TIOL-DDT 2097 · 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 2097 </font><br> 03.05.2013 <br> Friday</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">Liril Active Shower Gel is Soap and not Cosmetic preparation </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue is classification of the product ‘Liril Active Shower Gel'. The appellant classified the product under heading 3401.10 of the Tariff as Soap. The department alleged that ‘the composition, characteristics and advertised use for care of skin' justified its classification in heading 33.04 which covers "Beauty or make up preparations and preparations for the care of the skin (other than medicaments), including sunscreen and suntan preparations; manicure or pedicure preparations". The Commissioner upheld the allegations and in appeal, the Tribunal held thus -</font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>"5.</strong> It is not disputed by either side that the use of the product is for washing of the skin and of bath. On the face of it, the product does not fall within any of the categories of the first part of Heading 33.04. The show cause notice relies upon the advertised use of the product. <strong>It is to be noted that, it is settled law that the use to which the product is purported to be suitable, as claimed by its manufacturer, is not a criterion for its classification</strong>. Apart from this, it is difficult to accept that it is advertised as claimed by the department. The notice does not set out any specific basis for the allegations it contain. The advertising that the Departmental representative emphasises, that the product makes its user feel fresh can by no means justify its classification in Heading 33.04. Freshness is by no means an expected or desired result of most of the product of Heading 33.04. It is hard to think of such products as lipstick etc. conferring any freshness upon its user. It is also of course evident that the claim for freshness can be made for any number of products or processes such as sweet, end use preparations, beverages, foods, nutritional substances etc. In fact, such a claim can be made for products which are used in connection with bathing. <strong>No one can deny the freshness that results after a wash or a bath</strong>. Such a general claim is no justification for classifying the product in Heading 33.04." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An alternative classification under heading 33.07 as bathing preparations was suggested by the Departmental Representative but the Tribunal negated it by observing that this was not a case before the Commissioner and it is not permissible for the Revenue to raise such a contention at this stage. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the order of the Commissioner was set aside and the classification under heading 3401.10 as claimed by the appellant was upheld. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CCE, Nagpur had filed a Civil Appeal before the Supreme Court and it was admitted in August, 2003. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter was decided by the Apex Court recently. The Supreme Court held - </font></p> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"2. We are in complete agreement with the view taken by the Customs, Excise and Gold (Control) Appellate Tribunal in its order dated October 3, 2002 holding that the product 'Liril Active Shower Gel' is covered by Heading 34.01 which covers soap and various other substances and the product is not covered by Heading 33.04 as contended by the Revenue. " </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Civil Appeals were accordingly dismissed. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <em><font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODgwMDA=" target="_blank">2013-TIOL-27-SC-CX-LB</a></font></em></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">New Exchange Rates </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has notified new exchange rates effective from 03.05.2013 for export and imported goods. The earlier rates were effective for two weeks. </font></p> <p align="left"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_052.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 52/2013 - Cus.,(N.T.), Dated: May 2, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">'Proprietary firm' given miss in third proviso to Rule 6(1) of STR, 1994 - conscious miss? </font></strong></p> <p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE </strong>received this mail - </font></em></p> <blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Kindly take a look at the first and third proviso to rule 6(1) of STR, 1994 concerning payment of Service Tax - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that where the </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:00FFFF" span="span"> assessee is an individual or proprietary firm or partnership firm,</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month, as the case may be, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">immediately following the quarter in which the service is deemed to be provided </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">as per the rules framed in this regard: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided also that </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:00FFFF" span="span">in case of individuals and partnership firms </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or agreed to be provided by him up to a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">in which payment is received.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whereas the first proviso refers to individual or proprietary firm or partnership firm the third proviso refers only to individuals and partnership firms. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I think this is an inadvertent miss for the reason that legally proprietary firm and the individual is one and the same and there may not be any cause for concern and proprietary firms can avail the benefit of third proviso, but then instead of adopting a long drawn out legal battle, it would have been prudent for the rule makers to mention the word ‘proprietary' too in the third proviso so as to be in sync with the contents of the first proviso." </font></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT feels that the Board should respond.</font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST Voluntary Compliance Encouragement Scheme, 2013 - few queries </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> getting to know that the VCES, 2013 provisions have not seen any amendment in the Finance Bill, 2013, a netizen sent us this mail - </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Section 96(2) says that where a declaration has been made by a person against whom - an enquiry/investigation has been initiated in respect of ST not levied or not paid or short-levied or short paid by way of viz. search of premises u/s 82 of FA, 1994; issuance of summons u/s 14 of CEA, 1944;requiring production of accounts, documents or other evidence OR an audit has been initiated, and such inquiry/investigation or audit is pending as on the 1 st March, 2013, then the designated authority [not below the rank of AC/DC] by an ‘order' and for reasons to be recorded in writing reject such declaration. </font></em></p> <p align="justify"><em><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What do you mean by initiation of an audit? </font></strong></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does it mean mere writing of letter to an assessee informing that Audit would be conducted on such and such date? The answer should be a resounding NO. This is because this clause of audit has been separately mentioned at (b). So, if the department has issued a letter prior to 1 st March, 2013 informing a person of an impending audit in the month of March, 2013, he should not be hit by this exclusion clause. