TIOL-DDT 2060 · 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 2060</font><br> 07.03.2013 <br> Thursday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">What is Double Lock System for Warehouse? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>I</strong> asked a Customs Officer in charge of a warehouse as to what the <strong>double lock system</strong> was. He enlightened me, “one key of the warehouse lock would be with the custodian and the other one with the Customs Officer”. Isn't it “Double Lock” system and not “Double Key” system? The officer had no answer. What is the purpose of having a key each with the Customs and the Custodian? Is it an “either or” bank account? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As I understood it, the warehouse is to have two locks – one by the Customs and the other by the custodian and the warehouse could be opened only if both the Custodian and the Customs officer are present together. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A licence issued by the Assistant Commissioner of Central Excise Ahmedabad V Division stipulates – "<em>The warehouse shall be under double lock, i.e one of the Customs department and the other of the licencee. The Customs departments lock should be of the model-Chhub (Godrej, purchased at the expenses of the licencee."</em> So, here the stipulation is two locks, not two keys. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 62(3) of the Customs Act stipulates, <em>"the proper officer may cause any warehouse to be locked with the lock of the Customs Department and no person shall remove or break such lock."</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But even the Board thinks it should be one lock with two keys. Circular No. 6/2007-Cus dated 22.01.2007 directs,<em> "The concerned Airlines / Custodian warehouse should have double locking arrangement, one key of which will be with the Airlines / custodian and the other with Customs, for storage of transhipment cargo."</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">STANDING ORDER NO. 03/2004-P dated 24.06.2004 of the Pakistan Customs states, <em>"Bonded warehouses are to be maintained with double lock system, one of the customs and the other of bonder. In quite a few cases, only one lock was found on the doors of the bonded premises, especially the private bonded warehouses, giving uncalled for free access to the licensees, without any check. This aspect should be looked into and necessary action must be taken accordingly."</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the risk with the Indian Customs too, especially when we are not clear as to whether there should be two locks or two keys. The CBEC should clarify this. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Post Export EPCG duty credit scrip(s) Scheme </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has explained the Post Export EPCG duty credit scrip(s) Scheme notified on 5.6.12 vide a new para 5.11 in FTP read with a new para 5.23 in the HBPv1. The scheme envisages that the duty credit in these scrips shall be a duty remission computed based on the basic customs duty paid on capital goods which had been imported on payment of all applicable duties of customs in cash. Subject to installation and use of the imported capital goods, and other conditions including non-disposal of the capital goods till the date of last export, the duty remission may be granted by the Regional Authority in proportion to export obligation fulfilled within a fixed export obligation period. The notification Nos.5/2013-Customs and 6/2013-Customs both dated 18.2.13 have been issued under section 25(1) of Customs Act, 1962 to permit imports through debit of the customs duties in the duty credit scrip. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the Commissioners to peruse the notifications and Circular for details and implementation. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>For more details, please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17045" target="_blank">DDT</a></strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17045"><strong>2049 - 20.02.2013</strong></a></font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_010.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 10/2013 - Customs, Dated: March 06, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Setting up of Public/Private Bonded Warehouses for Gems & Jewellery Sector – CBEC Prescribes Procedure </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> scheme shall be applicable to jurisdiction of Commissioners of Customs (a) CSI Airport, Mumbai, (b) Jodhpur (Hq. at Jaipur), (c) Air Cargo Export, Delhi and (d) Airport & Air Cargo, Chennai. A Private/Public bonded Warehouse may be set up in SEZ/DTA subject to observance of Board's existing instructions on setting up such warehouses wherein imported goods would be kept by the warehouse licence holder. Physical control over the warehouse in the form of <strong>Double Lock System</strong> and posting of Cost Recovery Officer is waived. