TIOL-DDT 705 · 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 705</font></b><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
24.09.2007<br>
Monday</b></font></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Adjudication of Show Cause Notices - What is an issue??? </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A show cause notice was issued to an assessee demanding duty for the last five years invoking suppression of facts and answerable to the Commissioner. When this notice is pending, another notice was issued to the same assessee for the subsequent period, but this time, answerable to the Assistant Commissioner as the duty involved fell within his competence. Now, as two SCNs are pending before two different adjudicating authorities, it is possible that the Commissioner and the Assistant Commissioner may adjudicate the case with opposite findings which will be an embarrassment for the Department. Even if both the adjudicating officers confirm the demand, for the assessee to contest the issue further, one appeal lies with the CESTAT against the Commissioner's Order and the other with the Commissioner (Appeals). So it is always desirable for both the assessee and the department to pass one adjudication order for both the show cause notices. But, in communicating the above objective, Board clarified vide Circular No. 752/68/2003-CX., dated <st1:date ls="trans" Month="1" Day="10" Year="2003" w:st="on">1-10-2003 that :</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">In case different show cause notices have been issued on the same issue answerable to different adjudicating authorities, attention is invited to CBEC's Circular No. 362/78/97-CX., dated <st1:date ls="trans" Month="9" Day="12" Year="97" w:st="on">9-12-97 , whereby it has been clarified that all the show cause notices involving the same<font color="#FF0000"> <u>issue</u></font> will be adjudicated by the adjudicating authority competent to decide the cases involving the highest amount of duty</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the above Circulars, instead of show cause notices involving the <u><font color="#FF0000">same issue of the same assessee</font></u><font color="#FF0000">,</font> it was only SCNs involving the "same issue". So irrespective of the fact whether the assessee is same or not, if the issue is same, the show cause notices will be bunched and adjudicated by the adjudicating authority competent to decide the case involving the highest amount of duty. Now what is an <font color="#FF0000">issue</font>? Is Valuation an <font color="#FF0000">issue</font>? Or 'Depot clearances' is an issue? Is Cenvat an<font color="#FF0000"> issue</font>? Or Cenvat is not an issue but only Cenvat on Capital goods is an<font color="#FF0000"> issue</font>? Or just Service Tax is an issue (similar instructions are given for adjudication of service tax cases)</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Well, it all depends on who wants to adjudicate. If a Commissioner wants to adjudicate all the cases, nothing can stop him from literally stripping his AC/DC/JC/<st1:stockticker w:st="on">ADC from adjudication powers as in any Commissionerate, at any given point of time, there will be a Valuation issue, a Cenvat issue pending with Commissioner. At the same time for those ACs /DCs/JCs/ADCs who wants to pass the buck, the Circular comes in handy to push the files to the Commissioner. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact in Circular dated <st1:date ls="trans"
Month="9" Day="12" Year="97" w:st="on">9-12-97 it has been decided that where simultaneously different cases of the same notices(s) ( should it be noticees?) involving the same issue are due to be adjudicated in a Commissionerate, all such cases will be adjudicated by an officer competent to decide the cases where duty involved is of the highest amount.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board like to clarify?</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Net telephony - illegal/ taxable?</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I talk to my daughter in the US of A almost free through yahoo messenger or skype. The voice is clear and better than that of any conventional telephone and through a web cam, you can actually see the person you are talking to. All that you need is a net connection. Am I breaking any Law? Am I liable to pay any tax? Though my knowledge about tax matters is abysmally low, in spite of spending a whole life time in trying to understand the tax laws, something tells me that as I don't pay any money or receive any money for the sin of talking to my daughter through Yahoo Messenger, I don't need to pay any taxes. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But I am told that the ISPAI has lodged a complaint with the FM's office and DoT that Yahoo, <st1:stockticker w:st="on">MSN, Net2Phone and Google and some other international companies were providing Internet telephony services in <st1:country-region
w:st="on"><st1:place w:st="on">India</st1:country-region> without a proper licence.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ISPAI had alleged that an ISP licence or a unified access services licence (UASL) is required to provide Internet telephony, which these firms do not possess. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This means that the alleged offenders neither pay service tax (as there is no billing for such calls in <st1:country-region
w:st="on"><st1:place w:st="on">India</st1:country-region>), or the 6% <st1:stockticker w:st="on">AGR or even the 0.75% of <st1:stockticker w:st="on">AGR to be paid as <st1:stockticker w:st="on">ADC. ISPAI had also pointed out that these companies were also violating the security norms governing telecom licences. UASL and ISP licences have to ensure monitoring and surveillance, especially where international voice calls are involved. This gained importance after several terrorist attacks/bomb blasts were linked to calls made to and from destinations outside <st1:country-region w:st="on"><st1:place w:st="on">India</st1:country-region>. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ISPs want a level playing field as these international service providers carry a superior cost structure that allows them to charge a fraction of the tariffs offered by licensed providers. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can the Government do anything? And will I continue to have my free talk to the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:country-region>?</font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">ATF 8 Times Costlier For Domestic Carriers : ASSOCHAM Report</font>
