TIOL-DDT 633 · the untouched capture
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<p align="justify"><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">TIOL-DDT 633</font></b><b></b></font><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><b><br>
12.06.2007<br>
Tuesday</b></font></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Exit from EOU Scheme - de-bonding under Advance Authorisation permitted subject to positive NFE </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Para 6.18 (g) of the Foreign Trade Policy, as amended, with effect from 19.4.2007, </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(g)
An EOU / EHTP / STP / BTP Unit may also be permitted by Development Commissioner
to exit under Advance Authorization as a one time option. This will be subject
to fulfillment of positive NFE criteria.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To give effect to this, the Revenue Ministry has amended the excise Notification No. 22/2003 and the Customs Notification No. 55/2003 to add a new proviso that <font color="#663399">in a case of exit by a user industry where positive NFE criteria is fulfilled in terms of Para 6.18 (g) of Foreign Trade Policy, such clearance or de-bonding of goods shall be allowed under Advance Authorization as one time option on payment of applicable duty.</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This, in effect, means that a unit that has fulfilled the positive NFE Criterion can be permitted by the Development commissioner to exit under the Advance Authorisation Scheme as a one time measure and from 6.6.2007 Customs and Central Excise departments have no objection. As is well known, the policy becomes effective only when and if the Revenue Ministry decides to give it effect.</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=30&filename=notification/excise/2007/etariff07_26.htm" target="_blank">Notification No. 26/2007-CE,</a><b> and </b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_076.htm" target="_blank">76/2007-Cus., Dated June 6, 2007 </a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Re-import of cut and polished diamonds – Certification Agency</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s. International Diamond Laboratories DMCC, Dubai is appointed as a certification/grading agency for the re-import of cut and polished diamonds. As per Notification No. 55/2001-Cus., dated 16.5.2001 re-imported cut and polished diamonds are exempted from Customs Duty, if they are imported by Jewellery exporters having three years track record and an average annual turnover of Rs. 5 Crores and the re-import is within a period of three months from the date of export and the re-import is on production of a certification/grading report from the nine specified agencies. Now the above Dubai laboratory is notified as a specified agency.</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=23&filename=notification/custom/2007/ctariff07_076.htm" target="_blank">Notification No. 76/2007-Cus., Dated June 6, 2007 </a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Exemption to consumables for manufacture of Gem and Jewellery</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Notification No. 41/99-Cus, consumables imported for manufacture of Gem and Jewellery are exempted to holders of Replenishment Authorisation. This exemption is allowed up to one percent of the FOB value of the export of gold or platinum jewellery, up to two percent for silver jewellery. Now a new category – rhodium finished jewellery made of silver is added to the exemption and up to three percent FOB is allowed.</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=23&filename=notification/custom/2007/ctariff07_076.htm" target="_blank">Notification No. 76/2007-Cus., Dated June 6, 2007 </a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Difficulties being encountered by Goods Transport Operators in complying with the provisions of Service Tax – Board clarifies</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 4B of Service Tax Rules prescribes that any ‘goods transport agency’ providing service in relation to transport of goods by road in a goods carriage shall issue a consignment note to the customer. In terms of this rule, the “consignment note” means <i>“a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, <b><font color="#663399">registration number of the goods carriage in which the goods are transported</font><u>,</u></b> details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency”.</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Road Transport Agency Association has informed that it may not always be possible for goods transport agency to mention truck No. on consignment note in respect of small consignments, i.e., consignments that are less than a truck load. In such cases, the transporters have to wait till they accumulate a truck load of small consignments for a particular destination. Further, at times some consignments are shifted to other trucks in accordance with the business exigency. These factors make it practically impossible to know the registration number of the truck transporting a particular shipment at the time of booking of cargo. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has kindly considered the matter and has directed that</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. in respect of small consignments, where truck number is not known, an endorsement, i.e., “truck number not known” may be made on customers copy of consignment note, against the entry for truck No.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. As and when the truck No is known, the goods transport agency shall make an entry of trucks No. in their copy of consignment note to satisfy the requirements of said rule 4B and also for any future reference. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Similarly, in case of transshipment of goods, the goods transport agency would make entry of such transshipment, in their copy of consignment note. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. For example, if goods moves from Delhi to Agra, and is transshipped there for further movement to Mumbai, the goods transport agency would mention in his copy of consignment note, against vehicle No. as “ (<i>i) Delhi to Agra: Vehicle No.- XXX (ii)Agra to Mumbai: Vehicle No.- XXXX</i>”.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. This would satisfy the requirement of the said rule 4B. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The truck operators have the power to block the National Highways and no Board can afford to play with them – you always have the manufacturers if you feel like issuing a Show Cause Notice.</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=41&filename=notification/servicetax/2007/sercir95.htm" target="_blank">Circular No.95/6/2007-Service Tax Dated the 11th June, 2007</a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Small is beautiful: No requirement of truck number for small consignments</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the above Board Clarification, I woke up a Service Tax expert last night and asked for his comments. This is what he sent me early in the morning:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When