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The warehouse licence holders shall be responsible for the safe keeping of the goods, for making physical delivery thereof to the users, as the case may be, against duty assessed Bills of Entry on which ex-bond clearance has been allowed by the proper officer, and for rendering to Customs a complete account of goods received and kept by them in bond. In their capacity as bonders, they will also maintain the prescribed records, including name, address and other specified details of the users and quantity of the goods released to the user and exported by him. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 11/2013 - Customs, Dated: March 06, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Huge Seizure of Coal in North East</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CHIEF</strong> Commissioner, Customs, Central Excise & Service Tax, Shillong, Ananya Ray informs: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Coal is leviable to Central Excise duty with effect from March 2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, coal miners, traders and dealers particularly from Meghalaya continue to evade the Central Excise duties by way of clandestine removal, without payment of duty from the mines and depots leading to a huge revenue loss to the Government. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Extensive persuasive efforts by the Central Excise Authorities to bring about compliance have been met with resistance, particularly in Jaintia and West Khasi Hills District and evasion of duties continues with impunity.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, in view of the reluctance and non-compliance of the coal Miners in the Jaintia Hills and West Khasi Hills areas of Meghalaya to get themselves registered with Central Excise Authorities and pay the applicable excise duty, a massive anti-evasion drive was Undertaken jointly by the officers of Central Excise&Service Tax, Shillong, Central Excise & Service Tax, Guwahati, Customs Preventive, NER, Shillong and Assam Police to intercept the coal laden trucks coming tom Jaintia Hills & West Khasi Hills to Guwahati on the night of 5th & 6th March '13.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a result, 82 (eighty two) trucks containing a total of 1188.97 MT coal (approx) valued at approxRs.5,69,57,149/- (five crore sixty nine lakh fifty seven thousand one hundred and forty nine)including conveyance were seized. Besides, nine trucks containing 81 MT have also been detained near Badrpur (Barak Valley). </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further investigation is on….. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Department should not suffer on account of lapse of Special PP </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Union of India had filed an application for condonation of delay of 110 days in seeking leave to file appeal against a judgement of acquittal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The reason for the delay, the Special PP told the Court, is that he has been informed by the Dy. Commissioner of Customs, Prosecution Cell, that the earlier Special PP was responsible for not filing the appeal within the stipulated time and that he is being debarred from appearing on behalf of the Union of India in any Court and that the Bar Council is also being moved for the purpose. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court held - " <em>…since the lapse was on the part of Special PP against whom Department is taking action and since department should not suffer on account of lapse of Special PP, Application is allowed and delay is condoned."</em></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=33&filename=legal/hc/2013/2013-TIOL-175-HC-MUM-CUS.htm" target="_blank">2013-TIOL-175 -HC-MUM-CUS</a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Education Cess Went into Mid Day Meal Scheme</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Ministry of Human Resource Development received over Rs. 18334.00 crore in 2011-12 from Education Cess. The Lok Sabha was informed yesterday by the Minister of State for Human Resource Development, Dr. Shashi Tharoor that Ministry spent about 18006.27 crores from this money in Mid Day Meal Scheme (MDMS) and the Sarv Shiksha Abhiyan (SSA). </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/par.jpg" alt="Legal Corner Icon" width="500" height="175" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No Multi Member CAG:</strong> Chairman, High Level Committee (HLC) for Commonwealth Games, ShriV.K. Shunglu had suggested for certain changes in CAG organization, including for making it into a multi-member body. It was suggested that a three member body would have greater transparency in its operation. Out of the three members, one member should possess professional accounting qualifications, CA or its transnational equivalent. This should not seem to exclude an IAAS officer from the triumvirate, who has wide exposure to Finance, Audit and Accounts and best International practices in these areas. No decision has been taken by the Government to make the CAG a multi-member body like the Election Commission - NAMONARAINMEENA, MOS, Finance. