TIOL-DDT 657 · the untouched capture
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<p align="justify"><font size="2"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 657</font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
16.07.2007<br>
Monday</font></b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Central Excise - Arrest and Prosecution - Board issues instructions</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has reiterated its earlier instructions that the inspector can arrest; that prosecution may be launched when duty involved is Rs. 25 Lakhs or more; that prosecution may be considered of habitual offenders even for lesser amount of duty that Chief Commissioner has the power to sanction prosecution.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board
feels that arrest and prosecution are effective tools to tackle evasion and
to raise tax compliance levels. So, the Board wants the best possible use
of these provisions by following the Board instructions scrupulously.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>How to launch Prosecution?</u></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You have arrested a person, got the sanction of the Chief Commissioner to prosecute him but how do you really proceed to prosecute him? The long journey of prosecution starts with filing a complaint. Now for an offence under Central Excise, who is to file the complaint? Neither under the Central Excise Act nor under the Customs Act, any officer has been specified as one authorised to file a complaint.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the Drugs and Cosmetics Act, an Inspector has been authorised to institute prosecution. Under the Companies Act, the Registrar is authorised to file a complaint. In our related Acts, under the FERA, the Director of Enforcement and certain other officers were authorised to file a complaint. Even under the old Sea Customs Act, the complaint had to be filed by the Chief Customs Officer or an Officer authorised by him not below the rank of Assistant Collector. The old Central Excise Rules also had a provision that no charge of an offence can be made by an officer inferior to an inspector. There are judicial decisions especially an interesting one in which an accused was found to have evaded excise duty and was so liable for punishment. He was required to take licence but did not do so and was liable for conviction; he forged gate passes and could have gone to jail on every charge but the court discharged him for the simple reason that the Assistant Collector was not competent to file the complaint.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is time the Board seriously considered this lapse.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/instruct0208.htm" target="_blank">Board's F.No. 208/21/2007-CX-6, Dated June 15, 2007</a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Import of Rubber Chemicals - Anti-dumping investigation on</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Designated Authority has initiated investigation into Anti-Dumping against imports of certain Rubber Chemicals from <st1:country-region w:st="on">China</st1:country-region> and <st1:country-region
w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region>. The Designated Authority has invited submissions from the exporters in those countries, importers and users in <st1:country-region w:st="on"><st1:place w:st="on">India</st1:place></st1:country-region> and any other interested party to participate in the investigation and to make their submissions within forty days from 6<sup>th</sup> of July, 2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/anti_dum.htm" target="_blank">DG Anti-dumping Notification, Dated July 6, 2007</a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">DEPB</font></b><font color="#006600"><b> Rates announced</b></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT has announced the new DEPB rates valid for shipments made with "let export" dated up to 31<sup>st</sup> March, 2008.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2007/dgft07pn017.htm" target="_blank">DGFT PUBLIC NOTICE NO. 17(RE-2007)/2004-2009., Dated July 12, 2007</a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Appreciated Rupee - harried exporters - RBI Instructions</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please See <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5757" target="_blank">DDT 656</a> Dated 13.07.2007 on the subject, where it had been reported that the Government had decided to come to the rescue of exporters by providing interest subvention (Financial Support) of two percentage points. Now RBI has come out with detailed instructions on the scheme. Banks will be reimbursed the subvention amount on the basis of quarterly claims. The amount of subvention will be on the amount of export credit from the date of disbursement to the date of repayment. The claims are to be accompanied by auditor's certificate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_noticredit.htm" target="_blank">RBI Instruction No. 22/04.02.01/2007-08, Dated July 13, 2007</a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">From our Legal Corner - tomorrow's cases</font></b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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></font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF0000">CESTAT </font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Adverse remarks against CESTAT Member - They proceeded to hang him by the closest lamp post simply for the reason that his neck nicely fitted the noose - remarks expunged : CAT</font> </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">THERE </font></strong>is delay in passing an order by CESTAT which was commented by a High Court. The delay was mostly because of one member, but the President of the CESTAT made an adverse remark in the 'annual confidential report' of the other member. The Secretary to the government sitting in appellate authority over the President of the CESTAT, a retired High Court Chief justice, refuses to expunge the remarks. The aggrieved Member of the Tribunal is before another Tribunal, the Central Administrative Tribunal. But hasn't the Madras High Court held that the President of the CESTAT is not competent to write the ACR of the Member?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Income Tax</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Tax evasion is not necessary pre-condition for AO to refer the case to Transfer Pricing Officer : ITAT Special Bench </font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">WITH</font> </strong>the Indian economy finding itself at the centre of rapid integration of virtually all sectors with the globalisation process, the participation of MNEs has logically grown manifolds. So has the importance of transfer pricing in Income Tax Act. Though the developed countries are well versed with the phrase but <st1:country-region
w:st="on"><st1:place w:st="on">India</st1:place></st1:country-region> is still struggling to effectively deal with the issue. Transfer pricing, to put simply, is a mechanism to make adjustments in controlled price of international transaction in the light of Arms length price (ALP). Controlled price is the price charged or paid by associate enterprises for goods and services in international transactions between them whereas ALP is the price of comparable uncontrolled transaction i.e. international transaction between unrelated enterprises. The issue is sensitive because of the capability of MNCs to manipulate the transactions between their subsidiaries in order to reduce or avoid tax. They have the ability to divert tax by manipulating prices thus burning a hole in the national exchequer. It is here the concept of Transfer Pricing (TP) assumes importance in order to come to the right price in international transactions of asociated enterprises to ensure that income taxable in <st1:country-region w:st="on"><st1:place w:st="on">India</st1:place></st1:country-region> is not diverted. The intricacies of TP mechanism was discussed threadbare by a Special Bench of Tribunal constituted to look into the matter in the case of M/s Aztec Software & Technology Services Ltd. v. ACIT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Customs</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">CBEC cannot interfere with adjudication - used rails - CBEC Circular No 8/2006-Cus quashed : <st1:City w:st="on"><st1:place w:st="on">Madras</st1:place></st1:City> HC </font></b></font><font 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><font color="#663399">THE</font> </b>CBEC had issued a Circular No. 1 of 2005-Customs dated 11.01.2005 clarifying that used steel rails for re-rolling were classifiable under heading 72.04 and these were freely importable.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board issued another Circular No. 8 of 2006-Customs dated 17.1.2006 clarifying that the appropriate classification of "used steel rails" shall be under CTH 7302, and not under CTH 72.04 as ferrous waste and scrap.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is this second circular which is under challenge before the High Court.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u><font color="#663399">See our columns Tomorrow for the judgements</font></u></b></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></font></p>
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