TIOL-DDT 416 · the untouched capture
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<html> <head> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <title>Taxindiaonline's DDT 402</title> </head> <body> <p > <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 416</font><br> 28 07 2006<br> Friday</b></font></p> <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">The Taxation Laws (Amendment) Act, 2006 – Board explains</font></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Taxation Laws (Amendment) Act, 2006 has come into effect from 13.07.2006 and now Board is explaining the provisions. </font></p> <p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>1. </b> Section 11A of the Central Excise Act, 1944 has been amended to introduce an optional scheme for enabling voluntary payment of duty by assessees, in full or in part, in cases involving fraud, mis-statement etc. along with interest and 25% of the duty amount as penalty within 30 days of the receipt of the show cause notice thereby dispensing with the rigours of adjudication procedure. This is an additional facility given to the Trade to settle the dispute at an early stage to reduce litigation and also aid in collection of tax dues more expeditiously. The scheme is optional and not compulsory. The assessee has the further option of using the <b>proposed </b>facility in full or in part. In case of part payment, the remaining amount will be subject to regular proceedings as per the law. <b>(What is the proposed facility? Is it not already the law? And why should any one follow this provision when the proviso to Section 11AC(1) already has such a provision after the adjudication orer?) </b></font></p> <p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>2. </b> Section 35E the Central Excise Act, 1944, authorizes a Commissioner of Central Excise to review the orders passed by an adjudicating authority subordinate to him and direct filing an appeal before the appellate authority. While sub-section (4) of the said Section speaks of filing such an appeal by adjudicating authority or the authorized officer, the erstwhile sub-section (2) only referred to the adjudicating authority and omitted reference of “the authorized officer”. This lacuna has generated disputes and has attracted different interpretations by the Tribunal and the courts. Hence a corrective measure has been taken to amend section 35E (2) to authorize an authority other than an adjudicating authority to file appeals on behalf of the Commissioner.</font></p> <p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>3. </b> Rule 16 of the Central Excise Rules, 2002 has been retrospectively amended to declare “wire drawing units” as assessees for the period 29.05.2003 to 08.07.2004. The process of drawing of wire from “wire rod” was held as not amounting to ‘manufacture’ by the Supreme Court in the case of M/s Technoweld Industries. Therefore, the benefit of availment of credit of duty on inputs by the “wire drawing units” was withdrawn on 29.5.2003 by a circular issued by the Board. However, certain wire drawing units continued to pay a sum representing duty, and continued to pass on the credit of amount paid as duty to the ultimate buyer of drawn wire for further manufacture. By an amendment in the Budget 2004, Note 10 was inserted in Section XV of the Central Excise Tariff Act, 1985 to declare the said process as amounting to ‘manufacture’. However, as the said Section Note was effective from 9.7.2004, it did not resolve the problem for the said period. Show Cause Notices were issued to wire drawing units for recovery of Cenvat Credit availed on inputs on the grounds that the process of wire drawing did not amount to manufacture for the said period. Show Cause Notices were also issued to the downstream buyers of “drawn wires” who availed Cenvat Credit of amount paid as duty on drawn wire, on the ground that the sum paid on clearance of “drawn wire” by wire drawing unit did not represent central excise duty. </font></p> <p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>4. </b> The retrospective amendment in Rule 16 is aimed at facilitating “wire drawing units”, which had paid a sum equal to the duty leviable on “drawn wire” after availing the credit of duty paid on inputs for the said period. It is aimed at regularizing availment of credits at two stages and payment of an amount representing duty at one stage. The purpose of the amendment is to regularize credit taken at the input stage (on wire-rod), credit taken by the downstream user of “drawn wire” and the amount paid as central excise duty on clearance of drawn wire. In other words, wire drawing units, which had paid a sum equal to duty leviable on drawn wire, would be eligible to avail the credit of duty paid on inputs and utilize the same for payment of duty on drawn wire for the period of amendment. The sum paid by the wire drawing unit in such cases will be treated as duty and shall be allowed as credit to the buyer of drawn wire, in terms of the amendment. This amendment would not create any additional liability on any wire drawing unit which did not pay duty on drawn wire during the period of amendment.</font></p> <p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>5. </b> All pending Show Cause Notices are to be decided by 15th August 2006 and compliance report sent to the Board by 31st August 2006.</font></p> <p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>6. </b> Regarding Section 11DDA and 37E – attachment of property pending adjudication and publication of names of alleged offenders, Board is going to issue detailed instructions in due course – when? After some over enthusiastic officer has attached property immediately after a Show Cause Notice?