TIOL-DDT 2125 · 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 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">TIOL-DDT 2125 </font><br>
12.06.2013 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Are Cigarettes covered u/s 4A of the CEA, 1944? </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> <em>received this smoky mail from a netizen -</em> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Kindly take a look at the following extract from Chapter 24 of the CETA, 1985 as appearing on the CBEC website and many taxation journals and websites. </font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top" width="88"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Item </font></strong></p></td>
<td valign="top" width="44"> </td>
<td valign="top" width="181"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></strong></p></td>
<td valign="top" width="39"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Unit </font></strong></p></td>
<td valign="top" width="117"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rate of duty </font></strong></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) </font></p></td>
<td valign="top" width="44"> </td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) </font></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- </font></p></td>
<td valign="top" width="181"><p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cigarettes, containing tobacco : </font></em></p></td>
<td valign="top" width="39"> </td>
<td valign="top" width="117"> </td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 10 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">--- </font></p></td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other than filter cigarettes, of length not exceeding 65 millimetres </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 509 per thousand </font></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 20 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">--- </font></p></td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other than filter cigarettes, of length exceeding 65 millimetres but not exceeding 70 millimetres </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 1772 per thousand </font></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 30 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">--- </font></p></td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) not exceeding 65 millimetres </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 509 per thousand </font></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 40 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">--- </font></p></td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 65 millimetres but not exceeding 70 millimetres </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 1249 per thousand </font></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 50 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">--- </font></p></td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Filter cigarettes of length (including the length of the filter, the length of filter being II millimetres or its actual length, whichever is more) exceeding 70 millimetres but not exceeding 75 millimetres </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 1772 per thousand </font></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 60 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">--- </font></p></td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Filter cigarettes of length (including the length of the filter, the length of filter being 11 miilimetres or its actual length, whichever is more) exceeding 75 millimetres but not exceeding 85 millimetres </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 2390 per thousand </font></p></td>
</tr>
<tr>
<td valign="top" width="88"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 90 </font></p></td>
<td valign="top" width="44"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">--- </font></p></td>
<td valign="top" width="181"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other </font></p></td>
<td valign="top" width="39"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tu </font></p></td>
<td valign="top" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 2875 per thousand </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It will be observed that Cigarettes of the length mentioned above are chargeable to <strong>specific rates</strong> of Central Excise duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If this be so, is there any need to declare "Cigarettes" in the Third Schedule of the Central Excise Tariff Act, 1985 as the goods mentioned in this Schedule are the ones which are notified for assessment based on the Retail Sale Price (MRP) in terms of Section 4A of the Central Excise Act, 1944. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, are they declared in the Third Schedule? one may ask. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you have any doubts, please take a look at the following extract from the Third Schedule - </font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top" width="7%"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S. No. </font></strong></p></td>
<td valign="top" width="36%"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Heading, sub-heading or tariff item </font></strong></p></td>
<td valign="top" width="56%"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></strong></p></td>
</tr>
<tr>
<td valign="top" width="7%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) </font></p></td>
<td valign="top" width="36%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) </font></p></td>
<td valign="top" width="56%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) </font></p></td>
</tr>
<tr>
<td valign="top" width="7%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26A. </font></p></td>
<td valign="top" width="36%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 20 10 to 2402 20 90 </font></p></td>
<td valign="top" width="56%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All goods </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Furthermore, more proof lies through Notification 49/2008-CE(NT) dated 24/12/2008 as amended by notification 7/2012-CE(NT) dated 17/03/2012 which prescribes the following abatement factor for Cigarettes against Serial no. 26A - </font></p>
<h3 align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TABLE </font></h3>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S.No </font></strong></p></td>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter, heading, sub-heading or tariff item </font></strong></p></td>
