TIOL-DDT 1706 · 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 1706</font><br>
04.10.2011 <br>
Tuesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Offence - Should Smugglers walk off with a bail immediately after arrest? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PEOPLE</strong> were being routinely arrested and sent to jails for alleged offences under the Customs and Excise Laws. When the Supreme Court on Friday </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><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2011/2011-TIOL-95-SC-CX-LB.htm">]</a></strong> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">held
that these offences were bailable and the arrested persons had to be released
on bail, if they sought bail, it sent shock waves across the country – among the officers. “What?, we arrest somebody and he just walks away without even coming up to the court with us?” Super sleuths like the ones in DRI are appalled! Many of the officers are hopeful that the government will correct this lapse – and
they will, soon. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, we must remember that the Supreme Court was only explaining the law and not writing it. When the Customs Law provides for bail – you have no option but to give bail. There are several Laws, which prohibit bail: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 37 of the Narcotics and Psychotropic Substances Act, reads as: </font></p>
<blockquote>
<p align="justify"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">37. Offences to be cognizable and non-bailable : </font></em></strong></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), - </font></em></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Every offence punishable under this Act shall be cognizable; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) No person accused of an offence under section 19 or section 24 or section 27A and also for offences involving commercial quantity shall be released on bail or on his own bond unless- </font></em></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) The Public Prosecutor has been given an opportunity to oppose the application for such release, and </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. </font></em></p>
</blockquote>
</blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) The limitations on granting of bail specified in clause (b) of sub-section (1) are in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974), or any other law for the time being in force on granting of bail. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a similar provision in the Money Laundering Law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 10A of the Essential Commodities Act reads as: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>10A. Offences to be cognizable and non-bailable</strong>. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be cognizable and non-bailable. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Section 21 of the Central Excise Act clearly provides for granting bail by the Central Excise Officer, as does Section 104 of the Customs Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even Section 175 of the Sea Customs Act of 1878 provided for such a bail. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, the Law has always been for bail – jail was an aberration, which by some mistake continued for too long. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Probably, the Government will now get the Acts amended to state that <em><strong>Offences are to be cognizable and non-bailable. </strong></em></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Bail:
An interesting case! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>E. KRISHNAMACHARY</strong> was arrested on 6-12-1985 and produced before the Addl. Judge, Ist Class Magistrate, Nellore on 7-12-1985, with a remand report that he is guilty of offence under Section 135 of the Customs Act and was liable to be punished for the offence. The Addl. Judge, 1st Class Magistrate, Nellore, remanded Krishnamachary to judicial custody on 7-12-1985. Krishnamachary filed a bail application before the Magistrate on 9-12-1985. That petition was dismissed on the ground that the Magistrate has no jurisdiction to grant bail, while holding that the Special Judge dealing with Economic Offences Cases, Hyderabad, alone has jurisdiction to entertain the application. On 11-12-1985, the Magistrate passed the orders, directing the transfer of the case to the court of the Special Judge for Economic Offences at Hyderabad as he has exclusive jurisdiction to try the offence and directed the Jail Superintendent to cause the production of the accused on 23-12-1985 before the Special Judge for Economic Offences at Hyderabad. The records were received by the Special Judge for Economic Offences on 16-12-1985. Meanwhile, Krishnamachary filed Crl. M.P . No. 670/85 before the Sessions Judge Nellore, for grant of bail. In spite of the objection raised by the Public Prosecutor about the jurisdiction of the court to grant bail, the Sessions Judge granted the bail. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Against this bail, the Superintendent moved the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the High Court emphatically held, "The District and Sessions Judge, Nellore, should not have entertained the application for bail, when it was brought to his notice that the Addl. Judicial 1st Class Magistrate, Nellore dismissed the applications with an observation that the Special Judge for Economic Offences alone has got jurisdiction to the cases. It is clear that the jurisdiction of the Sessions Divisions in the State of Andhra Pradesh has been excluded and that the <strong>Special Judge for Economic Offences alone is competent to consider the application for grant of bail."</strong></font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Actually, the Superintendent could have released Krishnamachary on bail! </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">BAIL - Not Defined - Hunch of the Bench? