TIOL-DDT 686 · 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</font></b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><b>-DDT 686</b></font><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
27.08.2007<br>
Monday</b></font></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Intermediate
goods for manufacture of <i>chaddars</i> - exemption under Section 11C proposed</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 11C is a provision in the statute that allows the lawmaking babus to correct their mistakes. While making changes in the laws, they leave certain loose ends; for example, when an exemption is given usually some periods are left out. Generally on noticing the mistake, the Board issues a retrospective exemption notification under Section 11C of the Central Excise Act. But this is usually preceded by hundreds of Show cause Notices and avoidable litigation. One such issue is before the Board.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
manufacturer of chaddars buys the cotton yarn and carries out processes like
dyeing, printing, bleaching, etc on such yarn. These activities are chargeable
to duty in terms of Chapter Note to Chapter 52. However, the <i>chaddar</i> was
eligible for exemption SSI notification No. 8/2003 for clearance upto Rs.
1 crores. As there was no exemption to the said intermediate yarn, duty
had become payable on such yarn. Prior to 01.03.2003, dyed printing bleached
yarn of Chapter 52 were exempted provided duty has been paid on base yarn
(Sl. No. 95 of Notfn. No. 6/2002). Therefore, prior to 1.3.2003, problem
of payment of duty on such intermediate yarn by chaddar manufacturers did
not arise. However, for the subsequent period, chaddar was eligible for Rs.
1 crore exemption under Notfn. No. 8/2003 (SSI Notification). Further, all
intermediate goods manufactured and used captively within the factory were
also exempted in the same notification. But these intermediate goods should
also be specified in the notification and goods of chapter 52 were not covered
by the said SSI notification. Therefore, duty liability on these intermediate
yarns existed even though the final product namely chaddars was exempted.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Board is considering issue of a Section 11C Notification but before that wants Chief Commissioners to furnish tons of data like amount of duty collected, not collected, audit objections, court cases etc,. Board wants the particulars urgently as a VIP reference is pending. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The period is 01.03.2003 to 08.07.2004 and the Board is still calling for particulars. When it knows that duty could not be demanded, why can't the Section 11C Notification be issued immediately?</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sometime back we had reported about jute twine becoming dutiable because of the switch over from 6 digit tariff to the 8 digit one. The good Board was kind enough to issue an exemption notification. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5643" target="_blank">DDT 638 - 19.06.2007</a></u>, we had reported,</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is now exempted; but what about the last five and a half months when there was no exemption? <b><font color="#663399">The Government has to give a Section 11C notification and they will ultimately give it. May be after hundreds of Show Cause Notices are issued and many consultants have made enough money! Why can't they do it now and save this country some paper and a lot of time of the department and the rest of us. Already a Central Excise officer called us up and informed us that this exemption only proves that duty had to be paid till now and he is going to issue Show Cause Notice immediately even alleging suppression and intent to evade duty! </font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will be happy to report as soon as possible that the exemption is with retrospective effect from 1.1.2007.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe it will take three and a half years to issue that notification - if there is a VIP reference!</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/chaddars.htm" target="_blank">CBEC F.No. 63/01/2004-CX-1 dated August 14, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Imports of agricultural products - DGFT allows certain items</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Note 7 to the Exim Policy 2002-07, Import of agricultural products was not to be allowed under Duty Free Credit entitlement Certificate Scheme. Now import is allowed except for certain items like garlic, peas, Coconut, Areca Nut, Oranges, Lemon, Fresh Grapes, Apple and Pears, spices, Tea, Coffee and Pepper, oil seeds etc,.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of all edible oils shall be allowed under the scheme only through STC and MMTC.</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=45&filename=notification/dgft/2007/dgft07not024.htm" target="_blank">DGFT NOTIFICATION NO. 24 (RE 2007)/2004-2009., Dated: August 23, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Authorisation when SIONs are not fixed</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 4.7.1 of the HOP of the Foreign Trade Policy, in cases where NC has already ratified norms for same export and import products in respect of an authorization obtained under paragraph 4.7, such norms shall be valid for a period of <b><font color="#663399">six months</font></b> reckoned from the date of ratification. Now the<b><font color="#663399"> six months</font> </b>is made <b><font color="#663399">one year</font></b><font color="#663399">.</font> </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further NC should ensure that adhoc norm(s), if not notified already are notified within a period of one month after <b><font color="#663399">six months</font></b> of ratification of such adhoc norms. This is also made <b><font color="#663399">one year</font></b> now.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is now added that,</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However in such cases where the NC decides adhoc norms based on information available to it and the exporter represents against the decision of the NC, time limit for filing representation, if any, before the Norms Committee shall be four months from the date of communication of decision of the fixation of adhoc norms by NC.</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/dgft07pn037.htm" target="_blank">DGFT PUBLIC NOTICE NO. 37(RE-2007)/2004-2009, Dated: August 23, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Implementation of IPR Rules - CBEC issues draft circular for comments - all Custom Houses to have IPR Cells with officers of proven calibre. </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has issued a draft circular containing instructions for implementation of Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 and wants your comments before 11.9.2007.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Circular stipulates</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. it has been decided that, the right holders may furnish a General Bond without security to the Commissioner of Customs in the format as prescribed at Annexure-A to this circular prior to the grant of registration, undertaking to execute the Bond and indemnity Bond as required under Rule 5(a) and Rule 5(b) respectively of the said Rules within three days from the date of interdiction of any allegedly infringing imported consignment .</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Prior to grant of registration, the right holder shall also be required to furnish an indemnity bond in the format as specified at Annexure-C to this circular, in addition to the General bond.