TIOL-DDT 714 · the untouched capture
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<p align="justify"><font size="3"><b><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 714</font></b><font face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></font><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
08.10.2007<br>
Monday</b></font></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Input services for export of goods – refund exemption – Board corrects errors and adds a couple of services. </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember the feud between the Commerce and Finance Ministries on the exemption from Service Tax for exports? Finally the Revenue relented and issued a notification on 17<sup>th</sup> September allowing a complicated refund for certain services used for exports. The refund was allowed only for</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.Port Services provided for export. (Section 65[105][zn] of the Finance Act, 1994)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.Other port Services provide for export. (Section 65[105][zzl])</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.Services of transport of goods by road from <b><font color="#663399">ICD to port</font></b> of export provided by Goods Transport Agency. (Section 65[105][zzp])</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.Services of transport of export goods in containers by rail from ICD to port of export. (Section 65[105][zzzp])</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6082" target="_blank">DDT 701 dated 18.09.2007</a></u></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Revenue has amended the Notification basically to rectify certain mistakes, but the amendment is made cleverly to allow the benefit for some more services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the benefit will be allowed only if the </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">said goods have been exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A couple of conditions are added as follows:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.(c) the exporter who is not registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Finance Act or the rules made thereunder, shall, prior to filing a claim for refund of service tax under this notification, file a declaration in the Form annexed hereto with the respective jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.(d) the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code (<st1:stockticker
w:st="on">STC) number to the exporter within seven days from the date of receipt of the said Form;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One more document is added to the list of documents to be produced for claiming the refund.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) wherever applicable, a copy of the written agreement entered into by the exporter with the buyer of the said goods, as the case may be;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And three services are added to the list of services eligible for the refund. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.Services provided to an exporter by an insurer, including a re-insurer carrying on general insurance business in relation to insurance of said goods</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.Services provided by a technical testing and analysis agency in relation to technical testing and analysis of said goods where such technical testing and analysis is required to be undertaken as per the written agreement between the exporter and the buyer of the said goods.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.Services provided by an inspection and certification agency in relation to inspection and certification of export goods where such technical inspection and certification is required to be undertaken as per written agreement between the exporter and the buyer of the export goods</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subject to certain conditions like</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.document issued by the insurer, including re-insurer, for payment of insurance premium shall be specific to export goods and shall be in the name of the exporter.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.the exporter furnishes a copy of the written agreement entered into with the buyer of the said goods requiring testing and analysis of the said goods; and</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.the invoice issued by the service provider shall be specific to export goods and shall be in the name of the exporter.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why do you make life so complicated?</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=40&filename=notification/servicetax/2007/stnot07_041.htm" target="_blank">Notification. No.41/2007-Service Tax Dated 6th October, 2007</a></u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_041.htm">. </a></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Review of Customs cases – Committee of Chief Commissioners – jurisdiction changed </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committee of Chief Commissioners to review orders of Commissioners is really a tricky committee with transfers and additional charges of Commissioners and Chief Commissioners. Now the Chief Commissioner, Mumbai I and II will constitute the Committee for Commissioners of Customs, Import and Export, <st2:GivenName w:st="on">Nhava</st2:GivenName> <st2:Sn w:st="on">Sheva</st2:Sn> and Chief Commissioners, <st1:PersonName
w:st="on"><st2:GivenName w:st="on">Mumbai</st2:GivenName> <st2:nameSuffix
w:st="on">II</st2:nameSuffix> and III will be the Committee for Commissioners - Air Cargo (Import)Mumbai, Air Cargo(Export) Mumbai, Customs (Airport) Mumbai, Customs (Preventive) Mumbai, Customs, Pune.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After some time, even the Board will lose track of who the Committee is for which Commissionerate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why not have a few Chief Commissioners for just reviewing the orders? </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_102.htm" target="_blank">NOTIFICATION NO. 102/2007-Cus.,(</a></u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_102.htm"><st2:GivenName w:st="on"><u>N.T.</u></st2:GivenName><u>), Dated: <st1:date ls="trans" Month="10"
Day="05" Year="2007" w:st="on">October 05, 2007</u></a></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Advance Authorisation – Export Obligation for spices – HOP amended</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 4.22 of the Handbook of Procedures, Vol. I,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fulfilment Period of EO under an Advance Authorisation shall commence from Authorisation issue date. EO shall be fulfilled within 24 months except in case of supplies to projects / turnkey projects in <st1:country-region w:st="on"><st1:place
w:st="on">India</st1:country-region> / abroad under deemed exports category where EO must be fulfilled during contracted duration. In case of Spices {(covered by chapter 9 of ITC (HS)}, EO shall be fulfilled within 90 days from the date on which first import consignment is cleared by Customs Authorities.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, in case of import of spices for VA purpose like crushing / grounding / sterlisation or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc., EO shall be fulfilled within 120 days. EO Period for import of drugs (with a specific export order and pre-import condition) and for import of tea shall be 6 months.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this part is changed to,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"However, in case of import of spices for VA purpose like crushing / grinding / sterlisation or for manufacture of oils and oleoresins of pepper, cardamom and chillies and not for simple cleaning, grading, repacking etc., EO shall be fulfilled within 120 days from the date of importation of first consignment. In case of import of spices (other than pepper, cardamom and chillies) for manufacture of spice oils and oleoresins, EO shall be fulfilled within 12 months from the date of issuance of advance authorisation.”</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=47&filename=notification/dgft/2007/dgft07pn060.htm" target="_blank">DGFT PUBLIC NOTICE NO. 60 (RE-2007)/2004-2009, Dated: <st1:date ls="trans" Month="10" Day="4"
