TIOL-DDT 727 · 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 727</font></b><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
25.10.2007<br>
Thursday </b></font></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Is LPG not a petroleum gas? Is 4% additional duty leviable on LPG? - Board clarifies </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More than a year ago, <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3449" target="_blank">DDT 323</a></u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3449"> [16 03 2006</a><b>] </b>asked, <b><font color="#663399">Is LPG not a petroleum gas? Is 4% additional duty leviable on LPG? - Board's clarification needed.</font> </b>Well, the Board has clarified the issue after more than a year. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue was: As per <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2006/ctariff06_020.htm" target="_blank">NOTIFICATION NO. 20/ 2006-Customs, <st1:date ls="trans" Month="3" Day="1" Year="2006" u1:st="on"><st1:date
ls="trans" Month="3" Day="1" Year="2006" w:st="on">March 1, 2006</a><b>, </b>Petroleum crude, kerosene for Public distribution scheme, <b><font color="#663399">liquefied petroleum gas for domestic household consumers,</font> </b>petrol, diesel, coal, coke and <b><font color="#663399">petroleum gases</font></b> and fuels, falling under Chapter 27 are exempted from the 4% additional duty imposed on all goods. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please note <i>LPG for domestic consumption</i> and <i>petroleum gases</i> are exempted. But <b><font color="#663399">LPG</font></b> is also a <b><font color="#663399">Petroleum gas</font></b>; then what is the purpose of exempting it separately? </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
highlighted the plight of an importer of LPG for other than domestic household
consumers who
was allowed the exemption in some ports while it was denied in some others,
for the LPG imported by him.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Now
the Board's secret clarification: </font></b>By a letter dated11<sup>th</sup> June,
2007, addressed to the Chief Commissioner, <st1:place u1:st="on"><st1:City u1:st="on"><st1:City
w:st="on"><st1:place w:st="on">Ahmedabad and copies marked to all Chief Commissioners,
the Board clarified,</font></p>
<div align="justify">
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The wording
of the entry 'Petroleum gases' of chapter <st1:metricconverter ProductID="27 in" u1:st="on"><st1:metricconverter
ProductID="27 in" w:st="on">27 in the notification itself covers the LPG
supplied to domestic consumers and LPG supplied to other category of
consumers, irrespective of whether they are used for fuel or feedstock
or otherwise. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The wording 'liquefied
petroleum gas for domestic household consumers' is specifically given,
as an abundantly cautious step to ensure that such domestic household
use is not in any case charged with 4% <st1:stockticker u1:st="on"><st1:stockticker w:st="on">CVD
exemption to LPG supplied to any specific use. <b></b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In view
of the above, Board clarifies that the LPG imported for supply to domestic
consumers as well as LPG supplied other category would be eligible for
exemption from payment of 4% special <st1:stockticker u1:st="on"><st1:stockticker
w:st="on">CVD under serial No.2 of notification No.20/2006-Customs dated
1.3.2006. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Accordingly,
it is directed that the field formations may finalise all the Pending
assessment of LPG Import.</font></p>
</div>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Just look at the might of the government! Because of some drafting mistake, imports were held up, importers were made to run from pillar to post for a clarification. Within a fortnight of the notification, we brought to the notice of the Board, the confusion prevailing in various custom houses. Nobody in his right sense could have ever argued that LPG is not a petroleum gas, but it happened and it took the highest authority to clarify albeit after 15 months of mindless litigation.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">LPG is okay, but is <st1:stockticker u1:st="on"><st1:stockticker
w:st="on">LNG a petroleum gas? </font></b>Board had clarified only on LPG and so a doubt persists whether the exemption is applicable to <st1:stockticker u1:st="on"><st1:stockticker w:st="on">LNG. The good Board had to again study the issue and three months after the first clarification, issued another clarification that <font color="#663399">the imported <st1:stockticker u1:st="on"><st1:stockticker w:st="on">LNG, irrespective of its end-use, would be eligible for exemption from payment of 4% special <st1:stockticker u1:st="on"><st1:stockticker w:st="on">CVD under Serial No 2 of Notification No 20/2006-Customs dated 1.3.2006. Accordingly, it is directed that the field formations may finalise all the pending assessments of <st1:stockticker u1:st="on"><st1:stockticker w:st="on">LNG import.</font></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope that the assessments will be completed without asking for any further clarifications.