TIOL-DDT 362 · the untouched capture
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<p><font size="3"><b><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT
362</font></b><font face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br>
15 05 2006<br>
Monday</b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise officers not to visit any factory
without Assistant Commissioner’s permission</b></font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems Board had Vide letter F.No.201/07/2006-CX6
dated 31.03.2006, decided that for visiting units other than SSI units also
prior permission of Asstt. Commr/Dy.Commr should be obtained and reiterated
that the officer visiting these units should follow all the procedures laid
down for visit to SSI units including making entries of relevant particulars
in visitors book being maintained by the assessee and that any violation would
be viewed very seriously. <b>DDT</b> has been informed about this by Lok Satta,
the NGO which conducted the mega meetings with CBEC, CVC and trade. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Summons only as a last resort – clarifies CBEC</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TIOL had submitted to the Parliamentary Committee
that the power to summon people have been misused by the officers and the recent
trend especially in Service Tax is to summon top officers of the organisation
at the drop of a hat, just to get information that a clerk can provide. The
idea is to intimidate people into surrender. Now Board clarifies that Ministry
vide letter F.No.201/07/2006-CX6 has directed DGCEI to issue instructions to
the field formations, reiterating the significance and use of summons only as
a last resort when it is absolutely required. This has also been informed to
<b>DDT</b> by Lok Satta. CBEC seems to have taken both CVC and Lok Satta for
a ride. We hope to bring more details in the near future.</font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><a
href="ftp://ftp 2004-09/"><font color="#006600">FTP 2004-09</font></a><font color="#006600">
–</font> <font color="#006600">Board explains</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3691">TIOL-DDT
358 - 09 05 2006</a><b> </b>had explained the customs notifications to bring
into effect the new Foreign Trade policy. The Board has explained the new features
in a circular.</font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Duty Free Import Authorisation (DFIA) Scheme:-
</b>Under the scheme, the inputs required for export production are exempt
from basic customs duty, additional customs duty, education cess, anti-dumping
duty and safeguard duty. The scheme is similar to Advance Licence Scheme with
certain differences. One significant difference is that unlike the Advance Licence
Scheme where the value addition requirement is only positive value addition,
under the new scheme minimum value addition requirement is 20% (except for items
in gem & jewellery sector). Another vital difference is that under the new
scheme once the export obligation is fulfilled, the licence or the inputs imported
(other than fuel) against it can be transferred / sold. As in the case of erstwhile
DFRC Scheme, under the new scheme, in respect of sensitive items mentioned in
para 4.55.3 of the Handbook, the exporter shall be required to give declaration
with regard to technical characteristics, quality and specifications in the
shipping bill. Notification No. 40/2006-Customs dt. 1.5.2006 has been issued
to operationalise the DFIA scheme. </font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Vishesh Krishi & Gram Udyog Yojana:-
</b>The Vishesh Krishi Upaj Yojana has been expanded to include village industry
products and is now called Vishesh Krishi & Gram Udyog Yojana. The list
of products will be notified by DGFT in due course. Some other changes have
also been made in this scheme. One important change is that the entitlement
has been reduced to 3.5% (from 5%) for all products in cases where the exporter
has availed the benefits of duty exemption / duty remission schemes under Chapter
4 of the Policy and Duty Drawback. The EOUs and SEZ units have been excluded
from the purview of Vishesh Krishi Upaj & Gram Udyog Yojana, meaning thereby
that these units will not be eligible for the benefits of the scheme. Notification
No. 41/2005-Customs dt. 9.5.2005 has been amended by notification No. 43/2006-Customs
dt. 5.5.2006. </font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>EPCG Scheme :- </b>Paragraph 5.11 of Handbook
has been amended to provide that extension of export obligation period beyond
8+2 years can be considered for a further extension upto 2 years with a condition
that 50% of duty payable in proportion to the unfulfilled export obligation
is paid by the licence holder to the Customs authorities. Notification No. 97/2004-Customs
dt. 17.9.2004 has been amended by notification No. 43/2006-Customs dt. 5.5.2006.
Further, paragraph 5.18 of the Handbook dealing with clubbing of EPCG licences
has been amended to restore the provisions of licences having been issued during
the same licensing year and for export of the same product(s) or same services,
as obtaining prior to 8.4.2005. </font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Advance Licence Scheme:- </b>A number of
changes have been made in the Policy and Handbook in the chapter dealing with
Advance Licence Scheme. Advance Licence can now be issued for supply of stores
on board of the foreign going vessel / aircraft subject to the condition that
there is specific SION in respect of the item(s) supplied. The provision providing
for extension in export obligation period beyond 36 months in respect of advance
licence (para 4.22.1 of Handbook) has been deleted restricting the export obligation
period to 36 months even after 12 month extension. Likewise, the provision providing
for extension in export obligation period in respect of advance licence for
annual requirement has been deleted from the Handbook. [<st1:place w:st="on">Para
4.24 A(e)] </font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was brought to the notice of the Board that
although the requirement of logged DEEC book has been withdrawn from the FTP
in consultation with DOR w.e.f. 1.4.2002 in the case of Advance License for
Annual Requirement Scheme, the Customs field formations are insisting the same
for want of deletion of the clause from the corresponding Customs notification.
Notification No.94 / 2004-Cus dated 10.9.2004 has since been amended vide notification
No. 43/2006-Customs dt. 5.5.2006 so as to delete the requirement of DEEC book.
