TIOL-DDT 365 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
365</font><br>
18 05 2006<br>
Thursday</b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CBEC
reforms - contd</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
bring you a few more gems from the Board reply to Lok Satta. For all the major
suggestions made by the NGO, Board has diplomatically said – not possible; For
what is already in place, Board is gracious to accept the suggestions. Lok satta
has asked for certain major reforms which are already in the statute./ Obviously
they also don’t read the law before complaining. An alert Board has pointed
out the existing statutory position. </font></p>
<table width="450" border=1 align="center" cellpadding=3 cellspacing=0 class=MsoTableGrid>
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<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Lok
Satta Recommendations</b></font></p></td>
<td width=378 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CBEC’s
ATR</b></font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The
effect?</b></font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Pre-deposit
provisions to be simplified by accepting cash and / or bank guarantee
or other securities. The assessee should have the option to pay the deposit
in cash or through bank guarantee. In case bank guarantees are not renewed
in time, the same may be encashed.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
Provisions for a pre-deposit should be made such that if the case is not
decided within 6 months, the amount of pre-deposit shall be refunded.
(The department is reluctant to agree that delays are inevitable. CVC
may please discuss with CBEC and reconcile this. The assessee cannot be
penalized for the delays in adjudication, provided he cooperates fully
and does not contribute to delays). </font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not
acceptable as pre-deposit is towards government dues finalized and is
distinctively different from security to be furnished against disputed
amount.</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
pre deposit trauma will continue. When stay gets vacated after six months
why can’t pre deposit be returned if case is not decided within six months?</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When
it comes to money, Revenue will not budge, Lok Satta and CVC not withstanding.</font></p></td>
</tr>
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<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
Section 35-C(2A) of the Central Excise Act, 1944, giving CESTAT a time-limit
of 180 days to decide the appeal should be amended and the stay granted
should be valid till the appeal is finally decided. </font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
is the domain of appellate forum. Suggestion is not feasible.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not
feasible as the appellate tribunal providing stay is dependent on the
circumstances of each case and it cannot be bound by general rules. </font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
is bureaucratic comment at its evasive best: when several draconian measures
can be brought in through Parliament, why can’t this be done? </font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
Instead of 4 regions, CESTAT should be in other regions also. A study
of the appeals arising in that particular region should be made for deciding
the location.</font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can
be examined.</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yet
another classic case of not taking facts seriously. TIOL had brought to
the notice of the Lok Satta that there five benches of the Tribunal not
four. They did not change their draft. Is the Board not aware that a new
bench of the Tribunal was stated in Ahmedabad? They could have given a
positive reply. Now they say, <b>Can be examined – by whom? </b></font></p></td>
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<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
Export valuation in respect of information knowledge based and propriety
industries should be flexible, and the special problems of such Industries
must be handled with sensitivity. </font></p></td>
<td width=378 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instructions
issued that exports would not suffer on account of problems in valuation
of goods. However, the Board’s circular No.33 of 2005 of 2.8.2005 has
been reiterated. (F.No.401/49/2003 Cus.III dated 31.03.2006).</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
problem is as vague as the answer.</font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
For valuation of import goods for customs duty purposes, a national import
database is now available only to the department. This can be moved into
public domain and the industry can access them on payment of suitable
charges. </font></p></td>
<td width=378 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
is not found feasible to accept the suggestion considering the sensitive
nature of the data. However, general data on imports and exports in the
form of Trade Statistics are already published by Custom Houses and Directorate
General of Commercial Intelligence and Statistics. </font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
sensitive data can be accessed in several sites. Only for the Board it
is a secret.</font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
In case of valuation of second hand machines, normally a certificate from
approved chartered engineer should be accepted, if it gives full details
as prescribed. In case of discrepancies on intelligence information, machines
should be allowed on second-check basis. Customs instructions on this
should be reiterated. </font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board’s
instruction F.No.493/124/86-Cus . VI dated 4.1.98 has been reiterated
vide Ministry’s letter F.No.401/49/2003-Cus.III dated 31st March, 2006.
</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What
is the purpose of reiterating? </font></p></td>
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<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
provisions of section 27 of Customs Act for refund are not available in
case of assessment of Bill of Entry, and provisions of appeal under section
128 have to be followed. In case of demands, the department can raise
demand under Section 28 within six months and without challenging assessment
of Bill of entry. Considering the principles of equity and natural justice,
the provisions needed to be aligned so that refunds can be sanctioned
without challenging the assessment in the Bill of entry. When the assessment
claimed by importer is accepted, this provision of filing appeal is valid.