</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Domestic aircraft operators pay over 8 times higher taxes on Aviation Turbine Fuel (ATF) as these are charged with various tax levies, totalling 66% against 8% on international airlines that fill-in ATF in India and thus erode their annual profitability by 10.5% to 15%, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM).</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These findings are revealed in a Paper brought out by ASSOCHAM on `Implications of Higher Tax Incidences on ATF for Domestic Flyers' highlighting that fuel is the largest component of operating expenses for airlines, accounting for almost 35-40% of their total cost. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a result of higher tax incidences on ATF for domestic carriers like sales tax, central excise, import duty and education cess which works out to be 66% as against 8% for overseas airlines, their adverse effect on profitability of full service carrier is estimated at 10.5% as per ASSOCHAM paper. However, on low cost carriers, the ATF taxes burden on their profitability is assessed around 15%". </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to ASSOCHAM, the scheduled operators in aviation industry have largely been protected from the impact of custom duty on import of aircrafts or partsofaircraftsinto<st1:country-region
w:st="on"><st1:place w:st="on">India</st1:country-region>. Furtherscheduledaircrafts are also exempt from payment of excise duty on aircrafts manufactured in <st1:place w:st="on"><st1:country-region
w:st="on">India</st1:country-region>, whereas the aircrafts are used to operate a scheduled route. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has further estimated that the emerging middle class along with upper and upper middle population will grow to nearly 40% of the total population by 2007-08, whose size is likely to go over 55% in next 3 years and thus further enhance a huge demand for air travel services. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While until lately, the target category of households has been only the upper middle to high-income categories, the drop in fares and conversion of premium rail travellers to air travellers could result in widening the addressable market to cover even the middle income households. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The modernization and expansion of the major airports of <st1:City w:st="on">Delhi, <st1:City w:st="on">Bombay, Chennai, Kolkata, <st1:City w:st="on">Hyderabad and <st1:City w:st="on"><st1:place w:st="on">Bangalore are expected to facilitate further growth in traffic. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Rupee appreciation and losing jobs </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the Indian rupee went down below 40 against the dollar for the first time in nine years, the situation has become frightening as it has left several thousands workers jobless in the textile town of <st1:City
w:st="on"><st1:place w:st="on">Tirupur.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">President of Tirupur Exporters' Association (TEA), described the situation as 'alarming'. Last year the region earned Rs 11,000 crore for readymade garments and knitwear exports. A 20 percent growth was expected this fiscal, but it seems impossible as there are no fresh orders coming in. The knitwear exporters are completing the existing orders and some have no orders on hand. Out of the total workforce of 400,000, nearly 7,000 have already lost their jobs and more than 100,000 will lose their jobs if the situation doesn't improve, it is feared.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The TEA had asked the Prime Minister to help them come out of the crisis. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Ministry, in its recent notification, has given service tax exemption only to two services. The exporters want all services rendered by them to be exempted from the payment of service tax and also fringe benefit tax. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs, please give publicity to your seizures!</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A drug smuggler who lost two bags of cocaine after hiding them at the entrance to a Boy Scout camp allegedly asked authorities to get him out of jam with his supplier. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Federal agents claim <st1:PersonName
w:st="on"><st2:GivenName w:st="on">Leroy</st2:GivenName> <st2:Sn w:st="on">Carr</st2:Sn>, who was arrested on charges of cocaine possession in <st2:Sn w:st="on"><st1:State
w:st="on"><st1:place w:st="on">Washington</st2:Sn> state, contacted Immigration and Customs Enforcement agents and asked that they issue a press release announcing the seizure of his drugs. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That way, he said, his drug-dealing bosses would know he didn't steal the coke himself. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Working group on GST likely to submit report in November - Shome</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The working group on Goods and Services Tax (GST) is likely to submit its report to the empowered committee and the finance minister in November, advisor to Finance ministry <st1:PersonName w:st="on"><st2:GivenName w:st="on">Parthsarathi</st2:GivenName> <st2:Sn w:st="on">Shome</st2:Sn> said in Kolkata. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The working group will hopefully submit its report in November," he said on the sidelines of a seminar on 'Indirect Taxation and its Future Reforms'. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The model which would be developed for <st1:place
w:st="on"><st1:country-region w:st="on">India</st1:country-region> would not be a copy of those followed by other countries, he said, adding "it will be our aim to improve upon the existing VAT system." </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Shome said GST, which is proposed to be introduced by <st1:date
