TIOL-DDT 2059 · 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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2059</font><br> 06.03.2013<br> Wednesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">A Show Cause Notice to be Replied to After 25 Years </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> 4th November 1988, the Superintendent of Central Excise, Range VI, Thane Division issued a Show Cause Notice to Voltas Ltd to show cause as to why the 7.5% abatement claim in the price lists filed by the assessee should not be disallowed and why Central Excise Duty of Rs. 7,94,648.42 should not be demanded from them. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instead of replying to the Show Cause Notice, the assessee approached the Bombay High Court, which granted interim relief restraining the Department from taking any action in pursuance of the Show Cause Notice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee's argument was that the issue had reached finality by a decision of the Tribunal in their favour for the previous period and the issue has, therefore, become final and conclusive between them and the Department. They argued that by the Show Cause Notice, an issue is sought to be agitated which is already decided conclusively. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The impugned show cause notice proceeds on the footing that subsequently there is a change in the pattern of sales. If that be so, the principles of res judicata will have no application. Moreover, the finding of CEGAT is on the basis of consideration of the invoices for the relevant period which were produced before it. The learned Senior Counsel appearing for the Petitioners submitted that neither the Department has proved that there was a change in the pattern nor the Petitioners have been called upon to produce the material before this Court. However, all this is a matter of adjudication after reply to the show cause notice is given. The show cause notice specifically makes factual allegations regarding change of pattern of sales. The principles of res judicata cannot be applicable as a change in pattern of sales is alleged. Therefore, we are of the considered view that by invoking principles of res judicata, the show cause notice cannot be quashed, and therefore, the Petitioners will have to file a reply to the show cause notice and the issue whether there is a change of pattern of sales will have to be decided by the concerned Authority. All issues in that behalf are kept open."</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was on 17.10.2012 - 24 years after the Show Cause Notice was issued! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee took the matter to the Supreme Court. The Supreme Court, day before yesterday - 04.03.2013, dismissed the SLP. However, the Supreme Court granted six weeks' time to the assessee to file reply to the Show Cause Notice of 4th November 1988. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the assessee will be filing the reply after about 25 years! Will the Central Excise Department be able to trace this 25 year old file and adjudicate the case? The Range, Division and Commissionerate must have all changed in the last quarter of a century - and the case is not going to end there - it can live for another twenty five years in the maze of Indian Litigation Industry. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Set Top Box Added to List in FPS </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FPS </strong>= FOCUS PRODUCT SCHEME</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Object of the Scheme is to promote export of products, which have high export intensity/employment potential, so as to offset infrastructural inefficiencies and other associated costs involved in marketing of these products. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of products (listed in Table 1 of Appendix 37D of HBPv1) to all countries (including SEZ units) shall be entitled for Duty Credit Scrip equivalent to 2 % or 5% of FOB value of exports (in free foreign exchange). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now,<em> Set Top Box /Set Top Unit (STB/STU required for receiving Digital Signals from DTH & Cable in CKD / SKD is included in the list in Appendix 37D with a 5% duty credit. </em></font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2012/dgft12pn051.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No.51 (RE2012)/2009-14 Dated: March 05, 2013. </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">External Commercial Borrowings (ECB) Policy - Corporates under Investigation </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the existing guidelines, corporates that are under investigation by any law enforcing agencies like the Directorate of Enforcement, etc. are not allowed to access ECB under the Automatic route. Any request by such corporates for ECB is examined by the Reserve Bank under the approval route. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has now decided to permit all entities to avail of ECBs under the automatic route as per the current norms, notwithstanding the pending investigations / adjudications / appeals by the law enforcing agencies, without prejudice to the outcome of such investigations / adjudications / appeals. Accordingly, in case of all applications where the borrowing entity has indicated about the pending investigations / adjudications / appeals, Authorised Dealers while approving the proposal shall intimate the <strong>concerned </strong>agencies by endorsing the copy of the approval letter. The same procedure will be followed by the Reserve Bank of India also while approving such proposals. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated May 3, 2000 have been issued vide Notification No.FEMA.256/2013-RB dated February 06, 2013, notified vide G.S.R.No.125(E) dated February 26, 2013. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2012/rbi12cir087.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI/2012-13/429 -A.P. (DIR Series) Circular No. 87 Dated: March 05, 2013. </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Early hearing in CESTAT only for cases involving duty more than Rs.3 crores </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the case reported by us as <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2013/2013-TIOL-174-CESTAT-MUM.htm" target="_blank"><font size="1">2013-TIOL-174-CESTAT-MUM</font></a></strong>, we had highlighted the observation of the <strong>CESTAT, WZB</strong> that early hearing applications would not be entertained where the revenue involved is less than Rs.3 crore. