TIOL-DDT 217 · the untouched capture
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<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#6633CC" size="3">TIOL-DDT 217</font><br> 06 10 2005<br> Thursday</b></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Smuggling in Visakhapatnam goes unchecked with the approval of the Government for more than a decade</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> As per Section 7 of the Customs Act, the Board can appoint ports and airports which alone shall be ports for import and export. Now Board has appointed Dahanu port in Maharashtra for Unloading of imported Coal by Reliance Energy Ltd and Tirupathi airport for Loading of perishable fruits and vegetables.<br> <br> But in the callous way that notifications are prepared, a very important lapse has gone undetected and in spite of <b>DDT</b> mentioning it several times, Board has not bothered to rectify the lapse. As per Sl. No 2(4) of Notification No. 62/94-Cus NT, Visakhapatnam is a port for Loading of export goods. Imports through Vizag port are illegal as Vizag is not declared as a port for import. There is a Chief Commissioner sitting in Vizag assisted by a Commissioner in collecting Crores of Revenue on import duty when import itself through the port is illegal. Whenever the goods are unloaded from a vessel in Vizag port, the goods should be seized as Vizag is not a port for unloading of imported goods. As per Section 111(a) of the Customs Act, <b>any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such good are liable for confiscation.</b> As mentioned earlier Vizag is a port only for loading of export goods and not for unloading of imported goods. And so all the goods unloaded at Vizag port are liable for confiscation.<br> <br> As per Section 2(39) of the Customs Act “smuggling”, is defined as <b>any act or omission which will render (such) goods liable to confiscation under section 111 or section 113; <br> </b><br> <b>So the goods unloaded at Vizag port are smuggled goods and there is a whole Custom House there abetting this smuggling, which is going unabated for more than a decade. As per Section 112, any person who abets any act which makes the goods liable for confiscation is also liable to a penalty. So every officer of Vizag Customs who allows clearance of this illegally unloaded cargo in Vizag is liable for this penalty! </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2005/cnt05_090.htm">NOTIFICATION NO.90</a> and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2005/cnt05_091.htm">91/2005-Cus.,(N.T.), Dated: October 4, 2005</a></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DEPB extended till December but there is a gap</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Notification No. 96/2004-Cus., dated 17-9-2004 exempts goods imported under the DEPB scheme or rather exempted., as the notification originally expired on 31st March 2005, but was by Notification No. 31/2005-Cus., dated 30-3-2005 extended till 30th September 2005. As we reported earlier, 30th September 2005 went by without any extension. But things cannot be left at that and everyone knew that the scheme had to be extended. We were flooded with calls and mails enquiring about the fate of the scheme. As an agony aunt, we comforted people that the scheme was bound to be extended – it was only a matter of time; they must have forgotten, the officer concerned must have been on leave or trying for a new posting. And further 30th September was a weekend and may be the babus were in a rush to go. The earliest opportunity they had, to realise the lapse was Monday 3rd October and by that time the notification had lapsed. <b>Resurrection is not the option always.</b> So a new notification had to be issued and that would take a couple of days and so was born Notification No. 89/2005-Cus., dated: October 4, 2005. The notification is dated 4th October but it was not made available till the evening of 5th October. These are minor infirmities of governance. The taxed should learn to live with the audacious actions of the taxmen. You may wonder why the government could not extend the scheme well before 30th September. But governance is a serious business and these things do happen. <b>The new notification is an identical copy of the dead notification, but it raises an important issue. What happens to the imports between 1st October and 3rd October 2005, when there was no notification?</b> More clarifications or litigation to follow!.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_089.htm">NOTIFICATION NO. 89/2005-Cus., Dated: October 4, 2005</a></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Credit on GTA – Board clarification<br> <br> The Ahmedabad Chief Commissioner has a doubt</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <i>whether a person who is not a service provider, but discharges the service tax liability on the taxable services, under Section 68(2) of Finance Act, 1994, is entitled to avail credit of such service tax paid even if he is not using such service as input service for use in the manufacture of excisable goods or taxable services. The issue is raised in the context of service tax paid on goods transport agency service by a person other than the service provider.</i><br> <br> The Board clarifies in a letter addressed to the Chief Commissioner and copies marked to all Chief Commissioners, Commissioners and DGs. <br> <br> <i>In the present case, the person liable to pay service tax under Section 68(2) is neither the provider of an output service nor the manufacturer of final product and therefore the input service can not be used either for providing output service or manufacture of a final excisable product. The person is treated as deemed provider of service in relation to services for which he is taxable only for the limited purpose of discharging the service tax liability and not for all purposes.