TIOL-DDT 746 · 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 746</font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
22.11.2007<br>
Thursday</font></b> </font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Mandatory penalty - duty paid before issue of Show cause Notice - Board communicates our orders</font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is
penalty payable even if the duty is paid before issue of Show Cause Notice?
This was an issue that has been agitated quite for some time. CBEC has
communicated to the field the ILPEA case which we reported in <u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-1017-CESTAT-DEL-LB.htm" target="_blank">2007-TIOL-1017-CESTAT-<st1:stockticker
w:st="on">DEL-LB</a> </u>wherein the Tribunal held that ''once it is held that
imposition of penalty under Section 11AC is warranted, the wordings of
Section 11AC do not leave any option for imposing a reduced penalty,
except as specifically provided for in the amended provisions of Section
11AC''.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has also referred to our judgement in Commissioner of Central Excise & Customs, Aurangabad Vs M/s Padmasshri V V Patil Sahakari Sakhar karkhana Ltd (<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2007/2007-TIOL-419-HC-MUM-CX.htm" target="_blank"><u>2007-TIOL-419-HC-MUM-CX</u></a><u>)</u> in which it has been decided that there is no discretion for reducing mandatory penalty under Section 11AC even if duty is paid before issue of Show Cause Notice.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While on this issue, please recall our article <b><a href="http://www.taxindiaonline.com/RC2/inside2.php3%20filename=bnews_detail.php3&newsid=5976" target="_blank">ERR (O) <st1:stockticker w:st="on">THO DARRO!</a> </b></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=31&filename=notification/excise/2007/judicial.htm" target="_blank">CBEC's No. F No 383/19/2007-JC Dated: August 2007</a></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Export of onions from India - big news in Bangladesh</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When <st1:country-region w:st="on">India</st1:country-region> banned export of onions, the worst affected country was <st1:country-region w:st="on"><st1:place
w:st="on">Bangladesh</st1:country-region>, which depended on Indian Onions. In spite of the increased price of onions, <st1:country-region
w:st="on">Bangladesh</st1:country-region> has no choice but to import onions from <st1:country-region w:st="on"><st1:place w:st="on">India</st1:country-region>.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>ASSOCHAM wants 12% excise duty</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Associated Chambers of Commerce and Industry, whose representatives met <st1:PersonName
w:st="on">Revenue Secretary <st2:GivenName w:st="on">P.V.</st2:GivenName> <st2:Sn w:st="on">Bhide</st2:Sn> and submitted their pre-budget wish-list, said excise duty rate should be cut to 12 percent from the present 16 percent on manufactured goods. ASSOCHAM suggested,</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Manufactured goods are still quite expensive and therefore, reduction in excise duty rate to 12% will make them affordable to larger population while boosting their demand and accelerating the manufacturing sector's growth with minimum impact on revenue</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++Such reduction will align tax rates under excise and service tax, facilitating their integration under Central GST</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++Excise duty rate on automobiles should be moderated by removing special excise duty on this sector</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++Upgrading infrastructure significantly in order to sustain economic growth, it was suggested that service tax and excise duty on inputs during the investment phase should be exempted from tax or refunded and that tax may be collected once projects are put to use and they start earning revenue</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Presently a large number of Indian companies are investing overseas for profitable growth and strategic advantage. Any dividend remittance by foreign companies will attract full tax even where such profit from which dividend is remitted has suffered tax in the host country. This has led to Indian companies setting up head offices abroad or parking funds overseas.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Many countries exempt such dividend where shareholding is substantial (20-40%). <st1:country-region
