TIOL-DDT 2917 · 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"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26988"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2016.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="252" height="220" hspace="5" border="0" align="right" ></a></font><font color="#663399" size="3">TIOL-DDT 2917</font><br>
26 08 2016<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>Customs Rummaging - Cash-ual?</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REFERENCES</STRONG> have been received in the Board alleging lackadaisical approach of Customs officers in rummaging and examination of vessels which come to berth at various Indian ports. The references also allege <strong>illegal gratification in the form of gifts and cash</strong>. A Standing Order issued by Chennai Customs states, <em>"citing international <strong>formalities</strong>/convention, in certain cases the Master of the Vessel/Shipping Agent may offer gifts to the Boarding Officer. The boarding Officer should refuse the gift politely and firmly."</em> - very difficult indeed! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board refers to the guidelines prescribed in Customs Preventive Manual, 1987 regarding boarding and rummaging of vessels. Over the years many changes have taken place in the sphere of Customs administration in the background of changed economic scenario and increasing volume of trade. There has been a manifold increase in the number and movement of vessels and aircrafts. This has been accompanied by a more transparent and accountable work environment based on information technology which aims to better channelize scarce resources through risk management and at the same time endeavours to reduce transaction costs and promotes ease of doing business. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC further states: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rummaging of vessels berthing at the ports/aircrafts landing at airports/vehicles crossing land customs stations is an effective method to prevent any attempt to smuggle prohibited and restricted goods into the country and hence supervisory officers need to pay adequate attention to this important preventive function. With an enhanced fleet of vessels and aircrafts to be dealt with limited human resources, rummaging exercises will prove to be effective when they are carried on sound risk management principles. While the prevailing rummaging practices need not be diluted, a full detailed rummage should be carried out on vessels/aircrafts/vehicles where risk analysis, reliable information etc. suggests the necessity for such. This will also help in reducing harassment, alleged complaints and enhance ease of doing business. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the new initiatives are required to be undertaken at each Customs location, the guidelines prescribed in the Customs Preventive Manual, 1987 regarding rummaging which inter alia include the nature of goods, the areas to be searched, precautions for safeguarding the officers and the vessels/aircrafts/vehicles, official supervision, professional approach to minimise annoyance and loss, etc. will continue to be in force. </font></em></p>
<p align="center"><font color="#006600" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3"><a name="f1"></a>Should Customs Preventive Manual, 1987 still continue? </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THOUGH</STRONG> the Board admits that<em> over the years many changes have taken place in the sphere of Customs administration in the background of changed economic scenario and increasing volume of trade,</em> does the Board still think the 1987 manual is relevant, appropriate and valid? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13 years after the 1987 manual was released, the CBEC found that the manual needed a thorough revision and in the year 2000, prepared a Draft Customs Preventive Manual, which is languishing in glorious dust in some unknown rack in the North Block. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nine years later in 2009, the DRI prepared another Draft Manual and released it for feedback latest by 31.01.2010. More than six years have lapsed and dust continues to gather with the new manual nowhere in sight. Please see <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTAyMjU=" target="_blank"><strong>DDT 1276</strong>.</a> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, they are still depending on a thirty-year old manual, because they failed to release the revised manuals in 2000 and 2009 in spite of preparing the drafts. How much time and money they must have wasted in preparing two bulky draft manuals and then consigning them to the unread pages of history? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even if GST comes, Customs will still continue. So the CBEC should seriously consider issuing another Draft Preventive Manual. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzOTQ=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Instruction No. 25/2016-Customs., Dated: August 23 2016</font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f2"></a>Customs - Exemption from CVD - Supreme Court Dismisses Revenue's Review Petition in SRF case </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> decision of the Supreme Court in the SRF case <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAxNzA1" target="_blank"><strong>2015-TIOL-74-SC-CUS</strong> </a>created quite a stir in tax circles. In Circular No. <strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTgzMzA=" target="_blank">1005/12/2015-CX</a></strong>, dated 21.07.2015, the CBEC observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>It may be recalled that the Hon'ble Supreme Court, in the case of M/s SRF Ltd. versus Commissioner of Customs. Chennai and M/s ITC Ltd. v/s Commissioner of Customs (I&G), New Delhi - <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAxNzA1" target="_blank">2015-TIOL-74-SC-CUS</a></strong> relating to CVD exemption, has held that the benefit of excise duty exemption [available to final products manufactured by the domestic manufacturer, subject to the condition of non-availment of CENVAT credit of duty on inputs or capital goods used by such manufacturer for manufacture of such final products] will also be available to the importers of such final products for the purposes of CVD on the ground that the importer was not availing the credit of duty on inputs or capital goods.