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The surety and security shall be on consignment basis and shall be furnished along with the bond to be furnished consequent upon interdiction of consignment allegedly infringing rights of the right holders.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Keeping in view the value of the goods and other incidental expenses, it has been decided that the Bond amount should be equal to 110% of the value of goods.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In case it is found at any stage that the right holder has furnished any wrong or false information, the registration accorded under Rule 4 of the said Rules may be cancelled forthwith.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. If , after the registration is granted , the right holder wants any modification on account of any amendment in registration granted to them by the respective registry of the departments enforcing the parent IPR law or on account of any other reason, the right holder shall be required to seek fresh registration in place of the old registration and would be required to undergo all the processes of registration again, like making fresh application, payment of fees, execution of bond etc.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. The registration will be granted only after the Commissioner of Customs has completed verification of the documents and facts and after the right holder has furnished the General Bond and Indemnity Bond.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. The protection of rights will be accorded only on grant of permanent registration number to the right holders. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. To begin with, while the web-enabled electronic registration system is being put in place, the field Commissioners are advised to accept the applications in the format as prescribed in the Annexure to the said Rules.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. However, in order to have a centralized registration , it will be mandatory for all applicants to file applications on-line, once the system is geared up for accepting electronic on-line registration. The trade will be intimated the date of coming into force of the electronic regime.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. The Customs and the right owners/holders seeking protection are under obligation to follow the time lines indicated in various sub-rules that cover practical situations that may arise in the field.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. For smooth implementation of the IPR regime, it is desirable that IPR Cells may be constituted in each Custom House.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. The IPR Cell may be vested with the responsibility of verifying the applications, completing web-enabled registration formalities and making correspondence with the Risk Management Division and other Customs formations.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. Further, any import involving suspected infringement of IPRs may have to be invariably handled by the IPR Cell. Any instance of suo-moto interdiction of the import consignments by the Customs, involving possible infringements, should also be referred to such IPR Cell.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. The job is time - bound and sensitive and hence it is advised that officers of proven calibre may only be posted in the IPR Cells.</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/draft_circ.htm" target="_blank">CBEC Draft Circular in F. No. 305/96/2004-FTT (Pt-I)</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CBI books its own SP </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In its continuing drive to check corruption within the organisation and to ensure high standards of integrity and professionalism, CBI registered a case against its own SP posted in the Special Crimes Branch of Kolkata on allegation of corruption. The allegations are that the SP by abusing his official position and in collusion with private persons has been threatening accused/suspect persons in CBI cases and obtaining bribe from them with a motive to show favours in the investigation of the cases.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI is also reported to have arrested a Central Excise Inspector in a dramatic filmy style chase. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Inspector had asked a businessman to be in touch on cell phone constantly and follow his instructions before actually handing over the promised cash. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As was instructed, the businessman boarded a train at Khraragpur, got off at Santragachi and stood in front of a designated tea shop in the platform. The Inspector reached the place and asked the businessman to follow him to a waiting car. He was then asked to put Rs. 35,000/- inside an envelope and keep the packet inside the car. This was obviously to avoid "red handed' catch. But the CBI was smarter and still caught up with him. Once a trap is laid, there is really no escape!</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><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"><b>Income Tax</b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Interest income from investment in banks not income from an industrial undertaking - not entitled to deduction u/s 80I : Deduction u/s 80I to be made after allowing deduction u/s 32AB : HC </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">THE</font> </b>questions before the High Court were, Whether on the facts and in the circumstances of the case, the ITAT, is justified in,</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.holding that interest income from investment in banks be treated as income derived from an industrial undertaking and entitled to deduction u/s. 80 I of the Act? </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.in directing that deduction u/s. 80 I should be allowed without deducting the amount of deduction permissible u/s. 32-AB of the Act?</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>No limitation for taking Modvat Credit - Sec 11B not applicable : Allahabad HC </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court had no hesitation in holding that the provisions of Section 11B of the Act is not attracted in the case of Modvat which is governed by Rules 57A to 57P. Further, during the relevant period no limitation had been provided for availing of the Modvat credit. Thus, the respondents were within their right to avail the short fall in the Modvat credit at any time. </font></p>
<p align="justify" ><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs</b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Anti-dumping : Provisional assessments are non est as section 18 of Customs Act has not been borrowed in Sec 9A(8) of Customs Tariff Act : Tribunal </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A levy introduced retrospectively cannot be recovered under the provisions of Sec.28 of the Customs Act, 1962 in the light of the High Court decision in Chhotabhai Jethabhai Patel and Co. vs. Union of India.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No anti-dumping duty can be levied on imports made during the interregnum period between the expiry of the provisional levy and the levy of final anti-dumping duty, under Rule 21 of the Anti Dumping Rules, 1995. </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>
<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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