TIOL-DDT 2462 · 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><s><strong><font size="2"><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=20079"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2014_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="250" height="123" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></s><font color="#663399" size="3">TIOL-DDT 2462</font><br> 24.10.2014 <br> Friday </strong></font></p> <p align="center"><font size="3"><strong><em><font color="#006600" face="Georgia, Times New Roman, Times, serif">CE Valuation - Maruti directed to pay Rs. 150 Crores pre-deposit - Another Fiat in making?</font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Commissioner of Central Excise demanded a duty of Rs. 241 crore from Maruti Suzuki by adding to the assessable value the dealers' contribution in the consumer promotional schemes paid from the dealer's margin.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/DDT%202462_1.jpg" alt="Legal Corner Icon" width="250" height="175" hspace="5" border="0" align="left">Maruti offers several promotional and incentive schemes such as corporate discount, free insurance etc. for their customers through the dealers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner held that the discounts borne by the dealers was a flow of consideration to the appellants by reason of or in connection with the sale of vehicles and accordingly the amount of discount borne by the dealer was includible in the assessable value for the purpose of payment of central excise duty in terms of the definition of 'transaction value' as provided under Section 4 of Central Excise Act, 1944. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On appeal, the Tribunal noted that <em>prima facie</em>, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">the promotional discount was given under the understanding between the manufacturer and the dealer in relation to the activity of sale as <u>an expenditure on behalf of the appellant by the dealer</u> , and that is regulated through dealer's margin. That would form part of the assessable value of such goods. Undoubtedly, such discounts borne by the dealers could also be to the advantage of the dealers in the form of increased sale leading to earning of increased profit Commission. However, in relation to the manufacturer, it would be an indirect consideration received by the assessee in relation to the clearance of the product manufactured by him . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal did not accept the plea of Maruti that the dealers bear the discount on their own accord, <font color="#FF0000">as no one will sacrifice his margin unless otherwise compensated.It would be commercially unthinkable for any dealer to remain in business without offering promotional discounts on 'Ex-showroom Price', while charging over and above that price in the name of 'Handling Charges' or by some other name. Therefore, <em>prima facie</em> it transpires <strong>that the discounts have been offered in connection with the sale and such discounts were a booster to the appellant to increase the sales. Further, such discounts has character of expenses on account of Advertising or Publicity, Marketing and Selling Organization Expenses, which are covered within the definition of 'transaction value' as provided under Section 4(3)(d) of CEA, 1944. </strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal found that the adjudication has force and pre-deposit is required to protect the interest of Revenue. And so the Tribunal ordered a pre-deposit of Rs. 150 Crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After decades of existence of Central Excise Duty, it is strange that even now we have disputes on valuation! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you today the Order of the Tribunal delivered a week ago. <strong>Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=21795" target="_blank">Breaking News</a> </strong></font></p> <p align="center"><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600">Six Months time for taking CENVAT Credit - Applicable for invoices issued prior to 31.08.2014? </font></strong></font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the amendment to the CENVAT Credit Rules by Notification No. 21/2014-CENT dated 11.07.2014, after 1.9.2014, CENVAT Credit cannot be taken after six months of the date of issue of invoices/documents.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the question is; will this rule apply to invoices issued prior to 1.9.2014 or after? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This question was raised recently in the RAC meeting of Chennai Central Excise Zone. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner, Service Tax observed that the CENVAT credit on which credit has not been taken earlier, should have been taken during the interim period i.e., 11.07.2014 to 30.08.2014 and ample time was provided to the assesses for taking such credit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner, LTU also endorsed the above view and informed that there is no time limit to take credit on invoices which was issued before 01.09.2014. This limitation would apply only to those invoices that are issued on or after 01.09.2014. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Joint Commissioner (CCO) brought to the notice of the committee that the above notification no 21/2014 CE (NT) dated 11.07.2014 does not provide any relaxation for such instances and sufficient time from 11.07.2014 to 30.08.2014 has been provided for taking credit of such old invoices in the notification itself. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chief Commissioner clarified that from 01.09.2014, the said Rule provided for a period 6 months from the date of invoice for taking credit. The Rule read strictly and in isolation would imply that (on) an invoice issued, say on 1.1.2014, credit of duty paid on the invoice cannot be availed. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">But whether the benefit can be denied in a case such as this where the right to avail credit had already vested denied at a later date by virtue of the amendment, the matter will be taken up with the Board for clarification . </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board give a clarification before the matter reaches the Supreme Court? </font></p> <p align="center"><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600">FTP - Export of Dried Silk Worm Pupae to EU - Conditions Notified </font></strong></font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has notified the following conditions for export of Dried Silk Worm Pupae when exported to European Union: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) A ‘Shipment Clearance Certificate' is to be issued consignment-wise by the CAPEXIL indicating details of the name and address of the exporter, address of the registered plant, IEC No. of the exporter, plant approval number, nature of export product, quantity, invoice number and date, port of loading (Name of the port) and destination. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) After the shipment is made, the exporter shall also provide a ‘Health Certificate" consignment wise to the buyer giving details of vessel name, shipping bill number with date, etc. as per the requirement of EU. The certificate would be issued jointly by CAPEXIL& Regional Animal Quarantine Officer, Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture, Government of India.</font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTcyMTc=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 95 (RE-2013)/2009-2014, Dated: October 22 2014 </font></strong></a></p> <p align="center"><font color="#006600"><em><font face="Georgia, Times New Roman, Times, serif"><strong><font size="3"> Why People don't pay taxes? </font></strong></font></em></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/DDT%202462_2.jpg" alt="Legal Corner Icon" width="350" height="350" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<em><strong>FOR</strong> almost 68 years, no one has gone to jail for not paying their taxes. Our people have a tendency to not pay them. The informal sector doesn't get itself registered. There is no mechanism to keep a tab on the income of micro-retail. Salons, private tuition centres, tax solicitors, software developers - how many of them pay taxes? With a non-trustworthy system, people have no incentive to pay taxes."</em>, commented Pakistani newspaper, ‘The Express Tribune' yesterday. The diagram is from the Sustainable Development Policy Institute of Pakistan. </font></p> <p align="center"><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600">Diwali Gift - 2162 officers in CBEC promoted as Assistant Commissioners - Great Job - Madam Chairperson </font></strong></font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/DDT%202462_3.jpg" alt="Legal Corner Icon" width="219" height="162" hspace="5" border="0" align="left">CBEC Chairperson, Shanti Sundharam is to retire next Friday. Many of the officers in the Department are not exactly her fans. But on Diwali eve, she earned an exalted place in the hearts of over 2000 Group B officers and their families - for she promoted them as Assistant Commissioners and issued the orders just before the auspicious and sentimental Deepavali. The joy of some of these officers who spoke to me knew no bounds, though many of them had a deep regret that they had to wait so long to get the second promotion in their lives - for some of them after 37 years of stagnated service. But they were all unanimous that this could not have come through, but for the efforts of Madam Chairperson. Many of them requested me to cover this in DDT. (<em>And mind you without your usual jibes</em>, they warned.) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I did not know till I spoke to some of the promoted officers that a promotion meant so much in life! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Madam, you made the day for thousands of people and all of them will wish you a happy healthy retired life. </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><em><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif">Jurispruden</font><font color="#FF6633" size="4" face="Georgia, Times New Roman, Times, serif">tiol</font><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"> - Monday's cases</font></em></strong></font></strong></font></p> <p align="justify"><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"><font color="#663399"><strong>Service Tax</strong></font></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Refunds - Interest payable on delayed refunds - CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> has categorically directed the formation that the refund claim of the service tax paid on services rendered to SEZ units should be sanctioned within the maximum time of 30 days from the date of filing of refund claim and in any case beyond 45 days from the date of filing of the refund claim. The time limit which has been given out in place by the Board needs to have been followed failing which, the liability to pay interest arises. The circular dtd 20th May, 2009 has practically put the refund claims filed in terms of Notification of 9/2009 on a higher platform as compared to other types of refund claims filed under Section 11B for which 3 months period was prescribed for processing the claim from the date of filing of the refund claims. </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 when assessee has option to claim exemption either u/s 10(23C) or Sec 11(1), AO cannot force assessee to go for deduction u/s 11 - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a Trust registered u/s 12AA of the Act. The AO observed that the application of Rs.53,84,680/- which was claimed to have been made through statement of affairs was made on the purchase/addition to the fixed assets. Further, in response of accumulation claimed to have been made as per Explanation to sec 11(1) of the Act, it was also noticed that no application for exercise of option in writing was found on record. Accordingly, he asked the assessee as to why the expenditure made on addition/purchase of fixed assets may not be treated as application for charitable purpose in view of the ratio of decision in the case of <em>Queens Educational Society v. CIT</em> of the High Court of Uttarakhand and since no notice as per section 11(1) of the Act r.w.Exp.2 to this section, was given within the prescribed time limits, why exemption may not be withdrawn on such accumulation. The AO did not consider the purchase of fixed assets as application towards charitable purpose and accordingly withdrawn the exemption of Rs.53,84,680/- and added the same to the income of the assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when assessee has option to claim exemption either u/s 10(23C) or Sec 11(1), AO cannot force the assessee to go for deduction u/s 11. YES is the answer of the Tribunal.</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 - s.4A of CEA, 1944 - Goods cleared in bulk does not mean that they are meant for Industrial/Institutional consumers - It should be meant for Industrial/Institutional consumers under SWAM Rules to pay duty u/s 4 of the CEA, 1944 - Appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is a manufacturer of ceramic tiles and clearing the same to their depots. The appellant sells these tiles to dealers who in turn sell to ultimate consumers. The appellant also sells tiles to buyers such as Real Estate Developers, Construction Co., Cooperative Housing Societies, Commercial Complexes, Educational Institutions & Hostels, Hotels, Hospitals, Interior Designer etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant is discharging duty liability on MRP basis as per Section 4A but the revenue is of the view that as these tiles have been cleared to real estate developers etc. viz. industrial or institutional consumers, they are not required to affix MRP inasmuch as they are exempted from this requirement as per Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and, therefore, the appellants are required to pay duty on transaction value i.e. as per Section 4 of CEA, 1944. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Monday for the judgements </font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more<strong> DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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@tiol.in"><strong>vijaywrite@tiol.in </strong></a></font></p> </body> </html>