TIOL-DDT 2017 · 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 2017</font><br> 04.01.2013<br> Friday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC and Government Determined to Kill Small Assessees? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is always the small businessmen who have to bear the might of the Government, more so in the Indirect Taxes Department of the Central Government. Even the recent New Year Bomb from the Board on Recovery of confirmed demands stands testimony to this theory. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us take a live classic example. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Two Companies <strong>A</strong> and <strong>B</strong> manufacture the same product <strong>P</strong>. As per the Board clarification and Supreme Court judgement, the Product <strong>P</strong> attracts a nil rate of duty. But recently, a Commissioner felt that he was not bound by the stupid clarifications of the Board and the wrong orders of the Supreme Court. So, he revived an issue that was settled by the Apex Court and the Apex Board long ago. Show Cause Notices came to be issued to both the assessees <strong>A</strong> and <strong>B</strong>. Demand from <strong>A</strong> was Rs. 20 Crores and demand from B was Rs. 4 Lakhs. <strong>A</strong> was to answer the Show Cause Notice to the Commissioner and <strong>B</strong> was asked to answer to Deputy Commissioner. Both gave identical replies (they had the same lawyer). And both the adjudicating Authorities confirmed the demands with equal amounts of penalty and consequent interest. What happened to them after that was not identical. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘A' went in appeal to the CESTAT and got an absolute stay and waiver of pre-deposit, because Tribunal could easily understand that the case was covered in favour of the assessee by the Board Circular and Supreme Court judgement, which the Commissioner had the audacity to brush aside. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘B' appealed to the Commissioner (Appeals) who did not find any prima facie case and ordered pre-deposit of the entire duty and penalty. The assessee told him that in an identical case in respect of a giant assessee, the Tribunal had granted absolute stay, but he was not impressed. He wrote that stay orders have no precedential value. Because the assessee could not comply with the atrocious order of the learned Commissioner (Appeals) to deposit Rs. 8 lakhs, his appeal was dismissed. Immediately the Central Excise officers swarmed all over him demanding that he pay up the eight lakhs or face attachment. He told them that his neighbour manufacturing the same product and who had a turnover of 100 Crores is not asked to pay up. They politely told him that the neighbour has a stay from the Tribunal - you also go and get a stay. The poor assessee who is not able to pay his workers is forced to pay a lawyer to appeal to the Tribunal. (He started the business after being assured that there is no Central Excise Duty on his product). After he filed his appeal in the Tribunal, he found that the Tribunal is not functioning regularly as they don't have enough Members. In the meantime, the Central Excise Officers harassed him so much that he paid up Rs. two Lakhs. Finally, the Tribunal remanded the case to the Commissioner (Appeals) with a direction to hear the appeal without pre-deposit. Rs. 2 lakhs were already extracted from him! He is back with the Commissioner (Appeals), but now he finds that the Commissioner has been transferred and there is nobody posted in his place. Meanwhile, the Central Excise Officers are after him to collect the remaining six lakhs. Unable to bear the tension, he has closed down his factory - but that is only the beginning of new troubles for him. Even now, the Central Excise officers don't leave him alone - they threaten to attach his bank accounts and personal property. Finally, in helpless exasperation, he told me, "I feel sorry for these officers - they will see the worst hell for harassing me like this!" </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the plight of the small assessee and this is prior to 1.1.2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After 1.1.2013, things are different. Immediately after you lose the first stage of appeal, you are required to pay up all those atrocious unrealistic demand! Thanks to Board Circular 967/01/2013-CX dated 01.01.2013. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Recovery after Adjudication - Board's Salvo - Angry Reactions</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>CBEC's New Year Bomb on recovery proceedings has evoked angry reactions from all quarters. The CESTAT Bar Association has taken up the matter with the vice-president of CESTAT and requested him to list all pending stay applications at the earliest so that there is no inconvenience to the Members of the Bar and Trade and Industry on the one hand and legitimate revenue to the State does not remain unnecessarily blocked for indefinite period on the other hand. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A lawyer remarked, "<em>One more example that the Government is not in sync with the mood of the people. Terrible that such an action is coming in the days of liquidity pressure, high interest rates and absurd, revenue biased demands</em>". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Netizen suggested, "stop the Show Cause Business - a letter from the Supdt to remit the tax or duty will do - Show Cause drafting time, Adjudication & Appeal time, review time etc can be avoided - at least 50 % of the high paying jobs in Excise and Service Tax department also can be abolished - more revenue to Government from both sides. The appeal in CESTAT or High Court cannot be avoided even as of date. From Supdt's letter, we can go to appellate courts wherefrom the tax payer gets relief . ..........Is it not this really happening? So, by abolishing adjudication and appeal section in the Dept, Government will be saving lots of money which they collect from tax payers".