TIOL-DDT 1941 · 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 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><font color="#663399" size="3">TIOL-DDT 1941 </font><br> 13.09.2012<br> Thursday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit of Basic Excise Duty for Payment of NCCD - Board wants to clarify</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has received representations from certain industry associations seeking a clarification whether CENVAT credit of the duty of excise specified in the First Schedule to the Central Excise Tariff Act (commonly known as basic excise duty) paid on inputs used in or in relation to the manufacture of final products can be utilized for payment of National Contingency Calamity Duty (NCCD) on said final products. It seems some field formations are issuing show-cause notices for recovery of NCCD paid out of <em>CENVAT credit </em>of basic excise duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has examined the matter and observes:- </font></p> <blockquote> <p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ According to sub-rule (1) of rule 3 of <em>CENVAT Credit</em> Rules, 2004, a manufacturer or producer of final products is allowed to take credit of basic excise duty except when paid on any goods in respect of which the benefit of exemption under notification No.1/2011-CE dated 01.03.2011 or Sl. Nos. 67 and 128 of notification No.12/2012-CE dated 17.03.2012 is availed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ According to sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, credit may be utilized for payment of any duty of excise on any final product.</font> </p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++ NCCD is a duty of excise levied under Section 136 of the Finance Act, 2001. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++ The only restriction with regard to the utilization of CENVAT credit of any duty specified in sub-rule (1) for payment of NCCD is prescribed in the fifth proviso to sub-rule (4) whereby such credit cannot be utilized for payment of NCCD on goods falling under tariff items 8517 12 10 and 8517 12 90 respectively of the First Schedule to the Central Excise Tariff Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++ Further Rule 3(7) (b) of the CENVAT Credit Rules provides that CENVAT credit in respect of NCCD leviable under Section 136 of the Finance Act, 2001 shall be utilised towards payment of NCCD duty only. This envisages the utilisation of NCCD credit availed to be restricted for payment of NCCD on the final product but does not interfere with the provisions of Rule 3(4) (a) of the CENVAT Credit Rules that allow the credit of basic excise duty to be utilised for payment of NCCD. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ From a combined reading of these provisions, it is evident that barring exceptions in the fifth proviso to rule 3(4), credit of basic excise duty paid on inputs used in or in relation to the manufacture of final products is permitted to be utilized for payment of NCCD on such final products in terms of the provisions of Cenvat Credit Rules, 2004. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board notes that this position is in conformity with the view taken by CESTAT, Kolkata in <em>Prag Bosmi Synthetics Ltd vs. CCE Dibrugarh </em>- <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2007/2007-TIOL-1227-CESTAT-KOL.htm" target="_blank"><font size="1">2007-TIOL-1227-CESTAT-KOL</font></a></strong>, which was upheld by the Guwahati High Court vide order dated 29.06.2011 inC.EX ref. Case No. 4/2008 and since accepted by the Board. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Wait, this does not mean that the Board has given the clarification. They have placed it in the ‘Draft Circulars' and have invited comments/suggestions to <a href="mailto:budget-cbec@nic.in"><strong>budget-cbec@nic.in</strong> </a>by 23rd September 2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What suggestions and comments do they want on an issue decided by the High Court and accepted by the Board? Why can't they simply issue the circular and be done with it? God knows when they would clear this! </font></p> <p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/draft_circular_354_2012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Draft Circular in F. No. 354 /135/2012-TRU dated: September --, 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Transfer Orders - Disobedient Officers - CBEC is Again Angry </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> the Board transfers officers of the rank of Assistant Commissioner to Commissioner, it is not always that the officers obediently go and join at the new place of posting. Many of them who are not happy with the wisdom of the Board, hang on to their places and try through various sources for retention or a better posting. And in many cases, the Board obliges! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the CBEC notes that many of the officers transferred in 2012 are not relieved and still continue in their old posting. What does the Board do in such situations? IT TAKES A SERIOUS VIEW. And the Board had been consistently taking a <strong>serious view</strong> for nearly half a century. The officers know that the serious view of the Board is a big joke and they laugh it off. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In its latest <em>taking a serious view</em>, the CBEC has requested the Chief Commissioners to ensure that the transfer orders of the Board are implemented by 14th September 2012 positively and compliance reported to Board. Otherwise, the Board shall be constrained to initiate disciplinary action against defaulting officers/controlling officers. Every officer knows this is an empty threat. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the Board is really serious, let them suspend one disobedient officer and his controlling officer and keep them without a posting for a year - the whole system will fall in place. These empty threats will not work - everybody knows the Board can't be serious. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At the same time, the Board should understand the agony of the transferred officers - some of them might have genuine reasons and Board should consider those cases sympathetically. Perhaps, after every transfer, Board should give 15 days time to the officer to represent against his transfer and give a reasonable reasoned order on his transfer and then insist that he should be relieved immediately. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The general perception among the officers is that the Board is very unfair, cruel and not interested in the welfare of the officers and that transfers are highly influenced by political and other considerations. The other day a senior officer told me that great injustice was done to him by transferring him even though he was not due for a transfer, though his new posting was a very good one. I asked him what a very good posting was - "You know”, he laughed it off! </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/cbecorder_12_C50.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F. No. C-50/65/2012 - Ad.II Dated: September 08, 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Overseas Direct Investments by Indian Party - RBI Instructions </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> Indian party, which has set up / acquired a Joint Venture (JV) or Wholly Owned Subsidiary (WOS) overseas, shall submit, to the designated Authorised Dealer every year, an Annual Performance Report (APR) in Form ODI Part III in respect of each JV or WOS outside India and other reports or documents as may be specified by the Reserve Bank from time to time, on or before the 30th of June each year. The APR, so required to be submitted, has to be based on the latest audited annual accounts of the JV / WOS, unless specifically exempted by the Reserve Bank. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2012/rbi12cir029.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI AP (DIR Series) Circular No.29 Dated: September 12, 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The 500 word limit </font></strong></p> <p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> received this mail - </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"By a notification dated 31st July, 2012, the Central Government in supersession of the Central Information Commission (Appeal Procedure) Rules, 2005 and the Right to Information (Regulation of Fee and Cost) Rules, 2005 has framed a new set of Rules called Right to Information Rules, 2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What caught my attention is Rule 3. It reads - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">'3.<strong> Application Fee.</strong>- An application under sub-section (1) of Section 6 of the Act <font color="#FF0000">shall be accompanied by a fee of rupees ten and <u><strong>shall ordinarily not contain</strong></u> more than five hundred words, excluding annexures, containing address of the Central Public Information Officer and that of the applicant: </font></font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that no application shall be rejected only on the ground that it contains more than five hundred words.'</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Usage of the words '<strong>shall ordinarily not contain</strong>' would to a commoner mean that in exceptional circumstances the RTI application can exceed 500 words. Further, for the purpose of computing the limit of 500 words, the word count of addresses of the CPIO and the applicant stand excluded. The Rule by a proviso clause mandates that no application shall be rejected on the sole ground that it contains more than 500 words. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I was just imagining as to how the CPIO would be processing an application received under the RTI Act, 2005. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In all probability, he would be doing the following - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Keeping all other office work aside, he would first start counting the words in the application but by the time he has reached a hundred words, the phone would ring and he would be in a dilemma - whether to take the phone or continue counting! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ After jotting down the number of words he has counted on his note pad and making a mark on the RTI application, he would pick up the phone and engage in an animated discussion veering from his transfer to his seniority;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ the telephonic conversation having come to an end, he would start counting again only to be interrupted by a call on his intercom - his PA informing that the boss has summoned him for a meeting - repeating the exercise he had conducted before taking the earlier phone call, he would fume and utter some cuss words and make his way to his boss's cabin;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ by the time he returns, the note pad goes missing and he starts counting all over again. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ finding this to be a ridiculous exercise, he would finally ask his PA to carefully type out the contents of the RTI application in Microsoft word so that he can employ the ‘Word Count' button. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Satisfied that the first part of the job is done he would now put his mind and heart to decide the fate of the application. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, this is what would happen when the CPIO finds that the word count in the RTI application exceeds 500 words, say it is 555, and the proviso in Rule 3 requiring him to honour the application. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ He first opens the typed word document and brings down the word count to 500 by using the ‘delete' button on his PC (personal computer). Obviously, he would delete the essentials - meaning the ‘information sought' and then come to a conclusion that the application does not seek any information and hence there is nothing to be attended to. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">His conscience pricks him from adopting this sly attitude so moves on to the next alternative. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Taking a puff from his 555, he again opens the Word document and deletes the last fifty-five words and happily says that he would now attend only to the information sought in the first five hundred words that remain!</font></p> </blockquote> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Right to Ingenuity (RTI)...? </font></strong></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"> - Friday'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">Income Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether mere fact that payments in respect of expenses incurred by assessee were made by account payee cheques, it suffices to accept transactions as genuine - NO: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether, if a party fails to avail of the opportunity to cross-examine a person at the appropriate stage in the proceeding, the said party would be precluded from raising such issue at a later stage of the proceeding;Whether mere fact that payments in respect of expenses incurred by the assessee were made through account payee cheques can be the sole criteria to accept the genuineness of the transaction;Whether the transactions through account payee cheques can be accepted even when the identity of the creditors to whom such payments were made were doubtful and Whether the issue as to the expenses were necessary or not in terms of the commercial expediency u/s 37 (1) of the Act would arise only after the assessee had discharged its initial onus to prima facie establish such claim. And the verdict goes against 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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">BAS - Applicant were appointed by M/s YBL as distributors of beer in Sikkim region and accordingly purchased beer from M/s YBL and sold to retailers in area -<em> prima facie </em>no case made for waiver - pre-deposit ordered: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> an agreement dated 01.04.2006 between M/s.YBL and the applicant, the applicant was appointed as a sole distributor for marketing the products of M/s.YBL in the state of Sikkim on behalf of them. At clause 7 of the said agreement, it is mentioned that there shall be no margin to the distributors (i.e. the applicant) with regard to their business. Hence, the margin shall be reimbursed to the distributors on monthly basis by providing distributor discount (or other re-imbursement expenses). It is further mentioned that the distributors shall submit monthly manifesto and the first party (M/s.YBL) shall reimburse the amount stated in the manifesto. The parties to the agreement agreed that the monthly discount shall be discharged at the rate fixed under the said clause.</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">Revenue not above law - they have to follow provisions of law as laid down in statute and within time frame work prescribed as there is no provision in CHALR, 2004 to condone delay - suspension revoked: CESTAT by Majority. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>allegation against the CHA is that the refund claim of Rs.5.15 Crores was attempted to be filed in October 2010, which had become time barred by October 2010 and Smt. Shivani Gurav, STA inserted the said entry of M/s General Motors refund at serial No.1284 of page 364 which pertains to the claims received up to 16th June 2010. By making this entry, the claim would have been treated as filed within time limit. The Revenue was of the view that if the appellant CHA, ShriHareshB.Shah, Director had acted with due diligence, the attempted filing of time barred refund claim would not have taken place. As the investigation started, M/s. General Motors withdrew the refund claim which was allowed to be withdrawn on 09.12.2010. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">One wrong decision cannot be basis of another wrong decision - whether in respect of packing machines for Pan masala/gutka duty would be payable only on pro-rata basis for number of days in month during which machine had functioned or would be payable for whole month without giving abatement for period for which machine was sealed - Prima facie case not in favour: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE </strong>is no provision for abatement of duty on the machines which were in sealed condition during the month and for this reason were not operational - though this provision in PMPM rules may appear to be harsh, it has to be borne in mind that the Government notifies items under Section 3A having regard to Nature of process of manufacture or production of excisable goods of any specified description, extent of evasion of duty in regard to such goods, or such other factors as may be necessary to safeguard the interests of revenue - PMPM Rules have been framed taking into account the ground reality of rampant duty evasion by Gutka and Pan Masala units. </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> </body> </html>