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, a reading of the sub-section (2) indicates that inspite of these exclusions if a person makes an application/declaration, such a declaration can be rejected by the designated authority after giving reasons therefor. The usage of the word ‘order' means the principles of natural justice have to be followed. So if the declarant is unhappy with this order can HE GO IN APPEAL AND IF SO TO WHICH AUTHORITY? THE PROVISIONS OF THE SCHEME ARE SILENT IN THIS REGARD AND NEED CLARITY. Assuming that the declaration is rejected can the evidence be used against the person?Suppose the designated authority wrongly allows an applicant to file a declaration under section 96 of the VCES though he is hit by the debarring clauses. Can this order be reviewed by the Commissioner or any authority? </font></em></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">If at the threshold itself there are so many queries, the Central Government needs to bring out an Education Guide and if needed make suitable amendments before the scheme becomes operational. This is the<strong> DDT</strong> view. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appellant fails to pay cost of imposed Rs.5000/- for restoration of appeal - appeals dismissed </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AGAINST </strong>an order passed by the <em>Commissioner of Customs (Import), Nhava Sheva</em> in the year 2009, the appellants had filed appeals before the CESTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Although the appeals were listed for hearing on several occasions, the appellants failed to appear and, therefore, the CESTAT had dismissed the same on 30.03.2012 by observing that the appellants were not interested in pursuing the appeals. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subsequently, the appellant made their appearance and filed an application for restoration of their appeals. They made an emotional plea that they have been out of business since 2005 and they have not been able to revive their business and had engaged on employee to receive communication from various places including the Government departments; that since the said employee could not get salary on time, he did not inform the appellants; therefore, they were not aware of notice of hearing on 30.03.2012 and hence could not be present. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT sympathised with the appellants and laid down the following condition for restoration of the appeals by observing<em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2012/2012-TIOL-1946-CESTAT-MUM.htm" target="_blank"><font size="1">(2012-TIOL-1946-CESTAT-MUM)</font></a></strong></em> -</font></p> <blockquote> <p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"4. In this case, it has been observed that the non-representation of the appellants is not restricted to 30.03.2012 only. The case has been listed several times earlier on 19.12.2011, 20.01.2012 and 30.03.2012 was given as a last chance. Therefore, it is not a case for non-appearance on single occasion but on several occasions. Therefore, the explanation given by the appellant is not convincing as to why they were not represented on earlier occasions. Since the case has been dismissed for non-prosecution, we are of the view that the applications for restoration should be considered only on cost basis. </font></em></p> <p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Accordingly, we direct the appellants to pay a cost of Rs.5000/- for each of the appeals and remit the same to the credit of the Commissioner of Customs (Import), Nhava Sheva within four weeks from today and report compliance on 15.01.2013. On such compliance, the appeals and stay applications shall be restored to their original numbers. The miscellaneous applications are disposed of in the above terms. " </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, when the matter was called for compliance, nobody appeared for the appellants and no compliance was reported.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Bench dismissed the appeals and stay applications. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc5OTk=" target="_blank">2013-TIOL-682-CESTAT-MUM</a></font></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"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2097_cartoon.jpg" alt="Legal Corner Icon" width="400" height="451" hspace="5" border="0" align="center"></strong></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"> - 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">Goods manufactured under Area based exemption and exported under rebate - Amendment on 17.9.2007 to Notification No.19/2004, to disallow rebate - Rebate is not admissible though goods were cleared from factory before amendment, since actual export took place after amendment: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is a manufacturer in Kutch availing the Area based exemption under Notification No.39/2001 dated 31.7.2001. The dispute in the instant case is whether the amendment made on 17.09.2007 to Notification No 19/2004 to disallow rebate on goods manufactured under area based exemptions is applicable for goods cleared before 17.09.2007, but exported after the amendment. The appellant contended before the High Court that once the goods were cleared for export from the factory of the petitioner, right to claim rebate accrued. Such accrued right cannot be affected by any subsequent change in the Exemption scheme. The amendment Notification dated 17.9.2007 would not adversely affect the petitioner's claim of rebate on goods manufactured and cleared from the factory for export before such date. </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 Sec 80C benefits can be availed even if insurance premium is paid by a relative on behalf of beneficiary - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether Sec 80C benefits can be availed even if insurance premium is paid by a relative on behalf of the beneficiary and whether the provisions of present Section 80C are different from the earlier provisions where the Section had specified that the deduction was available only if the payment was made out of the income chargeable to tax. 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">Customs</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Seized diamonds - appellant has been able to prove <em> bona fide</em> purchase of seized diamonds and hence appeal was allowed with consequential relief - since diamonds not returned even after one year, Commissioner has to file affidavit intimating action taken and if no action was taken, Commissioner to explain why contempt proceedings should not be initiated: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Ld. DR is not able to clarify the position about the action taken by the department pursuant to the order passed by this Tribunal. Accordingly, the Commissioner of Customs (Preventive), Mumbai directed to file a written affidavit intimating the action taken by the department in pursuance of the order dated 14/02/2012 passed by this Tribunal.In case, no action has been taken, the Commissioner has to explain why no action has been initiated in pursuance of the said order. Non-compliance of the order passed by this Tribunal will attract consequence of contempt. </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>