Year="2010" Day="1" Month="4" ls="trans" w:st="on">April 1, 2010, has the potential for reducing prices of commodities if the cascading effect was completely eliminated. He said the very aim of GST was to eliminate distortions by harmonisation of taxes levied by the Centre and states. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For complete elimination of loopholes and distortions, there would have to be a communication channel between the Centre and the states, He said. Remember CBEC Member stating in our Seminar that the States are not on talking terms?</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Corruption charges to be framed against ex-<st1:stockticker w:st="on">IRS officer</b> </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A <st1:stockticker w:st="on">CBI court has ordered framing of charges against a suspended deputy commissioner of Income Tax and a personal assistant to a former Minister of State for Finance in a four-year-old corruption case. The Special Judge has ordered framing charges against <st1:PersonName
w:st="on"><st2:GivenName w:st="on">Anurag</st2:GivenName> <st2:Sn w:st="on">Vardhan</st2:Sn>, a 1994 batch Indian Revenue Service (<st1:stockticker w:st="on">IRS) officer who was suspended following his arrest by <st1:stockticker w:st="on">CBI in 2003 and R Perumalswamy, an assistant to then Minister of State for Finance, G Ramachandran.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>4th INTERNATIONAL T@X CONFERENCE - ASSOCHAM</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">ASSOCHAM</font></strong> is organizing 4th International Tax Conference on September 25-26, 2007 at <st1:City
w:st="on"><st1:place w:st="on">New Delhi. The objective of the conference is to present a wider perspective of contemporary international taxation procedures and offer insight into issues that impinge the growth of international trade and commerce. It will debate on issue like OECD's recent initiatives on International Taxation, Treaty Shopping, International Tax dispute resolution - <st1:stockticker w:st="on">MAP and arbitration, International Tax aspects of cross border transaction-issues in <st1:stockticker w:st="on">BPO/ITES industries, Transfer Pricing in Direct and Indirect Tax, Tax and regulatory issues of non profit organization, environmental issues on tax regarding taxation of Carbon Credit and etc</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Conference will be addressed by eminent experts from <st1:place w:st="on"><st1:country-region
w:st="on">India</st1:country-region> and abroad. Delegates from Industry, Government, Academia, Institutions will participate in the 2 day conference. </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>TOPICS TO BE DISCUSSED </b></font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ OECD's recent initiatives on International Taxation </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++Treaty Shopping, misuse of Treaty & Remedy </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Recent Indian case laws / rulings on International Tax / treaties </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ International Tax aspects of cross border transaction </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Issues in <st1:stockticker
w:st="on">BPO / ITES Industries - An Industry Perspective </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++Direct Tax aspects of cross-border services </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Indirect Tax aspects of cross-border services (Service tax implications, Issues regarding related party transaction on Custom Valuation etc.) </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Inbound Investment structuring and funding </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Outbound investment by Indian company - tax strategy, planning & issues </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++Case Study on Merger / Acquisition across border </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Attribution of profit to Permanent Establishment </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Recent TP audit experiences in <st1:country-region w:st="on"><st1:place
w:st="on">India</st1:country-region> covering the recent decisions in the case of Morgan Stanley & Aztec Software </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Alternate Dispute Resolution Mechanism in tax arbitration in context of <st1:stockticker w:st="on">MAP, Settlement Commission, Advance Ruling Authority </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Opportunities for Indian Corporate to earn Carbon Credits - Tax & Regulatory Aspects </font></p>
<p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Cross-border Non-Profit Organization - Tax & Regulatory Aspects </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">THE SPEAKERS</font> </b>likely to address the conference include</font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <st1:PersonName
w:st="on"><st2:title w:st="on">Mr.</st2:title> <st2:GivenName w:st="on">H.R.</st2:GivenName> <st2:Sn w:st="on">Bhardwaj</st2:Sn>, Minister of Law & Justice </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++<st2:title w:st="on">Mr.</st2:title> <st2:GivenName w:st="on">Parthasarthi</st2:GivenName> <st2:Sn w:st="on">Shome</st2:Sn>, Advisor to Finance Minister</font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <st1:PersonName
w:st="on"><st2:title w:st="on">Mr.</st2:title> <st2:GivenName w:st="on">P.V.</st2:GivenName> <st2:Sn w:st="on">Bhide</st2:Sn>, Secretary, Department of Revenue </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <st1:PersonName
w:st="on"><st2:title w:st="on">Mr.</st2:title> <st2:GivenName w:st="on">B.M.</st2:GivenName> <st2:Sn w:st="on">Singh</st2:Sn>, Chairman, CBDT </font></p>
<p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <st1:PersonName
w:st="on"><st2:title w:st="on">Mr.</st2:title> <st2:GivenName w:st="on">S.K.</st2:GivenName> <st2:Sn w:st="on">Shingal</st2:Sn>, Chairman, CBEC </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And many leading consultants. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Revised Scheme for grant of cash award to meritorious children - CBEC guidelines</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Governing Body constituted to administer the Customs and Central Excise Welfare Fund and Special Equipment Fund has reviewed the existing scheme for grant of one-time cash award at 10th and 12th level Board Examination to the children of Departmental officers and staff.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The scheme has been made gender-responsive by incorporating the following provisions in case of girl child of all categories of the departmental officials:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (a) Minimum percentage of marks obtained in Board Examination for grant of cash award has been reduced by 5%;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (b) Amount of cash award has been enhanced by 20% i.e amount of each cash award is Rs. 6,000/- for girls as compared to Rs. 5,000/- for boys.