TIOL-DDT 695 · the untouched capture
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<p><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 695</font></strong><font size="2"><b><br>
10.09.2007<br>
Monday</b></font></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GST - Delegation of State Finance Ministers back from foreign tour - GST ready from 1.4.2010</strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">West Bengal Minister for Finance Asim Dasgupta who is also the Chairman of the empowered group of finance ministers, said the taxation model of the proposed Goods and Services Tax (GST) is being formulated. Dasgupta and his delegation is back from a tour of <st1:country-region w:st="on">Brazil</st1:country-region> and <st1:country-region w:st="on"><st1:place w:st="on">UK</st1:country-region>. His delegation included, H K Dwivedi, Commissioner, Commercial Taxes, Prof. Stephen Marandi, Deputy Chief Minister of Jharkhand, Jayant Patil, Finance Minister of Maharashtra, A K Walia, Finance Minister of Delhi, Tariq Hameed Karra, Finance Minister of Jammu and Kashmir, K N Rai, Sikkim Finance minister, Birender Singh, Finance Minister of Haryana, Kalikho Pul, Finance Minister of Arunachal Pradesh, D G Narvekar, Finance Minister of Goa, P. Shome, Adviser to the Union Finance Minister, M M Srivastava, Commissioner of Commercial Tax, Gujarat and Satish Chandra, Member Secretary of the Empowered Committee. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dasgupta said,</font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ We are formulating the GST in our own way.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The introduction of GST is scheduled to take place on <st1:date ls="trans"
Month="4" Day="1" Year="2010" w:st="on">April 1, 2010.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ After the Union government took the decision to introduce GST, we decided to take a look at the tax structures in other countries. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The introduction of VAT enabled setting off tax on inputs used for production of goods. By integrating Service Tax and VAT, GST will be introduced.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In <st1:country-region
w:st="on"><st1:place w:st="on">India</st1:country-region>, tax reforms have been on for quite some time. Prior to VAT, there were numerous tax rates.</font></p>
</blockquote>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exemption of Cess @ 0.05% on Textiles and Textiles Machinery – EDI – please correct</strong></font></p>
<p class=style1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cess has been exempted wholly with effect from 1.6.2007, but CBEC has information that textile cess is being collected by some of the Customs field formations despite the exemption from the whole of the cess being granted by the Government. Why does this happen? The CBEC's EDI system is not updated as fast as notifications are issued. In fact the EDI boys don't get the notifications and the system is God! Even if importers tell the Customs about exemption notifications, officers are helpless until changes are made in the EDI systems. </font></p>
<p class=style1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board now clarifies that no such textile cess is leviable w.e.f. 1.6.2007. Therefore, pending provisional assessments, if any, may be finalised accordingly.</font></p>
<p class=style1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has also come to the notice of the Board that Customs EDI directories reflecting the effective rate of duty have not been updated in certain Commissionerates. Board directs that the jurisdictional Commissioner of Customs shall ensure updating of the ‘directories' in the Customs EDI System periodically on the basis of the various notifications issued to reflect the correct position of the applicable duties on import and export. </font></p>
<p class=style1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Systems Managers in charge of Customs EDI systems in all Customs formations may ensure updating of the EDI directories on time, on the basis of the instructions / guidelines issued by the Directorate of Systems, to ensure collection of duties properly. In case of difficulties, if any, in updation of the Directories, they should consult the Directorate of Systems, <st1:place w:st="on"><st1:City
w:st="on">New Delhi for necessary guidance.</font></p>
<p class=style1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All wonderful! But why can't the system be updated immediately after the issue of the notification or rather simultaneously? </font></p>
<p class=style1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As the Customs EDI refused to accept an exemption from NCCD, the importer was made to pay the NCCD. He engaged in protracted correspondence with the department and finally asked for refund. Refund was rejected on the ground of unjust enrichment. Appeal was rejected as he had not challenged the assessment! All because the Department could not update its EDI!</font></p>
<p class=style1 ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You make a mistake and you are punished; the Department makes a mistake and you are punished! And we all think we are civilized! </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=25&filename=notification/custom/2007/instruction.htm" target="_blank">CBEC's F.No.528/68/2007-Cus(TU) Dated 7th September, 2007.</a></u></font></p>