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the Revenue wanted to try its luck and so filed an application for early hearing of an appeal on the premise that total revenue involved is more than Rs.2.7 crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The same Bench which passed the earlier cited order observed - </font></p> <blockquote> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">“3. On perusal of the records, we find that duty involved is only about Rs.1.13 crores out of which, the appellant has already made a pre-deposit of about Rs.48 lakhs, thereafter unconditional waiver of pre-deposit was granted to the appellants. Further, this bench is having the pendency more than 18,000 appeals and presently we are hearing the appeals filed in the year 2004. For consideration of early hearing, we have fixed the parameters for consideration where duty involved is more than Rs.3 crores, early hearing can be granted. In these circumstances, we do not find any reason to grant any early hearing of the appeal, accordingly, the application for early hearing is dismissed.” </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CDR should send instructions to his counterparts in the field making them aware of the above yardstick laid down by the CESTAT, WZB so that the unproductive work of filing Early Hearing applications in respect of <strong>any & every</strong> appeal that is pending is avoided. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2013/2013-TIOL-390-CESTAT-MUM.htm" target="_blank"><font size="1">2013-TIOL-390-CESTAT-MUM </font></a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Nothing New in Arrest </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> FICCI's National Executive Committee Meeting yesterday, Praveen Mahajan, Chairperson, Central Board of Excise and Customs (CBEC), said that the arrest provisions have always existed and nothing new has been attempted. Citing examples, Mahajan said that in 2011-12, 527 cases of commercial fraud came into light and only 26 arrests were made and in 2010-11, 581 cases of commercial fraud took place out of which mere 64 were arrested. However, she assured the industry that the provisions would be reviewed from time to time, according to a press release of FICCI. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On introduction of Special Audits, Dr. Poonam Kishore Saxena, Chairperson, Central Board of Direct Taxes (CBDT), emphasized that it was not an attempt to overturn the judicial decision. The intent is to only assist the assessing officer as the volume of accounts at times is humungous. There is no arbitrariness in the matter, she declared. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue Secretary Sumit Bose assured the industry that the dispute resolution mechanism was being strengthened through wide ranging restructuring of cadres of the Central Boards of Direct Taxes and Excise & Customs. This will enable the Finance Ministry to appoint more commissioners to deal with the rising trend of litigation and delays in adjudication of cases and refunds. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More Commissioners means more adjudication orders confirming huge demands - Sir, then we will need more Tribunal Benches and perhaps more High Court Benches, perhaps one for each Commissioner! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Three Hours to Clear Customs In US of A </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> you are travelling to the dreamland United States of America, be prepared to languish in airports for two to three hours before you are cleared by Customs. The US Government has imposed cuts on hiring and overtime last week and the result is at New York's JFK airport and Miami International, you will have to spend two to three hours before Customs will clear you. The situation is expected to worsen in the coming weeks. Uncle SAM has no money - even to man Customs! </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><font color="#663399" 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">Customs </strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Air India importing “aircraft engine” for repairs and claiming exemption - notification allows duty free import of goods for manufacture or servicing of aero plane, helicopter and not for repairs - CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue is in respect of an aircraft engine imported by the appellant, M/s. Air India Ltd. in May, 2005 by claiming exemption under Notification No.21/2002-Cus dated 01/03/2002 (serial No. 347). As per the relevant entry, parts of aeroplane, helicopter, etc. could be imported duty-free subject to condition that the parts should be used for manufacture or servicing of aeroplane, helicopter, etc. The explanation to the notification also defined parts to include engines and engine parts. Confiscation and RF upheld. </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 an intimation, which mentions that refund due to an assessee stands adjusted against tax demand raised in subsequent year, can be construed as prior intimation of proposed action u/s 245 - NO: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>assessee company is an export oriented unit and had claimed deduction u/s 10(B), which was disallowed by the AO. On appeal, the CIT(A) partly allowed the claim, and accordingly, the AO issued a communication to the assessee regarding the refund, but also stated that the same would be adjusted towards the demand raised for the AY 2008-2009. Aggrieved by this adjustment, the assessee filed a writ petition before the High Court. </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">Soaps manufactured without usage of power - Using electricity for unloading raw material cannot be held as “manufacture with aid of power” - CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AYURVEDIC</strong> soap manufactured without the aid of power and classified under CETH 3401.12 attracting Nil rate of duty - Revenue appeal on the ground that power was used in manufacture - Usage of power for unloading the raw material cannot be held as “ manufacture with the aid of power” as also held in preceding decision of the Tribunal against which no appeal was filed by the department - Revenue appeal seeking classification under 3401.19, chargeable to duty on MRP basis has no merit. </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><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>