TIOL-DDT 2070 · 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 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><font color="#663399" size="3">TIOL-DDT 2070 </font><br>
21.03.2013 <br>
Thursday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - Return of Seized Goods if no SCN given within six months - CBEC clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Section 124(a) of the Customs Act, no goods can be confiscated or penalty imposed unless a notice is given. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 110(2), if no such notice is given within six months, any goods seized have to be returned. The Commissioner can extend this six-months limitation for a period not exceeding six months. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board says that it has been the considered practice of field formations that in cases where seized goods have been provisionally released by the competent authority under Section 110 (a) [sic]and investigations in the matter are still pending there is no need for notice under Section 124(a) of the Customs Act and that a Show Cause Notice can be issued in such cases of provisional release on completion of investigations. For this, reliance was placed on the Hon'ble Bombay High Court judgment in writ petition No. 316 of 2008 (reported in “<em>Jayant Hansraj Shah v Union of India </em>- <strong> <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2008/2008-TIOL-212-HC-MUM-CUS.htm" target="_blank"><em>2008-TIOL-212-HC-MUM-CUS</em></a></font></strong>) to say that whenever the power to issue show cause notice is preserved, and a request is made, to release the goods taken into custody, there would be no question of unconditional release, by operation of Section 110(2) of the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But recently Hon'ble Delhi High Court in WP (C) No. 2952/2012 in the case of Jatin Ahuja Vs DRI has, vide decision dated 04.09.2012 - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2012/2012-TIOL-986-HC-DEL-CUS.htm" target="_blank"><strong><font size="1"><em>2012-TIOL-986-HC-DEL-CUS</em></font></strong> </a>has held that -“Sec 110A does not absolve or override provisions of Sec 110(2) - Though seized goods are released provisionally under Sec 110A, if no Show Cause Notice is issued within stipulated time under Sec 110(2), goods shall be returned” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board says that while <strong>the department is in the process of filling SLP</strong> against the said order, the matter has been examined in the Board and the Board gives the following instructions: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1) While, Section 110(2) provides for unconditional release of the goods on non-issue of notice within the stipulated period, <strong>there is no time limit provided for issue of Show Cause Notice under Section 124 and that the proceedings of confiscation of goods and/or imposition of penalty on the offender do not attract any time limit.</strong> However, release of goods for non-compliance of provisions of Section 110(2) is bound to create complications like difficulties in realisation of duty leviable on goods under reference and of fine and penalty amounts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2) The investigating officers should, therefore, exert to complete the investigations at the earliest and submit draft Show Cause Notice to the adjudicating Authority who should ensure that the Show Cause Notice is issued to the owner of the goods or such person under Section 124 of the Customs Act, 1962 within six months of the date of seizure of goods or within the period extended by the Commissioner of Customs in terms of Proviso to Section 110 (2). This is necessary in order to avoid the play of unconditional release of seized goods to the person from whom the goods were seized. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3) The field formations should invariably report all cases (including seizure cases) pending investigation in Annexure-IV of Customs MTR on Anti-smuggling Performance giving reasons for pendency of instigation wherever, the pendency is more than 3 months. All Chief Commissioners / Commissioners should monitor the position of cases under investigation (including cases involving seizure of goods through the MTR and otherwise) and take steps for issue of Show Cause Notices within the time limit prescribed under Section 110(2) of the Customs Act, 1962. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As usual, any deviation from the above stated procedure would be viewed seriously in view of possible loss of Revenue to the Government Exchequer . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Circular is numbered as 7/2013 dated 19th February 2013 and had been mysteriously missing all these days. After this, Board had issued Circular Numbers 8,10 and 11. Circular No. 9 is still missing. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_007.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 07/2013-Cus., Dated: February 19, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Is
CBEC not aware of own SLP in SC? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the Circular No. 7/2013, covered above, Board states, <strong>the department is in the process of filling SLP against the said order</strong>. Assume the Circular is dated 19th February 2013 - the fact is that by that date,Department had already filed the SLP in the Supreme Court and the Supreme Court had on 24th January 2013 condoned the delay and issued notice returnable in eight weeks. The petition was heard by the Supreme Court about 25 days before the above Circular was issued and the Circular states that the Department is in the process of filing SLP! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the information of all the concerned officers, the Petition for Special Leave to Appeal is numbered as CC 2290/2013. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What does the Board want from the Supreme Court?</strong> The High Court was simply stating the Law as contained in the Customs Act. The Supreme Court had long ago (in 1959) observed, "<em>Whenever a statute requires a particular act to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to accept the argument that the failure to comply with the said requirement should lead to any other consequence"</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the Department is not happy with Sections 110 and 124 of the Customs Act, they may as well amend them. Amending Acts is the easiest act for the Revenue Boards - no other department of the Government of India can manage to get legislation enacted and amended at will as the Revenue Boards can. An Additional Secretary in a Central Government Department once asked me as to how to get a statute amended retrospectively. I told him to simply draft the amendment and take it to Parliament and it will be passed - that is what the revenue Department does every year. He said, “But they have a budget every year and they can smuggle in all their retrospective amendments hidden in the voluminous budget papers - my department has not gone to Parliament with a Statute in the last fifty years; if I do it now, the entire focus of the nation will be on that amendment:. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why should the Department take this kind of litigation to the Supreme Court, instead of asking their officers to complete the investigation within the maximum period of one year? The Department is before the Supreme Court for the simple reason that they could not issue the Show Cause Notice within the time stipulated. Incompetence masquerading as virtue before the highest Court!</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No time limit for issue of Show Cause Notice??? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Board Circular also states,<strong> there is no time limit provided for issue of Show Cause Notice under Section 124 and that the proceedings of confiscation of goods and or imposition of penalty on the offender do not attract any time limit. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What does it mean? Can they give a Show Cause Notice after 50 years? How long is one to be under the threat of a notice from Customs? Based on this view, can they issue notices now in cases where they had not issued Show Cause Notices earlier assuming they could not? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">R K Laxman once had a brush with the Bombay Customs when they detained a book imported by him. About a year after the incident, he got a letter from the Assistant Collector that he had taken a lenient view and decided to let off Laxman. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Laxman wrote in Idle Hours that he was surprised that he did not even know that he was under Customs investigation. He wondered whether Customs sleuths were peeping into his bedroom to investigate his reading habits. His point was that even without your knowing it, you could be an accused or an offender until let off by a benign Assistant Collector. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can they issue a Show Cause Notice to Laxman now? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Inspectors