w:st="on"><st1:place w:st="on">India</st1:country-region> should promote itself as headquarters of business enterprises and retain long-term capital by exempting dividend remitted by foreign subsidiaries or associates with 40% or more investment. Alternatively tax paid on profit from which dividend is declared, should be given credit. </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Recommendations</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Create Agriculture Economic Zone on the lines of SEZ for making this concept a success, in order to achieve agriculture growth by at least 4% on sustainable basis</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ to ensure adequate investments in pre and post harvest management, food processing, export promotion related activities, specific crop related activities and application of R&D to agricultural production</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In order to ensure that there is adequate quality produce, investment in irrigation, transport, rural electrification, telecom connectivity will be required apart from pre and post harvesting activities to help develop rural infrastructure and to provide employment to labourers engaged in agriculture </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ For a strong research base and pool of intellectual properties, scientific research should be carried out in emerging sectors like bio-technology, nanotechnology, industrial deign, IT, telecom, food processing, medicine and engineering</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ They should be given favourable tax treatment under direct and indirect taxes to encourage such activities and the double taxation of intellectual properties under service tax and VAT regime should be discontinued.</font></p>
<p align="justify" class="style1"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instead of a 12% excise duty, government would rather have 16.5% Service Tax!</font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Customs Duty waiver on imports from <st1:country-region w:st="on"><st1:place
w:st="on">Nepal</st1:country-region></font><st1:country-region w:st="on"></st1:country-region></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:country-region w:st="on">India</st1:country-region> will waive customs duty on more than 4,500 items entering <st1:country-region w:st="on">India</st1:country-region> from the four least developed countries -- <st1:country-region w:st="on">Nepal</st1:country-region>, <st1:City w:st="on">Bangaldesh, <st1:country-region
w:st="on">Maldives</st1:country-region> and <st1:country-region w:st="on"><st1:place
w:st="on">Bhutan</st1:country-region> -- in the South Asian Association for Regional Cooperation (SAARC) from January, Minister of State for Commerce Jairam Ramesh said yesterday.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Speaking at a conclave of the Indian Chambers of Commerce and Industries, Ramesh said, "Under the terms of SAFTA, the government has decided to waive customs duty on 4,536 items imported from <st1:country-region w:st="on">Nepal</st1:country-region>, <st1:country-region w:st="on">Bangladesh</st1:country-region>, <st1:country-region
w:st="on">Maldives</st1:country-region> and <st1:country-region w:st="on"><st1:place
w:st="on">Bhutan</st1:country-region>. Agro items and textiles among others will be exempt from customs duty from January.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
He added that <st1:country-region w:st="on"><st1:place w:st="on">Afghanistan</st1:country-region> would also be included on the waiver list soon and that it would get the facility after it becomes a SAFTA member in February. <st1:PersonName w:st="on">Prime Minister Dr <st2:GivenName w:st="on">Manmohan</st2:GivenName> <st2:Sn w:st="on">Singh</st2:Sn>, during the 14th SAARC summit, had announced his government's decision to waive customs duties on certain items from the four SAARC countries.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He had also said the list of sensitive items would be scaled down to boost bilateral and multilateral trade in the SAARC region.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the Nepal-India trade treaty, except for a few sensitive ones, customs duty has already been waived on certain items. <st1:country-region w:st="on">Nepal</st1:country-region> exports vanaspati ghee, toothpaste, jute, jute products, polyester, acrylic, animal hides, leather products, medicinal herbs, cardamom, rice, oil, noodles, ginger and other items to <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"><br>
But is <st1:PersonName w:st="on"><st2:GivenName w:st="on">Jairam</st2:GivenName> <st2:Sn w:st="on">Ramesh</st2:Sn> the final authority? We still have an FM to grant exemption from Customs duties!</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Companies Rules - amendment</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Companies (Central Government's) General Rules and Forms, 1956, have been amended to provide for,</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4-A. (1) The promoters of a company under a proposed name or a company seeking to change its name may make an application to the Registrar of Companies of the State in which the registered office of the proposed company or of the company to be or is situated.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) The application shall be in Form 1A and be accompanied by a fee of rupees five hundred only.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) The Registrar shall cause to examine the application as to whether the changed name or the name with which the proposed company is to be registered, as the case may be, is undesirable within the meaning of section <st1:metricconverter
