TIOL-DDT 1898 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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></font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1898</font></strong></font><strong><br>
11.07.2012 <br>
WEDNESDAY </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No Service Tax on Foreign Remittance - CBEC Clarifies</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> all, it was only a storm in the pipeline. Shashi Tharoor can relax and all the agitation in the Gulf about the brutal Indian Government imposing a high tax on foreign remittances by Indians abroad was only because of a misunderstanding of Law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the CBEC Clarifies: </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. There is no service tax<em> per se</em> on the amount of foreign currency remitted to India from overseas.
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In the negative list regime, 'service' has been defined in clause (44) of section 65B of the Finance Act 1994, as amended, which excludes transaction in money. </font>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. As the amount of remittance comprises money, the activity does not comprise a 'service' and thus not subjected to service tax. </font>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In case any fee or conversion charges are levied for sending such money, they are also not liable to service tax as the person sending the money and the company conducting the remittance are located outside India. In terms of the Place of Provision of Services Rules, 2012, such services are deemed to be provided outside India and thus not liable to service tax.
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Even the Indian counterpart bank or financial institution who charges the foreign bank or any other entity for the services provided at the receiving end, is not liable to service tax as the place of provision of such service shall be the location of the recipient of the service, i.e. outside India, in terms of Rule 3 of the Place of Provision of Services Rules, 2012. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, the Board has clarified without any ambiguity that the service is not taxable at all. But why did it take so much time for the Board to clarify this? Why did they allow confusion to spread all over the world? Shouldn't they have reacted immediately after Shashi Tharoor shot off his letter to the Prime Minister? Board should have a slightly better PR outfit. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2012/sercir163.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 163/14/2012-ST, Dated: July 10, 2012</strong></font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP
- Duty Credit Scrips can be used to Pay Excise Duty on Domestic Procurement</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Foreign Trade Policy allowed scrips under different schemes of Chapter 3 of Foreign Trade Policy, namely, Focus Product Scheme (FPS), Focus Market Scheme (FMS), Vishesh Krishi and Gram Udyog Yojana (VKGUY) Scheme, Status Holder Incentive Scrip (SHIS) Scheme, Market Linked Focused Product (MLFPS) Scheme, Served From India Scheme (SFIS) and Agri. Infrastructure Incentive Scrip (AIIS) Scheme, for import of goods as per conditions of these Schemes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supplement 2012-13 to the Policy announced on 5th June 2012 allowed these scrips to be utilized for payment of Excise Duty for domestic procurement. Earlier only scrips under SFIS were so permitted for procurement of goods from domestic market. Now all scrips are permitted to source from domestic market so as to encourage manufacturing, value addition and employment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was an important measure for import substitution to help in saving of foreign exchange in addition to creating additional employment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, Para 3.17.5(c) of the Foreign Trade policy now states, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“Duty Credit Scrip can also be utilised for payment of Excise Duty on domestic procurement of such items as permitted to be imported under respective scheme”. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This means that the goods can now be procured from the DTA instead of importing them and excise duty can be paid from the scrip. This is what the Foreign Trade Policy states, but you don't get an excise exemption through the Foreign Trade Policy. You can't walk away with goods from a factory without paying excise duty. You need an excise notification and there had to be a procedure. And that was nowhere in sight even after a month of the change in Foreign Trade policy. It was a game of DGFT proposing and CBEC disposing. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Revenue Department has come up with Notifications exempting the goods and prescribing the procedure. