TIOL-DDT 2133 · 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 2133 </font><br>
24.06.2013 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Inputs obtained from EOUs - No credit on Education Cess?</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> Netizen writes in,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit on goods received from a 100% EOU is governed by proviso to Rule 3(7) of the CENVAT Credit Rules, 2004, according to which, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided further that the CENVAT credit in respect of inputs and capital goods cleared on or after the 7th September, 2009 from an export-oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such undertaking or unit has paid- </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(A) excise duty leviable under section 3 of the Excise Act read with serial number 2 of the notification no. 23/2003-Central Excise, dated 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003]; and </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(B) the Education Cess leviable under section 91 read with section 93 of the Finance (No. 2) Act, 2004 and the Secondary and Higher Education Cess leviable under section 136 read with section 138 of the Finance Act, 2007, on the excise duty referred to in (A), shall be the aggregate of - (I) that portion of excise duty referred to in (A), as is equivalent to - (i) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, which is equal to the duty of excise under clause (a) of sub-section (1) of section 3 of the Excise Act; (ii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act; and </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u>(II) the Education Cess and the Secondary and Higher Education Cess referred to in (B).] </u></strong></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the Budget 2012, Notifications No 13/2012 Cus and 14/2012 Cus both dated 17.03.2012 were issued exempting education cess and secondary and higher education cess on the CVD component. The purpose of these notifications has been explained vide para 19 of the JS(TRU) letter D.O.F.No.334/ 3/2012-TRU, Dated: March, 16, 2012 as under: </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19. Computation of Customs Duties: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19.1 The method of computation of Education Cess and Secondary & Higher Education cess on imported goods is being simplified. Currently, these cesses are first charged on the CVD portion of customs duty and thereafter on the aggregate of customs duties (excluding special CVD). The portion of cesses leviable on the CVD portion of customs duty is being exempted so as to <u><strong>avoid computation of such cesses twice</strong></u>.</font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Illustration: </font></strong></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td> </td>
<td> </td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Present </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Proposed </font></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessable value (CIF + Landing Charges) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">B </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Basic customs duty (BCD) 10% </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.00 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.00 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">C </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value for CVD (A+B) </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">110.00 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">110.00 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">D </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CVD equivalent to central excise duty 10% </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.00 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.00 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">E </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Educational Cess on CVD 2% </font></p></td>
<td><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">0.22 </font></p></td>
<td><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">0 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sec. and Higher Educational Cess 1% </font></p></td>
<td><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">0.11 </font></p></td>
<td><p align="right"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">0 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">G </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs duty for calculation of Cess </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21.33 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">H </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Educational cess 2% </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">0.43 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">0.42 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Secondary and higher educational cess 1% </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">0.21 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">0.21 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">J </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value for SAD </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">121.97 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">121.64 </font></p></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">K </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SAD @ 4% </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.88 </font></p></td>
<td><p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.865 </font></p></td>
</tr>
<tr>
<td></td>
<td><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total Duty </font></strong></p></td>
<td><p align="right"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26.85 </font></strong></p></td>