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And again, why is the Board so shy of making such important clarifications public? Board has a system of issuing circulars - why can't these be issued in public circulars? </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=25&filename=notification/custom/2007/lpgone.htm" target="_blank">CBEC letter F.No.620A6/2007-Cum.TU dated 11th June, 2007</a></u> and <u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2007/lpgtwo.htm" target="_blank">F No 528/16/2007-Cus(TU) dated 25th September, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Modvat - dutiable and exempted final products - 8% (10%) payable even when there is no sale - Board communicates Supreme Court judgement reported by TIOL</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A recent letter of the Board to the field reads as,</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The undersigned is directed to enclose copy of the order of the Hon'ble Supreme Court of India in Civil Appeal No. 1373 of <st1:metricconverter ProductID="2002 in" u1:st="on"><st1:metricconverter
ProductID="2002 in" w:st="on">2002 in the matter of <st1:stockticker u1:st="on"><st1:stockticker
w:st="on">CCE, Nagpur Vs. M/s. Ballarpur Industries Ltd. [<u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2007/2007-TIOL-153-SC-CX.htm" target="_blank">2007-TIOL-153-SC-CX</a></u>]</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The above order may be brought to the notice of the field formation for taking necessary action in cases involving erstwhile rule 57CC of the Central Excise Rules, 1944 and present rule 6 of the CENVAT Credit Rules, 2004.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held that 8% is payable even when goods are stock transferred to a sister unit. We are happy that Board is following TIOL and acting upon our inputs. </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=31&filename=notification/excise/2007/instruct0107.htm" target="_blank">CBEC F.No. 267/95/2007-CX-8 Dated : <st1:date ls="trans" Month="10" Day="12" Year="2007" u1:st="on"><st1:date
ls="trans" Month="10" Day="12" Year="2007" w:st="on">October 12, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Excisability of zinc dross - Board wants to revive the issue</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue is more than 20 years old and the Supreme Court had held that it is not excisable, but Board seems to be having doubts. Board in a letter to the field, says, It holds that zinc dross is not goods because it is not marketable. However, from internet, it appears that zinc dross has considerable commercial value. It is also marketed and is a high value input for rubber investment, for Zinc Electroplating units, Paint industry, etc. The issue is under examination of the Board.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So Board wants the field to furnish information regarding revenue which is likely to be collected if the excise duty/<st1:stockticker u1:st="on"><st1:stockticker
w:st="on">CVD is charged on zinc dross.</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=31&filename=notification/excise/2007/zincdross.htm" target="_blank">CBEC F.No. <st1:date ls="trans" Month="4" Day="3" Year="2007" u1:st="on"><st1:date
ls="trans" Month="4" Day="3" Year="2007" w:st="on">4/3/2007-CX.1 Dated : <st1:date ls="trans" Month="10" Day="9" Year="2007" u1:st="on"><st1:date
ls="trans" Month="10" Day="9" Year="2007" w:st="on">October 9, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service Tax - RAT and SIV</b> </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Kerala Service Tax Department had chalked out measures to track down tax evaders who resort to misdeclarations, suppression of facts and fraud. Addressing a gathering after inaugurating a five-day workshop on Service Tax in Kochi, Mr <st1:stockticker w:st="on">ASR Nair, Chief Commissioner said the department had initiated strong measures like creation of a Research, Analysis and Technical Unit (RAT) in all Commissionerate headquarters and a Survey, Intelligence and Verification Unit (SIV) in all divisional offices handling Service Tax in the state.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department would also monitor the performance of officers dealing with Service Tax, audit officers and officers dealing in anti-evasion units and strengthen the vigilance machinery to deal with companies. '' Through these measures the department was aiming to collect around Rs 1,250 Crore of Service Tax revenue during the current fiscal, an increase of 76 per cent compared to last year's collection of Rs 708 crore,'' he noted. The tax collection had not reached the optimum level due to non-registration of taxable service providers, misdeclarations or suppression of facts, lack of awareness, reluctance to pay tax, and failure to account for and deposit the Service Tax collected from the public with the government. <st1:PersonName w:st="on"><st2:title