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JUSTICE</strong> Krishna Iyer remarked,<em> "..... belongs to the blurred area of criminal justice system and <strong>largely hinges on the hunch of the bench</strong>, otherwise called judicial discretion. The Code is cryptic on this topic and the Court prefers to be tacit, be the order custodial or not. And yet, the issue is one of liberty, justice, public safety and burden of public treasury all of which insist that a developed jurisprudence of bail is integral to a socially sensitised judicial process." </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though ‘bail' is not defined in any statute, the Cr.PC defines, ‘bailable offence and non bailable offence'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is thus left to an individual Act to specify whether an offence is bailable or not and the latest and highest judicial view is that an offence under Customs or Central Excise, is bailable – that is the officer making the arrest should release the arrested person on bail. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Don't rush to arrest – until you change the law! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign Exchange Agents/Franchisees of Authorised Dealers - RBI issues Revised Guidelines </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>KEEPING</strong> in view the growth in money changing activities undertaken by the agents / franchisees of AD Banks/ FFMCs and the issuance of Anti Money Laundering (AML) Guidelines on money changing activities, there is a need to exercise adequate control over the franchisees by the franchisers. Accordingly, RBI has decided to amend certain instructions. Some of them are: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The foreign currency purchased by the franchisee should be surrendered only to the franchiser within 7 working days from the date of purchase. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The franchisers may take due care to avoid appointing individuals/ entities as franchisees who have cases / proceedings initiated / pending against them by any law enforcing agencies. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The AD Category – I banks / AD Category – II / FFMCs may appoint franchisees within a distance of 100 kms from their controlling branches concerned. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Franchisees should surrender foreign currency notes, coins and travellers' cheques purchased only to their franchisers within seven working days. </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir031.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Circular No. 31/RBI., Dated: October 03, 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"> – Wednesday'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">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit - Cement used for foundation/supporting structure of machinery cannot be regarded as ‘capital goods' - Duty paid on cement not eligible as CENVAT Credit: CESTAT Larger Bench </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the instant case, since the assessee availed credit in respect of duty paid on cement used for foundation/supporting structure for machinery, treating the same as “capital goods”, the Larger Bench, following the ratio of the Rajasthan High Court judgment on a similar issue, held that the provisions of sub-rule (2) of CENVAT Credit Rules, 2002 are similar to the provisions of CENVAT Credit Rules, 2004 and therefore, the issue referred to the Larger Bench was no longer res integra . </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">Income tax - Whether arrears of rent received after court order are to be taxed in relevant year in which they were due - No, it is to be taxed in year of receipt: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN </strong>the matter was still at the stage of notice u/s 148 pertaining to the aforesaid AY, the assessee filed its return for the year 2000-2001. In this return, the assessee disclosed receiving of arrears of rent and appended a note stating that this amount was not taxable in this year. In the assessment order passed, the AO accepted this position and did not tax the said receipt pertaining to arrears of rent albeit on the ground that in respect of this receipt notice u/s 148 for the relevant years had already been issued. The questions before the Bench are - Whether maintenance and other charges are deductible from rent while calculating Annual Letting Value of the property and whether the arrears of rent received by the assessee pursuant to the final order passed by the court can be taxed in the relevant year to which the rent relates. And the final verdict goes in favour of the assessee. </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">Assessment of imported goods found short in quantity at time of filing of ex-bond Bills of Entry - No conflict in decisions rendered by coordinate Benches of Tribunal - Matter returned to referral Bench for deciding case on merits: CESTAT Larger Bench </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee imported three consignments of edible oils during March 2003 through Kakinada port. The consignments were surveyed by independent surveyors in the presence of suppliers' representatives, importer, master of the vessel and Customs and ullage survey reports were prepared. Based on these reports, the assessee filed Into-bond Bills of Entry for bonding the imported goods. Thereafter, the assessee, on different dates filed several ex-Bond Bills of Entry and cleared the edible oils by declaring quantities as per shore-tank receipts. Since the department noticed shortage of quantity, a letter was issued to the assessee to pay duty on the quantity found short. In lieu of this, the assessee filed three Bills of Entry for the short quantity, which were assessed provisionally pursuant to which duty was paid under protest. The original authority assessed the goods on the basis of ship ullage survey reports. </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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