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In case of the children of Drivers the percentage of marks obtained in Board Examination for grant of cash award has been reduced to 65%;</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In case of physically handicapped children of all categories of departmental officials, minimum percentage of marks in Board Examination for grant of cash award has been prescribed as 65%</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Limit on number of cash awards have been done away with. Cash award will be admissible to all children of departmental officials found eligible for grant of cash award as per the scheme.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is experienced that some representations/applications/nominations have been received after closing date of the receipt of applications/nominations or even after cash awards have been disbursed. Generally, the following main reasons are cited for submission of delayed applications/nominations:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (i) Application/nomination sent by formations have not been received in the Directorate/Commissionerate;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (ii) Official was not aware of the scheme and came to know about the scheme in later stage.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Considering that cash award is recognition of performance of children of departmental officials and a welfare measures, though Governing Body has sanctioned in case of delayed applications in a few cases, but to avoid such delays the following procedure may be followed:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (i) Commissionerates / Directorates should send applications / nominations by Regd. /speed post only. No claim shall be entertained in respect of applications sent by Ordinary Post, if not received in this office.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (ii) Directorate will send acknowledgement of receipt of application /nomination latest by 15th of November, 2007.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (iii) The list of applications received shall also be put on the departmental web site.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (iv)
In case Commissionerates / Directorates do not receive acknowledgement by
30th November, 2007 they should take up the matter with this Directorate
about inclusion of their applications /nominations. No request for inclusion
of any nomination will be entertained after 15th December, 2007.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (v) After scrutiny, a list of eligible candidates for cash award will be put on departmental web site for information to all concerned.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The applications are to be sent by 31<sup>st</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/pdfdocs/cashaward07.pdf" target="_blank">Directorate of Logistics, Customs & Central Excise, F. No.712/172/07-DL(WF) / Dated the 19th September, 2007</a></u></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>Income Tax</b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Indo-Canadian DTAA is based on UN Model - Profits not only attributable to PE but also arising out of sales in other contracting State are taxable in India : Tribunal</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">TAXING</font> </b>income of a non-resident company is always a tricky business. In this case, the issue largely revolves around the attribution of profits between the Head Office (HO) and the Permanent Establishment (PE) in <st1:country-region
w:st="on"><st1:place w:st="on">India</st1:country-region>. Although the assessee opted for assessment under the provisions of Indo-Canadian DTAT but it also expressed its desire to be assessed under the Income Tax Act if the benefits are denied under the first option. Revenue stoutly resisted such switchover from DTAT to Income Tax Act as the tax rate was lower on fee for technical services but the Tribunal allowed it. However, the assessee was not allowed deduction of expenses as per 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>Parts cleared separately and stand alone compressor cleared separately - parts cannot be classified as compressor - but for valuation, the cost of parts may be includible - matter remanded - Supreme Court</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner is confused, whether it is a classification or valuation issue. As far as classification is concerned, the Supreme Court agreed with the Tribunal that parts cannot be classified with the compressor, but what the Commissioner wanted was more duty. He could collect it through valuation.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioners should realise that the profound orders passed by them are subject to scrutiny by the highest Court of the land and when the <st1:Street w:st="on"><st1:address
w:st="on">Apex Court comments that the Commissioner is confused between classification and valuation, it is a bad reflection of the working of the Department. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The other day a retired judge of a High Court told me that the least he expected the Commissioners to do was to read the orders 'put up' by their Superintendents. </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>Rebook Shoes - import of parts of shoes by two importers to finally manufacture shoes - two imports was only a fictitious arrangement to deceive the government - not eligible for exemption to parts - matter remanded for re-quantification - Supreme Court </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We have heard of clubbing of clearances of SSI units, but have you heard of clubbing of imports? Well, here is one such case!</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question of law that arises for determination in these civil appeals is: Whether shoe uppers, outer soles, insoles and sock liners imported by M/s. Phoenix Industries Ltd. (PIND) in the same container could be clubbed so that it could be considered as import of the shoe itself in semi knocked down (SKD) condition? Whether the importer was guilty of mis-declaration when the importer declared SKD goods as components?</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns Tomorrow for the judgments</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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