ProductID="20. In" w:st="on">20. In case the name is undesirable, he may reject the same or ask for resubmission of the application with new names or calls for further information, ordinarily within three days of receipt of the application:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that the applicants shall be given only upto two opportunities for re-submission of their proposal against the fee paid in the first instance for name availability after the original application is filed. In the event the registrar does not find the proposals so submitted and resubmitted as fit for approval, he shall reject the application after the second re-submission. However, the applicant will be at liberty to file fresh application along with prescribed fee.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) Where the Registrar of Companies informs the company or the promoters of the company that the changed name or the name with which the proposed company is to be registered, as the case may be, is not undesirable, such name shall be available for adoption by the said company or by the said promoters of the company for a period of sixty days from the date the name is allowed:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that if the name so allowed is not adopted on or before the expiry of the period of sixty days from the date it is allowed, the applicant may apply for extension for retention of such name for a further period of thirty days on payment of fifty per cent of the fee prescribed for the application at the initial stage:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also provided that no further extension will be granted after expiry of ninety days from the date the name is allowed in the first instance. The name allowed shall lapse after expiry of sixty or ninety days, as the case may be, from the date it is allowed first:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided further that the name allowed by the Registrar before the date of this notification comes into force, if not adopted, shall lapse after the expiry of a period of six months from the date on which the name was initially allowed or renewed. However, in case the name has not been renewed earlier, the applicant on or before the date of expiry, may apply for one time extension of such name for a further period of thirty days on payment of fifty per cent of the fee prescribed for the application at the initial stage.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Loss of data - Customs Chief apologises </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The new Acting Chief of UK Customs has tendered a public apology for loss of data reported by us yesterday. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:PersonName w:st="on"><st2:GivenName w:st="on">Dave</st2:GivenName> <st2:Sn w:st="on">Hartnett</st2:Sn>, the new Chairman of HM Revenue and Customs in a public statement said,</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I am writing to make a personal apology. A copy of some HM Revenue and Customs (HMRC) data about families, including yours, who have received Child Benefit has been lost. The copy of the data is likely to still be on Government property. The police are now conducting a search, and there is no evidence that it is in the possession of anyone else. This will not affect your Child Benefit payments.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This data includes your and your children's names and dates of birth, your address, your National Insurance number and, where relevant, the details of the bank or building society account into which your Child Benefit is or was paid. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you are paid through a bank or building society, they are aware of this matter. They are acting on this information, and assure us that they have appropriate safeguards in place to protect you. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As is usual in these circumstances, if you are the innocent victim of banking fraud you will not have to pay, but you may want to take some precautionary steps to protect yourself. If you receive bills, invoices or receipts or see entries in your statements for goods or services which you have not ordered you should contact your bank or building society immediately. In addition, do not give out personal or account details if anyone contacts you unexpectedly. Instead take a note of their name and number, and if you are at all suspicious contact your bank or building society. If your password uses any of your personal data, for example your child's name or date of birth, you may also wish to consider changing any passwords you use. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The advice of banks is there is no need for customers to ask for a new account or to contact their bank or building society. Your Child Benefit payments will continue to be paid as before and you do not need to contact HMRC. However if you experience any problems, in the receipt of your Child Benefit payments, please contact HMRC on 0845 <st1:phone o:ls="trans"
phonenumber="$6302 ᎁ" w:st="on">302 1444 between <st1:time
Hour="8" Minute="00" w:st="on">8am and <st1:time
