TIOL-DDT 1730 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1730 </font><br> 11.11.11 <br> Friday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Credit Scrips like SFIS, VKGUY - For Clearances from Customs Bonded Warehouses </font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">BOARD</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> has been asked a question as to whether duty credit scrips issued under the Chapter 3 schemes of the Foreign Trade Policy (FTP) namely <em>Served from India Scheme (SFIS), Vishesh Krishi Gram Udyog Yojana (VKGUY), Focus Market Scheme (FMS), Focus Product Scheme (FPS) and Status Holder Incentive Scheme</em> (SHIS) can be utilized for clearance of goods from Custom Bonded warehouses. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clearance of goods from Custom Bonded warehouses is allowable by utilizing DEPB credit scrips as per procedure mentioned in Circular No. 68/2000 dated 18.8.2000 and Circular No. 72/2003-Cus dated 11.8.2003. However, since the schemes such as SFIS, VKGUY, FMS, FPS, SHIS have come into being only after issuance of these circulars, these schemes do not find specific mention in the said circulars. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC now clarifies, <em>duty credit scrips of these schemes are allowed for clearance of goods from Custom Bonded warehouses under the same procedure as prescribed for DEPB scrips under Circular 68/2000 dated 18.8.2000 and 72/2003-Cus dated 11.8.2003 and subject to the conditions and limitations mentioned in Foreign Trade Policy (2009-14) . </em></font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_050.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 50/2011-Cus., Dated: November 09,2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Budget 2012 – Revenue Invites Suggestions From Trade Associations </font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> formulating the proposals for the Union Budget 2012-13, the Finance Ministry wants to be benefitted by the suggestions and views from Trade and Industry Associations. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They want the suggestions along with relevant statistical information about production, prices, revenue implication of the changes suggested, etc. In the Direct Taxes, since the Direct Taxes Code, 2010 has been introduced in Parliament and is proposed to be effective from 1.4.2012, they want only proposals, which are urgent in nature. And they are in a hurry – they want the suggestions with bulky accompanying documents by 15th of this month – you have just four days time, if you have not already sent in your suggestions. The president of a Trade Association suggested that they should have mentioned that these suggestions could be dropped directly in the ‘Waste paper Basket' of the Finance ministry. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suggestions regarding Customs and Central Excise are to be sent to Shri Vivek Johri, Joint Secretary (TRU-I), and Service Tax to Shri V K Garg, Joint Secretary (TRU-II), CBEC and suggestions relating to Direct taxes may be sent to Shri Ashutosh Dikshit, Joint Secretary, Tax Policy and Legislation (TPL), CBDT. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suggestions and views may also be emailed to </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:budget-cbec@nic.in"><strong>budget-cbec@nic.in </strong></a><strong> & <a href="mailto:ustpl3@nic.in">ustpl3@nic.in </a></strong></font></p> <p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/draft_circular_Budget.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MOF DOR F.No.334/9/2011-TRU Dated: November 02,2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> DEPB - 'Free Shipping Bills' for exports of 'Cotton yarn' - DGFT Clarification </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>DEPB</strong> on export of “Cotton yarn including Melange yarn” and “Cotton” which was withdrawn earlier has been restored by the Public Notices Nos. 67/2009-2014(RE 2010) and 68/2009-2014 (RE 2010 both dated 04.8.2011). During that period as DEPB was not available on export of “Cotton yarn including Melange yarn”, the exporters have made their exports under “Free Shipping Bills”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, DGFT has laid down the procedure to grant DEPB on the export of “Cotton yarn including Melange yarn” made between the period from 01.04.2011 to 04.08.2011 and on the export of “Cotton” made between the period from 01.10.2010 to 04.08.2011 on the basis of “Free Shipping Bills”: - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The exporters will apply to RA by feeding the details of the “Free Shipping Bill” manually on their on-line application; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A hard copy of the “Free Shipping Bill”, duly attested by the exporter will be submitted to the RA.; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ On the basis of the export description given on the shipping bill, the RA will decide whether that export product is entitled for DEPB or not; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ If the RA is satisfied that description of the export product in the shipping bill is the same as in the relevant DEPB entry, based on the FOB value of the shipping bill/Bank Realisation Certificate (BRC), the DEPB will be issued. </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir047.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 47/(RE-2010)/2009-14, Dated: November 08, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Larger Bench of High Court rules that remand by a Division Bench not correct. Same case in different Benches of High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>THIS</strong> is an interesting case giving rise to complicated issues. The CESTAT Mumbai Bench in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2011/2011-TIOL-288-CESTAT-MUM.htm" target="_blank"><font size="1">(2011-TIOL-288-CESTAT-MUM)</font></a></strong> decided 38 Central Excise Stay Applications by a common order. The Tribunal ordered pre-deposit of 50 per cent of the duties demanded. One of the parties in this case, SRJ Peety Steels Pvt Ltd , appealed to the Aurangabad Bench of the Bombay High Court. And the High Court remanded the matter to the Tribunal <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2011/2011-TIOL-695-HC-MUM-CX.htm" target="_blank"><font size="1">(2011-TIOL-695-HC-MUM-CX)</font></a></strong>. Revenue had approached the Supreme Court against this order, which was dismissed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some other parties involved in the CESTAT order approached the Mumbai Bench of the High Court. And the Mumbai Bench did not agree with the Aurangabad Bench and referred the matter to a Larger Bench. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2011/2011-TIOL-661-HC-MUM-CX.htm" target="_blank"><font size="1">(2011-TIOL-661-HC-MUM-CX)</font></a></strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Larger Bench gave its decision on 9th November 2011 – day before yesterday. The larger Bench also did not agree with the Aurangabad Bench and held that it cannot be treated as a precedent and so the Bombay Division Bench is competent to decide the appeal on merits. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now the situation is: The Aurangabad Bench decision upheld by the Supreme Court is binding on the Tribunal, as far as the appellant SRJ Peety Steels , is concerned and the Tribunal has to pass an order on remand. While the Tribunal's Stay Order is set aside by the Aurangabad Bench of the High Court, the other parties in the appeal have to agitate the same issue before the Bombay Bench. In effect, in relation to some parties, the CESTAT order does not exist, while for others it does! Two parties appealing against the same order will get two different orders just because of their geographical location! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps we should bring in some change in Law to stipulate that all parties covered in an order of the Tribunal should appeal to only one single Bench of the High Court irrespective of their location. Maybe the appeal should be made to the High Court having jurisdiction over the location of the Tribunal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this High Court Larger Bench Order today. Please see Breaking News. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Chairman writes to Brothers and Sisters in the Department - 'Team Work' is Mantra </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>THE</strong> new CBEC Chairman SK Goel has written his first letter as Chairman to his staff. He addresses them as his dear brothers and sisters . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He says that the Board is committed to take care of the officers, staff and their family through a number of welfare measures apart from working for timely promotions and grant of monetary and other entitlements; to ensure that the reasonable aspirations of the officers and staff are fulfilled and their family takes pride in the service to the society and the country. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He informs his officers that Cadre Restructuring and Reorganization proposal is at an advanced stage of consideration by the Government and it is expected to result in increase of 28,360 posts at various levels. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He would be happy to receive valuable suggestions and constructive criticism . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<em>Let our team work be the mantra for success in fulfilment of our goals</em>”, he concludes. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/Chairman_message_8Nov2011.pdf"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chairman's Message </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT Trivia - 11 11 11 DDT 1730 </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TODAY</strong> is said to be auspicious – at least the numbers sound good. It is 11.11.11. Incidentally, today's DDT Number is 1730, which adds up to 11. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though it is just another fancy number, it has created interest all over the world, as one can witness such a date only once in a hundred years – once in a lifetime perhaps. Many people believe that some great damage will be caused by this number and we can expect several calamities, while others believe that some extraordinary good will happen. 11.11 hrs on 11.11.11 is considered to be an auspicious time for marriages and several couples will jump into the dangerous enterprise at this time today. And there is a majority of people who believe that nothing would happen – and perhaps nothing will. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I hope my colleagues in TIOL will be able to upload this edition of DDT before 11.11 am.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><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><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">Merely because before sale of goods electrical conductivity could be injected into imported material, it will not make the goods ATF on date of import: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> vessel berthed at New Mangalore Port on 02.09.2003 for discharge of SKO (Superior Kerosene Oil) at Mangalore and Cochin. Based on intelligence, DRI drew samples from all the tanks of the vessel and sent the same for tests to Mangalore Refinery and Petrochemicals Ltd (‘MRPL'). A certificate of origin issued by M/s Oman Refinery Company indicated the cargo as SKO. The test results from M/s MRPL revealed that the sample meets the requirement of ATF, except for electrical conductivity. As ATF can be imported only through IOC as per EXIM policy, proceedings were initiated against the assessee. The assessee contended that the cargo imported was SKO and not ATF.</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 expenses incurred on account of application software is revenue in nature - Yes, rules Delhi HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee was in the business of manufacturing of automobile safety glass; the assessee had embarked upon a major computerization programme in the area of financial accounting, purchases, inventory, production, planning and control. In the AY 1997-98, the assessee had amortized an expenditure amounting to Rs 1,36,77,664/- towards software and professional expenses under the head “deferred revenue expenditure.” The issue before the Bench is - Whether expenses incurred on account of application software is revenue in nature. 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">Works Contract Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">When copyright of software developed under a contract for development of software vests with the customer from day one, such contract does not fall within mischief of ‘works contract' - Not covered under concept of deemed sale: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant, a registered dealer under the Karnataka Value Added Tax Act, 2003 (‘KVAT Act') and Central Sales Tax Act, 1956 was engaged in the business of software development and providing software services. The appellant was also registered under section 69 of the Finance Act, 1994 for the purpose of payment of service tax and has been paying service tax. The appellant's books were audited by the CTO and it was observed that the appellant had executed works contracts. A notice was issued for re-assessment and the assessing authority after hearing the contentions of the appellant concluded that the activity of software development attracted ‘works contract tax' (WCT) in terms of section 4(1)(C) of KVAT Act at 4%. </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> <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> </body> </html>