TIOL-DDT 704 · the untouched capture
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<p><font size="2"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 704</font></b><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
21.09.2007<br>
Friday</b></font></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>What is the value for sanctioning rebate claims? Dilemma continues unabated</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rebate is a dreaded word for many Commissionerates. In a performance appraisal system driven more by achieving the targets for revenue, this area of refunding money to the exporter gives sleepless nights for many officers as it eats up the revenue targets. So, all possible provisions will be explored to curtail the cash rebates. The value to be adopted for payment of excise duty for export goods is a major area where a lot of confusion prevails which affects the quantum of rebate to be sanctioned.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior to the introduction of the new Section 4, and the transaction value, when the value was normal price, Board had issued a Circular No 209/21/1985-CX6 dated April 10, 1986 stating that representations have been received from the trade requesting for acceptance of FOB value as assessable value for export consignments. The good Board had accepted the request decided that the FOB value would be accepted as assessable value for exports under Bond and under claim of rebate.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After nearly 10 years, the same doubts have arisen in respect of value of export goods for Central Excise purposes. This time the Board had done a somersault and directed that the FOB value is relevant only customs schemes like DEEC etc, but, for Central Excise, the value should be <b><font color="#663399">determined</font></b> under Section 4 of the Central Excise Act. Board has reiterated the above directions in Circular 510/06/2000-CX, Dated : February 3, 2000</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly, after the introduction of the transaction value under new Section 4 from 1.7.2000, no fresh instructions have been issued and now what is the value for sanctioning rebate is a big question with apparently no answer. If section 4 value is relevant for export, then with effect from 1.7.2000, different transaction values are accepted for different buyers and the transaction value, i.e. the amount paid by the importer would be relevant for arriving at the value for paying duty and subsequent rebate.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, as the department Circulars are b(l)inding on the officers, it seems even after 1.7.2000, the value for export goods is <b><font color="#663399">determined </font></b>under Section 4 of the CE Act under Circular dated 3<sup>rd</sup> Feb 2007. When asked how the value is determined under Section 4 as there can be different transactions for different buyers, a shrewd officer replied "normally we take different transaction values and even the FOB value and adopt the lowest value" for rebate. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even in the era of normal price, the FOB value was upheld by the CESTAT as normal price for the exports consignment as the export orders were under a separate contract and clearances of goods made for exports stand on different class of buyers. Please see <u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2004/2004-TIOL-725-CESTAT-BANG.htm" target="_blank"><font size="1">2004-TIOL-725-CESTAT-BANG</font></a></u></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is high time the Board clarified what is determination of Section 4 value for exports even after 1.7.2000.</font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Anti-Dumping duty on Phenol from USA, <st1:country-region w:st="on">Korea</st1:country-region> RP and <st1:country-region w:st="on"><st1:place w:st="on">Taiwan</st1:country-region> imposed.</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Based on the preliminary findings of the DGAD vide notification No. 14/5/2006-DGAD dated the 29th August, 2007, anti-dumping duty has been imposed on phenol originating in, or exported from the US, Korea RP and Taiwan. This will be effective upto and inclusive of the 18 th March, 2008</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_105.htm" target="_blank">Notification No 105/2007-Cus., Dated: September 19, 2007</a></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Credit Guarantee Fund Trust for Micro and Small Enterprises notified under clause xiv of Sec 36(1) of the IT Act</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vide Finance Act 2007, a new clause (xiv) has been inserted in Sub section (1) of Section 36 ( other deductions) of the IT Act as under:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(xiv) any sum paid by a public financial institution by way of contribution to such credit guarantee fund trust for small industries as the Central Government may, by <u>notification in the Official Gazette, specify in this behalf</u>.</font></p>
<p style="text-align:justify;"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, vide <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2007/it07not243.htm" target="_blank">Notification 243/2007, Dated: September 18, 2007</a> the Government has notified the Credit Guarantee Fund Trust for Micro and Small Enterprises for the purpose of the above clause.</font></p>
<div align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Rupee
hits nine year high – exporters
concerned</b></font>
</p>
</div>
<p align="center" style="text-align:justify;"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Indian rupee appreciated to below 40 mark against the dollar
for the first time in over nine years and the exporters are very much concerned.
In the last three days, Rupee gained 67 paise and ended yesterday at 39.88/99.
The Federation of Indian Export Organisations felt that government is taking
half-hearted measures to help exporters and the steps taken by the government
are not sufficient and it should intervene immediately to protect exporters
the government was not doing enough to help the exporters face crisis. According
to Nasscom, BPO segment would be the worst hit while large IT firms with
robust margins may absorb the impact</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner - Monday's cases<br>
</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>Income
Tax </b></font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Transfer
of immovable property - capital gains - To attract clause (v) of Sec
2(47), it is not necessary that full sale consideration is received by
the owner : Advance Ruling</strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">IN </font></strong>a
highly interesting and eruditely interpretational ruling which may have
serious implications for the bulk transfer of landed property for setting
up Special Economic Zones across the country and the liability of capital
gains on the transferors, the Authority for Advance Ruling has held that
to attract clause (v) of section 2(47), it is not necessary that the entire
sale consideration upto the last installment should be received by the
owner. Where the agreement for transfer of
immovable property by itself does not provide for immediate transfer of
possession, the date of entering into the agreement <b>cannot be considered
to be the date of transfer</b> within the meaning of clause (v) of Section
2(47) of the Income-tax Act.</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>Hair is very much an animal part - 'Shahtoosh' derived from the fallen hair of Chiru woven into a shawl - covered under the ban - seizure upheld </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exporters are in writ petition against, Customs, Ministry of Environment and the State Government. The whole controversy revolves around the question whether hair is an animal article under the Wildlife Protection Act. Plea of the petitioner was that the 'hair' of the animal Chiru does not form or part of an animal article as defined in Section 2(2) of the Act and hence the user of such 'hair' in producing the Shahtoosh shawls was not hit by the bar prescribed under Section 49 (B) 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><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>High Purity Burnt Lime is correctly classifiable under Tariff Item 2825 90 90 @16% adv -<st1:place w:st="on">AAR</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The applicant states that the two possible classifications of the high purity burnt lime in the First Schedule to the Central Excise Tariff Act 1985 are : 2522 under Chapter 25 and 2825 in Chapter 28. Chapter 25 covers "Salt; sulphur; earths and stone; plastering materials; lime and cement". The Tariff head 2522 under this Chapter covers "Quick lime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 2825".</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See
our columns on Monday for the judgments</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><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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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