</font></p>
<P align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Served
from India</st1:country-region> Scheme:- The following changes are made in
the scheme. </b></font></p>
<ul>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The foreign
exchange earned through international credit cards or other instruments as
permitted by RBI for rendering of service by the service providers shall also
be taken into account for the purposes of computation of duty credit entitlement.
<br>
</font></li>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Transfer of
duty credit scrips shall be allowed within the service providers of the Group
company as defined in Chapter 9 and managed hotels with actual user condition<br>
</font></li>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The stand-alone
restaurants will be entitled to duty credit equivalent to 10% of the foreign
exchange earned by them in the preceding financial year as against 20% allowed
earlier.<br>
</font></li>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The imports
against duty credit scrips shall relate to the service sector business of
the applicant. Earlier, imports were relatable to the main line of business.<br>
</font></li>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Utilisation
of duty credit earned under the scheme shall not be permitted for payment
of duty in case of import of vehicles. <br>
</font></li>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Utilisation
of duty free credit scrip earned under the scheme shall be permitted for payment
of duty in case of import of capital goods under lease financing in terms
of provision in para 2.25 of the Policy. </font></li>
</ul>
<P><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Other Changes </b></font></p>
<ul>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Two-Star Export
Houses and above shall be permitted to establish Export Warehouses as approved
by DOR. <br>
</font></li>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In Para 3.6.1,
payment for services received by service exporters in Indian Rupees which
are otherwise considered as having been paid for in free foreign exchange
by RBI has also been made eligible for service exports. Earlier, payment for
services was to be received in free foreign exchange only. <br>
</font></li>
<li> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Interest for
delayed payment of refunds would be made by the Government to ensure accountability
and cut down delays. <br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Board
wants difficulties faced, if any, in implementation of the Circular to be
brought to its notice early. </font></li>
</ul>
<P><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2006/cuscir06_16.htm">CIRCULAR
NO. 16/2006-Cus., Dated: May 9, 2006</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Overseas Corporate Bodies (OCBs) are not recognised
lenders - RBI</b></font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Way back in 2003, the RBI had clarified that
"no person resident in India</st1:country-region>can borrow from or lend
to an OCB in foreign currency or in rupees.” The RBI noticed that in spite of
this clarification, borrowers have availed External Commercial Borrowing from
OCBs post derecognition of the OCBs as investor class, on grounds that the OCBs
are their foreign equity holders. So now RBI reiterates that OCBs not being
recognized as investors cannot be recognized lenders. AD (Authorised Dealer)
banks have been asked to bring the contents of this circular to the notice of
their constituents and customers. </font></p>
<P><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=49&filename=notification/rbi/2005/rbi05cir034.htm">RBI
CIRCULAR NO. 34/RBI/, Dated: May 12, 2006</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Should we let lawlessness take its own course?</b></font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today
we are bringing you a special story – <b>Supari killing</b>. When we referred
the issue to one of our expert commentators, he remarked that we should not
interfere and let law take its own course. We should certainly let law take
its own course, but should we remain mute spectators when lawlessness rules
the roost and the might of the government is brutally misused? After all don’t
we have a concept called rule of law? </font></p>
<P align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><B><IMG height=62 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_txt2.jpg" width=375></B></font></P>
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<TD><div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#0000FF"> <b><i><u>contemporanea
expositio</u></i></b></font><b><i><u> - </u></i></b>"administrative
construction (that is, contemporaneous construction placed by
administrative or executive officers charged with executing a
statute) generally should be clearly wrong before it is overturned;
such a construction, commonly referred to as practical construction,
although non-controlling, is nevertheless entitled to considerable
weight, it is highly persuasive" (Crawford on <i>Statutory
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<p align=justify ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <i>K. P. Varghese vs ITO (131 ITR 597 SC),</i>
it was pointed out by the apex court that not only are the circulars and instructions
issued by the CBDT in exercise of the power under Section 119 binding on the
authorities administering the Tax Department, but they are also clearly in the
nature of contemporanea expositio, furnishing legitimate aid to the construction
of the Act. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Legal Maxims</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Rule of law - government authority may only
be exercised in accordance with written laws, which were adopted through an
established procedure. The principle is intended to be a safeguard against arbitrary
rulings in individual cases.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Governments shall be of laws rather than
of men.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><i>... every official, from the Prime Minister
down to a constable or a collector of taxes, is under the same responsibility
for every act done without legal justification as any other citizen. The Reports
abound with cases in which officials have been brought before the courts, and
made, in their personal capacity, liable to punishment, or to the payment of
damages, for acts done in their official character but in excess of their lawful
authority. [Appointed government officials and politicians, alike] ... and all
subordinates, though carrying out the commands of their official superiors,
are as responsible for any act which the law does not authorise as is any private
and unofficial person. - </i>Albert Venn Dicey in his <i>Law of the Constitution</i>
in 1895:</font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Those who make and enforce the law are themselves
bound to adhere to it</b>.</font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Power under Article 226 of Constitution of
India has to be exercised to effectuate the rule of law and not to abrogate
it – Supreme Court of India </b></font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>In a democracy governed by rule of law surely
the only acceptable repository of absolute discretion should be the courts.
– Supreme Court of India</st1:country-region> </b></font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Natural justice is a concept which has succeeded
in keeping the arbitrary action within limits and preserving the rule of law.
Supreme Court of India</st1:country-region> </b></font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Power of judicial review is integral part
of Constitution without it Rule of law would become a teasing illusion and promise
of unreality – Supreme Court </b></font></p>
<P align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><i>For the rule of law to prevail in this
country, the subordinate authority should follow the decision of the higher
authority- CESTAT</i></b></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </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@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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