TIOL-DDT 234 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<html>
<head>
<title>Untitled Document</title>
</head>
<body bgcolor="#FFFFFF">
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
234</font><br>
03 11 2005<br>
Thursday </b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Drawback
when inputs are imported availing DEPB – yet another faux pas from the
Board? </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>A
recap of yesterday’s DDT:-</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday
<b>DDT</b> had brought to you details of the Board’s Circular No. 41/2005-
cus.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board
clarifies that <b>“it has been decided that the additional customs duty
paid through debit under DEPB shall also be allowed as brand rate of duty
drawback.”</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Board clarification needs a little analysis. Here’s the text of the
operative part of the circular.</font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">an
issue has been raised as to whether additional customs duty paid through
debit under DEPB can be allowed as brand rate of duty drawback.<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
The matter has been examined by the Board. Hitherto, the additional customs
duty paid in cash only was adjusted as CENVAT credit or duty drawback while
the same paid through debit under DEPB was not allowed as duty drawback.
In the Foreign Trade Policy 2004-2009, which came into force w.e.f. 1.9.2004,
it has been provided under paragraph 4.3.5 that the additional customs duty/excise
duty paid in cash or through debit under DEPB shall be adjusted as CENVAT
credit or Duty Drawback as per the rules framed by the Department of Revenue.
Taking note of this change, it has been decided that the additional customs
duty paid through debit under DEPB shall also be allowed as brand rate of
duty drawback.</font></li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So
according to the Board,</font></p>
<ol>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">The
Foreign Trade Policy has provided that CVD paid through DEPB credit can
be adjusted as Cenvat Credit or Drawback as per the rules framed by the
Department of Revenue<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
Taking note of this change, Board has now decided (by a circular) that CVD
paid through DEPB shall also be allowed as duty drawback.</font></li>
</ol>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
this raises certain questions:-</font></p>
<ol>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
Board has issued this clarification by a circular on 28th October 2005.
Since when is it effective? From October 28th 2005 or September 2004?<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
Will drawback be given from the date of the policy?<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
This circular is silent on cenvat credit. Does it mean Cenvat credit will
be allowed of the CVD paid from DEPB credit?<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
Why is this circular silent on cenvat credit and what was the need for clarification
on drawback?</font></li>
</ol>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board
bases its circular on para 4.3.5 of the Foreign Trade Policy. This is what the
para states,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Normally,
the exports made under the DEPB Scheme shall not be entitled for drawback.
However, the additional customs duty/excise duty paid in cash or through debit
under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as per rules
framed by the Department of Revenue.</b></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Board was rather quick to notice this change in the FTP and in para No. 6.1
of CIRCULAR NO. 59/2004-Cus, Dated : October 21, 2004, observed,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.1
One significant amendment made in DEPB Scheme is that additional customs duty
paid through debit under DEPB shall be allowed to be availed as CENVAT credit
or duty drawback. Hitherto, the additional customs duty paid through debit
under DEPB was not being allowed as CENVAT credit or duty drawback. To give
effect to this policy decision, a provision has been made in the notification
governing the imports under DEPB Scheme, viz., notification No. 96/2004-Customs,
dated 17.9.2004. However, it may be noted that this facility would be available
only in respect of the licences issued under the new Foreign Trade Policy.