</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SPCA - Society for Prevention of Cruelty to Assessees:</strong> Yet another Netizen suggested that it is time we form an association called ‘Society for Prevention of Cruelty to Assessees'.</font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exchange Rates Notified</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the Exchange Rates for imported goods and export goods with effect from 04.01.2013. The last exchange rates notified were with effect from 21.12.2012 </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_001.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 1/2013-Cus.,(N.T.), Dated: January 03, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Withdrawal of provision for drawing of export samples of basmati rice for variety identification purposes</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>POLICY</strong> Circular No. 33 (RE-2008) 2004-09 dated 30th September, 2008 prescribed drawing of samples from the consignment of basmati rice and PUSA 1121 rice by the Customs and analysis of the samples by AGMARK testing centres for variety identification purpose. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Through Policy Circular No. 28/2009-14 dated 31.03.2010 Basmati Export Development Foundation (BEDF), Modipuram was also designated as authorized centre for testing of samples of basmati rice for variety identification. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since, export of non-basmati rice has been made free with effect from 09.09.2011, it has been decided to withdraw with immediate effect both the above policy circulars. 16 months after making export free! </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2012/dgft12cir011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No.11 (RE: 2012)/2009-2014, Dated: January 03, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of cotton through Wagah Border - DGFT Clarifies</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has been brought to the notice of the Government that delay is being experienced at Wagah Land Customs Port in clearing of consignments due to heavy congestion. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In respect of export of cotton, RC holders have been given 30 days time to export. In view of the congestion at Wagah such exporters of cotton to Pakistan are permitted to </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) seek one time extension in the validity period of the RC for a maximum period of 30 days, or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) surrender of un-utilized or partially utilized RC to the concerned RA without inviting penalty. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This dispensation is available only for such exporters of cotton who have obtained RC to export to Pakistan. In addition, the benefit will be available only if request for revalidation or request for surrendering the un-utilized or under utilized RC is made to the <em><strong>concerned</strong></em> RA within the validity of the respective RC. RAs are authorized to take necessary action accordingly. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2012/dgft12cir012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No.12 (RE: 2012)/2009-2014, Dated: January 03, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Export of Fresh Grapes, Groundnuts …</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has amended Schedule 2 (Export Policy) of ITC(HS) Classification of Export and Import Items: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Export of Grapes to European Union would require registration from APEDA. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Export of Groundnuts and its products to all countries except Russian Federation would require registration from APEDA along with controlled Aflatoxin level certificateby the recognized laboratories. Earlier only for export to European Union compulsory registration of contracts with APEDA along with controlled Aflatoxin level certificate was required. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Export of Groundnuts and its products to Russian Federation would continue to be on the basis of pre-shipment certificate by notified laboratories. </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2012/dgft12not028.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No.28 (RE - 2012)/2009-2014, Dated: January 03, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT Member PK Das Reinstated </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16536" target="_blank">DDT 2004 - 17.12.2012 </a></strong>had commented, "<em>Now the Government has no choice but to reinstate PK Das and pay him the back wages for the past three years…. Let us hope the Government shows respect for the Supreme Court judgement and that the order is carried out in letter and spirit without further dilly-dallying.</em>" </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has indeed acted and reinstated PK Das as Member of the CESTAT. He is posted to the Chennai Bench. <a></a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue Unaware that their Appeal Filed in year 2000 had been Dismissed Seven Years Ago</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is now clear that the Revenue formations do not keep a track of the fate of the appeals filed by them before the CESTAT. For had that been so, we would not have had the opportunity to report the cases <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2012/2012-TIOL-625-CESTAT-MUM.htm" target="_blank"><font size="1">2012-TIOL-625-CESTAT-MUM</font></a></strong>, <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2012/2012-TIOL-1047-CESTAT-MUM.htm" target="_blank"><font size="1">2012-TIOL-1047-CESTAT-MUM</font></a></strong>, <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2012/2012-TIOL-1738-CESTAT-MUM.htm" target="_blank"><font size="1">2012-TIOL-1738-CESTAT-MUM</font></a></strong> & <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2012/2012-TIOL-1889-CESTAT-MUM.htm" target="_blank"><font size="1">2012-TIOL-1889-CESTAT-MUM</font></a></strong>. In all these cases, the Revenue had filed an early hearing application without knowing that their appeals had been dismissed long ago and the Bench had to inform the Revenue representative about the same. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact, we would have been glad had the first Circular that came out of the Circular Machine in the Board in the New Year was directed to these silly and unwanted EH applications which occupy considerable parking space in the CESTAT registry already burdened with more than 70,000 pending appeals. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present case is one more of such instances where valuable time and energy is wasted of the Bench. As for the department, they have ample time at their disposal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Brief facts are that the assessee had filed a refund claim in pursuance of a favourable order-in-appeal dated 20.07.2000 and the same was sanctioned by the adjudicating authority. Aggrieved, the Revenue had filed an appeal before the Commissioner (Appeals) but this appeal was dismissed on 31.05.2004. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Against this O-in-A dated 31.05.2004, the Revenue is before the CESTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During the hearing held on 05.09.2012, the Revenue representative submitted that the adjudicating authority should not have sanctioned the refund but awaited the order of the CESTAT in the matter of the appeal filed by the Revenue against the O-in-A dated 20.07.2000. <strong>Inasmuch since the issue had not been settled, the sanction of refund is not sustainable, submitted the AR</strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench informed the Revenue representative that the Tribunal vide Final order dated 23.11.2005 had already dismissed the appeal no. E/3229/00 filed by the Revenue against the O-in-A no. SDK(178)178/AUR/2000 dated 20.07.2000 and hence there is no infirmity in the impugned O-in-A dated 31.05.2004. Resultantly, the present appeal was also dismissed.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Had only the CCE, Nashik asked his officers to spend some time on the case file, all this frivolous exercise could have been avoided long back and the pending case could have been erased off the record in the year 2005 itself. Probably, the demand for erroneously granted refund may also be lying somewhere! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But then...this is how the department works! </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(See </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2013/2013-TIOL-27-CESTAT-MUM.htm" target="_blank">2013-TIOL-27-CESTAT-MUM</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">)</font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> DDT cartoon</font></strong></p> <p align="center"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2017.jpg" alt="Legal Corner Icon" width="400" height="451" hspace="5" border="0" align="center"></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"> – 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">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT - Rule 6 of CCR, 2004 - Rule 6(5) of CCR, 2004 excludes "Consulting Engineer's services" from purview of rule 6(1) of CCR when used in or in relation to manufacture of dutiable as well as exempted goods - <em>prima facie</em> applicants have made out case in favour - Pre-deposit of Rs.157 Crores waived and Stay granted: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>applicants are engaged in the manufacture of motor vehicles and motor vehicle parts under Chapter 87 of the CETA, 1985. The applicants are having an Engineering Research Centre (ERC) situated in their premises where R&D activities are being undertaken. The applicants are availing CENVAT credit on input services utilized and consumed in the R&D activities in ERC. In respect of Prototypes manufactured in ERC the applicants are claiming exemption from payment of duty under Notification no. 167/71-CE dated 11.09.1971. </font></p> <p><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 no penalty u/s 271E is warranted when assessee reimburses money in cash to its Director who has issued cheque from his account to pay rental for company's premises - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AO</strong> observed that assessee-company made a repayment of loan of Rs. 2 lakh in cash to one of the Directors of assessee company, in contravention of the provisions of Section 269T. Assessee contended that there was no loan given by the Director. There was a current account in the name of Director who from time to time made payment for and on behalf of assessee as assessee did not have its bank account. Payment of Rs. 2.00 lacs was towards part reimbursement of expenses. It could not be treated as loan within the meaning of Section 269SS and 269T. AO observed that assessee was having substantial funds in the form of sales of Rs. 10 lacs and could not be deposited in its bank account then repayment/reimbursement could be made by cheque of the director. Any amount spent by any director on behalf of the assessee company was an unsecured loan in the hands of assessee-company and its repayment in cash was a clear violation of the provisions of Section 269T. </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">When entire order which got issued was not relatable to matter under dispute, notwithstanding reference numbers in preamble of same, it has to be held as if entire order was mistake - ROM application allowed, earlier order withdrawn and fresh order passed: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> order was passed by the CESTAT but the dictation, which was given in another case, got copied as order in this particular appeal, which got signed by both the Members and was issued. Anyways, the fact of the matter is that the appeal was allowed with consequential relief to the appellants. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the appellant doesn't mind even if anything else appears in the order - he, obviously, is and should be concerned about the last paragraph of the order. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Monday for the judgements </font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend </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>