TIOL-DDT 606 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">TIOL-DDT 606</font></b><b></b></font><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><b><br> 04.05.2007<br> Friday</b></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>EOUs under watch – Physical control? </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember the days of D3? Remember the days of rushing to the Range office with an intimation and organizing an Inspector to be ferried to your factory for the goods waiting to be verified by his highness? If you don’t – you will experience them soon – if you are an EOU. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you are getting excisable goods without payment of duty under Notification No. 22/2003-CE<b>, </b>dated 31 stMarch, 2003, for use in the EOU, you are in for hassles that will make you feel that it is better to get duty paid goods and take credit rather than get duty free goods and go through hell. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See the latest procedure prescribed by the Board for EOUs. If you are an EOU getting duty free goods:-</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Your consignor has to prepare an application ARE-3 in quadruplicate and send three copies to you and one copy to his Range Superintendent. <font color="#663399">That leaves no copy for him. So obviously he has to make five copies instead of four as required by the Board.</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. On receipt of the goods, the EOU has to make an entry in the ARE 3 copies and send all the three copies to his Superintendent. And don’t forget to keep the goods separately.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Superintendent will depute an officer to conduct physical verification of the goods within 24 hrs of receipt of intimation regarding arrival of goods.<font color="#663399"> How will this officer reach your factory? Obviously in a car arranged by you!</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. After verification, this bond officer <font color="#663399">(it is not specified as to who this James Bond is)</font>, will give a report to his Superintendent who shall countersign the certificate of warehousing on all copies of the application. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. What will the Superintendent do with all the three copies of the ARE 3? He will send the Original to the Superintendent-in-charge of the consignor, duplicate copy to the consignor and triplicate copy to the user industry for record. A photo copy of the original copy of ARE-3 will be kept in the office for records.<font color="#663399">(Who will make the photocopy? The assessee of course!, Range offices do not have Xerox machines!)</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. What happens if the copies are lost in transit? Correspondence, more correspondence, and Audit Paras?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where are we heading to? Back to the nineteenth Century? Is the Board creating more avenues for corruption and complaints? Long ago, the Government abolished physical control as it was found to be useless. Only more officers got charge-sheeted for conniving with the assessees! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is it worthwhile for an EOU to go through all these troubles when they can as well get the goods on payment of duty and take credit and even if they do not have DTA clearances, they can claim refund of the unutilized credit?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/excircular851.htm" target="_blank"><u>CBEC</u> <u>CIRCULAR NO. 851/9/2007-CX., Dated: May 3, 2007</u></a></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>EOUs – procedure for imported goods</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If procurement of indigenous goods is so complicated, can import of raw materials by EOUs be lagging behind? Strangely, the procedure for imported goods is rather simple. There is a Customs circular too to regulate the movement of non duty paid goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here the EOU with an export turnover of Rs. 15 crores and above in the preceding financial year and having a clean track record as determined by the jurisdictional Commissioner of Customs or Central Excise, is allowed self warehousing – of course subject to an elaborate procedure.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The EOU</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. shall specify and intimate the Jurisdictional Asstt./Dy. Commissioner of Customs or Central Excise the particulars of person(s) who are nominated for examination and certification of re-warehousing.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. On arrival of the indigenous goods at the premises of the unit, the authorized person of the unit shall verify the number/quantity/weight/description/value/duty paid etc. with the particulars mentioned in the application (ARE-3) and invoice. If no discrepancy is found on verification, the authorized person shall warehouse the goods and make entry in the account/register containing information relating to details of ARE-3 and invoice, date of receipt and warehousing, description of goods including marks and number, quantity, value, rate and amount of duty and shall affix his/her signature. The unit shall endorse certificate of warehousing on all copies of the application. The goods so warehoused can be used for the intended purpose. The unit shall, within one working day of arrival of goods, send original copy of ARE-3 to the Superintendent-in-charge of his unit, duplicate copy of ARE-3 to the consignor and retain triplicate copy of ARE-3 for his record.