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The salient features: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 1. The scrip should be registered with the Customs authority at the port of registration </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 2. The holder of the scrip, who may either be the person to whom the scrip was originally issued or a transferee-holder, should present the said scrip to the said Customs authority along with a letter or proforma invoice from the supplier or manufacturer indicating details of its jurisdictional Central Excise Officer and the description, quantity, value of the goods to be cleared and the duties leviable thereon. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 3. The Customs authority, taking into account the debits already made towards imports, shall debit the duties leviable, but for this exemption in or on the reverse of the said scrip and also mention the necessary details thereon, updates its own records and sends written advice of these actions to the Central excise Officer; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 4. At the time of clearance, the holder of the scrip should present the said scrip debited by the said Customs authority to the Central Excise Officer along with an undertaking addressed to the said Officer that in case of any amount short debited in the said scrip he shall pay on demand an amount equal to the short debit, along with applicable interest; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 5. Based on the said written advice and undertaking, the said Officer should endorse the clearance particulars and validate, on the reverse of the said scrip, the details of the duties leviable, but for this exemption, which were debited by the said Customs authority, and keeps a record of such clearances; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 6. The manufacturer should retain a copy of the said scrip, debited by the said Customs authority and endorsed by the Central Excise Officer and duly attested by the holder of the scrip, in support of the clearance under this notification. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, who is this mysterious Central Excise Officer? The Notification says, <font color="#FF3300">jurisdictional Central Excise Officer (hereinafter referred as the said Officer)</font>. Now Inspector to Commissioner - they are all jurisdictional officers. Can the documents be presented to anyone from Inspector to Commissioner? Why can't they specify the officer? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A great great commendable gesture of the CBEC in this notification is that they have stipulated that the <font color="#FF3300">holder of the scrip, to whom the goods were cleared, shall be entitled to avail the drawback or CENVAT credit of the duties of excise against the amount debited in the said scrip and validated at the time of clearance</font>. This single act would ensure avoidance of a mountain of mindless litigation.<strong> DDT</strong> salutes the Board for the thoughtful legislation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Following are the exemption notifications for the various schemes. </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><strong>1. Focus Product Scheme</strong> -<font color="#003399"> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/etariff12_29.htm" target="_blank">Notification No. 29/2012-CX., Dated: July 9, 2012 </a></strong></font></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><strong>2. Focus Market Scheme - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/etariff12_30.htm" target="_blank">Notification No. 30/2012-CX., Dated: July 9, 2012</a> </strong></font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 3. Agri. Infrastructure Incentive Scrip - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/etariff12_31.htm" target="_blank">Notification No. 31/2012- CX., Dated: July 9, 2012 </a></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 4. Vishesh Krishi and Gram Udyog Yojana (Special Agriculture and Village Industry Scheme) - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/etariff12_32.htm" target="_blank">Notification No. 32/2012-CX., Dated: July 9, 2012 </a></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 5. Status Holder Incentive Scheme -<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/etariff12_33.htm" target="_blank"> Notification No. 33/2012- CX., Dated: July 9, 2012 </a></font></strong></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>But are they exempted or duty paid?</strong> So far, so good, but are these goods to be treated as exempted or duty paid? When they are allowing credit, obviously they consider them duty paid. They should have amended the CENVAT Credit Rules also to clear the position that these goods will not be considered as exempted. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Consequential Customs Amendments</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONSEQUENT</strong> to the above Excise Notifications, amendments are made in the following Customs Tariff Notifications to incorporate the above excise notifications in them: </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> 1. 92/2009-Customs, dated the 11th September, 2009.