However, if an assessment order has been issued, then appeal has to be
filed and consequent refund claimed.</font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
requires amendment in the Act. It is being examined whether a change in
the law is feasible.</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CVC
is happy Lok satta is happy and Board will happily examine. </font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Quality
of the data will determine the success of EDI. The units of measurement
should be clearly specified taking into account international standard
in this regard. The industry should ensure quality of such data and standardize
the units in import and export documents to ensure effective use of EDI,
including effective risk management system. </font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">EDI
system already provides for standard units of measurements.</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
is private bureaucracy. What is the purpose of telling the Board what
importers should do?</font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
In case of CAG objections, the demand is being raised by the department.
Where objections raised by CAG pertain to policy decisions or guidelines,
demands should not be raised. If CAG raises objections against the guidelines/
policies, the matter should be referred to the ministry for decision and
it should have prospective effect. In other type of cases, demand may
be raised as at present and the issue resolved with CAG as quickly as
possible within six months. </font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
demand raised by the department is</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">protective
in nature. It is not feasible to place any restriction on raising of demand.</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nothing
changes – Show Cause Notices continue. </font></p></td>
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<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
case of unjust enrichment, the government should come up with a list of
situations detailing where unjust enrichment will not apply. In other
cases, where unjust enrichment applies, it should clearly be specified
what proof is required to establish that duty has not been passed on to
customers. </font></p></td>
<td width=378 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section
27(2) of the Customs Act provides the conditions under which refund is
payable. Preparation of exhaustive list is not feasible. </font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clarity
thy name is not Board! </font></p></td>
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<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
interest on refund should be paid if it is sanctioned after three months
from date of filing applications. Even if the refund becomes subject matter
of appeal and the same is allowed by the appellate authority, the interest
should be paid on expiry of three months of the original refund application.
</font></p></td>
<td width=378 valign=top > <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Already
provided under Section 27A.</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
is the height of ignorance of the grand NGO trying to change the government,
particularly the Board. As the Board rightly clarified, these provisions
are already there in the Statute. May be Lok Satta has no means of checking
their facts before taking on the CBEC. Before organizing such mega events,
should not Lok Satta undertake a study of the laws and procedures instead
of collecting a few tit bits here and there?</font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> A
copy of the statement, which may or may not be relied upon, deposed by
a witness during the course of investigation, should be given to the person
making the statement. The statement given by a person is his own property,
and a copy cannot be denied to him. This also ensures that statements
cannot be altered or tampered with subsequently.</font></p></td>
<td width=378 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any
person deposing under the Customs Act is given a copy of his statement.
Statement of documents which are relied upon in the investigation alone
are provided to the aggrieved person, as these form the basis of adjudication.
</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Board’s clarification is contradictory. They say that a person deposing
is given a copy and in the next sentence says only when it is relied,
it is given.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
fact is the second sentence and it is perfectly legal too.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But
why can’t a copy be given immediately after the statement is given?</font></p></td>
</tr>
<tr>
<td width=371 align="center" valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At
present, the facility of Advance Ruling is only available to Joint Ventures
of Subsidiary of a Foreign Company. A similar facility should be extended
to Indian Corporates. Effective mechanism to handle the potentially large
number of applications for Rulings must be evolved. </font></p></td>
<td width=378 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
is a step in the right direction. Consideration that this would provide
certainty in matters of doubt, binding effect on the parties, reduce litigations
and WTO complaints, this may be acceptable in principle. It would require
examination by both the Central Excise and Customs wing of the Board.
</font></p></td>
<td width=354 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When
you answer a hundred questions, after the fortieth, you lose interest.
</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Look
at the Board’s reply. They laud the suggestion and say it requires examination
by both the wings of the Board. Which wing gave this reply?</font></p></td>
</tr>
</table>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
will bring you more of these reforms in the following days. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income
tax exemption to foreign companies </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Certain
foreign companies have been exempted from tax on the income by way of royalty
or fees for technical services received in or outside India relating to the
projects connected with security of India</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2006/it06not0120.htm">NOTIFICATION
NO. 120/2006, Dated: May 16, 2006</a></u></font></p>
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<TD><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b><font color="#0000FF">pro bono publico</font> - </b>For the public
good </font></TD>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When
the petitioner has sent the representation as a <i>Pro Bono Publico</i>, it
would be very difficult for the authorities to send any reply on his representationand
then the office of all the judges is always to make such construction as shall
suppress the mischief, and advance the remedy, and to suppress subtle inventions
and evasions for continuance of the mischief, and <i>pro privato commodo,
</i>and to add force and life to the cure and remedy according to the true
intent of the makers of the Act, <i>pro bono publico.”</i></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><i><O:P></O:P></i><font color="#FF6666">Until
Tomorrow with more DDT </font></font></p>
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<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </font></p>
<p><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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