<td valign="top"><h4><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></strong></h4></td>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Abatement as a percentage of retail sale price </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26A. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2402 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cigarettes </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">50% </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, since Cigarettes are assessed to only SPECIFIC rates of duty, these entries mentioned in the Third Schedule and the Notification 49/2008-CE(NT) are NOT required and need to be expunged. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I feel that although it would be easy to remove the serial number 26A from the notification, removing it from the Third Schedule would require nothing less than an Amendment Act." </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Can netizens share some light on why all these entries came into being in the first place? </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">For more on this "smoky" issue look out for the <strong>Breaking News</strong> tomorrow. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Filing of appeals by the Department - Clarification on computing monetary limits involving Redemption fine & Penalty </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> instruction <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/cxinstruct05.htm" target="_blank">F.No.390/Misc./163/2010-JC: dated October 20, 2010</a></strong>, the CBEC had fixed monetary limits of Rs. 1 lakh and Rs. 2 Lakhs, for appeals to CESTAT and High Court respectively. <a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11572"><strong>DDT 1472</strong> </a>[22.10.2010] had commented, <font color="#FF6633"><strong>"But isn't the threshold limits too low</strong></font>? They should be at least Rs 5 lakhs and Rs. 10 Lakhs respectively". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thankfully, the monetary limits were enhanced by the <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/cxinstruct03.htm"><strong>CBEC as communicated vide Instruction F.No.390/Misc./163/2010-JC., Dated: August 17, 2011</strong></a>, as under - </font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr bgcolor="#85AA04">
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl.No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Appellate Forum </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Monetary limit </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Previous limits as per Instructions dated 20.10.2010 </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs.5,00,000/- </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 1,00,000 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">HIGH COURTS </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs.10,00,000/- </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 2,00,000 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SUPREME COURT </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs.25,00,000/- </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 5,00,000 </font></p></td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Paragraph 2 of the said Instruction read - </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"2. For ascertaining whether a matter would be covered within or without the aforementioned limits, <strong><u>the determinative element would be duty/tax under dispute</u></strong>. To illustrate it further in a case involving duty of Rs. 5 lakhs or below with equal penalty and interest, as the case may be, no appeal shall be filed in the Tribunal. Similarly, no appeal shall be filed in the High Courts if the duty involved does not exceed Rs.10 lakhs with or without penalty and interest. Further, the Commissionerates shall not send proposal to the Board for filing Civil Appeal or Special Leave Petition in the Supreme Court in a case involving duty up to Rs.25 lakhs, whether with penalty and interest or otherwise. However, <u><strong>where the imposition of penalty is the subject matter of dispute and the said penalty exceeds the limit prescribed, then the matter could be litigated further</strong></u>. Similarly, where the subject matter of dispute is the demand of interest and the amount of interest exceeds the prescribed limit, then the matter may require further litigation." </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board had also clarified certain queries raised by the field formations and also informed that the revised monetary limits will come into force with effect from 01.09.2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It appears that a couple of queries arose in the minds of the field formations<font color="#FF0000"><strong><em> pursuant</em></strong></font><strong></strong> to the issuance of the Instruction dated 17/08/2011 cited above. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Board has now issued clarification on the same. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The field formations are seeking clarification on the applicability of the threshold limit in the cases where <font color="#FF0000"><strong>either</strong></font> redemption fine <font color="#FF0000"><strong>alone</strong></font> is in dispute or<font color="#FF0000"><strong> both</strong></font> redemption fine and penalty are in dispute. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The reference is elaborated thus - <em>For example, in one case the Tribunal confirmed the <strong>duty</strong> but set aside the penalty of Rs. 5 lakhs and redemption fine of Rs. 15 lakhs imposed by the adjudicating authority. As the Instruction ibid did not specifically mention about redemption fine, a clarification has been sought whether the word "penalty" mentioned in para 2 of the Instruction ibid would include redemption fine or otherwise. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board after examining the matter clarifies thus - </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Redemption fine is an option in the hand of the owner of goods to redeem goods confiscated by the department for violation of any provisions of the Customs Act. On the other hand, penalty is imposed on any person who violates the provisions of the Customs Act while importing or exporting the goods out of India. Therefore, the nature and scope of penalty is different from that of the redemption fine. While penalty is in persona, redemption fine is on goods. However, both redemption fine and penalty are imposed for violations of the statutory provisions. Therefore, even though redemption fine cannot be said to be covered under the word ‘penalty' the treatment given to both redemption fine and penalty is required to be identical and hence, redemption fine and penalty would need to be clubbed to decide the applicability of threshold limit prescribed. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Accordingly, it is clarified that if the imposition of redemption fine <strong>alone</strong> is the subject matter of dispute, and if such redemption fine exceeds the monetary limits prescribed, then the matter could be litigated further in Courts and Tribunal. Further, if <strong>both</strong> the amount of redemption fine and penalty are in dispute and if such redemption fine and penalty in dispute, <strong>taken togethe</strong>r, exceed the prescribed monetary limit then the matter should be litigated further. </font></em></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/instruction13_001.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Instruction in F.No.390/Misc./163/2010-JC dated June 3, 2013. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of live-stock products - Amendment in ITC (HS) 2012 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended ITC (HS) 2012, Schedule 1 (Import Policy) in respect of entries relating to live-stock to insert the requirement of Sanitary Import Permit issued by Department of Animal Husbandry, Dairying & Fisheries, GoI under relevant Chapters of ITC(HS), 2012. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not018.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No 18/(RE-2013)/2009-2014 dated June 11, 2013. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No additional restrictive measures on gold - Chief Economic Adviser </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>a statement yesterday, the Chief Economic Adviser Dr. Raghuram G. Rajan explained: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exchange rate has depreciated about 5.5% since January 1, 2013 at par with Korea, Turkey and Brazil and much less than South Africa. Clearly a large part of the decline in the value of the rupee in recent days is because of dollar strength. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The decline in the rupee of 7.5% since May 1, 2013 has been significant. However, this is only partly due to the debt outflows after the Fed's remarks. I say partly, because despite the debt outflows, portfolio inflows between May 1 and June 10, 2013 have been significant. On net, India has received USD4.162 billion in equity flows, and lost 486 million in debt outflows, for a net inflow of $3.675 billion. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The other reason for rupee weakening is that typically, the May 2013 Current Account Deficit (CAD) is larger because of seasonal factors. Add on top of that the increased gold purchases as gold prices dropped, and I think we have the main reasons for rupee weakness. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We should see a significant drop in gold imports for June, 2013. I should add that we are not contemplating any additional restrictive measures on gold and there is no reason for speculating on this basis. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue interpreting Stay order to mean that there is no stay, so Tribunal clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> this interesting case, the appellant has filed an application for modification of the Stay order passed by the Bench. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The Stay order </em>- The Tribunal vide stay order dated 06/11/2012 directed the applicant to deposit an amount of Rs.10 lakhs in addition to the amount already deposited and waived the pre-deposit of the balance amount of duty, interest and penalty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>And the reason for filing the Modification application </em>- the Revenue is interpreting the Stay order to mean that "<strong>there is no stay against recovery of the amount in dispute</strong>". This, it has communicated to the assessee through its letter dated 17/01/2013. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Weird, isn't it? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Probably, it is the Board Circular <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/excircular967.htm" target="_blank">967</a></strong> which is playing truant! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Be that as it may, when the matter came up before the CESTAT, the Bench observed - </font></p>
<blockquote>
<p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"…The Revenue is interpreting the order in a way that there is no stay against recovery of the amount in dispute which is evident from the letter dated 17.01.2013. In these circumstances, we make it clear that on deposit of the amount mentioned in the stay order, the pre-deposit of the remaining dues is waived and recovery of the same is stayed during the pendency of the appeal. The miscellaneous application is disposed of as indicated above." </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One more reason as to why the appeal pendency keeps on increasing in the CESTAT on account of frivolous demand letters by the Revenue. </font></p>
<p align="left"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODg2MTQ=" target="_blank"><font size="1">2013-TIOL-883-CESTAT-MUM</font></a></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"> – Thursday's cases</font></strong></font></strong></font></p>
<p><font 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"><strong><font color="#663399">Service Tax</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST - appellant entering into a contract and putting their buses at disposal of PRTC, a Punjab State Government Undertaking and receiving an amount on per day basis which was to be paid on fortnightly basis - repair and maintenance of the buses and expense on diesel was to be borne by appellant and the driver was also to be provided by appellants on their expense - buses, however, were to be operated by PRTC on various routes as stage coaches and conductors were of PRTC - activity taxable as Rent a Cab service - since Commr(A) has not considered appellant's claim with regard to their eligibility for abatement under Notification No. 1/2006-ST and also exemption under Notification No. 6/2005-ST, matter remanded: CESTAT. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>department was of the view that the appellants are providing rent-a-cab service taxable under Section 65 (105) (o) read with Section 65 (91) and 65 (20) of the Finance Act, 1994, to PRTC and, hence, they would be liable to pay service tax on the amount being received by them from PRTC. Section 65 (91) during the period of dispute defined "rent a cab scheme operator" </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">Income Tax - Section 11 (5), 12AA , 13(1)(d) - Whether the assessee-trust loses entitlement to exemption u/s 11 merely because it placed some funds with chit funds - Whether such participation by the assessee can be construed as investments or utilisation of surplus funds</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, a Trust registered u/s 12AA, runs educational institutions. It claimed exemption u/s 11. The AO noted that the assessee had placed Rs. 2,08,456/- and Rs. 96,230/- with chit funds during the relevant previous year but they were not approved investments u/s 11(5). Hence it resulted in violation of the nature specified in Section 13(1)(d). The AO held that assessee was not eligible for exemption u/s 11 and the excess of income over expenditure was accordingly assessed to tax. </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">CE - Duty on cigarettes for period 17/03/2012 to 27/05/2012 - unless amendment moved to Finance Bill, 2012 on 07/05/2012 to replace 10% ad valorem rate of duty with specific rate was made effective from 17/03/2012 by declaration under Provisional Collection of Taxes Act, 1931, effective date of enhancement would be date of enactment of Finance Bill, 2012 i.e 28/05/2012 - <em>Prima facie</em> case for 100% waiver of pre-deposit </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the proposal in Finance Bill, 2012 Excise duty proposed was specific rate + 10% ad valorem (on 50% of RSP/1000 sticks) said proposed rate was made effective from 17.03.2012 under the PCTA, 1931. On 07/05/2012, the notice of amendment was moved to replace the 10% advalorem duty with increase in specific rate. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Thursday 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>
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