TIOL-DDT 671 · 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><font size="2"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 671</font><font face="Verdana, Arial, Helvetica, sans-serif"><br> 03.08.2007<br> Friday</font></b></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise – a peep into history</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior to 1889, the Salt, Abkari and Customs departments were together. However by the Madras Salt Act 1889, Salt and Abkari (liquor) were organised under the Madras Salt department and it functioned from the Custom House at Madras. It was the Salt department which alchemised into the Central Excise Department.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Salt department, under the Collector of Salt Revenue, Madras had three divisions- Northern, Central and Southern. Northern division consisted of Cocanada, Nellore, Massulipattinam and Chicacole. Central Division consisted of Chengleput, Bellary, Arcot and Cuddalore. Southern division consisted of sub-divisions like Nagapattinam, Tinnavelley, Trichinapally, and Calicut (Names are old). Besides Salt and Abkari revenue, the Salt department also administered all the Customs out ports in the coastal areas and land customs stations. This is how the major ports came under the control of the Customs department and the other ports under Central Excise.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1924, salt was separated from the salt and Abkari department. Abkari or liquor excise remains with the State Government even today. A separate Salt department was carved out with Collector of Salt Revenue as the head. This department also looked after the Customs out ports. The Salt department located its Offices in various places like Triplicane, Cathedral Road and finally Sterling Road. There were 13 Customs Outports in the Madras Presidency, at Cuddalore, Nagapattinam, Portonovo, Vizagapatam, Baindoor, Gangoli, Cannanore, Moolky, Badagara, Ponnani, Allepey, Quilon and Trivandrum. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Salt Amendment Act transferred the Madras Salt Department to the administrative control of Government of India in 1926. This was the first step to the <b><font color="#663399">Central</font></b> Excise Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1930 Silver was made an excisable commodity. In 1931 Provisional Collection of Taxes Act was legislated. In 1934 more commodities were brought under the Tax net like Iron and Steel, Matches, Sugar and Mechanical Lighters. Also a Tariff Act was legislated in 1934. Elaborate procedures, rules and regulations were framed for assessment, levy and collection of duty on the new excisable commodities like matches and sugar. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1934, the Central Board of Revenue was constituted. This Central Board located in Simla used to send handwritten letters to the field formations. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I had the privilege of seeing some of those letters. However the Governor in Madras had a typewriter and letters from the governor were typed.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Collector of Salt Revenue, Madras had three functions</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. administration of Salt Act under the Central Board of Revenue; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. administration of Excise on matches, sugar and other commodities under the provincial governments and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. administration of Customs Outports and Land Customs stations.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F.C. KING, was deputed by the British Government to study the feasibility of the Government of India taking over the administration of Central Excises from the Provincial Governments. Hitherto the respective Provincial Governments administered the revenue department and the collection of tax from the various commodities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">His report noted that the staff employed by the Madras Government for the purposes of the administration of the Central Excises was of the lowest grade. The report had compared the system of assessment and control over sugar and match factories in the various provinces. The total expenditure of collection of Central Excise was estimated to be about Rs.4,97,000/- per year. The then existing cost of collection was found to be highest in Bombay and lowest in Madras. Finally the Madras Salt Department under the Government Of India took over the administration of Central Excise. There were 7 Sugar factories and 3 Match factories during the year 1938-39. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To collect more Revenue to meet the war expenditure, excise duty on tobacco was introduced in 1942 with Collectorates in madras, Bombay and Delhi. The Collector had a jurisdiction far wider than UK.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An Inspector of Central Excise in the fifties used to get a starting salary of Rs. 80/- compared to today's Rs. 6500/-, which they(the inspectors) hope will be Rs. 20,000/- after the latest Pay Commission.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even though the country was ruled by a foreign power, their laws were fair. The Excise laws were assessee friendly. The procedures were such that they were tailored to meet the requirements of Trade and Industry instead of other way about. Senior officers went round the country to get a feedback and to find solutions for the practical difficulties of the assessees. Officers were encouraged to come up with suggestions. The working conditions were extremely harsh. No Government vehicle was provided at any level. Survey of tobacco fields required intensive visits to villages. A.N. Sattanathan, ICS, Member Central Board of Revenue prepared a supplement of Tobacco Manual, which was adopted for the rest of the country.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since then no better manual was ever prepared. It was to be a series of confusing, contradictory and uncompiled bulk of instructions therafter – with which we have to bear!</font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner – Monday's cases</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></b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Corruption and independence – any connection? </font></strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Among generally corrupt people, liberty cannot last long - Corruption connotes allowing decisions of a person to be influenced not by rights or wrongs of a cause, but by prospects of monetary gains : Supreme Court </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IT is a strange co-incidence that the Prevention of Corruption Act, 1947 was enacted in the year of our country's independence.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Corruption is one of the most talked about subjects today in the country since it is believed to have penetrated into every sphere of activity. It is described as wholly widespread and spectacular.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Corruption as such has reached dangerous heights and dangerous potentialities. The word 'corruption' has wide connotation and embraces almost all the spheres of our day to day life the world over. In a limited sense it connotes allowing decisions and actions of a person to be influenced not by rights or wrongs of a cause, but by the prospects of monetary gains or other selfish considerations. Avarice is a common frailty of mankind, and while Robert Walpole's observation that every man has a price, may be a little generalized, yet it cannot be gainsaid that it is not far from truth. Burke cautioned "Among a people generally corrupt, liberty cannot last long".</font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise</b></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Are horses, bulls, dolphins and asses excisable goods? Going by this Cestat ruling, YES! </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IT all stared with the eight digit tariff. With effect from 28.2.2005, the six digit tariff has been replaced with the eight digit tariff and in the new tariff, against certain entries, we find no duty rate, not even Nil rate. Nothing has been mentioned against these entries and the duty rate is left blank. Now the question is whether these goods are "excisable" or not?</font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income realised from sub-lessee in occupation of premises is to be assessed under Head 'Other Sources' as he is not owner of premises - Not as rental income under head 'house property' : ITAT </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PROFESSOR Harnam Singh is the owner of a property in New Delhi which was let out to Modi Rubber Ltd. from time to time. Last written lease expired somewhere in 1994 but the company was holding over. Prof. Harnam Singh was not able to get the premises vacated from M/s. Modi Rubber, therefore he executed a lease on 17.11.1998 in favour of the assessee company (appellant) for a period of 9 yrs. and 11 months, the lease to commence from the date the assessee appellant was able to get possession of the property. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns Monday for the judgements</u></b></font></p> <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>