not to attend office on Holidays this Month-end </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> had instructed that Customs and Central Excise offices throughout India will remain open on the holidays on 29, 30 and 31 March 2013 <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17292" target="_blank"><font size="1">(DDT 2067 - 18.03.2013)</font></a></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The All India Central Excise Inspectors Association has informed the Chairman that <em>in view of the continuing apathy and indifference of the CBEC and the Government of India to the appallingly poor career prospects available to Inspectors of Central Excise including abject stagnation being faced by them for decades, very wide disparities in promotions within and among the three cadres of Inspectors of Central Excise/Preventive Officers of Customs/Examiners of Customs to the Gazetted Gr B posts and further to the Gr A, and several other major grievances ventilated by the Association from time to time, they are highly agitated and demoralized and in protest against this treatment being meted out to this cadre, no member of this Association will attend office on Government Holiday/Saturday/ Sunday - 29th, 30th and 31st March 2013 respectively . </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is heard that the Superintendents will also join the inspectors in ‘staying away from office' during these holidays. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In any case, what are all the officers going to do in the office on all these days? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ROM
- Rule 31A of CESTAT (Procedure) Rules, 1982 - ‘same Bench to hear' means to be heard by same Members </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the present case, the applicant has filed a ROM application against a final order passed by the CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is his submission that in the appeal before the CESTAT he had submitted that he was a bona fide purchaser of a transferable licence without the knowledge of fraud and he had not cleared the goods imported under the said licence and had requested for re-export of the same; that the order was passed by the adjudicating authority in violation of principles of natural justice and, therefore, had requested the Bench for setting aside the order. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, even though the Bench had noted these submissions in the findings it has been recorded that the importers (transferees of licence) very well knew that the original licence issued was a licence with actual user condition and the same is not transferable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This observation, the applicant says, is erroneous and hence the ROM has been filed with a prayer to recall the final order. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Division Bench before whom the matter was posted observed - </font></p>
<p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">“3. Inasmuch as the original order has been passed by a bench consisting of the undersigned as Member (Technical) and Shri Ashok Jindal, Hon'ble Member (Judicial), the ROM has to be heard by the same bench. Accordingly, we direct the Registry to list the ROM before the same bench.” </font></em></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2013/2013-TIOL-487-CESTAT-MUM.htm" target="_blank">2013-TIOL-487-CESTAT-MUM </a></font></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">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">DRI refuses to give documents to accused and petitions HC that they are not required to do so. Filing of Petition by DRI appears to be <em>mala fide</em> ; dismissed : HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DRI by a petition seeks to invoke inherent powers of the Delhi High Court under Section 482 of the Code of Criminal Procedure for setting aside of an order dated 20.01.2010 passed by the Additional CMM, New Delhi whereby in the complaint case filed by the Petitioner, directions were issued to it to supply copies of the documents which consisted of more than 300 pages. <em>In order to have a fair trial and to have its case expedited, the Petitioner (DRI) ought to have supplied the Respondents with the copies of the documents promptly so that the trial could have proceeded. The Petitioner (DRI) is unable to make out a case for invoking the powers under Section 482 of the Code. Rather, the filing of the Petition appears to be mala fide; the same is accordingly dismissed</em></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"><font size="2"><strong><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif">I-T
- </font></strong></font><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether
a sum can be added to income of assessee u/s 40A(2) although same has
not been claimed as expenditure - NO: Delhi HC</strong></font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues before the Bench
are - Whether a sum can be added to the income of the assessee u/s 40A(2),
although the same has not been claimed as expenditure; Whether depreciation
can be disallowed on the intangible assets, although the same has been
allowed on the tangible assets and whether an amount which has been paid
as a part of the sale price in a slump sale transaction can be added back
to income of the assessee, merely on the pretext that the transaction was
alleged to be sham in nature. And the verdict goes in favour of the assessee.</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">Common inputs used in manufacture of CI castings which were cleared on payment of duty and also captively used in manufacture of PD pumps which were cleared under exemption - Amount of 8% to be paid should be on price of PD pumps and not CI castings: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants manufactured Castings. They took MODVAT credit on the inputs received for that purpose. Part of the Castings produced is captively used for the manufacture of exempted PD pumps and the remaining is sold in the market. The captively consumed castings are exempt from duty. Issue that arose was as to what action is required to be taken in respect of the credits taken on the inputs used in the production of captively consumed castings. The appellant was making payment at the rate of 8% of the value of the Castings in terms of Rule 57CC of the CER, 1944. The jurisdictional authorities were of the view that the assessee should be paying 8% of the price of the exempted PD pumps and so a demand notice was issued. However, the lower adjudicating authority dropped the proceedings by holding that the payment being made by the assessee was proper. </font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements </font></strong></p>
<p><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 color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"></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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