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. 93/2009-Customs, dated the 11th September, 2009.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. 94/2009-Customs, dated the 11th September, 2009.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. 95/2009-Customs, dated the 11th September, 2009</font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. 104/2009-Customs, dated the 14th September, 2009 </font></p>
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<p align="left"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_044.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>Notification No. 44/2012-Cus., Dated: July 9, 2012 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty on Vitrified Porcelain Tiles - Provisional Assessment</strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ANTI</strong> Dumping Duty on import of Vitrified Porcelain Tiles originating in, or exported from the People's Republic of China (China PR) and United Arab Emirates, was provisionally imposed vide Notification No. 50/2002 dated 02.05.2002. This Notification was valid till 01.11.2002. But by Notification No. 73/2003 dated 01.05.2003, definitive anti dumping duty was imposed, but with effect from the date of provisional anti dumping duty, that is 02.05.2002. This notification also expired on 02.05.2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government again freshly imposed the anti dumping duty on the product with effect from 27.06.2008 by Notification No. 82/2008 - Cus dated 27.06.2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Was there no dumping between 02.05.2007 and 26.06.2008? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now based on the recommendations of the Designated Authority, on review, Government has ordered provisional assessment in respect of two parties on the goods, when originating in or exported from China PR. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=337&filename=notification/custom/2012/ctariffadd12_035.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 35/2012-Cus., (ADD), Dated: July 10, 2012 </strong></font></a></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">WCO Chief in India </font></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/kuniomikuriya.jpg" alt="Legal Corner Icon" width="240" height="337" hspace="5" border="0" align="center"></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WORLD</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Customs Organisation Secretary General, Kunio Mikuriya, visited New Delhi, on 9 July 2012 for a working session on India's progress regarding WCO initiatives. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Indian Customs has examined its situation in relation to the Economic Competitiveness Package </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ECP) conceptual chart and supporting tools presented to the WCO Council during its recent sessions in Brussels. Viewing the CBEC as a comprehensive package for streamlining Customs activities through various tools, India has already identified areas where further progress may be required. In line with the Guidelines for Post Clearance Audit (PCA) included in the WCO Revenue Package, India implemented onsite PCA in 2011 and introduced self-assessment at the same time, which has benefited trusted traders for facilitation purposes and also improved their compliance. CBEC is also interested in research on the informal sector which the WCO intends to undertake. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Secretary General appreciated the work done by Indian Customs in adapting and incorporating WCO initiatives at the national level, in order to enhance the value of these initiatives. Picture shows him with CBEC Chief SK Goel. </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"> – Thursday's cases</font></strong></font></strong></font></p>
<p align="justify"><font color="#6633CC" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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"><font color="#663399">Central Excise</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Valuation - Addition of Pre-delivery inspection charges (PDI) and after sales service charges collected by dealers in transaction value - manufacturing of a product and marketability thereof are inbuilt elements of scheme of AV under Section 4 of CEA, 1944 - Pre-deposit ordered of Rs.1.06 Crores: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>APPLICANTS</strong> are manufacturers of cars and selling the same through dealers throughout the country. As per the Agreement, the dealers were given fixed discount for selling cars and dealers have to provide Pre-Delivery Inspection (PDI) and two free services from such dealers' margin. The CCE, Aurangabad confirmed the demand of more than Rs.3.11 crores with “auto” penalties and interest on the ground that the charges in respect of PDI and free service charges are to be added to the 'transaction value' of the cars in view of the provisions of S.4 of the CEA, 1944 r/w Rule 6 of the Valuation Rules, 2000. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether for availing Sec 54EC benefits, assessee earning capital gains on land transfer is required to count six months period from date of receipt of sale consideration or date of transfer of property - sale consideration, rules ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Tribunal are - Whether when assessee forms a JV with a builder for development of a property and enters into an irrevocable agreement, the date of agreement is to be treated as the relevant date for taxing the capital gains or the date of registration of the deed - Whether when it was not possible for the assessee to have invested the amounts in the specified Bonds within a period of 6 months due to non receipt of consideration, the amount can be deposited within 6 months from the date of receipt of amount and the exemption will be allowed. And the verdict partly goes in favour of the assessee. </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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bombay Flying Club cannot fly away from Service Tax liability - Conducting Training courses in Aircraft Maintenance Engineering and Flying School (Pilot training) & overhauling work of aircrafts is prima facie taxable under Service Tax category of 'Commercial Coaching or Training Services' and 'Management, maintenance and repair Services' - Pre-deposit ordered of Rs.1.50 Crores: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> had clarified that the training imparted by the institutions cannot be considered as courses recognized by law as the institutes are not created or recognized by the law. It was also clarified that the training programmes conducted by these institutes will not be eligible for the benefit of service tax exemption under notification 24/2004-ST as the institute courses do not directly enable the trainee getting the requisite employment. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></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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