TIOL-DDT 65 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#0000FF" size="3">TIOL-DDT
65</font><br>
1 3 2005<br>
Tuesday</b></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>To be or not to be - That is the question</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In the maze
of budget notifications and analysis, should there be a DDT today?<br>
<br>
Let's do a quick run through the procedural aspects.</font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <b>Settlement
commission can send back the case to the Tribunal</b> if the applicant does
not cooperate.<br>
<br>
2. Board abdicates yet another responsibility. Orders by Commissioners to
be reviewed by a committee of Chief Commissioners instead of the Board. In
DDT 8 it was pointed out that the review is any way done by the Chief Commissioner.
This system of review by two Chief Commissioners is a welcome step as officers
are known to be more judicious in a group than when alone.</font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise</b><br>
<br>
<b>Exemption mandatory</b> - There has been a dispute as to whether an assessee
can choose to pay duty when the goods are exempted. Now the law is amended
to make it mandatory for the assessee to avail the exemption without a choice
of payment of duty.<br>
<br>
<b>Retrospective Legislation</b> - A budget without a retrospective
amendment is just unthinkable.</font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <b>Rule 57CC amended retrospectively</b> - The controversial Rule 57CC
is back in news. The demands of the 8% amount were set aside by Tribunal on
the ground that there was no machinery provision to collect this amount. The
Board did bring in the machinery provisions. But the Tribunals are not very
obedient to Board's wishes and have agreed to this amendment only prospectively.
But the Board has the last laugh - <b>amend the law retrospectively.</b><br>
<br>
2. <b>Credit of AED</b> - There was absolute confusion on credit of
AED for certain periods. And the Board also was not all that sure about it.
But now they are - that it should be collected with retrospective effect.<br>
<br>
3. <b>Rural Area benefit extended</b> - Critics of the government will
be surprised to find a retrospective legislation in favour of the assessee
- See our Lijjad Papad Story.<br>
<br>
4. <b>Refining oil amounts to manufacture</b> - When we reported the
Shyam Oil case - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2004/2004-TIOL-93-SC-CX-LB.htm">2004-TIOL-93-SC-CX-LB</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">.
that refining does not amounts to manufacture, we had made it clear that it
does not apply now and was applicable in a bygone Era. What does the Board
do when it does not like the Supreme Court order? You guessed it right.</font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>No concessional rate of duty for SSI's</b> - In a hard-hitting
move to the SSIs, Notification No. 9/2003 has been rescinded - Please
See our SSI Story.<br>
<br>
<b>Service Tax</b><br>
<br>
<b>Deputy Assistant Commissioner on the way</b> - Remember our report
on Cadre restructuring in the department and the proposal to designate senior
superintendents as Deputy Assistant Commissioners. Now these Deputy Assistant
Commissioners will be empowered to issue Show Cause Notices and adjudicate
cases under service tax. And the law has been amended to empower any Central
Excise Officer to issue Show Cause Notices and adjudicate cases. Now there
will be an Army of adjudicators for service tax and within the next two years
thousands of orders will be in appeal before Commissioners (Appeals). To clear
the backlog of these appeals you need to create more posts of Commissioners.
So in the next cadre review we can expect another hundred or so posts of Commissioners.
Bright promotion chances!<br>
<br>
Goods Transport - Register before 31st March 2005. <b>3/2005-Service
Tax, Dated : February 26, 2005</b><br>
<br>
The table below gives you an overall picture of the Budget Notifications.</font></p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="0">
<tr>
<td colspan="2"><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central
Excise Tariff</strong></font></div></td>
</tr>
<tr>
<td width="94"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification
No</font></strong></div></td>
<td width="344"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subject</font></strong></div></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Effective
rate of duty under first & second schedules for certain goods.<br>
</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Effective
rate of duty under first & second schedules for certain goods.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Effective
rate of Addl. Duty on pan masala & tobacco products. </font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption
on tea and tea waste.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
Amendment to Notification. 23/03 to exempt Additional Customs duty for
goods produced in EOUs.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Exemption
of Addl. Duty of customs for goods manufactured in SEZs and brought
to other places in India.<br>
</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10/05</font></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Amendment
to following Notifications.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8/03
- limit to avail SSI exemption is enhanced to 4 crores.<br>
10/03 - 8% of duty imposed on mosaic tiles.<br>
</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">29/04
and 30/04 - to allow nil rate or 8% for yarn<br>
<br>
</font></p></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11/05</font></td>
<td> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Rescinds
the following Notifications.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9/03</font>
- <font size="2" face="Verdana, Arial, Helvetica, sans-serif">SSI
concessional rate of duty w.e.f. 1.4.05.</font><br>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">11/03</font>
- <font size="2" face="Verdana, Arial, Helvetica, sans-serif">exemptions
to SED w.e.f. 1.3.05<br>
42/03 - exemption from addl. Duty on tea and tea waste.</font></p></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Exemption
of addl. Duty as leviable under clause 85(1) of Finance Bill for captive
consumption</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Exemption
of SED on Tyres, PPY & ACs.</font></td>
</tr>
</table>
</div>
<p align="justify"> </p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="0">
<tr>
<td colspan="2"><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central
Excise (N.T.)</strong></font></div></td>
</tr>
<tr>
<td width="136"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification
No.</font></strong></div></td>
<td width="302"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subject</font></strong></div></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Abatement
is reduced to 30% from 35% on ACs.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Insertion
of Rule 12AA in Central Excise Rules,2002 for job work in articles of
jewellery.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Amendments
to Cenvat Credit Rules,2004.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To avail
exemption from taking registration, assessee has to file declaration
after crossing the value of clearances of Rs.40 lakhs instead of existing
Rs.90 lakhs limit.<br>
</font></td>
</tr>
</table>
</div>
<p align="justify"> </p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="0">
<tr>
<td colspan="2"><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SERVICE
