TIOL-DDT 2124 · 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><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 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></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></strong></font><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2124</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 11.06.2013<br> Tuesday</font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback - Re-determination after claiming AIR in Shipping Bill - Board Instructions only for Pune Commissioner? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Rule 3 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, a drawback is allowed on export of goods at such amount or at such rates as determined by the Central Government. If the amount of drawback determined is less than four-fifth of the duties and taxes suffered on inputs/input services used in manufacture of export goods, the exporter may request the Commissioner to re-determine the drawback rate, under Rule 7 of the Rules. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some exporters claim the drawback fixed by the Government, at the time of export and later apply for a special rate from the Commissioner. The Provisional rate amount is credited into the exporter's bank account based on the shipping bill. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This procedure was going on smoothly till the Year 2011, when the CBEC in a letter in F. No. 606/04/2011-DBK dated 30.12.2011, addressed to the Commissioner of Central Excise, Pune I Commissionerate clarified the issue as follows: </font></p> <blockquote> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, provisions do not provide that an exporter can avail the AIR Drawback first at the time of export under specified sub serial/ tariff item number of the AIR schedule and then file for determination of the Brand Rate under Rule 7. Exporter's declaration of tariff item number other than 9801 on the Shipping Bill is declaration that he is satisfied with the AIR rate and opts for it. Any other interpretation would also undermine the entire EDI procedure in this respect. </font></strong></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This upset the applecart in Pune. Based on the Board letter, the Commissionerate started rejecting applications for revision of drawback rates under Rule 7 after the exporters have taken the rates (known as AIR) at the time of export. The Commissioners (Appeals) routinely rejected the appeals. Matters started travelling up to the Revision Authority and the Revision Authority recently passed an order upholding the Department's stand. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Joint Secretary (Revision) noted that initially the <em>applicant exported the goods and claimed All Industry Rate of drawback. Subsequently, the applicant by terming the same as an inadvertent error wanted to change the same into a claim of fixation of Brand Rate. The lower authorities have objected to it stating that applicants failed to indicate their intention to avail brand rate of drawback under rule 7 at the time of export in the relevant Shipping Bills, and violated the provisions of drawback rules as well as Circular/clarification issued by the CBEC. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Authority relied on the Board clarification mentioned above and observed, <em>"The said clarification unambiguously states that opting of AIR drawback under rule 3 in the Shipping Bills disentitles exporter from claiming brand rate of drawback. The said clarification has neither been withdrawn nor set aside by any court of law. As such, the said clarification is very much is existence. Moreover, exporter has to carefully choose a scheme which is beneficial to him at the time of filing Shipping Bill. After choosing a scheme he can not be allowed to change it subsequently."</em> And he upheld the order of the lower authority. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However the Commissioner (Appeals), Pune-III had earlier allowed such an appeal. The Commissioner (Appeals) observed, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is an admitted position that prior to receipt of Board's above referred letter dated 30.12.2011, Brand Rates were being regularly fixed under Rule 7 by Special Brand Rate Unit of Pune-III Commissionerate after sanction of Drawback at AIR under Rule 3 by Customs authorities. Further, it has also been noticed that no appeal has been filed till date in respect of such Brand Rates fixed for the period earlier to 30.12.2011. Thus it clearly emerges that on receipt of Board's said letter dated 30.12.2011, the practice of fixation of Special Brand Rate has undergone a change in the Special Brand Rate Unit of Pune-III Commissionerate even though there has been no change in legal provisions governing Drawback in the Customs Act or DBK Rules. Further neither the Board's letter dated 30.12.2011 is in Public domain nor any Circular has been issued by the Board since 30.12.2011 making it mandatory to mention Tariff Item 98.01 in the Shipping Bills when the exporter intends to claim Drawback under Rule 7 of DBK Rules after claiming and getting Drawback amount at All Industry Rate under Rule 3 immediately after export of goods. It is also noticed that the said letter dated 30.12.2011 issued by the Board is only a reply given on certain doubts raised by Pune-I Central Excise Commissionerate. It is also a fact that no Public Notice has been issued by Pune-III Commissionerate informing exporters about change of practice of fixation of Special Brand Rate under Rule 7 . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He allowed the appeal and directed the Department to fix the Special Brand Rate. We don't know whether the Department has appealed against the order of the Commissioner (Appeals). </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Now does this apply to Pune only? Why did the Board give such an important clarification only to the Pune Commissioner? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>1 .