TIOL-DDT 2214 · 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 align="justify"><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></strong></font><font color="#663399" size="3">TIOL-DDT 2214 </font><br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>22.10.2013 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Can two exemption Notifications be simultaneously allowed - CBEC Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNDER </strong>notification No.12/2012-Customs, dated 17-03-2012 (S. No. 123 of the Table), Steam Coal falling under sub-heading 27011920 attracts basic customs duty (BCD) at 2% and countervailing duty (CVD) at 2%. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Steam Coal imported from Indonesia enjoys preferential BCD @ 0% under S. No. 207 of notification No. 46/2011-Customs, dated 1st June 2011 (India-ASEAN FTA). This notification does not specify the CVD rate. So, as per this notification, CVD would be the CVD payable as per the Central Excise Tariff. Now the Central Excise duty is 6% when CENVAT credit is taken and 2% when no CENVAT credit is taken. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, what is the CVD payable on steam coal imported from Indonesia? Is it 2% as per Notification No. 12/2012-Customs or 6% as per the Central Excise rate? The Department's view is that you cannot avail Notification No. 46/2011 for BCD and another Notification No. 12/2012 for CVD. If one exemption is availed it has to be availed fully and he cannot avail two notifications, each one partly. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This issue was discussed in a conference of Chief Commissioners of Customs in Vizag on 5.6.2013. The conference could not decide the issue and referred the matter to the CBEC. (Isn't it a little surprising that 20 odd Chief Commissioners with a Member present could not take a decision on this simple issue and referred it to the Board's wisdom?) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meantime, the case reached the Bombay High Court where an importer filed a writ even before the Adjudicating Authority passed an order. Normally a High Court would not interfere at that stage, but Bombay High Court did, as the Deputy Commissioner of Customs filed an affidavit emphatically stating that only the benefit of Notification No.46/2011 dated 1 June 2011 for coal imported from Indonesia is available. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court noted that CESTAT has consistently taken a stand that in the absence of any bar in the notification itself, it is open to an assessee to take benefit of more than one notification.<strong><font size="1"> [<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk0NTg=">2013-TIOL-624-HC-MUM-CUS </a>] </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For example <em> Commissioner of Central Excise vs. Premier Mushroom Farms <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2005/2005-TIOL-1091-CESTAT-BANG.htm"><font size="1">(2005-TIOL-1091-CESTAT-BANG)</font></a><font size="1">. </font></strong></em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly the Apex Court in the matter of <em>Super Cassettes Industries Ltd <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2006/2006-TIOL-135-SC-CUS.htm"><font size="1">(2006-TIOL-135-SC-CUS)</font> </a></strong></em>benefit of more than one exemption notification was extended. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has now issued the much sought after clarification without mentioning the reference from Chief Commissioners or the decided case law on the subject. But thankfully Board has come to the correct clarification though the reasons given appear to be a little flawed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that <strong>an importer while availing of BCD exemption on steam coal under notification No. 46/2011-Cus can simultaneously avail of concessional CVD at 2% under notification No. 12/2012-Cus </strong>. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">In this otherwise wise, correct, fair and just clarification, there is unfortunately a jarring note. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the Circular, it is mentioned, <em>or he has to pay the CVD at 6%, which is the rate of excise duty applicable on Steam Coal when Cenvat facility has </em><strong><em>not </em></strong><em> been availed of </em>. Sir, this is the rate when CENVAT facility is availed, not when it is not availed. As rightly mentioned in para 4 of the circular, "<em>In the present case, the excise duty applicable on Steam Coal is 6%, if CENVAT benefit <strong>is availed </strong>of and 1% if the CENVAT benefit is <strong>not availed </strong> of</em>."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any way what the Board finally clarifies is that an importer can avail Notification No. 46/2011-Cus for Basic Customs Duty (0%) and Notification No. 12/2012-Cus for CVD (2%) - maybe we should ignore the rest of the Circular. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_041.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 41/2013-Cus, Dated : October 21, 2013 </strong></font></a></p> <p align="center"> </p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Permission for sub-contracting by a SEZ Unit to a DTA Unit </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNDER</strong> sub-rule 41(1) of SEZ Rules, 2006 a Unit may sub-contract a part of its production or any production process, to a unit in the Domestic Tariff Area or in a Special Economic Zone or Export Oriented unit or Software Technology Park unit or Bio-technology Park unit with prior permission of the Specified officer to be given on an annual basis subject to conditions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Requests have been received from large manufacturing Units that permission may be granted to sub-contract for longer periods as against one year at a time so as to facilitate the manufacturing process and thereby augment exports. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department of Commerce has considered the request and decided that sub-contracting of production or any production process by large manufacturing SEZ Units to DTA units may be granted for a period up to 3 (THREE) years at a time subject to the following conditions: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The SEZ unit should be a manufacturing unit (not including Gems & Jewellery Sector units). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Such a unit should have substantial exports with average annual exports of Rs. 1000 crore or more in at least two out of four years (i.e. current plus previous three years). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The unit should have been Net Foreign Exchange Earner over the past 5 years block. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The unit should have an annual average export of not less than 51% of its total turnover in the block of 5 years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The Unit should have an un-blemished track record and no penalties against the unit for any violations under the Customs Act,FTDR Act etc. should have been imposed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The Bond-cum-LUT signed by the SEZ unit should adequately cover the goods which leave the SEZ for sub-contracting. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. The period for which sub-contracting is allowed will not exceed the validity period of the LOP of the SEZ unit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. The DTA unit to which the sub contract is to be awarded should be registered with the Central Excise Department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. No Sub-contracting should be permitted for goods, which are restricted/prohibited or otherwise not permitted under any provision of the SEZ Act and Rules. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Sub-contracting would also not ordinarily be permitted for goods, which attract anti-dumping duty as per EXIM Policy. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. Such permission should be granted with the approval of the Development Commissioner, SEZ. </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/sez13ins078.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Instruction No.78 Dated 11.10.2013 of Department of Commerce </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax - Internal Audit System-Strengthening the role of Supervisory Authorities </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>slow progress of work relating to settlement of Internal Audit Objections and also quality & coverage of internal audit have been a matter of serious concern. The Public Accounts Committee has also commented adversely on the present state of affairs and directed proper monitoring mechanism for desired improvement. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In order to streamline the system, CBDT has decided to strengthen roles of supervisory authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chief Commissioners are required to review the performance of Internal Audit Wing on a monthly basis to monitor the conformity to the Action Plan drawn for audit; Exercise supervision in a manner as to facilitate zero-error assessments. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Specific roles have also been assigned to Commissioners and Additional Commissioners. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Major and Minor Objections </strong>: the definition of Major audit objection, for the purposes of internal Audit, is henceforth revised as one where the revenue effect is Rs.2,00,000 or more for the purposes of Corporation Tax and Income Tax. This will apply to all pending objections & reports shall be revised for quarter ending December, 2013. The remaining objections are treated as minor. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/instruct1315.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Instruction No. 15/2013; Dated: September 18, 2013 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Crying fire is of no avail if one cannot show even a streak of smoke - Revenue appeal dismissed </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PURSUANT</STRONG> to an order passed by the Commissioner (A) allowing their appeal, the respondent claimed refund of Rs.13,09,506/- and the same was sanctioned by the lower adjudicating authority. The Revenue challenged the same on the ground that the lower authority has not applied the doctrine of unjust enrichment. This appeal was rejected by the Commissioner (Appeals) and so the Revenue is trying its luck before the CESTAT. The appeal was filed in the year 2006 and it was heard recently. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent skipped the proceedings. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is the submission of the Revenue that the lower authorities while deciding the question of unjust enrichment have not taken into consideration the fact that in the books of account during 2001 the amount receivable was shown as Rs.1411.0 lakhs whereas during 2003 the amount receivable was Rs.496.0 lakhs. Inasmuch as the grievance of the department is that the respondent has not shown the breakup of Rs.496.0 lakhs and has also not shown that the said amount covered the amount of Rs.13,09,506/- which was to be refunded. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the cross objection filed by the respondent it is submitted that the duty amount involved in this case was recovered by the department consequent to Dy. Commissioner's order dated 22/01/2002 by encashing bank guarantee of Rs.13,09,506/-; that consequent to the order of the Commissioner (Appeals) dated 23/03/2004 the en-cashed bank guarantee was required to be returned to the respondent and, therefore it will not be hit by doctrine of unjust enrichment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed - </font></p> <blockquote> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"…Firstly I find that all these aspects have been taken into consideration by learned Commissioner (Appeals) in his order. Secondly, the amount of Rs.496.0 lakhs can undoubtedly cover an amount of Rs.13,09,506/- lakhs. If the department had any doubt in this regard nothing prevented them to investigate and establish that the amount of Rs.13,09,506/- is not covered in Rs.496.0 lakhs. The department did not carry out any such exercise. Further the learned A.R made an alternate plea to get the issue re-examined by the lower authorities. I do not think this will serve any purpose, since the department has not taken any step before or after filing the appeal to find out whether Rs.13,09,506/- lakhs was covered/not covered under Rs.496.0 lakhs. Crying fire is of no avail if one cannot show even a streak of smoke. In these circumstances, I do not find any reason to interfere with the concurrent findings of the lower authorities. Therefore, the learned Commissioner (Appeals) order is upheld. The appeal which is devoid of merits is dismissed."</em></font></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Hopefully, the Department will not take their fire engine further…after all, it is after seven years that they have been reminded that there is no smoke without fire or for that matter that they are crying wolf! </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTAzODg=" target="_blank"><font size="1">2013-TIOL-1561-CESTAT-MUM</font></a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> - Wednesday's cases</font></strong></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"></font><font color="#663399">UP Trade Tax </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Fly Ash used in Cement - grant of rebate for units manufacturing cement using Fly ash in certain districts of UP alone discriminatory - Struck down: Supreme Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The substantial question of law in these appeals is, whether grant of rebate of tax by the State Government by issuing a notification in exercise of its powers under Section 5 of Uttar Pradesh Trade Tax Act, 1948 ("the Act", for short) discriminates between the goods imported from neighbouring States and goods manufactured and produced in the State of Uttar Pradesh and therefore contravenes the Constitutional Provisions viz.; articles 301 and 304(a) of the Constitution of India. </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 exemption u/s 10B can be denied merely on the basis that confirmation regarding export sale has not been received till date of making such claim - NO: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether exemption u/s 10B can be denied merely on the basis that confirmation regarding export sale has not been received till the date of making such claim; Whether exemption can be denied, even if assessee has made complete disclosure in its books of accounts and Whether penalty for concealment can be warranted in such a case. And the verdict goes against the Revenue. </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">Valuation - Freight charges collected separately and goods delivered at the buyer's premises; the AV for purpose of excise must be in terms of the Central Excise Act alone and not on the basis of VAT Act - Pre-deposit of Rs.4 Crores set aside: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The impugned order holds that as the freight is included in the value of goods for payment of VAT, it must be included also for arriving at the value of the goods for purposes of the Act is not appropriate. Both the levies are different and the assessable value for purpose of excise must be only in terms of the Act alone and not on the basis of VAT Act. The regime under the Act is transaction value and each transaction is to be separately assessed depending upon the terms of the contract and the time the ownership in goods is passed." </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">Section 66A is attracted only when services are received in India by a person situated in India even if such persons may have permanent establishment abroad: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The provisions of Section 66A are attracted only when services are received in India by a person situated in India even if such persons may have permanent establishment abroad. In the present case, the appellant has provided services through their branches abroad to customers located abroad. Therefore, it is not a case of the appellant receiving the services but it is a question of rendering services abroad. Therefore, prima facie view is that the provisions of Section 66A are not at all attracted. Appeal allowed by way of remand. </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 align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a Nice Day. </strong></font></p> <p align="justify"><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">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>