Licences issued under the previous Policies would be governed by the provisions
of earlier Policies.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So
the circular clearly understands that</font></p>
<blockquote>
<ol>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
Duty paid through DEPB was not allowed as cenvat credit or drawback prior
to the FTP 2004-09<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
It is now allowed albeit for licences issued under the new policy<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
To give effect to the policy, the Notification No. 96/2004 provided for
this.</font></li>
</ol>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Notification No. 96/2004-Cus., dated 17-9-2004 and its present version NOTIFICATION
NO. 89/2005-Cus., Dated: October 4, 2005 in para vi clearly stipulate that:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>(vi)
that the importer shall be entitled to avail the drawback or CENVAT credit
of additional duty leviable under section 3 of the said Customs Tariff Act
against the amount debited in the said Duty Entitlement Pass Book;</b></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So
the position can be summarized as:-</font></p>
<blockquote>
<ol>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
As per the new Foreign Trade Policy, CVD paid from DEPB credit can be allowed
as Cenvat credit or drawback<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
To give effect to this policy, the Finance Ministry, has provided for this
in the notification No. 96/2004 and 89/2005 – cus<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
This fact was mentioned in the circular issued by the Board vide Circular
No. 59/2004<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
The Board forgot about this circular and the notifications<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">
And so has now clarified that drawback will be allowed but is silent about
cenvat credit.</font></li>
</ol>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
strangest fact is that while the Board does not remember either Circular No
59/2004 or Notification No. 96/2004, it has resurrected an old irrelevant circular
No. 3/99 -Cus dated 3-2-1999 which stipulated that, “Therefore no drawback
is admissible against debit of duties made in a DEPB Book” Now the latest
Board Circular states that <b>the instructions contained in Circular No.3/99-Cus
dated 3.2.1999 stand modified</b>. When Board is aware that Credit or drawback
cannot be allowed under the Policy prior to 2004, what is the point in modifying
a 1999 circular? Strange are the ways of the Board! And what is the policy of
the Board in issuing draft circulars? Whenever Board rushes in to issue a circular
without circulating the draft, it is sure to end in a fiasco. There seems to
be an urgent need for outsourcing circulars and notifications.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2005/cuscir05_041.htm" target="_blank">CIRCULAR
NO. 41 /2005-CUSTOMS dated the 28th October,2005</a></b></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Board
transfers old files of Vizag Commissioner (Appeals) to Hyderabad- by an office
order!</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
office order issued by the Revenue Department states, “It has been decided
with the approval of <b>Competent Authority</b> that the 3 Appellate Commissioner
of Central Excise posted in Hyderabad zone be given the additional charge of
Commissioner (Appeal), Vizag with immediate effect and until further orders”
Cases pertaining to the year up to 2002 are given to one Commissioner (Appeals),
for the year 2003 to another and the year 2004 to yet another Commissioner (Appeals).
Who is the <b>Competent Authority</b> whose approval the department has taken?
This order seems to be patently illegal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
per Rule 3(2) 0f the Central Excise Rules,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2)
The Board may, by notification, specify the jurisdiction of a Chief Commissioner
of Central Excise, Commissioner of Central</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Excise
or Commissioner of Central Excise (Appeals) for the purposes of the Act and
the rules made there under.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So
it is the Board which has to by notification specify the jurisdiction of the
Commissioner (Appeals) and the Board had issued a Notification No. 14/2002 CENT
to specify the jurisdiction. This notification also specifies that</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided
that a Chief Commissioner of Central Excise may, within his jurisdiction,
specify, the jurisdiction of a Commissioner of Central Excise (Appeals) and
jurisdiction of such Commissioner of Central Excise (Appeals) shall be limited
to the jurisdiction so specified.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So
if the Chief Commissioner wants, the jurisdiction of a Commissioner (Appeals)
can be changed. But there doesn’t seem to be a provision under the law
for appointing Commissioners (Appeals) by office orders without amending the
relevant notifications.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The
real problem is that cadre review has created several posts of Commissioner
(Appeals) and they all want to be posted in cities like Hyderabad and not small
places like Vizag! Even as per the Board’s statistics there are more than
400 appeals pending in Vizag with only one Commissioner(Appeals) while there
are less than a hundred appeals pending in Hyderabad which has three Commissioners
(Appeals). Is there anything called accountability???</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/order184_2005.htm" target="_blank">Department
of Revenue Office Order No. 184/2005 Dated: 31st October, 2005</a></b></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Import
of Tetra-ethyl lead and Tetra-methyl Lead – restricted</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government
has amended the ITC (HS) Classifications of Export and Import Items, 2004-09
to make the import of Tetra-ethyl lead and Tetra-methyl Lead restricted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2005/dgft05not033.htm" target="_blank">DGFT
Notification No. 33 (RE-2005) /2004-09, Dated: October 31, 2005</a></b></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Union
Govt’s revenue up by 24%</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
central government's tax revenue has increased by 24 percent in the first half
of FY 2005-06, according to figures released by the Controller General of Accounts
(CGA) yesterday. The revenue from the tax collection has increased to Rs 96,249
crore in the first half of the current half year ended on September 30, 2005
as compared to Rs 77,860 crore in the same period a year ago.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#0000CC">Ramadan</font><font color="#006600">
unites all in fasting, worship and prayer. It is a time for contemplation, spirituality
and brotherhood. It is a special time of reflection, fasting, and charity. It
is also a time of spiritual growth and prayer and an occasion to remember the
less fortunate by sharing God's gifts with those in need.</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6666">Until
Monday with more DDT</font></b></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Have
a nice extended weekend.</b></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Mail
your comments to</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
<a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></b>
</font></p>
</body>
</html>