<p align=center style='text-align:center'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:PersonName w:st="on"><st2:title w:st="on"><b><font color="#006600">Pan</font></b></st2:title><font color="#006600"><b> <st2:Sn w:st="on">Masala</st2:Sn>, Gutkha and Chewing Tobacco – anti evasion measures</b></font></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems the FM was not very happy with the collection of revenue from this highly addictive and evasive sector, but the mandarins of north block had promised him that all loopholes will be plugged and Revenue will rise in the next few months. To start with, Board has decided that </font></p>
<p class=MsoListParagraphCxSpFirst style='text-align:justify;'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. All manufacturers of Pan Masala, Gutkha and Chewing Tobacco shall intimate the range Superintendent, details of the packing machines like model, No. of machines, No. of pouches produced by each machine.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The information is to be filed by 12<sup>th</sup> September 2007. [This instruction was issued on 7.9.2007 and it must be on its way to the Commissioners. When will it reach the manufacturers and are they all not offenders if they are not able to file the intimation by 12.9.2007?]</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In case, the unit brings any new filling and packing machine into the factory, the intimation should be filed before 24 hours of bringing in the said machine.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The Range Superintendent or any other officer authorized by the Commissioner of Central Excise may verify the number of machines available in the manufacturing premises and the representatives of assessee would be required to countersign the said verification report.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In case, any of the said machine is not being used, for any reason, the assessee shall intimate forthwith to the jurisdictional range officer or any other authorized officer as above, the details of said machine. Simultaneously, the assessee shall remove the said non-working machine out of the manufacturing premises and store the same in other premises and address of such other premises shall also be intimated. However, in case, it is not possible to remove the non working machines out of the manufacturing premises, these would be sealed by the range officer or any other authorized officer as above, in the manner that these cannot be operated. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Whenever, the assessee wants to use the sealed machines, he shall intimate the range officer or any other authorized officer as above and the officer shall remove the seal on receipt of the request.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. The assessee shall maintain records of receipt, consumption and stock of main inputs, like, beetle nut, tobacco and packing material. The said records shall be maintained and kept in the manufacturing premises only and made available for verification by the officers. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Any violation in complying with the above instruction would attract penal action as provided under the law.</font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will this bring in more Revenue? </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/excircular854.htm" target="_blank">CIRCULAR NO. 854/12/2007/CX ,Dated : <st1:date ls="trans" Month="9" Day="7" Year="2007"
w:st="on">September 7, 2007</a></u></font></p>
<p align=center style='text-align:center'><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest when duty is paid by DEPB debit – Board clarifies after one year.</strong></font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 10.4.2006, the Commissioner of Customs, Mumbai-II asked the CBEC for a clarification whether interest is payable when goods are cleared from warehouse and duty is debited from DEPB. Board gave a clarification on 21.07.2006 to him that DEPB is not an unconditional exemption and so interest was payable. </font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For almost a year, this issue was a private affair between the Board and the Commissioner, but recently the CBEC appears to have realised that there are other Customs Commissionerates in the country, who may also have the same issue. </font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So by Circular No. 26/2007 dated 20.7.2007, [that is exactly one year after the Board gave the clarification to the Commissioner), CBEC now clarifies for the benefit of all Commissioners that <b><font color="#663399">interest is chargeable on duty paid by way of debit in DEPB on goods cleared from the warehouse</font></b><font color="#663399">.</font></font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now DDT has a few questions.</font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Why did the Board wait for one year to issue the clarification to all Commissioners?</font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Why was such an important clarification given to the Mumbai Commissioner, not made known to other Commissioners?</font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. What happens now in cases where interest was not realised till now?</font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Who is responsible for the loss of Revenue/</font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. And why is this circular still not published in the CBEC's web site?</font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Is it still a secret?</font></p>