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether it is a fact that companies like <strong>Vodafone, Shell, Nokia, IBM and Hewlett-Packard are having conflict with Income-Tax Department on the issue of undervaluing share sales to parent companies:</strong> Out of these five companies, Transfer Pricing adjustment has been made in the case of M/s Shell India Markets Private Limited and M/s Vodafone India Services Private Limited for assessment year 2009-10, under section 92 CA of the Income- tax Act, 1961 (the Act) on the issue of undervaluation of shares transferred to their associated enterprises (AE). The Assessment Orders are yet to be passed in these cases. In case of M/s Shell India Markets Private Limited and M/s Vodafone India Services Private Limited, Transfer Pricing Officers (TPOs) have held that these companies have transferred shares to their respective AEs at price below fair market value of shares. Accordingly, TPOs determined arm's length prices in accordance with the provisions of the Act as per following details: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• In the case of M/s Shell India Markets Private Limited, as against the rate of Rs. 10/- per share adopted by the assessee on 87.64 crore number of shares transferred to its AE based in Netherlands, the TPO worked out the arm's length rate of Rs. 183.44 per share, at market price in accordance with the provisions of the Act, leading to adjustment of Rs. 15201 crore on account of undervaluation of shares. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• In the case of M/s Vodafone India Services Private Limited, as against the rate of Rs. 8509/- per share adopted by the assessee on 2.89 lacs number of shares transferred, the TPO worked out the arm's length price at Rs. 53,775/- per share, leading to adjustment of Rs. 1308.91 crore on account of undervaluation of shares.</font></p> <p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- S. S. PALANIMANICKAM, MOS Finance. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vodafone in Discussions: An Expert committee had been set up by the Government to look into the issue of retrospective amendment of tax laws. The Committee has submitted its report to the Government. The report of the Committee is under consideration of the Government. Vodafone is engaged in discussions with the Department of Revenue, Ministry of Finance.</font></p> <p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- P. CHIDAMBARAM, FM </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"> – 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">Service Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tourists only avail facility of ropeway provided by licensee appellant on payment of fees - they cannot be considered beneficiary of any planning, scheduling or arranging of tours since tour to be taxable has to follow its preceding activities enumerated by section 65(115) of FA, 1994 - CESTAT by Majority</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Appellants have leased a ropeway installed by Municipal Board, Mussoorie at Mall Road, Mussoorie and are engaged in operating it to entertain tourists by carrying tourists from Mall Road to Gun Hill and back to Mall Road. After amendment of section 65 (115) of Finance Act, 1994 to include any means of transport in the definition of tour operator, the Superintendent of Central Excise, Dehradun asked the appellant to deposit service tax on the charges collected by them from the tourists and they paid such tax under protest for the period Oct 2004 to September 2005. </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 Section 54F benefits are available against capital gains computed as per deeming fiction u/s 50 - NO: ITAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a Member of Parliament (MP) and a film actor owning M/s. Babbar Visuals. During the A.Y. under consideration, the assessee had sold a plot of land in Lonavala which was purchased in the year 1984. The assessee computed capital gains after deducting indexed cost of acquisition. In the return of income filed with the AO the assessee claimed deduction u/s 54F of the Act as the sale consideration was applied for construction of residential property. In course of assessment the AO invoked provisions u/s50C and re-computed capital gain as per Stamp duty paid. </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">Whether job workers could avail credit on raw materials purchased by appellant under actual user conditions has not been considered by Authorities below - matter remanded: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is a more than two decade old case and the story goes on...</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PROCEEDINGS were initiated against the appellants by a SCN dated 8.6.1989. The allegation in the SCN revolves around the erstwhile rule 57B of the CER, 1944 which allowed a manufacturer to take an enhanced quantum of MODVAT credit of the duty paid in case he had sourced the “inputs” from a SSI manufacturer. The appellants are engaged in the manufacture of electric wires and cables and had filed the requisite MODVAT declaration u/r 57G of the CER, 1944 indicating that the inputs are Copper and Aluminium wire rods. The appellants procured the duty paid Inputs under regular gate passes in their own name and sent the same to their job workers by endorsing the original Gate passes in their favour. </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>