<td><p align="right"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26.495 </font></strong></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hence, the purpose of the exemption is to avoid computation of cess on <strong>CVD portion twice</strong>. Which means, the education cess of Rs 0.42 and SHE Cess of Rs 0.21 in the above table at H and I includes cesses on CVD portion also. Obviously, the customs duty of Rs 21/- includes CVD of Rs 11/-. So, the Ed. Cess of Rs 0.42 has customs component of Rs 0.20 and CVD component of Rs 0.22. Therefore CENVAT credit should be allowed on cess component of Rs 0.22 on CVD. However, since Rule 3(7) allows only credit on Education Cesses paid on CVD, which are exempted under Notifications No 13 & 14 Cus dated 17.03.2012, credit is being denied to the buyers of goods from EOUs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the Board itself had clarified that the purpose of exemptions is only to avoid computation of Cesses twice, Rule 3(7) needs to be revisited in the aftermath of exemption notifications No 13&14. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This problem is faced not only by EOUs, but other importers also, who are not able to claim CENVAT credit of education cesses on CVD though they are paying cesses on CVD portion. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Reverse Gear - Rs. 200 Crore Demand from Skoda Auto India confirmed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAR</strong> manufacturers in India are on the wrong track - while new models are hitting the market, sales are hitting rock bottoms. And then there are tax problems. Last year Fiat had a total breakdown in the Supreme Court when the Apex Court ruled that when cars were sold at prices below the cost price, excise duty was to be paid on actual value. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now it is the turn of Skoda Auto India stuck with a huge Customs demand. Skoda India paid USD 45 millions to Skoda, Czech Republic as royalty while importing cars in SKD and CKD conditions. The Customs Commissioner found the documents fabricated/concocted to undervalue the imports. The Commissioner confirmed a duty amount of Rs. 97 Crores with equal penalty and applicable interest. He also imposed a penalty of Rs. 5 Crores on the former Managing Director. The Commissioner even imposed a penalty of Rs. 25 Crores on the tax advisory firm PWC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Two years ago, while deciding the Stay issue, the CESTAT had ordered a pre-deposit of Rs. 30 Crores against which the Company had appealed to the High Court and on failing there approached the Supreme Court, where also it did not meet with any success. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Tribunal has decided the issue - against Skoda. The Demand of 97.15 Crores is confirmed with equal penalty. The penalty on the MD was reduced to one Crore rupees and the penalty on PWC was dropped. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another interesting aspect of the story is that Skoda had paid Service Tax with interest on the USD 45 Millions they paid to their holding company abroad, but after the decision in the <em>Indian National Shipowners</em> case <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2008/2008-TIOL-633-HC-MUM-ST.htm" target="_blank"><font size="1">(2008-TIOL-633-HC-MUM-ST)</font></a></strong> realised that they were not required to pay the Service Tax and claimed refund of the interest [without claiming the refund of Service Tax which they had taken as CENVAT Credit], which was rejected by the CESTAT <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2012/2012-TIOL-961-CESTAT-MUM.htm" target="_blank"><font size="1">(2012-TIOL-961-CESTAT-MUM)</font></a></strong>. Corporate tax management is a difficult game indeed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you the Tribunal decision tomorrow - this is certainly not the end of the story - the matter is sure to reach the Supreme Court. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback rates changed for Article of gold jewellery </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> new rates of drawback for Articles of jewellery and parts thereof made of gold - </font></p>
<p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SCHEDULE </font></strong></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td> </td>
<td> </td>
<td> </td>
<td colspan="2"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A </font></strong></div></td>
<td colspan="2"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">B </font></strong></div></td>
</tr>
<tr valign="top">
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Item</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Unit </font></td>
<td colspan="2"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback when Cenvat facility has not been availed </font></td>
<td colspan="2"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback when Cenvat facility has been availed </font></td>
</tr>
<tr valign="top">
<td> </td>
<td> </td>
<td> </td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback Rate </font> </td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback cap per unit in Rs. </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback Rate </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Drawback cap per unit in Rs.</font></td>
</tr>
<tr valign="top">
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3</font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6</font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7</font></div></td>
</tr>
<tr valign="top">
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">711301 </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Articles of jewellery and parts thereof, made of gold </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">GMS </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 173.70 per gram of net gold content <br>
(.995 or more purity) in the jewellery</font></td>
<td> </td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 173.70 per gram of net gold content (.995 or <br>
more purity) in the jewellery</font></td>
<td> </td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier, it was Rs. 100.70 per gram of net gold content (.995 or more purity) in the jewellery in both the columns 4 & 6. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Probably, this enhancement was long overdue. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_064.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification 64/2013 - Cus.,(N.T.), Dated: June 20, 2013</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Without signing Vakalatnama, Counsel has no authority to appear - case file also not stitched or bunched properly - Appeal dismissed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>CESTAT registry had issued a show-cause notice to the appellant pointing out the following defects: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Court-fee stamp are not affixed to Vakalatnama </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Vakalatnama is not signed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) The file is not stitched or bunched properly. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apparently, these defects were not cured by the appellant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the hearing on 27/05/2013, the Division Bench of the CESTAT passed the following order - </font></p>