Year="2007" w:st="on">October 4, 2007</a></u></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:PersonName w:st="on"><st2:GivenName w:st="on"><b><font color="#006600">Mayur</font></b></st2:GivenName><font color="#006600"><b> <st2:Sn w:st="on">Bhavan</st2:Sn> closed to Public and Income tax Men today and tomorrow</b></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has informed that a fire was reported on the 7<sup>th</sup> floor of <st1:PersonName w:st="on"><st2:GivenName
w:st="on">Mayur</st2:GivenName> <st2:Sn w:st="on">Bhawan</st2:Sn> in the early hours of 6<sup>th</sup> October 2007. The fire was brought under control. The cause of fire and the extent of damage to the building are under investigation by the concerned agencies. (The agencies are really concerned)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The building (<st1:PersonName w:st="on"><st2:GivenName w:st="on">Mayur</st2:GivenName> <st2:Sn w:st="on">Bhawan</st2:Sn>) will be closed to the public and the staff of the Income Tax department on 8<sup>th</sup> and 9<sup>th</sup> October 2007 (Monday and Tuesday). </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Exchange Earner's Foreign Currency (EEFC) Account- Liberalisation – RBI Circular</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the recent global and domestic developments and with a view to give an opportunity to small and medium enterprises to manage the challenges in the global markets, it has been decided, in consultation with Government of India, to permit all exporters to earn interest on EEFC accounts to the extent of outstanding balances of US $ 1 million per exporter. This is a purely temporary measure and valid up to <st1:date
ls="trans" Month="10" Day="31" Year="2008" w:st="on">October 31, 2008 and would be subject to further review.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Currently, EEFC accounts are permitted to be maintained in the form of non-interest bearing current accounts. It will now be possible for account holders to maintain outstanding balances to the extent of US $ 1 million in the form of term deposits up to one year maturing on or before 31st October 2008. The rate of interest may be determined by the banks themselves.</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=49&filename=notification/rbi/2007/rbi07cir013.htm" target="_blank">RBI CIRCULAR NO. 13 /RBI., Dated: <st1:date ls="trans"
Month="10" Day="6" Year="2007" w:st="on">October 6, 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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Board Circular issued prior to amendment of Income Tax Act and SC ruling not binding : ITAT Special Bench</font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>IT</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> </b>is now an axiomatic law that Board circulars are binding on the Department, even if they are wrong or against decisions of the Supreme Court. But our Boards do not have the habit of tracking down the multitude of circulars they issue and considering whether they are relevant after the Law has been amended and the <st1:Street
w:st="on"><st1:address w:st="on">Apex Court had already ruled on the issue. In the <i>Dhiren Chemicals</i> case, the Supreme Court had held that if there was a Board Circular which was not in tune with the views of the Supreme Court, the Board Circular would prevail. The whole idea is that the Department should not be seen arguing that the Board was wrong - even if it is wrong, the Departmental officers should be bound by it.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So when the Law is amended or when the Revenue gets a favourable order from the Supreme Court, they should verify whether there is a contradictory circular and track it down and withdraw it. But the Board can't be expected to do this kind of hard work. So more litigation, as this case would show.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Wheeling out a part of electricity generated in factory of appellants to their own another factory cannot deprive them of credit of duty on naphtha used as fuel in their factory : Tribunal my majority</font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>THE <i>electrifying issue</i></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><i> </i></b>involved is as to the availability of modvat credit in respect of inputs used as fuel which generate electricity and part of which is captively consumed in the manufacture of final product and part of it is wheeled out to the appellant's sister concern.</font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Sales Tax</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Sales tax vigilance officer does not cease to be sales tax officer just because he is in vigilance and works under IG, Police - Assessment made for releasing seized goods is a proper assessment : SC</font></b></font></p>
<p align="justify"><font color="#6633CC" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">THIS</font></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> is an appeal by the State against the orders of the Orissa High Court and the respondent is a wholesale dealer in biscuits of different brands under the provisions of the Orissa Sales Tax Act, 1947 and Central Sales Tax Act, 1956. On 14th October, 1999, goods were being unloaded from vehicle No. WB-24-A-0112 when the Investigating Officer of Vigilance Wing, Balasore Division, found certain irregularity and, accordingly, the Sales Tax Officer (Vigilance), raised a sum of Rs. 32,592/- as tax and Rs. 54,320/- as penalty under Section 16-D of the Orissa Sales Tax Act, 1947. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The main contention of the respondent is that the Sales Tax Officer (Vigilance) is not competent to make assessment under Section 16-D of the Act inasmuch as he is an officer under the control of Inspector General of Police (Vigilance) and has no power to make assessment. </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="#6633CC" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Superintendent's letter cannot be termed as an order of Commissioner : CESTAT</font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> issue was remanded twice by CESTAT to the Commissioner (Appeals). The Commissioner (Appeals) upheld all the Orders-in-Original. The appellants imported various Electronic items and warehoused the same by executing the necessary bonds. They executed 3 bonds viz. (i) 60/96 dt. 18.01.1996; (ii) 98/96 dt. 02.02.1996 and (iii) 162/96 dt. 22.02.1996. In terms of the bonds, the initial warehousing periods are 17.01.1997; 01.02.1997 and 21.021997 respectively. In other words, the initial warehousing period is for one year. The appellants are expected to clear the goods on payment of duty. However, due to various reasons, if they are not in a position to clear the goods, they could apply for extension of the warehousing period to the Commissioner, who is the competent authority under the Customs Act, 1962. They should also give the reasons for the request for extension.</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>
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