TIOL-DDT 700 · 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" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 700</font><br> 17.09.2007<br> Monday</b></font></p> <p align="center"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://taxindiaonline.com/RC2/image/ddt/ddt700_inside.gif" alt="DDT 700" width="233" height="155"></font></b></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reaching this magical figure is no great achievement, worth writing about, but it is certainly an occasion to thank you, dear netizen, for your patronage for your shot -in- the- arm compliments, scathing criticism and sagely advice, which make <b><font color="#663399">DDT</font></b> a daily possibility. <b><font color="#663399">DDT</font></b> is also grateful to the powers that be, for its prompt and sometimes not so prompt response. We are told this is sort of a record - no daily column, more so a tax based column has run for so many days!</font></p> <p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs Valuation - amended provisions of Customs Act to be effective 10<sup>th</sup> October 2007</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Act, 2007 made certain changes with regard to customs valuation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. As per Section 2(41), "value", in relation to any goods, means the value thereof determined in accordance with the provisions of <font color="#663399">sub-section (1) of section 14. </font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Now this is changed to read as <font color="#663399">"sub-section (1) or sub-section (2) of section 14"</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 14(1) is transaction value and section 14(2) is 'tariff value'.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. A new Section 14 was inserted in place of the present section 14 to change the value from the deemed value to the transaction value.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The present section 156(2)(a) of the Customs Act, gives the Government power to make rules regarding <font color="#663399">the manner of determining the price of imported goods under sub-section (1A) of section 14.</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is changed to the manner of determining the transaction value of the imported goods and export goods under sub-section (1) of section 14;".</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All these changes are to take effect from 10<sup>th</sup> October 2007. </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=24&filename=notification/custom/2007/cnt07_093.htm" target="_blank">NOTIFICATION NO. 93/2007 - Cus., (<st2:GivenName w:st="on">N.T.</st2:GivenName>), Dated: <st1:date ls="trans" Month="9" Day="10" Year="2007" w:st="on">September 10, 2007</a></u></font></p> <p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs Import and Export valuation Rules notified - effective 10<sup>th</sup> October </b></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=24&filename=notification/custom/2007/cnt07_094.htm" target="_blank">Customs Valuation (Determination of Value of Imported Goods) Rules, 2007</a> and the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 are notified with effect from 10<sup>th</sup> October 2007. It is only on 10<sup>th</sup> October 2007 that the government gets the power to make these rules. Is it valid if the rules are made on 13<sup>th</sup> September when there was no power under the statute to make these rules? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">DDT</font></b> is not embarking on explaining the Rules as we have got an expert doing that job in our Guest Column today. <st1:PersonName w:st="on"><st2:GivenName w:st="on">JM</st2:GivenName> <st2:Sn w:st="on">Kishore</st2:Sn>, a Customs Appraiser, was the only Indian officer who won a prize in the WCO HS classification competition in 2006. Kishore explains the Rules and hopes that litigation will come down. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He has also made two excel files giving the highlights of the rules. Please download the files to your system and keep it as your ready reckoner for the new valuation rules. The import valuation Rules are covered extensively and we will bring you the detailed analysis of export valuation rules soon. </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=24&filename=notification/custom/2007/cnt07_094.htm" target="_blank">NOTIFICATION NO. 94</a></u><b><u> and </u></b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_095.htm" target="_blank">95/2007-Cus.,(<st2:GivenName w:st="on">N.T.</st2:GivenName>), Dated: <st1:date ls="trans" Month="9" Day="13" Year="2007" w:st="on">September 13, 2007 </a></u></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=bnews_detail.php3&newsid=6075" target="_blank">See also our Guest Column. </a></u></font></p> <p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>This is how changes are to be made - give a little time for understanding</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board deserves praise for making these changes effective from 10<sup>th</sup> October, 2007. This gives about four weeks time for the officers and the trade to read and understand the changes. Normally the Board announces the changes to be effective from the date of the notification, which will reach the field after two or three days. Now the Board should consider organising intensive seminars on the new concepts in all the customs formations both for officers as well as importers and exporters. <b><font color="#663399">TIOL</font></b> will be glad to assist the Board in this endeavour. </font></p> <p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>TIOL @ speed of light</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Larger Bench of the Tribunal passed an order regarding the validity of Rules 96ZO/96ZP even after the omission of Section 3A from the statute. This order