TIOL-DDT 1795 · the untouched capture
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<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14276"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt_1794.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1795 </font><br>
14.02.2012 <br>
Tuesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit Rules Amended – Board should appoint a Proof Reader </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong> the CBEC urgently needs is a proof-reader. Cadre review and all other important ambitious projects can wait, notwithstanding the candle march at noon by the Superintendents demanding better promotional opportunities. When we point out the blunders of the Board in law-making, angry officers ask us, “are you perfect?”. We, certainly, are not, but our mistakes don't affect the nation and we don't make laws! A lawmaker is expected to be careful at least in elementary drafting. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Look at the first Central Excise Non Tariff Notification of 2012 issued last week. It sates, <em>"In the CENVAT Credit Rules, 2004, in rule 12, for the words <font color="#FF6633"><strong>For the</strong></font> <font color="#FF6633"><strong>words</strong></font> notwithstanding anything contained in these rules" </em>the words “notwithstanding anything contained in these rules but subject to the proviso to clause (i) of sub rule (1) of the rule 3” shall be substituted. ” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please note –<strong> <font color="#FF6633"><em>'For the words'</em></font></strong> is repeated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Coming to the amendment, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 12 of the CENVAT Credit Rules, reads as, <strong>"Special dispensation in respect of inputs manufactured in factories located in specified areas of North East region, Kutch district of Gujarat, State of Jammu and Kashmir and State of Sikkim.</strong> - <em>Notwithstanding anything contained in these rules, where a manufacturer has cleared any inputs or capital goods, in terms of notifications of the Government of India in the Ministry of Finance (Department of Revenue) No. 32/99- Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated the 8th July, 1999] or No. 33/99- Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated the 8th July, 1999] or No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565(E), dated the 31st July, 2001] or notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue) No.56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated 14th November, 2002]or No.57/2002-Central Excise, dated the 14th November, 2002 [ GSR 765(E), dated the 14th November, 2002] or notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003] or 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R.717 (E), dated the 9th September, 2003, or No.20/2007-Central Excise, dated the 25th April, 2007 [ GSR 307 (E), dated the 25th April, 2007] the CENVAT credit on such inputs or capital goods shall be admissible as if no portion of the duty paid on such inputs or capital goods was exempted under any of the said notifications.” </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per proviso to clause (i) of sub rule (1) of rule 3, “CENVAT Credit of such duty of excise shall not be allowed to be taken when paid on any goods in respect of which the benefit of an exemption under notification <strong>No. 1/2011</strong> -CE dated the 1st March 2011 is availed.”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, this proviso is made applicable to Rule 12 also. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This notification No. 1/2011 is the 1 percent effective rate of duty introduced in last year's budget. This 1 percent duty is not allowed as CENVAT Credit. But for about 11 months, they forgot to amend Rule 12, which allowed credit notwithstanding anything said in the rules. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anytime is good time to correct a mistake. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/exnt12_01.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No.01/2012 CE (NT), Dated: February 09, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs
and Excise Duty Exemption on Machinery for LRSAM – Another messed up Notification </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MACHINERY</strong>, equipment, instruments, components, spares, jigs, fixtures, dies, tools, accessories, computer software, raw materials and consumables required for the Long Range Surface to Air Missile (<strong>LR-SAM)</strong> Programme of Ministry of Defence, were first exempted from excise duty by Notification No. 30/2007 –Cx dated 10.07.2007, by inserting a new Sl. No. 25 to the table in Notification No. 64/95-Central Excise, dated the 16th March, 1995. This was valid only till 31st May 2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As usual, the babus forgot all about this notification lapsing in May 2011. They woke up a little later and reintroduced this exemption by Notification No. 34/2011 – Central Excise, dated 19th July 2011 by inserting another Sl. No. 29 in the table to Notification No. 64/95-Central Excise, dated the 16th March 1995. And this was valid till 25th day of November 2011. Again, in November 2011, the experts in the Board forgot about this notification and they just woke up and issued a notification last week inserting another Sl. No. 30 in Notification No. 64/95-Central Excise, with identical words and this new exemption is valid till 25th May 2012. We can be sure it will not be extended before 25th May 2012. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the position is that in the table to the Notification No. 64/95-Central Excise, dated the 16th March 1995, there are three Sl Numbers 25, 29 and 30 giving the same exemption and there was no exemption during the period, 01.06.2011 to 18.07.2011 and 26.11.2011 to 08.02.2012. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Of course, there is consistency. The Customs Notification No. 39/1996 dated 23.7.1996 has been similarly messed up and now has the same exemption in Sl. Nos 32, 35 and 38 of the table. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board should seriously consider job work for its notification manufacturing activity. </font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/etariff12_04.htm" target="_blank">Notification No. 04/2012 CE, Dated: February 09, 2012</a> and </font></strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_006.