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. On arrival of the imported goods at the premises of the unit, the authorized person of the unit shall verify the number/quantity/weight/description/value/rate and amount of duty etc. with the content mentioned in the bill of entry. If no discrepancy is found on verification, the authorized person shall warehouse the goods after making entry in the account/register containing information relating to details of bill of entry for warehousing, date of receipt and warehousing, description of goods including marks and number, quantity, value, rate and amount of duty and affix his/her signature. The authorized person of the unit shall issue certificate of warehousing on all copies of the bill of entry as prescribed below. The goods so warehoused can be used for intended purpose.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Ten percent of the consignments, subject to minimum of two, received in a month will be randomly selected, spread over the entire month, for verification by officer-in-charge after the receipt of ARE-3 and manual or electronic bill of entry, as the case may be. A report of verification and warehousing details shall be furnished by the officer in respect of consignments selected for verification in all copies of ARE-3 or bill of entry.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A lot of fraud and evasion have been detected in the EOU sector, but this certainly is not the way to deal with the problem, as this will only increase corruption and complaints. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2007/cuscir07_19.htm" target="_blank"><u>CBEC CIRCULAR NO. 19/2007-Cus., Dated: May 3, 2007</u></a></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise loses yet another case because of over-smart officers </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Show Cause Notice is issued by a Superintendent in 1994 demanding duty from L&T for the girders they made for Konkan Railways. Within two months, the Show Cause Notice is withdrawn as it was not issued by the proper officer and issued without authorisation. For two years, the department kept quite and in 1996 issued another notice alleging suppression. The Supreme Court decided the case now, not on merits, but on limitation. There is no doubt the assessee was required to pay the duty, but the second notice was declared time barred as department’s slumber for two long years carried no premium. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is how the Department loses cases – even when they have a strong case on merits. It requires extraordinary talent to lose a case when the law is so strongly on your side and the Department is full of such talented people who will keep no stone unturned to ensure that the Department ultimately loses. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5422" target="_blank">Breaking News</a></u> for the details of the case</font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Finance Bill 2007 passed in LokSabha</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Bill is almost through – it has been passed by the LokSabha and that really is the end of it. The approval of RajyaSabha and the President is just a formality. In his reply the FM said,</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In the three years of the UPA Government, we have increased the tax, GDP rate from 9.2 per cent to 11.2 per cent. Of this, the ratio of direct taxes to GDP is 5.6 per cent and it is rising every year. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Gross tax revenue at Rs.4,71,742crore exceeded the Budget estimates by Rs.29,589crore and exceeded Revised Estimates by Rs.3,894crore. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As against an effective threshold of Rs.80,000 for salaried tax payers, we increased the threshold to Rs.1lakh. Besides, we continued with the exemption of up to Rs.9,600 per year for Transport Allowance, and up to Rs.15,000 per year for medical reimbursement. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Regarding the number of individual assesses who admit to an income of more than Rs.10lakh per year, in 2003-04, the number was approximately 97,500. In 2005-06, the number is estimated to have increased to approximately 1,40,000. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <b>Although services account for 56 per cent of GDP, service tax contributed 7.92 per cent of the total tax collection in 2006-07</b>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Renting is liable to Service Tax. We have introduced Service Tax only in respect of renting of large commercial properties. Properties used for education and religious purposes, for sports and entertainment are exempted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As regard to the number of Income Tax Officers leaving the service prematurely 103 Group ‘A’ Officers out of a total number of 4150 have left the service since June 2004. But on an average about 65 Group ‘A’ Officers have been recruited every year in the last five years to the Income Tax Department and hence there is no cause for alarm. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The cement industry has not respond positively to the dual Excise Duty regime. Hence the Government has decided to replace the dual rates of cement. Now onwards the concessions granted to cement sold at Rs.190/- or less per bag will continue; for cement sold at a higher price the Ad valorem rate will apply.</font></p> </blockquote> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT</font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend. </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> </body> </html>