was passed on 13.09.2007 and the copy was made available on 14.09.2007 and <b><font color="#663399">TIOL</font></b> is proud to bring you the order today, the next working day. Some DRs have expressed a feeling that we don't report cases favourable to the Revenue fast enough. This opinion is not correct as the present case would show. We are into the business of reporting, for or against revenue does not really matter. </font></p> <p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Third Member v Larger Bench</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When two members of a Bench differ on an issue, the matter is referred to a third Member who is required to support the judgement of one of the differing members and so his judgement becomes the majority judgement and is accepted. But this, by no means can be accepted as the judgement of a Larger bench. When both the Members of a Bench feel that the issue needs to be decided by a Larger Bench, due to conflicting decisions of two benches, a Larger bench is constituted. Can the Larger Bench constitute the referral bench also? There seems to be no bar! If this is the situation, what is the difference between the Larger bench and the Third Member? Maybe the situation can be rectified by having three members in every Bench, so that there is always a majority judgement and the Larger Bench should always consist of five Members. </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"><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/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></b></font></strong></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>Is penalty under Sec 11AC mandatory and is <i>mens rea</i> an essential requirement? - Issue referred to Larger Bench : Supreme Court</b></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">IN</font></strong> this batch of Civil Appeals, the question for determination is whether Section 11AC of the Central Excise Act, inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evade payment of tax, should be read to contain <i>mens rea</i> as an essential requirement.<O:P></O:P></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The judgment in the case of <i>Dilip N.Shroff Vs. Joint Commissioner of Income Tax, Mumbai</i> needs consideration by the larger Bench of this Court particularly when it has ramifications not only regarding provisions of the Income Tax Act but also with regard to the provisions of Sections 3A and 11AC of the Central Excise Act and Rule 96ZQ(5) of the Central Excise Rules.</font></p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><O:P></O:P> </font> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Lex non cogit ad impossibilia - payment of duty on supplementary invoice cannot attract interest u/s 11AB of Excise Act : Tribunal</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Relying on the Bombay HC decision in Indian Seamless Steel & Alloys Ltd, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2003/2003-TIOL-06-HC-MUM-CX.htm"><font size="1">2003-TIOL-06-HC-MUM-CX</font></a>, the Commissioner(A) held that if the unforeseen circumstances beyond the control of the assessee result in non-payment of duty, such circumstances cannot be construed to mean that the appellant had failed to pay the excise duty on the due date & hence the legal maxim " <b><i><font color="#663399">lex non cogit ad impossibilia</font> </i></b>" [ <i>the law does not compel a man to do that, which he cannot possibly perform </i>] is squarely attracted to the case. In short, no interest is payable either under rule 8(3) or S. 11AB of the <st1:stockticker w:st="on">CEA'44.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fortunately, the Tribunal did not go into the merits of the COD application else Revenue would have had another embarrassment on their hands. As for the issue of interest u/s 11AB in respect of supplementary invoices, the Tribunal has consistently held in the cases of Rucha Engineering, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2006/2006-TIOL-885-CESTAT-MUM.htm"><font size="1">2006-TIOL-885-CESTAT-MUM</font></a>, Chloritech Engineering <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-185-CESTAT-MUM.htm"><font size="1">2007-TIOL-185-CESTAT-MUM</font></a> & Force Motors, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-655-CESTAT-MUM.htm"><font size="1">2007-TIOL-655-CESTAT-MUM</font></a>, that when differential duty is paid due to price escalation, interest is not required to be paid under s.11AB of the <st1:stockticker w:st="on">CEA'44 as there has been no determination of duty under section 11A(2). <b><i><font color="#663399">Probably, Revenue does not have any "INTEREST" in these Tribunal decisions!</font></i></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>Learned DR fairly conceded - No, he cannot! - Income Tax - Departmental Representative's job is to appear, plead and act FOR the Revenue - he cannot concede : ITAT</b></font></p> <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 2 of the ITAT Rules, "authorized representative" means in relation to an income-tax authority who is a party to any proceeding before the Tribunal, a person duly appointed by the Central Government by notification in the Official Gazette as authorized representative <b><font color="#663399">to appear, plead and act</font></b> <font color="#663399"><b>for</b></font> such authority in any such proceeding and any other person acting on behalf of the person so appointed.</font></p> <p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Obviously this will apply to CESTAT also. So now </strong><b>DRs</b><strong> cannot concede a point even if it is wrong. And in future orders of Tribunal will not have words like, the "<st1:Street w:st="on"><st1:address w:st="on"><ST1:STREET u1:st="on"><ST1:ADDRESS u1:st="on">Learned DR fairly conceded".</strong></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> </body> </html>