TIOL-DDT 556 · 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 align="justify"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 556</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br> 21.02.2007<br> Wednesday</b></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Issue of Show Cause Notice for demanding interest and power of adjudication of such cases - CBEC relies on a non existent letter</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been noticed that there is a practice in certain industries, especially those manufacturing motor vehicle parts, that many a time vendors raise supplementary invoices on account of revision of prices. The differential duty is paid by the vendor on the value of such supplementary invoices but interest is not paid on said differential duty.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the issue and Board says it had examined the issue and by letter F.No.574/CE/5/Misc.2003, dated 28.07.2003 clarified that interest under section 11AB of the Central Excise Act, 1944 is payable on such differential duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fact is <b>Board had never issued such a letter. DDT is well aware that a couple of years ago there was an effort to trace this mysterious letter and they could not find it. Strangely, Board now relies on this non existent letter to advise the field on how to recover interest.</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no equity in taxation. If for any reason, the assessee has to refund some money to his customer, he will not get a refund from the department, but if his customer pays him some money after some time, he has to pay duty as well as interest. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now how is this interest recovered? We had carried an article three years ago, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=newsch/guest/achutan/achutan010.htm">SECTION 11AB : WHETHER RECOVERY PROVISIONS NEEDED </a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So now Board clarifies</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) It has been decided that where differential duty is paid without interest, in such cases, Show Cause Notices demanding interest and levy of penalty should be issued. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) In the Show Cause Notice, the reference of duty already paid should also be given.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) These cases should be decided by the proper officer based on the monetary limits fixed for the duty amount involved and not on the basis of the amount of interest.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) The amount of duty on which interest has been paid, should be the monetary criterion for deciding the authority to decide such cases.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are contained in Board’s instructions <b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/cxinstruction2.htm">in F.No. 208/27/2003-CX-6 dated 18 December 2006.</a></u></b></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>I.V. Cannula not eligible for exemption – Dr. CBEC to issue circular</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Notification No. 6/2006 CE “Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra-corporal spaces” are exempted. Incidentally if you search for this in the Notification No. 6/2006, you may not find it there. Sl. No. 61 of the table in the notification directs you to List 37 in the Customs Notification No. 21/2002.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is faced with a problem. Is this exemption available to I.V. cannulas? That is whether IV cannulas are covered under the description "Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra corporal spaces.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board observes,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) IV cannulas are primarily used in the peripheral veins and arteries for purpose of blood sampling, blood transfusion, single and multiple drug infusion, arterial pressure monitoring etc.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Aorta and venaecavae are not similar to peripheral veins and arteries as there are various anatomical and physiological differentials which distinguish between (a) aorta and venae cava and (b) peripheral veins and arteries.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) In exigencies, where specific catheter is not available, IV cannulas are rarely used in abdominal /pleural cavities but this does not justify their use and they are not recommended by standard medical text-books for use as cannula for intra-corporal spaces.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board proposes to issue a circular that</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IV cannula, which is primarily used in the peripheral veins and arteries, is not covered by the description "Disposable and non-disposable cannula for aorta, vena cavae and similar veins and blood vessels and cannula for intra-corporal spaces" and exemption under notification No. 6/2006-CE dated 1.3.2006 [earlier notification No. 6/2002-CE dated 1.3.2002 ] would not be available to such IV cannulas.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you don’t like the circular, you can tell the Board at <a href="mailto:dscx4cbec@yahoo.com">dscx4cbec@yahoo.com</a> by 28.02.2007.</span></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now as usual all the questions will crop up. From which date is the clarification applicable? Will Show Cause Notices be issued for the past five years alleging suppression and collusion? The Tribunal had in many cases held that such I.V. cannulas are eligible for the exemption. Can Board over-rule the Tribunal by a circular? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And then what happens in the Customs side? Will this clarification apply to Customs also?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hopefully Board will clarify the issues before the circular is finally issued.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/draftcirr.htm">Board’s Draft circular</a>.</u></b></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Tobacco fund – PC likely to provide grants in the budget</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Anti tobacco front is hopeful that the Finance Minister would provide a handsome grant to the Tobacco fund, so that the evils of tobacco are better attacked. Now will smokers pay for the fund?</font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Abolish DDT – Gujarat Chamber tells FM</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Gujarat Chamber of Commerce and Industry (GCCI), has demanded a complete abolition of DDT. Last week CII had suggested that <i>It is desirable to do away with DDT.</i> Thankfully they are not referring to this DDT but Dividend Distribution Tax (DDT)</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></span></font></p> </body> </html>