMS ACT BAILABLE? HC GRANTS BAIL ON SECOND APPLICATION </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">7. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6745">BAIL IS RULE; JAIL IS EXCEPTION - INVESTIGATION TO BE COMPLETE WITHIN 60 DAYS; IF NOT COMPLETED, ACCUSED HAS A RIGHT TO BE RELEASED ON BAIL - PERSONAL LIBERTY OF CITIZEN IS A FUNDAMENTAL RIGHT : DELHI HC </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">8. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6834">TO B(AIL) OR NOT TO B(AIL) ! </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">9. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6885">NO CUSTODIAL INTERROGATION BY CUSTOMS OFFICERS - ANTICIPATORY BAIL GRANTED : DELHI HC </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">10. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7942">ARREST UNDER CUSTOMS ACT - OFFENCE BEING BAILABLE, ACCUSED HAS A RIGHT FOR BAIL - COURT CANNOT IMPOSE CONDITION OF SURRENDER OF PASSPORT OR BAR ON FOREIGN TRAVEL - BAIL HAS TO BE GIVEN EVEN IF HE IS NOT ABLE TO GIVE SURETY: BOMBAY HIGH COURT </a></font></strong></font></p>
<p align="justify"><font size="1"><strong><font face="Verdana, Arial, Helvetica, sans-serif">11. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7972">CUSTOMS - SUMMONS - ANTICIPATORY BAIL - IMPOSITION OF CONDITIONS BEFORE ARREST NOT LEGAL OR VALID - POWER TO ARREST A PERSON BY A CUSTOM OFFICER IS STATUTORY IN CHARACTER AND CANNOT BE INTERFERED WITH - A PERSON SUMMONED IS BOUND TO COMPLY: SUPREME COURT </a></font></strong></font></p>
</blockquote>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value decreased for Brass Scrap and increased for Poppy seeds </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has decreased the tariff values of Brass Scrap (all grades) from USD 4392 to USD 4365 and increased the tariff value of poppy seeds from USD 2281 to 2290 </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no change in the tariff value of other items. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_071.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 71/2011-CUS (N.T.), Dated: September 30, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax to <em>Deposit Insurance & Credit Guarantee Corporation </em>(DICGC) - Board takes U Turn </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8914"><strong>DDT 1092</strong></a>, we reported that by a letter dated 12.01.2009, the Deposit Insurance And Credit Guarantee Corporation informed the bankers that the Commissioner, LTU Mumbai had informed them that Service Tax was payable with effect from 1st May 2006 and the Corporation informed the bankers that if at all Service Tax is payable, it has to be paid at short notice. Later by another letter dated 20th March 2009, the Corporation informed the bankers that the Finance Ministry has clarified the charges collected by DICGC are not taxable under the taxable service of “General Insurance Service. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">End of the story?. There is no END in a tax story - there are only ends, the ones which may or may not justify the means. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has reviewed its earlier decision and now clarifies that <strong>the insurance activity of DICGC falls within the ambit of Section 65(105)(d) [<font color="#FF6633">general insurance</font>] of the Finance Act, 1994 (FA, 1994) and is chargeable to service tax</strong>. Board has given a long explanation for this <em>volte-face</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DICGC is fully owned by the Reserve Bank of India. All commercial banks including the branches of foreign banks functioning in India, Local Area Banks and Regional Rural Banks are covered under the Deposit Insurance Scheme. The rate of insurance premium is 10 paise per Rs. 100. The premium paid by the insured banks to the Corporation is required to be absorbed by the banks themselves so that the benefit of deposit insurance protection is made available to the depositors free of cost. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DICGC collects about 5000 Crores annually and now perhaps the Government would like to collect Service Tax with interest and maybe a hefty penalty for intent to evade taxes by following the Board clarification which was bound to change! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board does not clarify as to the date from which this tax has to be collected. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/st_order187_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F.No.187/135/2008-CX.4 Dated: September 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Retrospective Bungling - Discussions on Non Existing Statute - Height of Ignorance at highest Seat </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Finance Act 2011, Section 73(b), the good Board fooled the Parliament into passing an impossible statute. Parliament amended the Third Schedule to the Central Excise Tariff Act and retrospectively added an entry 100A to the said schedule with effect from 29th April 2010. The idea was to retrospectively levy excise duty on packing, repacking of parts, components and assemblies of goods falling under tariff item 84264100, 8427, 8429, 843010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To discuss the modalities of the scheme, nine Commissioners of Central Excise met in North Block in August 2011 under the Chairmanship of the JS, TRU. The meeting was also attended by other officers of the TRU. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This high level meeting decided that:- </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ If duty is charged on the packing, repacking, labelling, re-labelling & other such activities retrospectively, credit of duty paid on '"inputs" brought into the factory during the period and used in or in relation to manufacture of that products that were cleared during the period from 29th April, 2010 to 8th April 2011 should also be permitted. It was agreed by all the participants that CENVAT credit is available subject to the production of necessary duty paying documents prescribed in the Rules. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ On the issue regarding the demand of interest of the duty paid retrospectively, it was pointed out by participants that the existing provisions of Central Excise law do not permit any waiver or relaxation. </font></p>
</blockquote>
</div>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the learned Commissioners and the more learned JS, TRU were discussing a NON-ISSUE. The Board had committed a big blunder by amending the Third Schedule to the Central Excise Tariff Act instead of the Central Excise Act. There is no Third Schedule in the Central Excise Tariff Act! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And we had done our duty. More than five months ago, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12451"><strong>DDT 1599-02.05.2011</strong> </a>pointed out this lapse with the caption <font color="#006600"><strong>Retrospective Bungling by CBEC - Even Parliament Not Spared</strong></font>. We had also pointed out that <font color="#FF6633"><strong>Now the Board cannot get away with a retrospective corrigendum - after all this is an Act passed by Parliament and signed by the President of India and certainly an Under Secretary in the Board cannot issue a corrigendum to a document signed by the President of India! </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the field there are learned officers who will search the Tariff to find out a section of the Central Excise Act, but apparently, even in the Board, you have lawmakers who do not know which Act to amend and they live happily in their blissful ignorance holding meetings to decide how to implement a law that does not even exist due to their bungling. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/revenue_order.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F. No. 341/33/2011-TRU Dated: September 12, 2011</font></strong></a></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><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">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">When tax with interest is paid under Section 73(3), no notice to be issued. If notice is issued, person to be punished is the officer issuing notice, not assesse - Department harassing assesses and wasting Court's time due to ignorance of law - officers are paid salaries to initiate action against defaulters, not against those who pay taxes: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THOUGH</strong> the law does not say so, authorities working under the law seem to think otherwise and thus they are wasting that valuable time in proceeding against persons who are paying service tax with interest promptly. They are paid salary to act in accordance with law and to initiate proceedings against defaulters who have not paid service tax and interest in spite of service of notice calling upon them to make payment and certainly not to harass and initiate proceedings against persons who are paying tax with interest for delay. </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 settlement applications are maintainable even if no return of income is filed nor any proceedings pending with Revenue - NO, rules Calcutta HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the High Court are - Whether, even if there are no pending proceedings with the Revenue, settlement applications filed before Settlement Commission are maintainable; Whether furnishing of a return of income is mandatory for making an application for settlement - Whether no income tax proceedings can be said to exist where no return has been filed by the assessee; Whether a case would be deemed to be pending until an order of assessment is actually made, even though the time for making an order of assessment might long have expired and whether the assessee would be entitled to apply for settlement before the Settlement Commission, even though no returns had been filed and the time for making assessment u/s 143 had expired. And the verdict goes in favour of Revenue.</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">Advance Ruling - Battery Cells inserted in a battery bank, not excisable: AAR </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> is no transformation that brings about a fundamental change in the character and use of the goods. The name remains the same (i.e. accumulator, although an assembly of batteries is called a battery bank), the character and usage remain the same (i.e. provide direct current to an appliance though of differing magnitude etc.) Applying the tests specified by the Apex Court, it cannot be said that a new article has emerged having a different name, character or usage. The activities undertaken do not amount to manufacture for the purpose of levy of excise duty.</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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