w:st="on">Mr</st2:title> <st2:Sn w:st="on">Nair</st2:Sn> said periodical open house meeting and publicity through media would be conducted to educate the taxable service providers and public on the remittance of tax. At present, there were about 20,000 registered taxable service providers in the state but many more were unregistered and yet to come within the tax bracket, he said. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Boric acid - issue of End use Certificate</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Such a boring subject like Boric acid seems to be too much in news, with even a former Member writing an article on the subject for us. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now DGFT informs that Regional Authority of DGFT have been allowed to issue end-use certificate for allowing import of Boric Acid.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An Advance Authorization holder can apply to the Regional Authority for endorsement of End-Use Certificate clause in the advance authorization for import of Boric Acid for non-insecticidal purpose as one of the inputs in export product.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Authorization holder would account for the quantity of Boric Acid at the time of applying for EODC or <st2:GivenName u1:st="on"><st2:GivenName
w:st="on">Bond</st2:GivenName></st2:GivenName> waiver.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If Boric Acid is imported alone for re-export with change in physical form as per SION or ad-hoc norms as the case may be, condition of <st1:stockticker u1:st="on"><st1:stockticker
w:st="on">CIB registration will continue to be applicable.</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=46&filename=notification/dgft/2007/dgft07cir016.htm" target="_blank">DGFT POLICY CIRCULAR NO 16 (RE-07)/2004-2009., Dated: <st1:date ls="trans" Month="10" Day="22" Year="2007" u1:st="on"><st1:date
ls="trans" Month="10" Day="22" Year="2007" w:st="on">October 22, 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"><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"><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"><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></b></font></strong></font></b></font></strong></font></b></font></strong></font></b></font></strong></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>FERA</b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Confessional statement corroborated by seized documents, admissible even if retracted : Bombay HC</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <ST1:STREET u2:st="on"><ST1:ADDRESS u2:st="on"><st1:Street u1:st="on"><st1:address u1:st="on"><st1:Street
w:st="on"><st1:address w:st="on">Apex Court in the case <i>Hazari Singh V/s. Union of <ST1:COUNTRY-REGION u2:st="on"><st1:country-region u1:st="on"><st1:country-region
w:st="on">India</st1:country-region></st1:country-region></ST1:COUNTRY-REGION> </i>and <i>Surjeet Singh Chhabra V/s. Union of <ST1:PLACE u2:st="on"><ST1:COUNTRY-REGION u2:st="on"><st1:country-region u1:st="on"><st1:place u1:st="on"><st1:country-region
w:st="on"><st1:place w:st="on">India</st1:country-region></st1:country-region></ST1:COUNTRY-REGION> & Others</i> has held that the confessional statement made before the Customs Officer though retracted is an admission and binding on the person.</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">Excise - valuation - goods cleared from consignment agent - factory sale price not applicable - just because Comm(A) passed two contradictory orders on same day, tribunal need not uphold wrong order : 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"><strong> </strong>appellant cleared some of their goods through their "Consignment agents". The sale had taken place not from the factory gate, but through the Consignment Agents. Revenue proceeded against the appellants on the ground that they had not discharged their duty liability on the value of the goods in accordance with Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules, 2000 for the period from 27.07.2000 to 19.01.2005. The original authority confirmed the demand of Rs. 5,06,029/- towards Central Excise Duty. Interest under Section 11AB was demanded. Equal penalty under Section 11AC was imposed.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The main contention of the appellants is that only w.e.f. 14.05.2003, the premises of Consignment Agents were defined as 'place of removal.' Therefore, the question of demanding differential duty prior to 14.05.2003 does not arise.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Utilisation of amount deposited during pendency of investigation of a case is no way illegal : Tribunal</font></b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FIRST</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>things first. This is an order passed in January 2006 and is transmitted only recently. Fortunately, there should not be any complaint from the appellant's side at least!</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">Drawback benefits - Sec 80HHC benefits allowed but not u/s 80IB; Sec 80IB benefits cannot be allowed on profit from sale of DEPB scrips as no direct nexus exists with activities of undertaking : ITAT</font></b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TO</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>shore up forex kitty Govt offers a slew of benefits to exporters. These benefits are not confined to customs, excise and service tax. There are certain provisions in the Income Tax Act which allow deduction for profits generated out of exports. But, can Sec 80IB benefits be allowed on profit generated by transferring DEPB scrips on a premium? This was the question which came up before the Tribunal which has held that <b><font color="#663399">the profit from sale of DEPB scrips has no direct nexus with the activities of the undertaking, and Sec 80IB benefits cannot be allowed.</font></b></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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