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By Vijay Kumar

Central Excise

Statements made under Sec 14 of Central Excise Act are admissible in evidence to sustain penalty under Excise Rules : High Court

Be careful when you give those voluntary statements to the Central Excise/Customs officers. For some strange reason, the Courts in India believe that these officers don't use the third degree methods that the policemen of this country are notorious for. Getting down to basics, why on Earth would a hard core smuggler or evader voluntarily admit before the angelic customs officer that he had broken every rule in the statute to defraud this country and as a first step of penance, he is ready to voluntarily deposit a few lakhs of rupees even before the statement is signed? Why would any sane individual implicate himself in all sorts of criminal activities? Does a massive correction take place the moment a person is summoned and he is excited to reach the excise/customs office as soon as possible to admit his guilt?

The fact is 99% of the statements are recorded under duress, threat and coercion, but the law recognises statements before Customs to be good evidence! The Courts believe that the statement giver has the option of silence, retraction etc, which are not really available. An assessee who was threatened not to retract his statement was too afraid to retract and so he wanted to give an affidavit before a priest or lawyer that the statement he gave was obtained by physical force!

The Department is run by highly talented officers who will certainly do a better job of investigation if they do not have the power to record statements. Now most often they go for the easy method of recording statements instead of the hard work of gathering evidence.

The pristine question before the High Court in this case, was whether statements made under Section 14 of the Central Excise Act, 1944 are admissible in evidence to sustain penalty under the Central Excise Rules, 1944. The High Court observed, "It is well settled that a statement made by a witness or a party under Section 14 is ex facie admissible in evidence."

Income Tax

Mobilisation charges relatable to voyage of vessel outside territorial waters of India are not taxable in India - As per Board Circular only 1% of total charges can be assessed u/s 44BB : ITAT

The assessee is a Non-resident company. The business of the company was providing services and facilities and or supplying plant and machinery on hire for use in the prospecting for or extraction or production of mineral oils. U/s 44 BB of the Income Tax Act, in the case of a Non-resident assessee, engaged in the business of providing services or facilities in connection with or supplying plant and machinery on hire, used in the prospecting for or extraction or production of mineral oils a sum equal to 10% of the amount paid and payable to such assessee on account of provision of services and facilities in connection with or supply of plant and machinery on hire used or to be used, in prospecting for or extraction or production of mineral oils in India, shall be deemed to profits and gains of business chargeable to tax.

Depreciation u/s 32 - Deduction to be allowed even on 'passive' use of assets : ITAT Third Member

SECTION 32 of the Income Tax Act provides for deduction on account of depreciation from the total income of assessee, and the two basic requirements to be fulfilled for claiming depreciation are ownership of asset and 'use of asset for the purpose of business'. What amounts to 'use' of an asset for the purpose of business has been a moot point in numerous cases as was in the instant case which had to be eventually decided by the Third Member of the Tribunal as even amongst the judicial and accountant members of the Tribunal, there was a difference of opinion. Basic issues to be decided was whether asset to be kept in ready to use condition was enough or its actual use and payments of hire charges were essential for entitlement of claim of depreciation. It was clearly held that the word 'use' for purpose of claiming depreciation u/s 32 embraces both active and passive user, thus it is not essential that an asset is actually used for purpose of business for claiming depreciation.

Antidumping

Indian tile manufacturers successfully contest new shipper review and amendment to Notification 73/2003-Cus - Tribunal rules new shipper review illegal

IT is good news for Indian tile manufacturers. Earlier they have lost the challenge to the amendment to the same notification 73/2003 Cus in CESTAT 2007-TIOL-368-CESTAT-DEL-LB (Also see analysis of the Order), But this time the CESTAT has categorically ruled that the new shipper review initiated by the Designated authority under Rule 22 of the of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 as illegal and contrary to the provisions of the said rule.

See our columns tomorrow for the judgements