</font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> <u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/excircular831.htm">CIRCULAR NO.831/08/2006-CX., Dated: July 26, 2006</a></u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/excircular831.htm"><u> </u></a></font></p> <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Exchange rates announced for imported goods and export goods</font></b></font></p> <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_083.htm">Notification Nos.83/2006 <u></u></a><u> <strong>and</strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_084.htm">84/2006-Cus., (N.T.), Dated: July 26, 2006</a></u><b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_084.htm"> </a></u></b>fix the exchange rates for imports and exports respectively with effect from 1<sup>st</sup> August 2006. Notifications 72 and 73/2006-Cus. (N.T.), dated 27-06-2006 are superseded<i>.</i></font></p> <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Import of PVC floorings scrap - conditions </font></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has amended the policy to allow import of PVC floorings scrap of the following specifications:_</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 1. The PVC flooring scrap shall consist of thoroughly blended composition of thermoplastic binder, fillers and pigments. The thermoplastic binder shall consist substantially of one or both of the following namely (a) Vinyl Chloride polymer and (b) Vinyl Chloride co-polymer. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 2. The density shall be 0.925. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 3. Ash content shall be 21 to 30%.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 4. The product manufactured form scrap shall conform to IS 14535: 1998 – Recycled plastics manufacture of products – design, and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 5. Recycling shall be in accordance with IS 14534: 1998- Guidelines for recycling of plastic.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 6. Final Waste PVC scrap (i.e. unconverted to floor coverings etc.) shall not exceed 5% of the quantity imported and shall be disposed of in landfills. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further the imports shall also be subject to the following conditions:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (i) Only industrial, trimmings and rejects of PVC flooring scrap shall be allowed to be imported. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (ii) Post consumer PVC flooring scrap and waste shall not be allowed to be imported. </font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (iii) Imports shall only be allowed to actual users. In case the actual users hire export/import houses they could do so on receipt of specific request from actual users for specific quantities based on the installed capacity of the plant only. </font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (iv) The concerned Pollution Control Boards/Pollution Control Committees shall monitor the use of PVC scrap imported by the units. </font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (v) The units/PVC scrap users shall file a return of imports made during a calendar year to the concerned PCB/PCCs; and</font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (vi) The product so manufactured should meet the BIS specifications IS 3462, 1986 for unbacked flexible PVC floorings.”</font></p> <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2006/dgft06not024.htm">NOTIFICATION NO.24 (RE-2006) / 2004-2009, Dated: July 26, 2006</a></u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2006/dgft06not024.htm"><u> </u></a></font></p> <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Service Tax on postal services – Communications Minister clarifies</font></b></font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Minister of State for Communications & Information Technology, Dr. Shakeel Ahmad, informed Parliament, that service tax has not been imposed on all postal services. It was initially introduced on the following postal services:</font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (i) Speed post and express parcel post</font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (ii) Banking and financial services run by Department of Posts</font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (iii) Postal Life Insurance and Rural Postal Life Insurance</font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (iv) Retail Post services rendered to non-government organisations/ individuals</font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subsequently it has been decided by Ministry of Finance to withdraw service tax from Banking and financial services run by Department of Posts (such as money orders, operation of Savings accounts, issue of postal orders, etc.), through a circular dated 4.7.2006 The circular further clarified that service tax need not be recovered on money order. So service tax will now have no impact on cost of money orders, Dr. Ahmad said.</font></p> <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">What about Service Tax already collected? (Even after the Board circular). Will it be refunded?</font></b></font></p> <p ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT </font></p> <p ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend. </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> </body> </html>