TAX</strong></font></div></td>
</tr>
<tr>
<td><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification
No</font></strong></div></td>
<td><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subject
</font></strong></div></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment
to Notification w.r.t. explanation to gross amount charged for construction
service</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment
to Notification 36/04 w.r.t. Business Auxiliary Service. For mutual
fund distribution, the company is made liable to pay the tax.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
6/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prescribing
exemption limit of Rs.4 lakhs for service tax providers.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7/05</font></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment
of Service Tax Rules.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. More
than one centralized registration permitted<br>
<br>
ii. Invoice can be issued within 14 days of service or receipt of
payment.<br>
<br>
iii. Service Tax to be paid by the 5th of the next month, not 25th
as it is now.</font></p></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption
of service tax on job workers.</font></td>
</tr>
</table>
</div>
<p align="justify"> </p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="0">
<tr>
<td colspan="2"><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CUSTOMS
TARIFF </strong></font></div></td>
</tr>
<tr>
<td width="118"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification</font></strong></div></td>
<td width="320"><div align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subject
</font></strong></div></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Amendment
of Notification. 21/02 - general exemption - several duties
reduced. </font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
12/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption
Notification 5/04 customs rescinded. This notification was used to reduce
the peak rates of customs duties, which are now included in the Notification
No. 13/2005.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Reduces
the peak rates of duty on most goods to 15%</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Supersedes
Notification 17/04 . The duties on fabrics under chapter 52 to 58 were
20% or a specific rate whichever was higher. Now it is 15% or a specific
rate.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Effective
rate of duties of standard and preferential rate.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment
to Notification 136/90 - baggage duty reduced to 35% from existing 40%.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption
of Addl. Duty of customs on tea and tea waste.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment
of exemption notfns.50/96,25/98 & 69/04.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Imposition
of 4% Addl. Duty of Customs on certain imported goods.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption
of education cess on Addl. Duty on the goods covered by Notification.
19/05</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21/05
</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Exemption
of BCD & Addl. Cus. Duty on importation of parts of cell phones
subject to following concessional rate of duty rules, 1996.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Amendment
to Notification .25/99 w.r.t. importation of goods at concessional rate
for manufacture of excisable goods.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment
to Notification 25/02 w.r.t. import of capital goods for IT / Electronic
sector.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Full
Exemption of BCD on importation of certain goods.</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25/05</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Exemption
of BCD for certain imported goods.</font></td>
</tr>
</table>
</div>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#006633">How they reported our Budget?</font></b><br>
<br>
<b>Here's a few selected reports on our budget from the foreign press.</b><br>
<br>
<b>LONDON</b> - Standard & Poor's Ratings Services said India's (BB+/Stable/B)
budget for 2005/2006 delivered today in New Delhi shows a lack of success
in reducing the country's deficit burden.<br>
<br>
"Government debt is the main obstruction in the path of further improvements
in India's credit ratings, and stands out in contrast to the many positive
economic indicators displayed by India in recent years," said Standard
& Poor's credit analyst Ping Chew, Singapore-based head of Asia Sovereign
and International Public Finance Ratings Group.<br>
<br>
The combined central and state government deficits will amount to 10% of GDP
in the near term, leading the consolidated debt of the central and state governments
to rise gradually for the next few years from more than 80% of GDP currently.<br>
<br>
"The 2005/2006 budget does not provide for any significant reduction
in the fiscal deficit, following a rather modest reduction in the previous
year," Mr. Chew added.<br>
<br>
"Given the strong growth being experienced by the Indian economy, it
is surprising that better progress could not be made. Conversely, it must
give rise to worries concerning India's future fiscal performance should growth
rates become less favorable," he noted.<br>
<br>
The budget should also be seen in the context of its track record, where budget
forecasts were missed in four of the past five years. The budget is also subject
to changes, given the political dynamics, especially due to the government's
minority representation.<br>
<br>
Although the fiscal outcome continues to disappoint, a more positive aspect
of the budget is the emphasis given to infrastructure spending and tax reform.
Likewise, the solid 21% growth in taxation revenue in 2004/2005, and an expected
growth of similar proportions this year, must be regarded positively in relation
to India's ability to service its debt burden. For example, in 2003/2004,
interest expense took up 47% of central government revenue, while in 2005/2006
the ratio is expected to fall to 38%. </font></p>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Indian
defence budget hike not helpful trend: Pak</b><br>
<br>
Pakistan today said the increase in Indian defence budget was not a "helpful
trend" and the region needed nuclear restraint and conventional balance.<br>
<br>
On the increase for defence allocation in the Indian budget presented today,
Pakistan Foreign Office spokesman Masood Khan told a media briefing in Islamabad
that "it is not a helpful trend".</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>LONDON, FEBRUARY 28:</b> NRI industrialist Lord Swraj Paul described
the Indian Budget as "pro-development and market-friendly". "It
is a good budget and it is also market-friendly and pro-development Budget,"
Lord Paul, British ambassador for overseas business said reacting to the Budget
for 2005-06 presented by Finance Minister P Chidambaram in Indian parliament.
"The Finance Minister has also simplified the tax structure and has made
enough allocation for education, health and employment sectors," he said.<br>
<br>
<font color="#FF0000"><b>Until tomorrow with more of DDT</b></font></font></p>
<p align="justify"><font color="#FF0000"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Have a Nice Day<br>
<br>
Mail your comments to</font></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>vijaywrite@taxindiaonline.com </b></font></p>
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