Hour="20" Minute="00" w:st="on">8pm on any day of the week (closed Christmas Day, Boxing Day and New Years Day). </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I would like to offer my personal apologies for any worry or concern this data loss may cause you. And I can assure you that all efforts are being made to ensure that such a loss can never happen again.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner - tomorrow cases<span class="style4"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><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></strong></b></font></b></font></span></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br>
<br>
<font color="#FF3366">Income Tax </font></b></font></p>
<p align="justify" ><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>100% depreciation on energy-saving device is given by wisdom of Legislature and there cannot be a grievance against that; expenditure for maintaining guest house cannot be claimed as deduction : ITAT</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF9966">THESE</font> </strong>are three appeals from Revenue and assessee and the order runs into more than 10,000 words of legal wisdom.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee is a Public Limited Company, engaged in the business of manufacture and sale of cables and filed its return of income, for the impugned assessment year 1996-97 on a income of Rs. 22,61,28,600. Thereafter the return was revised by reducing the total income to Rs. 19,33,26,400. In the course of assessment proceedings, the Assessing Officer made a number of additions and disallowances and finally determined the total income at Rs. 43,96,97,124.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the disallowances made by the Assessing Authority related to the depreciation allowance claimed by the assessee-company on its assets leased out to Andhra Pradesh State Electricity Board (APSEB). The assets leased out by the assessee-company to APSEB were Automatic Electrical Load Monitoring System. This is an energy saving device, and therefore, entitled for depreciation at 100%. The assessee-company, accordingly, claimed a depreciation allowance of Rs. 4,57,88,388.</font></p>
<p align="justify"><font color="#FF3366" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs</b></font></p>
<p align=justify ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:City w:st="on"><st1:place
w:st="on"><b><font color="#FF9966">Delhi High Court refuses to quash prosecution
though CESTAT had set aside adjudication order for lack of evidence</font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">WHAT</font> </b>happens to the fate of prosecution proceedings when the Adjudication order itself was set aside by the CESTAT and the Tribunal order reached finality? Should the prosecution proceedings also be quashed? This interesting issue has been already decided by the <st1:Street w:st="on"><st1:address w:st="on">Apex Court, but the Delhi High Court had an occasion to deal with the issue again in a recent petition under Section 482 of the CrPC.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner was alleged to have smuggled goods from <st1:country-region w:st="on"><st1:place
w:st="on">Nepal</st1:country-region>. The petitioner admitted the recovery, seizure and other incriminating facts. He stated that the seized goods were smuggled from <st1:country-region w:st="on"><st1:place
w:st="on">Nepal</st1:country-region> and he had engaged himself in the business of smuggling.</font></p>
<p align="justify"><font color="#FF3366" 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"><st1:PersonName w:st="on"><b><font color="#FF9966">Commissioner<st2:Sn
w:st="on">(A)</st2:Sn> remanding matter back on a finding which was not even alleged against appellant - Holding that order is devoid of any reasoning, Tribunal sets aside the same and remands the matter</font></b></font></p>
<p align="justify" ><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>STRANGE </b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">it may seem, but such instances do occur. The causes may vary - "over-worked", "under-staffed" or plain bored!</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In an interesting case that came before the Tribunal, the appellant was aggrieved with a remand order passed by the Commissioner(Appeals). For the Commr(A), it is shown as disposal thanks to the power of remand which he still continues to possess courtesy the Gujarat High Court decision in the case of Medico Labs <b>[</b><a
href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2004/2004-TIOL-39-HC-AHM-CX.htm">2004-TIOL-39-HC-AHM-CX</a><b>]</b>. Usually Revenue accepts such remand orders simply because they feel it is not worth going in appeal but rather <b><font color="#FF9966">dispose of the matter at the earliest after taking care of the short comings pointed out</font></b><font color="#FF9966">!</font></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, vexed with an erroneous ruling passed by the Additional Sessions Judge, the Delhi High Court rebuked the lower court judge for lacking<b> <font color="#FF9966">'elementary knowledge of criminal law and procedure'</font></b> and directed the district and sessions judge to recommend the ASJ's name for an intensive three-month refresher course at <st1:place w:st="on"><st1:PlaceName w:st="on">Delhi <st1:PlaceName w:st="on">Judicial <st1:PlaceType w:st="on">Academy. This news made headlines.</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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