<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/drawback_cir11_001.htm" target="_blank"> CBEC letter in F. No. 606/04/2011-DBK dated 30.12.2011 </a></strong></font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=352&filename=notification/custom/2013/drawback_002.htm" target="_blank">Order of the Revision Authority </a></font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=352&filename=notification/custom/2013/drawback_001.htm" target="_blank"> Order of the Commissioner (Appeals) </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of Imported Goods against Payment in Rupees - Iran Notified</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Para 2.35(a) of the Foreign Trade Policy, goods imported may be exported in same or substantially same form. If the goods were imported against freely convertible currency, the export was also permitted against freely convertible currency under para 2.35(b). Recently, by Notification No. 16 dated 06.06.2013, Government amended this para 2.35(b) to allow export of goods imported against payment in freely convertible currency where export proceeds will be realized <strong>in rupees</strong>. This dispensation is applicable to such countries as would be notified by DGFT from time to time. They also have to achieve 15% value addition. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has notified Iran as an eligible country. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not017.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No.17 (Re 2013)/2009-2014, Dated: June 10 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DRI ADG Transferred to Kolkata - does not join - Kept on Compulsory Wait </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mr.</strong> RK Sharma, ADG, DRI, Delhi Zonal Unit was transferred as Commissioner of Customs (Appeals), Kolkata and was relieved on 24.01.2013. Mr. Sharma did not join at Kolkata so far. An ADG, DRI made to work as Appellate Commissioner? Sacrilege! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last Friday - 7.6.2013, the CBEC issued an order apparently in pursuance of a CAT order that Mr. Sharma will be on ‘compulsory wait' till further orders. He has been granted leave from 25.02.2013 to 07.06.2013 and his leave from 25.01.2013 to 24.02.2013 is to be regularised, if he applies for it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From 25.01.2013 onwards, he will get his salary from the DG, Inspection. They all live happily ever after! <a></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But it seems that Mr. Sharma was attending the DRI office in Delhi when he was supposed to be in Kolkata or on leave. DRI is a super sleuth agency with tons of confidential and sensitive information and the facility of telephone tapping. Incidentally, it was reported that Mr. Sharma had organised tapping of the telephones of his Chairman's sister and TIOL's editor. See the report in <a href="http://www.indianexpress.com/news/presidential-awardee-former-customs-officer-among-those-illegally-tapped/1020784/0"><strong>Indian Express</strong></a>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is really difficult for the Board to transfer its immovable assets. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/cbecorder133_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Office Order No.133/2013, Dated: June 07 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">After filing appeal, Revenue is of the view that it was not necessary </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AGAINST</strong> an Order-in-Appeal No. BR/212/Th-II/2005 dated 05.08.2005 passed by the Commissioner of Central Excise (Appeals), Mumbai-IV, the CCE, Thane-II had filed an appeal before the CESTAT and the appeal was numbered <strong>E/3860/2005-Mum. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When this matter was heard on the 17th April, 2013 by a Division Bench, the Revenue representative submitted that after filing the appeal the Revenue itself is of the view that the "registration" is to be granted to the respondent. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent assessee was also represented but no need arose for him to submit anything. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench, therefore, held - </font></p> <blockquote> <p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"4. Considering the fact that Revenue is of the view that registration is to be granted to the respondents. Therefore, we do no not find any infirmity in the impugned order, the same is upheld. The appeal filed by the Revenue is dismissed." </font></em></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT adds</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> - Interestingly, we also came across an order passed by the CESTAT, WZB on 5th December, 2006, reported by us as <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2007/2007-TIOL-202-CESTAT-MUM.htm" target="_blank"><font size="1">2007-TIOL-202-CESTAT-MUM</font></a></strong> and which refers to the same appeal <strong>E/3860/2005-Mum</strong>. Incidentally, while deciding the case then, the Bench had arrived at a similar conclusion - the Revenue appeal was rejected. </font></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/caseLawDet.php?QoPmnXyZ=ODg1OTk=" target="_blank">2013-TIOL-875-CESTAT-MUM </a></font></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">'Tax Your Brain' - TV Quiz Show </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Directorate of Income Tax (PR, PP&OL) has <em><strong>produced</strong></em> a twelve-episode quiz show, which is telecast every Saturday on NDTV 24x7. The quiz show is called "Tax Your Brain" and aims to communicate with the school children and youth of the country on the "need for taxation in civil society". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The quiz show features 32 teams from 32 different cities of the country. Mr. Saurav (Dada) Ganguly, ex-India cricket captain is the quiz master. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT thinks that netizens would also be glad to watch a similar show produced on Service Tax. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">What is ‘Sweetheart tax'? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO,</strong> it is not a tax to be paid by ‘sweetheart' or on behalf of ‘sweetheart' but an allegation that is made against HMRC [ Her Majesty's Revenue and Customs] - the non-ministerial department of the UK Government responsible for the collection of taxes. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently Vodafone Group Plc said that it paid no corporation tax in Britain for the year ending March 2013. The business has already faced a barrage of criticism, after its £1.2 billion settlement of a decade-long dispute with HMRC in 2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">HMRC officials were accused of arranging "sweetheart" tax with multinationals, sparking an investigation by former High Court judge. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the past, Google's chairman Eric Schmidt has<em> blamed the low payments on the UK's weak tax laws, saying that it has a duty to shareholders to <strong>pay no more tax than required</strong> and that his company's hands are tied by the <strong>Government's low demands</strong>. </em></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"> - Wednesday'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">Commercial Training & Coaching Centre - Notf. 9/2003-ST & 24/2004-ST on true and fair construction merely requires that vocational coaching or training imparted must impart skills which enable trainee to seek employment or undertake self-employment - It does not require establishment of fact whether one or some or all of students of assessee institute have obtained employment or have pursued self employment after conclusion of course of instruction - Exemption available - Appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant runs a film and media business and conducts the courses in B.A in journalism; post graduate diploma courses in Print, Television; on-line journalism and media management apart from short term courses such as anchoring and dramatic arts, direction and script writing; television production; TV and Radio anchoring and presentation etc. During the period under consideration, the appellant claimed exemption from payment of Service Tax on the taxable activity of "commercial training and coaching centre" in terms of notification 9/2003-ST dt. 20.06.2003 & notification 24/2004-ST dt. 10.09.2004 under the category of ‘a vocational training institute' which is defined in the Explanation to the notification as a commercial training or coaching centre which provides vocational coaching or training that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching. </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 expression 'a residential house' mentioned in Sec 54 effectively means one flat - NO, AP HC agrees with Karnataka HC decision </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is an individual. He filed his return of income for the assessment year 2007-08 declaring a net income of Rs.43,97,840/-. Before the assessing officer, the assessee offered under the head, long term capital gains, a sum of Rs.41.00 lakhs contending that he had inherited an ancestral house property which was sold during the year under consideration and the resultant long term capital gains were offered from sale of the said house; that he had taken the sale consideration of Rs.1,99,50,000/- for arriving at the capital gains even though the sale deed mentioned the sale consideration as Rs.2,66,00,000/-; that out of the sale consideration he had purchased two flats in May Fair Apartment, Banjara Hills, Hyderabad and he was entitled to claim deduction/exemption under Section 54 of the Act for an amount of Rs.93,80,192/- and that in view of the decision in <em>CIT Vs. Ananda Basappa</em> <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2008/2008-TIOL-254-HC-KAR-IT.htm" target="_blank"><font size="1">(2008-TIOL-254-HC-KAR-IT)</font></a>,</strong></em> even though Section 54 mentioned that the proceeds should be invested in "a residential house", it being a beneficial provision, it should be construed liberally and the deduction cannot be restricted to only one residential house and it should be extended to the purchase of two adjacent residential flats. The assessing officer held that the assessee was not entitled to claim exemption in respect of Rs.93,80,192/- but only to the extent of Rs.45,52,860/- comprising of consideration of Rs.42,36,000/- and a stamp duty of Rs.3,16,860/- utilized for investment on one of the flats by the assessee on the ground that the inspection report of the I.T.I. deputed by the assessing officer showed that what was purchased were two residential units separated by a strong wall; that they were purchased from two different vendors under two separate sale deeds and as such the deduction under Section 54 has to be restricted to only one flat. </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">Cookers removed in bulk packing from factory along with extra (single) cartons - at depot, cookers are repacked in single cartons by using packing material cleared from factory - CENVAT credit not admissible for period prior to 14/05/2003 since depot was not defined as ‘place of removal' u/s 4 of CEA, 1944 - however, larger period of limitation not invokable as appellant declaring packing material in RG-23 Pt I returns - Appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is engaged in the manufacture of presser-cookers. They cleared the manufactured cookers to their Deport, C.F.A. in bulk cartons (containing many cookers) along with extra cartons (meant for repacking of the cookers independently) before dispatch to their whole sellers and distributors for sale. The appellant availed input tax credit (on such packing material) with the understanding and belief that the extra or individual cartons have been used in relation to the manufacture of final products. It is also their case that the cookers are not sold without the individual cartons as per the requirement and business practice of the appellant. Only for the sake of convenience, the cookers are removed from the factory in bulk packing along with the extra (single) cartons to its depot or C&F agent, which is not on sale. Thereafter, the cookers are repacked in the single cartons at the depot of the appellant from where they are dispatched to the whole sellers or distributors on sale. This practice was regularly being followed for several years and the same was in the knowledge of the department. </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><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>