TIOL-DDT 648 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 648</font><br>
03.07.2007<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Imported
CDs to cost more – anti dumping duty </strong></font>
</p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Recordable Compact Discs (CD-Rs) originating in or exported from
the People's Republic of China, Hong Kong, Singapore and Chinese Taipei were
subject to a provisional anti dumping duty. Now a definitive higher anti dumping
duty is imposed on all these imports.<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_078.htm" target="_blank">NOTIFICATION NO. 78/2007-Cus., Dated: June 29, 2007</a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">SAFTA imports – customs duties reduced</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Imports
from</strong></font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Islamic
Republic of Pakistan</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Democratic Socialist Republic of Sri Lanka</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> People’s Republic of Bangladesh</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Kingdom of Bhutan</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Republic of Maldives and
Nepal</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">were
allowed under a concessional rate of duty, but with the reduction of peak
rates of duty, these rates have become almost equal to tariff rates. So the
rates are now further reduced.<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_079.htm" target="_blank">NOTIFICATION NO. 79</a> and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_080.htm" target="_blank">80/2007-Cus., Dated: June 29, 2007</a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Indian
Rupee Value of the special currency Basket for deferred payments contracts – DGFT
clarifies</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
pursuance of the Deferred Payments Protocol dated the 30th April, 1981 and
23rd December, 1985 between the Government of India and the former USSR,
the Reserve Bank of India has revised the Indian Rupee Value of the Special
Currency Basket at 56.8292 with effect from 19.4.2007 and after two and a
half months, the DGFT is issuing a public notice in public interest.</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=47&filename=notification/dgft/2007/dgft07pn012.htm" target="_blank">PUBLIC NOTICE NO. 12 (RE-2007)/2004-2009, Dated: June 27, 2007</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>History
of India’s
exchange rates</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From
1950-1951 till December 1973, India followed an exchange rate regime with
Rupee linked to the Pound Sterling, except for the devaluations in 1966 and
1971. When the Pound Sterling floated on June 23, 1972, the Rupee’s
link to the British units was maintained; paralleling the Pound’s
depreciation and effecting a de facto devaluation.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> On September 24, 1975, the Rupee’s ties to the Pound Sterling were
broken. India conducted a managed float exchange regime with the Rupee’s
effective rate placed on a controlled, floating basis and linked to a “basket
of currencies” of India’s major trading partners.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In early 90s, the above exchange rate regime came under severe
pressures from the increase in trade deficit and net invisible
deficit, which led the Reserve Bank of India to undertake downward
adjustment of Rupee in two stages. This adjustment was followed
by the introduction of the Liberalized Exchange Rate Management
System (LERMS) in March 1992 and the adoption of a dual (official
as well as market determined) exchange rate in India. However,
such system was characterized by an implicit tax on exports resulting
from the differential in the rates of surrender to export proceeds.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Subsequently, in March 1993, the LERMS was replaced by the unified exchange
rate system and hence the system of market determined exchange rate
was adopted. However, the RBI did not relinquish its right to intervene
in the market to enable orderly control.<br>
The foreign exchange market of India was characterized by the existence
of both official and black market rates with median premium. However, such
black market premium steadily declined.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> According to the RBI, <font color="#663399">“The exchange rate policy in recent years has
been guided by the broad principles of careful monitoring and management
of exchange rates with flexibility, without a fixed target or a pre-announced
target or a band, coupled with the ability to intervene if and when necessary.
The overall approach to the management of India’s foreign exchange
reserves takes into account the changing composition of the balance of payments
and endeavours to reflect ‘liquidity risks’ associated with different
types of flows and other requirements".</font></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#006600"><strong>India’s External Debt as at the end of March 2007</strong></font></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/debt.jpg" alt="Legal Corner Icon" width="495" height="293" hspace="5" border="0" align="center"></b></b></b></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
India’s external debt at end-March 2007 increased by US $ 28.6
billion over the end-March 2006 level to reach a level of US
$ 155.0 billion.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++ The positive valuation impact reflecting the depreciation
of the US dollar vis-à-vis other major international currencies has added to the
outstanding debt stock</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++ Among the various components of external debt, external
commercial borrowings (ECBs) at US $ 42.8 billion have recorded
a significant increase of 59.2 per cent followed by trade
credit and NRI deposits.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++ Multilateral and bilateral debt witnessed moderate increase.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++ Short term trade credit has witnessed a sharp increase of US $ 3.3 billion
(37.7 per cent) underpinned by growth in imports during the year.</font></p>
<p align="center"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#006600"><strong>From our Legal Corner – tomorrow’s cases<br>
</strong></font><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></b></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong><font color="#FF0000">Customs</font></strong><br>
<br>
Sec 110 of Customs envisages both sides of coin - Commissioner's order that
assessee may pursue provisional release with investigating agency and on other
hand, order extension of period of SCN are totally contradictory and extraneous
: Tribunal<br>
<br>
The Tribunal also clarified that the mere fact that the goods were released
on the bond would not take away the power of the Customs Authorities to levy
redemption fine in view of the Supreme Court decision in Weston Components
Ltd<br>
<br>
<strong><font color="#FF0000">Service Tax</font></strong><br>
<br>
<font color="#663399">operating and maintaining power plant does not involve taxable services of
management or engineering consultancy, C and F or BAS - Generation of electricity
is within the meaning of manufacture under Central Excise : CESTAT<br>
<br>
<strong>RUNNING of power plant</strong> - is it covered under</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> management constancy</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> engineering consultancy</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> C&F agent</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Business Auxiliary service</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Maintenance and repair service</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> This was the question before the Tribunal in a high value appeal.<br>
<br>
<strong><font color="#FF0000">Income Tax</font></strong><br>
<br>
<font color="#663399">TDS - payment made to non-resident supplier of plant and machinery - Foreign
supplier liable to pay tax only on 10% of receipts, but TDS not to be determined
based on this 10% - TDS to be on whole payment - Assessee cannot decide tax
liability of its customer : ITAT</font><br>
<br>
<font color="#663399"><strong>See our columns tomorrow for the judgements</strong></font><br>
<br>
<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="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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