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 06/2012 Cus, Dated: February 09, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Bank rates Increased by 350 Basis Points from Today </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH </strong>effect from the close of business yesterday (February 13, 2012), Reserve Bank of India has increased the Bank Rate by 350 basis points, i.e., from 6.00 per cent per annum to 9.50 per cent per annum. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 49 of the Reserve Bank of India Act, 1934 requires the Reserve Bank to make public (from time to time) the standard rate at which it is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase under that Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Being the discount rate, the Bank Rate should technically be higher than the policy repo rate. The Bank Rate has, however, been kept unchanged at 6 per cent since April 2003. This was mainly for the reason that monetary policy signalling was done through modulations in the reverse repo rate and the repo rate under the <strong>Liquidity Adjustment Facility (LAF</strong>) (till May 3, 2011) and the policy repo rate under the revised operating procedure of monetary policy (from May 3, 2011 onwards). Moreover, under the revised operating procedure, <strong>marginal standing facility (MSF)</strong>, instituted at 100 basis points above the policy repo rate, has been in operation, which in many ways serves the purpose of the Bank Rate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the policy repo rate and the MSF rate have become operational, the Bank Rate continues to remain at 6 per cent. Currently, the Bank Rate acts as the penal rate charged on banks for shortfalls in meeting their reserve requirements (cash reserve ratio and statutory liquidity ratio). The Bank Rate is also used by several other organisations as a reference rate for indexation purposes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The RBI states that the increase in Bank Rate should be viewed and understood as one-time technical adjustment to align the Bank Rate with the MSF rate rather than a change in the monetary policy stance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, will also stand revised, which was 9% and 11% and will now be 12.5% and 14.5%. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_notification.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI/2011-2012/396, Dated: February 13, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">India – Pakistan Trade - Open Arms, Hearts and Gates </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Pakistan Daily Times reported today, “For the first time in the Indo-Pak history since partition in 1947, the commerce ministers of both the countries along with high-powered business leaders gathered at the Lahore Expo Centre on Monday pledging to open arms, hearts and gates for one another to tape trade potential of both South Asian states furthering the track II diplomacy successfully. <em>Hurdles to free trade between Pakistan and India are being removed through sustained dialogue as continuous interaction has helped bridge the differences between the two sides enabling India to organise its first-ever trade show in Pakistan</em>, said Indian Minister for Commerce, Industry and Textile Anand Sharma while speaking at the closing ceremony of the three-day <strong>The India Show</strong>. Pakistan and India together form one of the largest consumer markets in the world. We are situated at a historical trade route. The prospects of economic prosperity through trade in the region are very strong.” </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">WTO - India files dispute against Turkey </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> 13 February 2012, India requested consultations with Turkey under the dispute settlement system concerning the latter's safeguard measures on import of cotton yarn (other than sewing thread). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT in Limca Book of Records - Thanks for all Messages </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> all humility and rejuvenated will to work better, DDT acknowledges all the congratulatory messages and phone calls from Netizens. This overwhelming response from the enlightened netizens was far more gratifying than the record itself. THANK YOU. </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><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">Valuation - Related Job worker - Tribunal did not consider whether the parties were related - Matter remanded: SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong>, M/s Food & Healthcare Specialities was engaged in the blending and packing of 'Glucon D' for M/s Heinz India Pvt. Ltd. The Tribunal, by an exceptionally short order, set aside the order-in-original, concluding that since the Adjudicating Authority has itself given a specific finding that the status of the Assessee was not better than that of hired labour and Heinz is the manufacturer, the duty is leviable only on the manufacturer. </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 when Revenue issues notice u/s 148, mere failure to mention words 'Principal Officer' and 'Pvt Ltd' results in vagueness which justifies quashing of entire assessment proceedings - NO, rules Delhi HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT </strong>is palpable that the CIT(A) has not examined whether or not to grant exemption from payment of the advance tax under Section 249(4)(b) of the Act and the proviso. The proviso requires the CIT(A) to decide and record in writing whether there were good and sufficient reasons to exempt an assessee from complying with Section 249(4)(b). This is mandatory. This requirement has not been complied with. </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">CENVAT Credit - Cell Towers, prefabricated building, printer, office chair – neither Capital Goods, nor inputs for providing cellular telephone service: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> component or part of any goods means something, which is required to make such goods a finished item. In other words, only those articles, which would go into the composition of another article, can be considered to be components or parts of the latter. This is just a matter of common sense. What might occur to the common man's prudent mind is also reflected in the meaning of the word 'component' found in dictionaries of the English language </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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