TIOL-DDT 2600 · the untouched capture
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<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 color="#663399" size="3"><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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><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=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2600 </font><br>
19 05 2015 <br>
Tuesday </strong></font></p>
<p align="center"><font size="2" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600" size="3">Education Cess - Where did the Money Go? </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>his 2004 Budget speech the then Finance Minister Mr. Chidambaram said, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In my scheme of things, no issue enjoys a higher priority than providing basic education to all children. The NCMP mandates Government to levy an education cess. I propose to levy a cess of 2 per cent. The new cess will yield about Rs.4000-5000 crore in a full year. The <font color="#FF0000">whole of the amount collected as cess will be earmarked for education</font> , which will naturally include providing a nutritious cooked midday meal. If primary education and the nutritious cooked meal scheme can work hand in hand, I believe <font color="#FF0000">there will be a new dawn for the poor children </font>of India. </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What happened to the new dawn? And what really happened to the <em><font color="#FF0000">whole of the amount collected as cess?</font> </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CAG in its latest report to Parliament studied the issue, which revealed some startling facts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A non-lapsable fund for elementary education known as <em>Prarambhik Shiksha Kosh </em> (PSK) was created in 2005-06 under non-interest bearing section of the reserve funds in the Public Account. This fund is meant to meet the expenditure requirement for elementary education under the schemes of Sarva Shiksha Abhiyaan and Mid-Day Meal Scheme. The education cess collection was initially credited to the Consolidated Fund of India and subsequently transferred after obtaining the Parliamentary authorisation to the PSK to finance the expenditure on elementary education. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During the period 2004 to 2014, against the total collection of Rs. 1,30,599 crore of education cess in the CFI, only Rs.1,19,197 crore was transferred to the PSK, resulting in short transfer of Rs. 11,402 crore. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SHE is worse </strong>: In 2007, the same Finance Minister levied a Secondary and Higher Education (SHE) Cess of 1 per cent in addition to the 2 per cent education cess levied in 2004. The Finance Minister told Parliament in his budget speech, "<em>I have a proposal regarding the cess for education. While the cess of 2 per cent on all taxes to fund basic education will remain, I propose to levy an additional cess of 1 per cent on all taxes to fund secondary education and higher education and the expansion of capacity by 54 per cent for reservation for socially and educationally backward classes."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What happened to this money? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From 2007 to 2014, they collected Rs. 52,268 crores as Secondary and Higher Education (SHE) Cess. However, unlike the creation of PSK in the case of primary education cess, neither a designated fund was created to monitor the deposit of proceeds of SHEC nor schemes identified on which the cess proceeds were to be spent. Consequently, the utilisation of cess for furthering the cause of secondary and higher education as envisaged in the Finance Act was not ascertainable from the Union Accounts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 2009, the Minister for HRD told the parliament, "<em>Regarding 1% additional cess for Secondary & Higher Education, only Gross Budgetary Support is provided to Department of Higher Education (HE) to meet its budgetary requirement & no separate allocation is made from the funds generated from this 1% additional cess.</em>" </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government's only justification is that the funds allotted to the HRD Ministry are more than the education cess collected. Is this fair? You collect tax from me for a specific purpose and you don't know what happened to the money. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see our Guest Column article <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjM2NDg=" target="_blank">Subsuming of Education Cess on Excisable Goods</a><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjM2NDg=">.</a> </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>Education Cess - the RTI Trail </em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> 7th March, I asked the Revenue Secretary </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Sir, </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>I would like to have the following information under the Right to Information Act. </em></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <em>Amount of Education Cess collected under Direct Taxes from 2004-05 to 2014-15, each year separately. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <em>Amount of Education Cess collected under Indirect Taxes from 2004-05 to 2014-15, each year separately. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <em>Amount of Secondary and Higher Education Cess collected under Direct Taxes from 2006-07 to 2014-15. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <em>Amount of Secondary and Higher Education Cess collected under Indirect Taxes from 2006-07 to 2014-15. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. <em>Details of how the amounts collected were spent/distributed/allocated year wise. </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>As you are the Revenue Secretary, I assume that the information must be readily available with you. </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 16th March, I was informed that my request has been transferred to CBDT and CBEC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 17.03.2015, an Under Secretary in CBEC informed me that they do not have the information and my request has been transferred to the Director of Data Management (DDM). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 31st March, DDM informed me the education cess on Customs and Central Excise collected from 2006-07. They informed me that separate figures are not maintained for Service Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 13.4.2015, the CBEC Under Secretary again informed me that information in points 2 & 4 is not held by him and the Director of Data Management might have it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 15.04.2015, he again informed that with respect to point No. 8, Central Excise, Customs and Service Tax are the three taxes administered by CBEC and they don't have information on other taxes and he doesn't have information on Points 10 & 12. [Please note that my query did not have points 8, 10 and 12] </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 07.05.2015, the Deputy Director of Income Tax (Systems) informed that the <em>data required as per point 1 & 3 is not available in the format asked for i.e year wise and collation of the same would require to disproportionately divert the resources of the Public authority concerned</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I didn't want to further waste the nation's money in these babus working overtime to ensure that information is not provided. So, I didn't appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They don't know how much they collected, they don't know where the money went - and they don't know what you should do with the credit of education cess accumulated by you. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What can poor Modi do? </font></p>
<p align="center"><font color="#006600" face="Georgia, Times New Roman, Times, serif"><strong><font size="3"><em>Pay IT Dues in Advance - RBI </em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Reserve Bank of India has appealed to income tax assessees to remit their income tax dues sufficiently in advance of the due date. It has also stated that assessees can use alternate channels like select branches of agency banks or the facility of online payment of taxes offered by these banks. These will obviate the inconvenience involved in standing <font color="#FF0000">in long queues at the Reserve Bank offices</font>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is observed that the rush for remitting Income - Tax dues through the Reserve Bank of India has been far too heavy towards the end of June every year and it becomes difficult for the Reserve Bank to cope with the pressure of issuing receipts although. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is strange that people still want to stand in queue outside RBI to pay income tax, when they can do it online. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/rbi_2434.PDF" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI Press Release: 2014-2015/2434., Dated May 18 2015 </strong></font></a></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>FTP -Pre-shipment Inspection Agency - Revised Procedure from 1.7.2015 </em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong> order to facilitate transitional arrangements, the Director General of Foreign Trade had kept in abeyance the provisions of para 2.55 [Recognition as Pre-shipment Inspection Agency (PSIA) and issuance of Pre - shipment Certificate (PSIC)] and 2.56 [Responsibility and Liability of PSIA and Importer] of Handbook of Procedures, 2015-20 (which came into effect from 1.4.2015) till further orders. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the procedure for issue of Pre-Shipment Inspection Certificate (PSIC), as laid down in para 2.32.2A and 2.32.2B of Handbook of Procedure Vol. I 2009-14, were to remain in effect, till further orders. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further orders have come. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has notified the revised procedure to be followed by Pre-shipment Inspection Agencies (PSIAs) for issue of Pre-Shipment Inspection Certificates (PSICs), with effect from 01.07.2015. Till then, the old procedure will continue. Procedure for application by the existing PSIAs as well as new applicants for recognition/extension of area of operation etc. has been notified. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTgwNTA=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice No. 12/2015-20, Dated: May 18, 2015 </strong></font></a></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>GST - Take antibiotics till the End - Malaysian PM </em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MALAYSIA </strong>introduced GST with effect from 1st April 2015. In the last less than two months, there is total mess all around in spite of the low rate of 6% GST. Today the Prime Minister who is also the Finance Minister said, <em>"We have to inform about additional revenue, how we are using it. We are collecting for the benefit of the people, we will return it to the people. These are short-term challenges that must be faced." </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Noting that there were grumblings from people, the Prime Minister wanted the officers to get feedback to see if their <em>grumblings have any basis or was caused by certain quarters taking advantage by maintaining the sales prices with an additional 6% even though the SST had been abolished </em>. The prime minister hoped all parties would continue to understand GST as a more efficient and effective tax system that makes the country's fiscal financial foundation stronger and said, "<em>We must take antibiotics until the end to allow our health to recover, we must have courage despite being beaten by the waves as the ship must head to its destination."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is in store for us? </font></p>
<p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><font size="3"><em><font color="#006600">Jurispruden</font><font color="#FF6633">tiol</font> <font color="#006600">- Recent Supreme Court Judgements </font></em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Central Excise - Modvat Credit - Defective inputs - once the inputs have gone into the manufacturing process, Modvat credit is to be allowed: Settlement Commission - High Court has the power to decide the principle of law on the admitted facts:</font> </strong>In this case, the Settlement Commission had disallowed modvat credit on damaged inputs which have gone into the process of manufacture. The assessee appealed to the High Court and the High Court agreed that the assessee is eligible for such credit, as each step <em>towards production would be a process in relation to the manufacture. </em>The High Court remanded the matter to the Settlement Commission. Against the remand order, the Department is before the Supreme Court. The Supreme Court upheld the High Court order, dismissed the Revenue appeal and directed the Settlement Commission to decide the case again - after 13 years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=23649" target="_blank">Breaking News</a> </strong> - <em><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAyNzYw" target="_blank"><strong>Union of India Vs Asahi India Safety Glass Ltd -