<blockquote>
<p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">“2. The Counsel for the appellant, even without signing the vakalatnama, seeks more time to cure the defects. The learned Counsel has no authority to appear for the appellant without signing the Vakalatnama.”</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fine, the appeal was dismissed under Rule 11 of the CESTAT (Procedure) Rules, 1982. </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=ODg4MDM=" target="_blank">2013-TIOL-953-CESTAT-MUM</a></font></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">More on the falling rupee </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HERE</strong> is what the <em>Director General of DGFT</em> has to say on the falling rupee - </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Fall in Rupee will not benefit much for exports because of high import content in our major shipments like pharmaceuticals, gems and jewellery. Lower rupee or higher rupee does not bother, what is bothering is volatility. There should be stability; if there is volatility no one will know how to handle the uncertainty; there is nothing called right rate. If it is not volatile our exporters will be able to handle."</font></em></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"> Interestingly, what are volatile these days are the expert comments and more would like to add to them. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Inviting proposals for the "Prime Minister's Awards for Excellence in Public Administration for the year 2012-13 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government of India has instituted PM's Award for excellence in Public Administration to acknowledge, recognize and reward the extraordinary and innovative work done by officers of the Central Government and State Government. The Department of Administrative Reforms has now invited nominations for PM's Award for Excellence in Public Administration for the year 2012-13. The last date for receipt of nominations is 16th July, 2013 in the Department of Administrative Reforms & Public Grievance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Department has asked its field formations to send proposals for the award latest by 24th June 2013 that is TODAY. The letter was issued on 20th June and they expect officers to send the proposals by 24th June -22nd and 23rd were holidays! Do they take at least the Prime Minister seriously? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And what about CBEC? Are they aware of anything like this? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/inviting_proposal_prime_ministers.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DITDOMS letter F.No.27/01/2011-AP/KM/DOMS, Dated: June 20, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Authorised Representative of the Department has to argue over twenty cases per day in CESTAT </font></strong></p>
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<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"> - Tuesday'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">Lump sum payment of USD 45 million made to SKODA towards technological fees for manufacturing 45,000 car kits is includible in Assessable Value as per Rule 9(1)(e) of Customs Valuation Rules - equivalent penalty and interest imposable: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the order, the Commissioner of Customs (Import), Nhava Sheva has held that the agreements, viz. Technology Transfer and Trade Mark License Agreement dated 01.10.2001, supply agreement dated 01.10.2001 and importer agreement dated 26.09.2001 between the two companies are fraudulent and fabricated and have no relation to the real state of affairs . On this basis, the Commissioner decided that 45 million USD charged as Technology Transfer is attributable to pre-importation activity and, therefore, this amount has to be added and included in the assessable value, applicable to each imported car kit. Accordingly, he has confirmed a duty demand of Rs.97,15,00,054/- with interest as applicable. He has also imposed a penalty equal to duty under Section 114A of the Customs Act, 1962. He has also imposed a fine of Rs.10crores under Section 111 (m) of the Customs Act, 1962. </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 before bringing any interest expenditure under ambit of Rule 8D(2)(ii), it is necessary for AO to prove that such interest is not directly attributable to any particular receipt - 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 it is necessary for the AO to record satisfaction if he proposes to invoke Sec 14A - Whether before bringing any interest expenditure under the ambit of Rule 8D(2)(ii), it is necessary for the AO to prove that such interest is not directly attributable to any particular receipt. And the verdict goes against the Revenue. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">As per definition, in respect of repair, alteration, renovation or restoration, it is specifically mentioned that it is in relation to building or civil structure - there is no mention of "part thereof" in sub-clause (d) of definition - applicant has <em>prima facie</em> strong case in favour - Pre-deposit waived and stay granted: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> applicant had undertaken interior work at 9th floor, State Bank Bhavan, Nariman Point, Mumbai. The Commissioner of Service Tax, Mumbai-II was mesmerized by the ‘kala' exhibited to such an extent that he demanded a ‘sagar' of Service tax of Rs.1.61 Crores from the applicant along with the accoutrements of interest and penalties. Not happy with the damaging interiors the demand would do to their balance sheet, the applicant is before the CESTAT. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns tomorrow for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT </strong></font></p>
<p><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>
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