TIOL-DDT 673 · the untouched capture
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<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL</font></b><font color="#663399" size="3"><b>-DDT 673</b></font><font size="2"><b><br>
07.08.2007<br>
Tuesday</b></font></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>New North-East Notification – Now recognized in CENVAT Credit Rules </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 25-4-2007, the Government issued Notification No. 20/2007-CE, exempting goods in the North Eastern states and Sikkim. On 3<sup>rd</sup> August, 2007 the Government has issued a notification incorporating this Notification No. 20/2007 in the CENVAT Credit Rules.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 12 of the CENVAT Credit Rules, CENVAT Credit is available to goods received from the North Eastern States covered under various exemption notifications starting from Notification No. 32/99 to Notification 56/2003. Now Notification No. 20/2007 is also added to the list of notifications.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 12A(1), LTUs are allowed to remove inputs on which credit has been taken, to their other units except units availing the various notifications for the North Eastern States. Now Notification No. 20/2007 is added to this list also.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 12A(4), LTUs are allowed to transfer CENVAT Credit from one unit to another, except from the units availing the North East exemption notifications. Now Notification No. 20/2007 is added to this list also.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But these additions are done only on 3.8.2007 that is three and half months after Notification No. 20/2007 had been issued. Does it mean that during the last three months </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Credit was not available if inputs were received from units availing Notification No. 20/2007?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Could LTUs remove inputs to units availing Notification No. 20/2007?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Could LTUs transfer CENVAT Credit from units availing the above notification?</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/exnt07_32.htm" target="_blank">Notification No. 32/2007 – C.E., (N.T.), Dated August 3, 2007</a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Anti-dumping duty on POY</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provisional Anti-dumping duty on POY originating in or exported from China was imposed by Notification No. 77/2006-Cus., dated 2-08-2006. This Notification was effective only till 01.02.2007. Now based on the recommendations of the Designated Authority, Government has imposed definitive anti-dumping duty on these products.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But was there no dumping and injury to domestic industry during the period 02.02.2007 to 02.08.2007? </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_092.htm" target="_blank">Notification No. 92/2007 -Cus., Dated August 3, 2007</a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Government notifies the COST INFLATION INDEX FOR 2007 -08</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 48 of the Income Tax Act, for calculating capital gains, indexed cost of acquisition is to be deducted from the sale consideration to arrive at the taxable gains. And the Government is to notify a cost inflation index (CII). The government has now notified <b>551</b> as the cost inflation index for 2007-08. <br>
<br>
Want to know the indices for the previous years? Here they are.<b></b></font></p>
<div align=center>
<table width="450" border=1 align="center" cellpadding=3 cellspacing=0>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Sr.No</b></font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Financial Year</b></font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CII</b></font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Sr.No</b></font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Financial Year</b></font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CII</b></font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Sr.No</b></font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Financial Year</b></font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CII</b></font></p>
<p align="justify"></p>
<p align="justify"></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1981-82</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1990-91</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">182</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19</font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1999-00</font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">389</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1982-83</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">109</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1991-92</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">199</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20</font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2000-01</font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">406</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1983-84</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">116</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1992-93</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">223</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21</font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2001-02</font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">426</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1984-85</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">125</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1993-94</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">244</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22</font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2002-03</font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">447</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1985-86</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">133</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1994-95</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">259</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23</font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2003-04</font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">463</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1986-87</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">140</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1995-96</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">281</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24</font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2004-05</font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">480</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1987-88</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">150</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1996-97</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">305</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25</font></p></td>
<td width=87 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2005- 06</font></p></td>
<td width=51 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">497</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1988-89</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">161</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1997-98</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">331</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26</font></p></td>
<td width=87>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2006-07</font></p></td>
<td width=51>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">519</font></p></td>
</tr>
<tr>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9</font></p></td>
<td width=76 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1989-90</font></p></td>
<td width=50 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">172</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18</font></p></td>
<td width=79 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1998-99</font></p></td>
<td width=56 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">351</font></p></td>
<td width=43 valign=top>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>27</b></font></p></td>
<td width=87>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>2007-08 </b></font></p></td>
<td width=51>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>551 </b></font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2007/it07not214.htm" target="_blank">Income Tax Notification NO. 214/2007, Dated: August 3, 2007 </a></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Deposit during pendency of appeal – Customs ordered to pay Rs. 9.5 Crores interest – Supreme Court </font></b><b></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Overzealous Revenue officers are known to pressurise the assessees into paying up the duty, what they think is payable, even before a proper Show cause Notice is given. Trigger happy Preventive and Audit parties gloat about the voluntary deposits and spot realisations. Even when appeals are pending all kinds of illegal means are used to persuade the assessees to pay up disputed amounts. This may not always be good for Revenue. In a Supreme Court case we are reporting today, the Apex Court has ordered Revenue to pay a whopping 9.5 Crores as interest to ONGC.</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner – tomorrow'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 color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Amendment to Notification is prospective- If the intention was to give retrospective effect, it would have been stated to be so specifically – Supreme Court</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is an assessee who pleads that amendment to Notification has retrospective effect and Revenue strongly rebutting that.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">During period of forfeiture, an assessee can discharge duty liability either out of PLA or by utilising Cenvat credit and failure on his part to do so would not attract interest and penalty - CESTAT Larger Bench </font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO doubt, this decision is only of academic interest. But take a look at the reasons this matter came to be referred to the Larger Bench. </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>It all started in the year 2004 when the lower appellate authority upheld a demand of Rs.8,35,000/- made against the assessee who always had noble intentions. There was a forfeiture order passed against the assessee requiring them to make duty payments on consignment wise basis and that too through Account Current P.L.A. The Noble assessee disobeyed this order and landed in trouble. He was in for a rough time that took him to the Tribunal. </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Fragile Rule 6 takes repeated beating - No need to pay 10% amount if credit taken on common inputs used in exempted goods is reversed : Tribunal </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">IN</font></b> terms of Rule 6 of the Cenvat credit Rules, if an assessee is engaged in manufacturing both dutiable and exempted goods and is using common inputs, he has option to maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products and exempted goods and take credit only on the inputs used in the dutiable goods. The assessee also has the option of paying 10% amount on the price of the exempted products instead of the hassles of maintaining the separate accounts. What happens if the follows neither? Naturally the revenue demands 10% amount on the sale price of the exempted goods. But unfortunately the 10% amount, being computed on the sale price of the exempted goods, runs into several crores of rupees for taking credit of a few lakhs on the common inputs resulting in "uncommon sense" demands notwithstanding setting aside of such demands by the CESTAT repeatedly.</font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income Tax</b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Penalty for non-deduction of TDS - Assessee acted in a bona fide manner under opinion from counsel - no interference against concurrent findings of lower authorities : Madras HC </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">THE</font></strong> questions before the High Court were, whether in the facts and circumstances of the case, the Tribunal was right in</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. holding that penalty under section 271C is not leviable on the assessee company?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. holding that penalty under Section 271C is not leviable when the assessee had advertised in the news paper that the return on the investments made with the company will not attract tax deduction at source, which is against the provisions of the section 194A and thereby induced the depositors to invest?</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns tomorrow for the judgements</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>
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