2015-TIOL-129-SC-CX </strong></a></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Central Excise - Valuation (prior to 2000) - Clearance to own unit - Comparable price correct method - Highest price to other buyer of a single unit cannot be the basis for assessable value:</font> </strong>The Revenue/Department found that the price shown for various models of VIT cleared for captive consumption of the appellant's own unit at Nasik is much lesser than the price at which the appellant had been selling such products to the other parties. A differential duty of Rs.94,48,210/- was proposed to be demanded in the SCN. The respondent replied to the show cause notice in which the prime contention raised was that even if Nasik unit was its own unit and it would be treated as related party, the prices at which the goods were cleared, for Nasik unit was negotiated price and at arms length. On that basis it was pleaded that the price declared for clearance of such goods for Nasik unit should be accepted. The Assessing Officer rejected the plea of the appellant and confirmed the demand raised in the show cause notice. The rejection was on the ground that Nasik unit was to be treated as "related party", such price as declared cannot be taken into consideration in view of the provision of Section 4(1)(a) of the Central Excise Act, 1944. For the purpose of valuation the adjudicating authority resorted to the Valuation Rules. He took into consideration the instance of those models of VIT which were identical in nature and supplied to third party and the highest comparable price i.e. the highest price at which the goods were sold to the third party. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <em><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAyNzU5"><strong>Crompton Greaves Ltd Vs Commissioner of Central Excise, Aurangabad -
2015-TIOL-128-SC-CX </strong></a></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Central Excise - <em>in relation </em> to manufacture - Material handling equipment: </font></strong>The Supreme Court Held <em>: It is an admitted position, as explained by the appellant itself, that these pallets which are manufactured/assembled in the factory of the appellant are in the nature of material handling equipment, to keep and carry work in progress goods from one machine to the other. Thus, the use of the pallets is for carrying out the material from one machine to the other. It cannot, therefore, be said that these goods are used in relation to the manufacture in or in relation to the manufacture of the final products. </em></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <em><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAyNzU4" target="_blank">Gajra Gears Ltd Vs Commissioner of Customs and Central Excise, -
2015-TIOL-127-SC-CX </a></em></font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Central Excise - <em>Classification- yarn - the goods in question, viz., manufacturing yarn out of synthetic waste, rags, silk waste and wool waste are subject to levy of excise duty under entry 5509.90. Tribunal's order upheld.</em>: </font></strong>After going through the order of the tribunal Supreme Court found that the Tribunal has come to the right conclusion that the goods in question, viz., manufacturing yarn out of synthetic waste, rags, silk waste and wool waste are subject to levy of excise duty under entry 5509.90. Supreme Court was also of the view that the extended period of limitation was rightly invoked. Therefore, it did not find any merit in the appeal preferred by the assessee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal has reduced the amount of demand of Rs. 26,35,780/- as contained in the order of the Commissioner to Rs.7,28,540/- on the ground that the period prior to 26.5.1995 could not be taken into consideration. The Tribunal has given valid reasons for this conclusion. Thus, the appeal of the Revenue also, challenging this part of the order, is dismissed. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAyNzU3" target="_blank"> <em>Commissioner of Central Excise, Chandigarh Vs Oswal Yarns Ltd -
2015-TIOL-126-SC-CX </em></a><em> </em></font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Central Excise - valuation - bought out items<em>.</em>: </font></strong>It is contended that the assessee had removed boilers in unassembled form at the factory site according to the excise authorities. The Tribunal has decided this issue in favour of the Revenue accepting its plea that without these parts a boiler cannot function. It is this part of the Tribunal's order which is assailed in the present appeal. Counsel pointed out that though in the show cause notice such bought out parts were mentioned in annexure D thereto, while computing the demands which were raised in the show cause notice, no excise is demanded on the above item. If that be so, there is no need to go into the issue raised by the appellant in this appeal as the decision of this appeal either way would not affect the appellant if the duty itself is not demanded thereupon. While dismissing this appeal, it is clarified that if there was no such amount demanded in the show cause notice, the direction contained in para 10 and 11(b) of the impugned order of the Tribunal to the jurisdictional officer to determine and recover the duty from the appellant shall have to go. However, it is only if the Officer is satisfied that no demand was made in respect of aforesaid items while computing the demand. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <em><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAyNzU2" target="_blank">Thermax Babcock and Wilcox Ltd Vs Commissioner of Central Excise, Pune -
2015-TIOL-125-SC-CX </a></em></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"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></strong></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>
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