<p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Disaster management – shameful disaster? </font></strong></font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/flyover.jpg" alt="Legal Corner Icon" width="128" height="190" hspace="5" border="0" align="left"></b></b></b></font></b></font></strong><b><b></b></b></font></b></font></strong>Recently TIOL wrote strongly about the woeful inadequacies in our Disaster Management Systems. A disaster can strike at any moment, we really have no control over it, but should we not be equipped to deal with the situation after the tragedy? </font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An under-construction fly over in <st1:place w:st="on"><st1:City
w:st="on">Hyderabad collapsed yesterday, because of a heavy rain which shook the foundation. Thank God, it happened before the faulty fly-over was commissioned! </font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This happened in the most congested traffic area of <st1:place
w:st="on"><st1:City w:st="on">Hyderabad and the administration simply did not know what to do. The NIMS hospital is hardly a furlong away and three hours after the accident, only one victim landed up in the Super Speciality hospital and he came on his own – in an auto rickshaw! </font></p>
<p c><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Member of the National Disaster Management Authority reached the spot within half an hour and directed the police to arrange for a mike. Nothing happened for an hour and he left the disaster to mange itself!</font></p>
<p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">From our Legal Corner – tomorrow's cases</font></strong></font></p>
<p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><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></b></font></strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Accused has no right to inspect investigation file of NCB (this applies to Customs too) - when handwriting expert dies, fresh specimen handwriting can be taken for referring to another expert : <st1:City w:st="on"><st1:place
w:st="on">Delhi High Court</font></b></font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">In the absence of a specific provision made in the statute indicating that offences will have to be investigated, inquired into, tried and otherwise dealt with according to that statute, the same will have to be investigated, inquired into, tried and otherwise dealt with according to the Criminal P.C. In other words, Criminal P. C. is the parent statute which provides for investigation, inquiring into and trial of cases by criminal Courts of various designations.</font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs and other Law enforcing Authorities can take the benefit of this order!</font></p>
<p class=style6><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p class=style6><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - Deduction - Excise duty credited in <st1:stockticker w:st="on">PLA - goods not cleared - no deduction can be allowed - When an issue is referred to Special Bench, should a division Bench decide the issue? : ITAT </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Is Excise duty credited in <st1:stockticker w:st="on">PLA allowed as a deduction?</b> Incidentally this issue is before a Special Bench with the question, "Whether deduction for tax, duty etc. is allowed on payment basis without incurring of prior liability to pay such amount u/s 43B of the Act?". The assessee's counsel requested that the AO may be directed to follow the order of Special Bench, when it comes. But Revenue persisted that the Bench should decide the issue based on existing orders. And the Tribunal decided this issue against the assessee. </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Interestingly the Special Bench order is out and we will bring that to you the day after tomorrow</b>.</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The whole purpose of constituting a Special Bench is to resolve conflicting decisions of co-ordinate benches. Then is it correct for a Division Bench to decide the issue when the matter is pending before the Special Bench? And why was Revenue so insistent that the issue has to be decided even before the SB decision comes? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Fraudulent credit taken by consignor and duty payment effected therefrom while removing manufactured goods - Credit availed by consignee on such inputs proper as transaction is <i>bona fide</i> : Tribunal</font></b></font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">On the issue of availment of credit by the user-manufacturer, it is clarified that action against the consignee to reverse/recover the CENVAT Credit availed of in such cases need not be resorted to as long as the bona fide nature of the consignee's transaction is not in dispute.</font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Excise - MRP - repacking from bulk pack to retail packs would not, by itself, amount to 'manufacture' - Besides repacking from bulk pack to retail packs, there must be labeling or affixing of brand name also : CESTAT</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Besides repacking from bulk pack to retail packs, there must be labeling/re-labeling or the affixing of a brand name also. In the impugned orders, Commissioner has not found both the ingredients to be cumulatively present in this case.</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 judgments</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><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p>
<p><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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