<br> <br> CENVAT Credit Rules are applicable only to the manufacturer of excisable goods or the provider of taxable services. It is evidently clear from the provisions of Section 68(2) that the person discharging the service tax liability is neither the provider of output service nor the manufacturer of final product as required under the CENVAT Credit Rules, 2004. The terms “final product” and “output service” are defined under CENVAT Credit Rules, 2004. The view that such recipient of taxable services even if they discharge their service tax liability under Section 68(2) are not entitled to avail credit of the service tax paid on taxable services received by them under CENVAT Credit Rules, 2004, is in accordance with the statutory provisions and there is no scope for any other interpretation.</i><br> <br> <b>Simple! You understand this?</b> Translated into English, this simply means that if you are paying for goods transport and if you are neither a manufacturer, nor a service provider, you are not eligible for credit on the Service Tax paid on goods transport. Isn’t this obvious? Not really. But it seems the field has already taken a view that manufacturers are not eligible for credit of Service Tax on goods transport. Before the rampage starts, it would be nice if the Board can give another clarification. <br> <br> While on this, it has to be noted that there are many issues which call for immediate clarification from the Board regarding GTA.<br> <br> 1. Should Service Tax on GTA be paid only by Challan?<br> <br> 2. Can a manufacturer pay the tax from his Cenvat account or PLA?<br> <br> 3. The Challan evidencing payment of duty is the document prescribed for taking credit. What is this Challan? Is it TR6 Challan or an invoice?<br> <br> 4. If payment can be made from cenvat account, what is the government getting? A few pages of accounts and no money?<br> <br> 5. If it has to be paid only by TR6 challan, this amount can be taken as credit and that credit can be used for paying excise duty. Even then the government does not get any money. <br> <br> 6. If payment is allowed from PLA why not from credit account?<br> <br> 7. Does it mean that really for a manufacturer, there is no Service Tax on GTA as he gets it back as credit? <br> <br> 8. Is the Government clear on this tax?<br> <br> 9. And finally why this confusion; why can’t the system be more simple and clear?<br> <br> Will the Board clarify these issues? And publicly! It beats logic that the Board should give important clarifications by letters to field officers. This letter will not be made available to the public. After 10 years somebody will refer to this letter and then nobody including the Board will have a copy of this. <br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2005/gtaletter.htm">You can access the Board’s letter here</a></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Commissioners in the Board</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Six Commissioners have been posted to the Board and for a period of five years. They have been attached to a member each. The good bureaucracy has a good knack of multiplying itself. Now perhaps a Couple of additional commissioners should be attached to each of these commissioners and what are additional commissioners if they don’t have a few Assistant Commissioners under them? Maybe the hierarchy can be upgraded a little by posting half a dozen Chief Commissioners in the Board. And you can have a Commissioner for each Chief Commissioner’s office. If the Board is going to grow at this pace they may have to soon vacate the North Block to accommodate all these officers.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?filename=_b6452db6d0a6f5_news.htm&subCatDisp_Id=70&PHPSESSID=70b1fba72da68faf9bf6bbdf6307e782">OFFICE ORDER NO. 171/2005 Dated, the 5th October, 2005</a></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Nexus with product group – DGFT clarifies</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has clarified the scope and meaning of nexus with product group in the policy.<br> <br> • Besides Capital Goods having the capability to produce any of the goods covered in the respective Product Groups and Office equipments, any input listed in the relevant product group category of the SION Book will be within the scope.<br> <br> • If they don’t fall within the product group in SION, cue can be taken from ITC HS</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2005/dgft05cir027.htm">DGFT CIRCULAR NO. 27(RE-2005)/2004-2009 Dated: October 5, 2005</a></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>DGCEI arrests Goa manufacturer</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Officers of the Directorate General of Central Excise Intelligence, Zonal Unit, Mumbai today arrested the partner of a Goa factory on a charge of evasion of Central Excise duty amounting to Rs 3.5 crore. The unit is alleged to have fraudulently availed CENVAT credit. The accused was remanded to 14 days judicial custody by the Additional Chief Metropolitan Magistrate, Esplanado Court, Mumbai for further investigations in the matter.<br> <br> <font color="#FF6666"><b>Until Tomorrow with more DDT<br> <br> Have a nice day. <br> <br> Mail your comments to</b></font> <a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>