</em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The implication of the Hon'ble Supreme Court judgment was that all such final products when imported by manufacturer importer would have attracted concessional excise duty as CVD while the domestic manufacturer of such final products had to forgo input tax credit to be eligible for such concessional rate. This would put the domestic manufacturers at a disadvantage vis-a-vis imports and would adversely impact the Make in India Policy of the Government. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Judgment of the Hon'ble Supreme Court was examined in CBEC and it was found that there were certain errors apparent on record / interpretational issues and, with the concurrence of the Ld. Attorney General, a Review Petition / Revision Application has been filed against the same. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board's review Petition has been dismissed by the Supreme Court as the Court found no error, much less apparent error, in the order impugned. Please see <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTE3NTQy" target="_blank">2016-TIOL-130-SC-CUS</a></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We have extensively covered this issue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Mystery of Confusing, Complicated and Controversial Notifications - <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjQxNjY=" target="_blank"><strong>DDT 2645 21 07 2015 </strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Confusing, Complicated and Controversial Notifications - Storm in the Teacup blows over - DDT Effect - Board amends - <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjQxODA=" target="_blank"><strong>DDT 2646 22 07 2015</strong> </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Exemption from CVD when Excise Exemption is Conditional - Recent Confusing Notifications validity upheld by HC - <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjUxNTI=" target="_blank"><strong>DDT 2720 06 11 2015 </strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjQyNDY=" target="_blank"><strong>Confusion, damage control and now, more confusion </strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjQ1NTE=" target="_blank"><strong>Interpreting section 3 of CEA - Who wins and who loses</strong> </a></font></p>
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<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f3"></a>VAT/CENVAT/GST - Reversal of Input Credit when Sale Price is less than Purchase Price </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</STRONG> 19 (20) of the TN VAT Act reads as, <em>""S. 19(20) Notwithstanding anything contained in this section, where any registered dealer has sold goods at a price lesser than the price of the goods purchased by him, the amount of the input tax credit over and above the output tax of those goods shall be reversed." </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The constitutional validity of this was challenged in the Supreme Court. The Apex Court in a recent judgement upheld this provision observing: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Challenge to constitutional validity of sub-section (20) of Section 19 of VAT Act has to fail. When a concession is given by a statute, the Legislature has power to make the provision stating the form and manner in which such concession is to be allowed. Sub-section (20) seeks to achieve that. There was no right, inherent or otherwise, vested with dealers to claim the benefit of ITC but for Section 19 of the VAT Act. That apart, we find that there were valid and cogent reasons for inserting Section 19(20). Main purport was to protect the Revenue against clandestine transactions resulting in evasion of tax. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Retrospective validity struck down</strong>: while upholding the validity of the provision, the Supreme Court struck down the retrospective validity of the same. The Supreme Court referred to its earlier decision on the broad legal principles while testing a retrospective statute: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(i) A law cannot be held to be unreasonable merely because it operates retrospectively; </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The unreasonability must lie in some other additional factors; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) The retrospective operation of a fiscal statute would have to be found to be unduly oppressive and confiscatory before it can be held to be unreasonable as to violate constitutional norms; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Where taxing statute is plainly discriminatory or provides no procedural machinery for assessment and levy of tax or that is confiscatory, Courts will be justified in striking down the impugned statute as unconstitutional; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) The other factors being period of retrospectivity and degree of unforeseen or unforeseeable financial burden imposed for the past period; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) Length of time is not by itself decisive to affect retrospectively. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTE3NTE0" target="_blank"><strong>2016-TIOL-128-SC-VAT </strong></a></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f4"></a>EOUs - Out of Bond-age -Central Excise Notification Amended </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Notification No. 44/2016-Cus., dated 29.07.2016, the Government has decided to to do away with the need to comply with Customs warehousing provisions by </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Export Oriented Units (EOUs), </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Electronics Hardware Technology Park Units (EHTPs), </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Software Technology Park Units (STPIs) and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Bio-Technology Park (BTP) Units </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(Please see <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=Mjc2OTc=" target="_blank"><strong>DDT 2900 01 08 2016</strong></a>). This has come into force from 13.08.2016. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps at that time they forgot to amend the Central Excise Notification pertaining to EOUs - No. 22/2003-Central Excise dated the 31st March, 2003. The Government has now amended this notification to bring into effect the removal of mandatory warehousing. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzOTI=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 31/2016-Central Excise, Dated: August 24 2016 </font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f5"></a>CESTAT Member Transferred </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MR.</strong> Devender Singh, Member (Technical), at CESTAT, Mumbai is transferred and posted as Member (Technical) to CESTAT Regional Bench at Chandigarh with immediate effect, in administrative exigency and public interest.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Member is to report for duty at CESTAT Chandigarh by 02.09.2016.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzOTU=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT F.No. 27(39)/Trans.Policy/CESTAT/Admn.08., Dated: August 24 2016</font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f6"></a>Don't Publish Names of Advocates or Judges - High Court Tells Publications</font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MANY</STRONG> publications, when reporting court cases, often publish the names of the judges who decided the case and some tax publications even publish/highlight the names of the advocates who argued the case. This is a sort of publicity/advertisement for the lawyers. We in TIOL also get requests from lawyers to carry remarks that the case was argued by …., which we normally don't oblige.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Madurai Bench of the Madras High Court last week frowned on this practice. The Court observed,</font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Often times, we have been noticing that the Print and Electronic Media is carrying on publication of the names of legal practitioners as well as the names of the Judges of the High Court concerned, who dealt with particular cases, publication of names of practitioners who may have appeared for one party or the other in a particular case can lead to an indirect method of soliciting or indulging in advertisement of the professional abilities or skills of the advocates. We, therefore, direct the Registrar (Administration) of this Bench to immediately circulate instructions to all Print, Electronic and Media Houses not to publish the names of the practitioners as part of news item.</font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We also direct, for the present, the Registrar (Administration) to request the Print, Electronic and Media House, not to publish the individual names of the Judges unless it is so essentially required. The reason being every Judge of the High Court is carrying on with his work sitting in a particular division/roster as assigned by My Lord The Hon'ble Chief Justice. The Judges do perform their duties dispassionately and to the extent possible by not allowing their individual notions and philosophies to be a guiding factor in deciding the causes brought before them. Therefore, we feel that the names of the Judges should not be published and on the other hand, the name of the High Court alone should be published.</font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ironically, while reporting this case even top newspapers like the Hindu and agencies like UNI mentioned the names of the Judges who delivered this judgement asking publications to desist from carrying the names of judges.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Tribunal Judge was very angry with me for reporting a High Court case in which the Judge was the appellant and the judgement contained certain disparaging remarks against the judge in his confidential report which were eventually expunged. We couldn't report the case without mentioning the judge's name!</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTE3NjIw" target="_blank">2016-TIOL-1888-HC-MAD-MISC</a></font></strong></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>Inflation is the invisible tax which has never been passed by Parliament. </em></strong></font></p>
<p align="right"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nani Palkhiwala</font></em></p>
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<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"><strong>Have a nice weekend.</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to <a href="mailto:vijaywrite@tiol.in" target="_blank"><strong>vijaywrite@tiol.in</strong></a></font></p>
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