TIOL-DDT 2671 · the untouched capture
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<p align="justify"><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>TIOL-DDT 2671 </font><br>
26 08 2015<br>
Wednesday </strong></font></p>
<p align="center"><font size="2" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#000000"style="background-color:#D2FFDE" span="span"><font size="3"><strong>Yesterday in Supreme Court - CX Valuation - Discount - Classification - Heel Guard - medicament or skin care product </strong></font> </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> a Special Tax Bench in the Supreme Court, many old issues are getting settled and unsettled. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise - Valuation - Cash Discount has to be taken into account in arriving at <em>"price"</em> even under Section 4 as amended in 2000: In Central Excise, valuation is a problem as old as Central Excise itself. And the Government ensures that the same issues are agitated before the Supreme Court again and again. In the case decided yesterday, the Supreme Court considered the valuation provisions as it existed prior to 1973, after 1973 and before 2000 and after 2000. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The main issue was deduction on account of trade discounts. The Supreme Court observed, "<em>It can be seen that the common thread running through Section 4, whether it is prior to 1973, after the amendment in 1973, or after the amendment of 2000, is that excisable goods have to have a determination of "price" only "at the time of removal". This basic feature of Section 4 has never changed even after two amendments. The "place of removal" has been amended from time to time so that it could be expanded from a factory or any other premises of manufacture or production, to warehouses or depots wherein the excisable goods have been permitted to be deposited either with payment of duty, or from which such excisable goods are to be sold after clearance from a factory."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>When sold</em></font> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> does not mean the time: </em>The Supreme Court observed that <em>the expression "actually paid or payable for the goods, when sold" only means that whatever is agreed to as the price for the goods forms the basis of value, whether such price has been paid, has been paid in part, or has not been paid at all. The basis of "transaction value" is therefore the agreed contractual price. Further, the expression "when sold" is not meant to indicate the time at which such goods are sold, but is meant to indicate that goods are the subject matter of an agreement of sale. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vaseline Intensive Care Heel Guard is medicament: The issue involved in the appeal is as to whether Vaseline Intensive Care Heel Guard ('VHG') is to be treated as merely a skin care preparation or it is a medicament having curing properties. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The product in question, Vaseline Intensive Care Heel Guard, is marketed as a solution for cracked heels and it is claimed that this solution is specially developed by the scientists at Vaseline Research. The composition of this product includes salicylic acid I.P. 1.5% w/w. lactic acid 8.0% w/w. Triclosan 0.1% w/w. Cream base - q.s. Salicylic acid is described as keratolytic substance having bacteriostalic and fungicidal properties used in the treatment of fungus infection of the skin. The Tribunal, while deciding that the aforesaid product is a medicament, pointed out that the product was formulated and essentially used for treatment of 'cracked heels', protection from further cracks in the human heels due to extreme climatic conditions and low humidity, constant exposure of feet to water and due to absence of shoe or other protection while walking. It also found that this product was manufactured under a drug licence as drug authorities had treated the same as a medicament. The Tribunal also found that the usage of this product was related to the effect of therapeutic or mitigating substance of prophylactic substances added. Thus, the effect of mitigation of an external condition is primary effect and the effect of smoothing the skin was secondary in nature and, therefore, it was to be treated as a medicament and classified under Chapter 30. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court agreed with the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24506" target="_blank">Breaking News</a></strong></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#000000"style="background-color:#D2FFDE" span="span"><strong><strong>Litigation Loving Revenue to pay interest on interest payable - Revenue High-handedness condemned by High Court </strong> </strong> </font></em></strong></font> <font size="3" face="Georgia, Times New Roman, Times, serif"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT </strong>is easier for a camel to pass through the eye of a needle than an assessee to get refund from the Indirect Taxes Department. It is easier for two camels to pass through the eye of that needle than for an assessee to get interest on that refund. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But here is an assessee who got not only the refund and interest, but interest on interest - due to the perseverance of the department, yes the department. Their love for litigation finally landed them in this comically sad situation. Of course it took 17 long years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a long story, which I had briefly narrated in <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjMxNDc="><strong>DDT 2561</strong></a>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An importer realised that he paid the Customs duty, even though he was eligible for an exemption. He promptly filed a refund claim of Rs.1,06,74,049/- on 24.12.1998 and it was promptly rejected. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner (Appeals) allowed the appeal but ordered crediting the refund amount to the Consumer Welfare Fund on the ground of unjust enrichment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeal against the said order was allowed by the Tribunal vide order dated 27.07.2005 in favour of the appellant by holding that the refund claim is not hit by the principles of unjust enrichment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue appeal against the Tribunal order was dismissed by the High Court on 01.04.2010. Revenue took the matter to the Supreme Court, where also it lost the case on 21.02.2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The importer approached the Customs for refund with interest - twelve years after filing the first refund claim. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department was kind enough to grant refund but not interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner (Appeals) upheld the rejection of interest on the ground that the refund amount has been sanctioned within three months from the date of judgment of Hon'ble Supreme Court in dismissing the Special Leave Petition (SLP) filed by the department; and that for a substantial period, the amount was lying with the Consumer Welfare Fund and not with the department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The importer approached the Tribunal again. The Tribunal allowed the appeal with consequential benefits observing that the object behind insertion of interest provisions in Section 27A of the Act is that interest is compensatory in character. <strong>(<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAwNDcy">2015-TIOL-442-CESTAT-BANG</a>).</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The never say die, Revenue is in appeal before the High Court again.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court in a very refrained order condemned the Revenue to a further interest at 9%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some observations of the High Court. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Even when on 27.07.2005, the Tribunal allowed the appeal of the respondent-company with consequential benefits, yet the amount was not refunded and therefore, the matter was taken up by the Revenue before the High Court and further also before the Supreme Court, where the appellant-Revenue had been unsuccessful. It was then, after more than 12 years of filing of the application for refund, on 13.04.2011 an order was passed by the Assistant Commissioner for refunding the amount, but without interest. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Here, we may mention that initially itself it took nearly three years for the Department to process the application of the respondent for refund of customs duty and pass an order on the same, which, in our opinion, does not appear to be justified, but we however refrain from passing any further comments on this issue. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Even after the amount was found to be payable to the respondent-company, the appellant-Revenue did not pay the interest on the amount to be refunded. Admittedly, the respondent was deprived of the amount of over Rs.1 Crore which had been deposited by it, and was found refundable to the respondent-company. Earlier also, the appellant dragged on the matter up to the Supreme Court, and paid the amount only after more than 12 years when the matter was finalized by the Supreme Court. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The appellant (Revenue) has been misinterpreting the law, and thereby depriving the respondent from its rightful claim of interest, even after the order for refund of the amount had been made upto the Supreme Court. Not only that, the interest has been denied to the respondent even though the order directing payment of interest was made by the Tribunal on 21.05.2014, which was based on a decision of the Supreme Court. Merely because of the pendency of this appeal, though there was no stay order granted, the appellant has thus, without any valid reason, further delayed the payment of interest for a period of over 15 months from the date of the order of the Tribunal dated 21.05.2014</em>. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At least now, will they pay the interest or take the matter to the Supreme Court? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this exemplary order today, which should be an example for all those pseudo revenue lovers, who pretend to protect the interest of revenue by unimaginable demands, illegal rejection of refunds etc. The department should realize that such officers are actually an impediment in Revenue realization. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24504" target="_blank">Breaking News</a> </font></strong></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#000000"style="background-color:#D2FFDE" span="span"><strong><strong><strong>Ease of Doing Business - CBEC</strong> </strong> </strong> </font></em></strong></font> <font size="3" face="Georgia, Times New Roman, Times, serif"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ADVOCATE </strong>S. Viswanathan mails in: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The much touted new <em>magnum opus </em> CBEC site gives pride of the place to so called <em>"<a href="http://cbec.gov.in/resources/htdocs-cbec/st_ease_of_doing_bussiness.pdf">Ease of doing business"</a></em>, wherein while referring to Notification NO.6/2015-CE (NT) dt 01.03.2015 the following is mentioned: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>If the export proceeds are not received within the prescribed time period, the exporter has to reverse the Cenvat Credit. Re-credit of such reversed Cenvat credit has been allowed, if such export proceeds are received within one year from the specified period. </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I have not come across the relevant provisions warranting such reversals anywhere, nor the amendments. Is this ease of business.? </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#000000"style="background-color:#D2FFDE" span="span"><strong><strong><strong><strong><em>Anti Dumping Duty - Phosphoric Acid - Re-imposed </em></strong></strong> </strong> </strong> </font></em></strong></font> <font size="3" face="Georgia, Times New Roman, Times, serif"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ANTI</strong> Dumping Duty on <em>"Phosphoric Acid of all grades and all concentration (excluding Agriculture or Fertilizer grade)",</em> falling under Chapter 28 of the First Schedule to the Customs Tariff Act, originating in, or exported from, Korea (RP), was imposed vide notification No.140/2009-Customs, dated 15th December, 2009, with effect from 22nd June 2009 and expired on 21st June 2014. After a month of its expiry, it was extended till 21st June 2015 by Notification No.32/2014-Customs (ADD), dated the 23rd July, 2014 </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It again expired on 21st June 2015. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, they have imposed the duty afresh for another five years. Thanks to them for not going for that tempting retrospective amendment. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg0NDA=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 45/2015-Customs (ADD), Dated: August 24, 2015 </strong></font></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#000000"style="background-color:#D2FFDE" span="span"><strong><strong><strong><strong><em><strong><em>Liquid Cocaine as massage oil </em></strong> </em></strong></strong> </strong> </strong> </font></em></strong></font> <font size="3" face="Georgia, Times New Roman, Times, serif"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HONG KONG</strong> Customs recently seized about 760 grams of liquid cocaine with a market value of about USD 800,000 at Hong Kong International Airport. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The drug was found in a parcel from Brazil to Hong Kong, which was declared to contain massage oil. A Customs officer at the airport suspected that the two massage oil plastic bottles contained liquid cocaine. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A man who was expecting a parcel actually got handcuffs from the Customs. The 32-year-old arrested man will be charged with trafficking in dangerous drug. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the Dangerous Drugs Ordinance, drug trafficking is a serious offence for which the maximum penalty is life imprisonment and a fine of USD 5 million. </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#000000"style="background-color:#D2FFDE" span="span"><strong><strong><strong><strong><em><strong><em><strong><em>A Gentle Reminder to file income Tax Return </em></strong> </em></strong> </em></strong></strong> </strong> </strong> </font></em></strong></font> <font size="3" face="Georgia, Times New Roman, Times, serif"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TODAY</strong> the Income Tax Department sent a nice mail to many assessees. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Dear Taxpayer, </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>By this time last year, you may have had already electronically filed your Income Tax Return. This is a gentle reminder for you to file your Income Tax Return for Assessment Year 2015-16. E-filing is simple, easy and convenient as you would have experienced in the last year. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>This year we are excited to bring you the electronic verification facility using which you can avoid the signing and sending of the ITR-Verification form to CPC Bangalore. E-verification is possible through </em></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. <em>Aadhaar One-time password (OTP) for which you would have to authenticate your Aadhaar and link it with your PAN, or </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. <em>Net-banking where you can login to your netbanking account and get redirected to the efiling account directly or </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii. <em>E-filing OTP (available only if the Returned Income is below Rs 5 Lakh and no refund is claimed). </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>You are, therefore, kindly requested to login to </em><a href="https://incometaxindiaefiling.gov.in/"><em>https://incometaxindiaefiling.gov.in </em></a><em> and download the free return preparation software with a host of new features to help you in preparing the Income Tax return and submit your return. You can also prepare and submit ITR1 and ITR4S online. Please take some time to browse through all the value-added services offered on the E-filing website that will help you prepare your return accurately and guide you in case of any prior pending items. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Needless to mention that the quicker you submit your return and send the signed ITR-V (ITR-Verification) form to CPC, Bangalore, the faster your refund, if any, would be processed and credited to your bank account. As on 19th August 2015, over 6.4 lakh refunds have already been issued for AY 2015-16, many of them where return was e-verified! File early to get your return processed soon</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They are actually <em> selling </em> refund. CBEC, please note. </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#000000"style="background-color:#D2FFDE" span="span"><strong><strong><strong><strong><em><strong><em><strong><em><strong>CBEC Top Brass with Revenue Secretary and MoS </strong></em></strong> </em></strong> </em></strong></strong> </strong> </strong> </font></em></strong></font> <font size="3" face="Georgia, Times New Roman, Times, serif"></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Conference_CBEC.jpg" alt="" width="570" height="244" hspace="5" border="0" align="center"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> Members Neerja Shah, AK Kaushal, Revenue Secretary Shakti kanta Das, MoS Jayant Sinha, CBEC Chairman Najib Shah and CBEC Member VS Krishnan at the Conference of Chief Commissioners at New Delhi yesterday. </font></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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