TIOL-DDT 1724 · 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 1724 </font><br>
01.11.2011 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Satish Kumar Goel is new Chairman of CBEC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/guest/sk_goel.jpg" alt="Legal Corner Icon" width="149" height="224" hspace="5" border="0" align="left"><strong>A</strong> 1975 officer of the IRS, Mr. SK Goel has taken over as the new Chairman of the CBEC. He was the Member, Customs in the CBEC. He brings in 36 years of experience in various posts in Government like CVO in NBCC, I&B Ministry, NCB and particularly in CBEC in TRU, Commissioner (PAC), DRI apart from posting as Chief Commissioner in Mumbai Customs. A press release says, “His appointment to the position of Chairman in CBEC is expected to support the continued ongoing tax reforms, trade facilitation, increased tax payer services and automation for enhancing operational efficiency of the department and improve the functioning of intelligence and enforcement agencies, and thus improve overall tax compliance and satisfaction levels of tax-paying public”. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TIOL wishes the new Captain all the best in the hot seat. He is a master blaster; we wish him good batting. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value decreased 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 decreased the tariff values of Brass Scrap (all grades) fr om USD 3952 to USD 3951 and de creased the tariff va lue of poppy seeds from USD 2207 to 2120</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><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_076.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 76/2011-CUS (N.T.), Dated : October 31, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">All India Rates of Drawback - Board explains amendments</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ALL</strong> Industry Rates (AIR) of Duty Drawback 2011-12 were notified vide Notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. These rates have come into effect on 01.10.2011. Subsequently, the Ministry has received representations on the Drawback Schedule 2011-12 from Export Promotion Councils, Trade associations and individual segments of industry. The representations broadly relate to doubts on classification of items (mainly erstwhile DEPB items) in the Schedule, duty drawback rates, value caps and other miscellaneous matters. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The representations have been duly examined and certain amendments/ changes, wherever required, have since been carried out vide Notification No. 75/ 2011-Cus. (N.T.), dated 28.10.2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some of the major changes / amendments carried out in the notification are:. </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Parts and components made of iron, steel or aluminium through casting or forging process which were earlier covered under various serial numbers of product group 61 (Engineering) of DEPB scheme were incorporated in Chapter 73 or 76, as the case may be, in the Drawback Schedule. These entries are now appropriately replicated under headings 8487, 8548 and 8708 to enable exporters to claim drawback on such parts or components, irrespective of classification of such goods at any other four digit level in the Chapter 84 or 85 or 87 of the Schedule. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It has been decided to replicate the existing entry/entries appropriately under the tariff heading as has been sought by exporters. However, while replicating these entry/entries, the existing entry/entries in the Schedule have been retained so as to avoid any disputes. Further, in all such cases where existing entries have been replicated, due care has been taken to ensure that the rates of duty drawback / value caps (wherever assigned) are the same for both the existing entries as well as the replicated entries. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The replication of entries and the insertion of Note 3(A), is a purely transitory arrangement and with a view to resolving classification disputes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All changes/amendments as have been carried out through the amending notification No.75/2011-Cus.(N.T.), dated 28.10.2011, came into effect retrospectively from October 1, 2011. In all such cases, wherever it is required, the exporters shall be allowed to file supplementary drawback claims and these claims shall be processed accordingly. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_048.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 48/2011-Cus., Dated: October 31, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of Services - Refund of Credit - Streamlining process - Board issues Draft Circular</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REPRESENTATIONS</strong> have been received both from the field and the trade regarding difficulties being faced in the determination of the input services, which are eligible for refund under Notification No. 05/2006. Resultantly, the issue has spawned delays and disputes, which has necessitated the issue of this clarification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Board admits its ambiguity:</strong> The issue of eligibility of input services to refund under Notification No. 05/2006 has been addressed in Circular No. 120/01/2010-ST dated 19th January 2010 in paragraph 3.1. The criterion laid down in this paragraph for determining the eligibility states that “ in case the absence of such input/input service adversely impacts the quality and efficiency of the provision of service exported, it should be considered as eligible input or input service ”. This criterion has not been very useful as it is found to be too conceptual and not easily translatable into objective tests that could help in deciding actual cases. Thus, a need has been felt for further elaboration by the Board on this issue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No export of taxes:</strong> Board loftily states,<em> "the goods and services that are exported from the country should not be burdened with any excise or service taxation". </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Principles to determine eligibility for refund</strong>: Board has summarised the method to be followed for determining eligibility to refund as: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Check that the service on which refund is claimed satisfies the definition of input service that is given in Rule 2 (l) of the CENVAT Credit Rules, 2004. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Next, service is eligible to refund unless facts of the case indicate that the benefit of the service has gone exclusively into domestic business with no spill over what-so-ever into export business. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The second principle mentioned at sub-para (2) above is to be given a strict construction. Disqualification on this account would be an exception rather than a rule and should be done only when there is unmistakable indication that the benefit of the service has not gone into export business what-so-ever. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The level at which a determination shall be made of whether the input service has gone exclusively into domestic business or not shall be at the level of the “input service invoice". The officer scrutinizing the claim will not disaggregate the invoice and extract elements from it and state that these elements have exclusively contributed to domestic business. If at the level of aggregation that is reflected in an invoice, a portion of the input service that is embodied in the invoice has contributed to exports, then the entire input service invoice shall be eligible for refund. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Keeping the above principles and statutory provisions in mind, as also after considering the feedback from the field formations on eligibility of input services, a list of input services that are eligible for grant of refund has been prepared. The list contains 68 services. The shoddy manner in which the Board drafted this circular is reflected in the fact that Sl. No. 27 in the list has no conditions or eligibility - it is just left blank! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The circular appears to have taken into account the amendments to the definition of input service in Budget 2011. But most of the refund claims stuck with the Department pertain to the earlier period. (Construction, rent a cab, works contract etc denied in tune with the amended definitions) </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suggestions can be sent to Board by 30.11.2011 at <a href="mailto:d.aron@nic.in"><strong>d.aron@nic.in </strong></a></font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/draft_circular_refunds_st.pdf" target="_blank">CBEC Draft Circular</a> </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Same Monetary Limit for Adjudication for Ad.C and JC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD </strong>has decided to prescribe the same monetary limit for adjudication of Central Excise cases for both Additional Commissioners and Joint Commissioners. Accordingly, now both Additional Commissioners and Joint Commissioners can adjudicate cases involving duty above Rs. 5 Lakhs and up to Rs. 50 Lakhs. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/excircular957.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 957/18/2011-CX-3 , Dated: October 25, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">TDS - Due Dates For Government Deductors Notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has amended the Income Tax Rules, 1962 to prescribe separate due dates for filing quarterly TDS returns by Government offices as deductors. The dates are 31st July, 31st October, 31st January and 15th May. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further now, if the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2011/it11not057.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Notification No. 57/2011, Dated: October 24, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">PAN Application - New Forms Notified</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has issued a corrigendum to Notification No. 56/2011 dated 17.10.2011 to issue new 49A and 49AA Forms. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2011/it11not058.htm" target="_blank">CBDT Notification No. 58/2011, Dated: October 29, 2011</a>; <a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/itr62Form49A.pdf">Form No. 49A </a> + <a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/itr62Form49A_ins.pdf">Instructions49A </a>; <a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/itr62form49AA.pdf">Form No. 49AA </a>+ <a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/itr62form49AA_ins.pdf">Instructions 49AA </a></strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Focus Product Scheme - Amendments </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended the Handbook of Procedures Vol.1 (Appendices and Aayat Niryat Forms) 2009-2014. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new Table 8: <strong>SPECIAL BONUS BENEFIT @ 1% OF FOB VALUE OF EXPORTS (IN FREE FOREIGN EXCHANGE)</strong> is added in Appendix 37D and a new product is added in Table 4. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn083.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 83 (RE2010)/2009-14, Dated: October 31, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Ram Kumar Passes Away </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/guest/ram_kumar.jpg" alt="Legal Corner Icon" width="60" height="75" hspace="5" border="1" align="left"><strong>IT</strong> is with deep sorrow that we report that one of our contributors, M. Ram Kumar is no more. Though we could carry only a few of his articles, Ram Kumar was a frequent contributor in the Message Board and had an opinion on almost all the topics and used to flood us with his articles and comments. He was working as a Superintendent of Central Excise in Bangalore. I called up Mrs Ram Kumar who fondly remembered his association with TIOL and several of our writers. He was a very humble person and would always start his mails to us with an apology for disturbing us. Alas! That has come to an end! May his Soul rest in peace. </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"> – Wednesday'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">Service Tax </font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Agreement with media house for providing services of media bookings, issue release instructions on their behalf, supervise production /programs for sponsored telecasts etc taxable under category of BAS – Pre-deposit of Rs. 85 lakhs ordered: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CESTAT</strong> observed that the allegation against the appellant is based on the agreement entered by them with an electronic media house. As per the agreement, the appellants provide services of media bookings and issue release instructions on their behalf, supervise production such as programs for sponsored telecasts, negotiate rates, positions, payment terms and other such matters involving placement of advertisements with the media. In terms of the agreement, prima facie, the appellants are providing services to media under the category of BAS and liable to pay tax on the write backs and discounts received by them from media for advertisements. </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 brand promotion expenses incurred by assessee belonging to a group of companies can be partly disallowed on ground that benefits also accrued to related parties - NO, rules ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues before the Tribunal are - Whether when the non-resident technology partner does not pass on proprietary right to assessee on transfer of knowhow, the royalty paid by the assessee under a knowhow transfer agreement is revenue or capital expenditure and whether brand promotion expenses warrant part disallowance on the ground that the benefit also accrued to other related parties. And the verdict goes against the Revenue. </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">When a 100% EOU claims benefit of notification issued by state government exempting sales tax, benefit of Notification No. 23/2003-CE for exemption of SAD not available: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION </strong>No.23/2003-CE granted exemption from payment of SAD on the condition that the goods cleared into DTA are not exempted by the state government from the payment of sales tax. In the instant case, since the appellants cleared the goods by availing the benefit of notification issued by the state government, they are not entitled for the benefit of Notification No.23/2003-CE. </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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