Road Transport Agency Association represented to the Board expressing difficulty
to comply with the provisions of Rule 4B of Service Tax Rules – which
requires mentioning of registration number of goods carriage in which the
goods are transported – in respect of small consignments as the GTA
would not know the truck number at the time of booking of consignment, the
CBEC vide Circular <b>No.95/6/2007-ST dt. 11/06/2007 </b>has given the following
solution:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> “Therefore, in respect of small consignments, where truck number is not known, an endorsement, i.e., “truck number not known” may be made on customers copy of consignment note, against the entry for truck No. As and when the truck No is known, the goods transport agency shall make an entry of trucks No. in their copy of consignment note to satisfy the requirements of said rule 4B and also for any future reference. Similarly, in case of transshipment of goods, the goods transport agency would make entry of such transshipment, in their copy of consignment note. For example, if goods moves from Delhi to Agra, and is transshipped there for further movement to Mumbai, the goods transport agency would mention in his copy of consignment note, against vehicle No. as “ (<i>i) Delhi to Agra: Vehicle No.- XXX (ii)Agra to Mumbai: Vehicle No.- XXXX</i>”. This would satisfy the requirement of the said rule 4B. “</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the GTA tries to implement the above solution, one day he may find that the solution given by CBEC is more complicated than the problem. If the whole problem is to satisfy the requirement of the rule (as felt by CBEC) then the GTA can put any truck number of his fleet. Person having even a cursory knowledge about the way GTA booking offices function would certainly laugh at the above solution, because the consignment note / LRs never seen to contain (filled) all details except consignee address and freight charges as these offices book number of consignments everyday and they are manned by not so literates, they hardly find time to follow niceties of law. In such a scheme of things is it possible for the person transshipping goods in Agra to inform his Delhi office to trace and enter transshipped truck number in the CN issued to “ small consignment “ booked at Delhi. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thank god, the circular did not add that the GTA has to inform to consignor (who booked small consignment and got his CN copy filled as “truck number not known”) the truck number/ transshipped truck number, so that he can correct his copy accordingly.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may be remembered that one of the reasons for opposing imposition of service tax on GTA agencies is that the GTA are run by illiterates or semi literates.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, if the above circular (solution) is meant for taking Cenvat credit without any problems at the consignee end, then it is enough if they “satisfy” the officer than the requirement of rule 4B</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instead of issuing the above non-workable solution, the Govt. may consider adding a proviso to rule 4B dispensing requirement of mentioning truck number in case of small consignments. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left"></b></b><font color="#006600">From our Legal Corner</font></b></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service Tax - Hire purchase and hire purchase financing are not synonymous - Hire purchase finance not covered by Finance Act, 1994 - Bajaj Auto Finance wins Rs 26 Cr case in Tribunal</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SIX </strong>months ago, we broke the story that the Tribunal in the case of Bajaj Auto Finance [<a
href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2006/2006-TIOL-1473-CESTAT-MUM.htm" target="_blank">2006-TIOL-1473-CESTAT-MUM</a>] has granted waiver of pre-deposit of Service Tax of Rs 26 Crores opining that prima facie, hire purchase and hire purchase financing are not synonymous. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow, we will report the final order of the Tribunal setting aside the order of the Commissioner of Central Excise, Pune-I by holding that "Hire Purchase Finance" in which the appellants are engaged is different from "Hire Purchase" and that Hire Purchase Finance is not covered under the provisions of Section 65(10) of Chapter V of the Finance Act, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, we had in our Budget Round up carried an article <i>"Service Tax - Hire purchase & Hire purchase financing - Change Gears else the department may lose its pound of flesh" </i>bringing to the fore the inconsistency in the definitions employed by the Finance Act, 1994.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns tomorrow for the judgment</u></b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>No prosecution if accused exonerated in adjudication proceedings on the same set of facts : Delhi HC</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is no doubt true that judgments of the Court have settled the position that exoneration in adjudicatory or assessment proceedings should not automatically result in conclusion that criminal complaints are not maintainable. The court examining the issue should consider the facts of each case. If the exoneration is based on technicalities or in the absence of certain features which are otherwise available in the criminal proceedings, the latter should be allowed to proceed. Additionally, the Court has also to consider other circumstances such as whether an appeal is maintainable before a superior or appellate body and is pending; the standard of proof in either proceedings etc.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But in this case, prosecution was quashed. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns tomorrow for details</u></b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Sale of equipment by head office of foreign enterprise directly to NSPT - No income tax on profits in India : ITAT</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal held that under the provisions of Article 7(1)(b), on the facts of this case, sale of equipment directly by the head office of the foreign enterprise directly to NSPT (Nava Seva Port Trust) does not lead to taxability of profits thereon in India.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns tomorrow for details</u></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more DDT</font></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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