TIOL-DDT 747 · 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 747 </font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>23.11.2007 <br>
Friday</b> </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Cigarette Manual, tobacco manual - where are they CBEC?</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A recent missive from the CBEC to the field officers starts with,</font></p>
<blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Attention is invited to instructions contained in Chapter - V, section 'C', paragraph 83 of the <b>Cigarette Manual</b>. As per these instructions, the Divisional Assistant/Deputy Commissioner interalia - 'must inspect each cigarette factory in his charge not less than once in each quarter on a working day. Through <b>interrogation</b> of officers and a comprehensive scrutiny of <b>survey books</b> and other records, he must satisfy himself that the relevant provisions of the Act and <b>Tobacco Excise Manual</b>, <b>Supplementary instructions</b> and the Board's and Collector's standing orders are being satisfactorily followed and each officer is performing the duties allotted to him in the preceding chapters of the manual'.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">Cigarette Manual</font></b> - Has anyone seen it lately? Is it still valid?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">Interrogation.</font></b> - And you thought only smugglers and offenders were interrogated!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">Survey books</font>-</b>Does anyone know what this is and does anyone in the department maintain it?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">Tobacco Excise Manual</font>-</b>Excise duty on tobacco was abolished in 1979 and the Board abolished this manual in 1989.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">Supplementary instructions-</font> </b>Who is issuing these instructions now?</font></p>
</blockquote>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now in 2007, when half the departmental officers have no idea about any of the above jargon, Board has realised that the archaic cigarette manual has not prescribed a proforma for interrogation report and they have done it now!</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now is the cigarette manual valid? </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:place u1:st="on"><st1:place
w:st="on"><strong><font color="#663399">Para 2.2 of the CENTRAL EXCISE MANUAL OF CBEC'S INSTRUCTIONS has a reference to it.</font></strong></font></p>
<p align="justify" class="MsoNormal"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">2.2 In respect of cigarettes, each invoice shall also be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the cigarettes are removed from the factory. If the factory is in operationfor all 24 hours, the officers are rotated/posted for 24 hours. They check the operations of the assessee as per instructions, mutatis mutandis, contained in the <b>Commodity Manual for Cigarettes.</b></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, this MANUAL OF CBEC'S INSTRUCTIONS was first published in 2001 with a promise that they will be updated every September. The first update came in 2005 after four years. The second update is yet to come though two Septembers have gone by - of course the standard is four!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why can't the Board incorporate all the instructions in the new manual or issue a new manual instead of trying to resurrect corpses, whose bones have withered away.</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/cvc_cigarette.htm" target="_blank">CBEC F.No. 206/03/07-CX-6 Dated: November 07, 2007</a></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Import of 0.177 bore air guns and air pistols - policy slightly relaxed</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As of now, import of 0.177 bore air guns and air pistols will be free for shooters registered with Rifle Clubs or District/State/ National Rifles Association. Now free import of 0.177 bore air guns and air pistols will also be allowed to National Rifle Association of India (NRAI) for supplying the same to the eligible State Rifle Association / Clubs and to the eligible shooters. NRAI shall be required to keep appropriate account of the imported weapons.</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=45&filename=notification/dgft/2007/dgft07not052.htm" target="_blank">DGFT Notification No 52 (RE-2007)/2004-09, Dated: November 21, 2007 </a></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Import - compliance of mandatory Indian Quality Standards - list reduced</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of all the products as per Appendix III to Schedule I of the ITC (HS) Classifications of Export and Import Items, shall be subject to compliance of the mandatory Indian Quality Standards, which are also applicable to domestic goods. For compliance of this requirement, all manufactures/ exporters of these products to <st1:country-region
w:st="on"><st1:place w:st="on"><st1:country-region u1:st="on"><st1:place u1:st="on">India</st1:country-region></st1:country-region>, shall be required to register themselves with Bureau of Indian Standards(<st1:stockticker
w:st="on"><st1:stockticker u1:st="on">BIS). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Alternatively certification of the products under mandatory quality Indian standards will be permitted under the <st1:stockticker
w:st="on"><st1:stockticker u1:st="on">BIS Product Certification Scheme for Indian importers provided all the following conditions are met:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a)
Items are required for captive consumption,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b)
Items are required on continuous basis and</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c)
Items are procured from pre-identified sources.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Indian Importers would have to apply to <st1:stockticker
w:st="on"><st1:stockticker u1:st="on">BIS for seeking a licence for each of the notified product he intends to import. <st1:stockticker w:st="on"><st1:stockticker u1:st="on">BIS would record the application after satisfying itself that all the above conditions are met and that the applicant importer has installed the test facilities. Based on the recording of application, the Customs can clear the consignment, which will be tested by the <st1:stockticker w:st="on"><st1:stockticker u1:st="on">BIS and a licence issued if the product conforms to the relevant Indian standard. The importer would use the material only after grant of licence for the first lot so imported and for the subsequent imports, after testing the product for conformance to Indian Standard.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The conditions above shall not be applicable on imports of gifts where the recipient of a gift is a charitable, religious or an educational institution registered under a law relating to the registration of societies or trusts or otherwise approved by the Central or a State Government and the gift sought to be imported has been exempted from payment of customs duty by the Ministry of Finance.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this Appendix III is amended. The appendix had 109 items while the amended Appendix has 68 for mandatory <st1:stockticker
w:st="on"><st1:stockticker u1:st="on">BIS registration.</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=45&filename=notification/dgft/2007/dgft07not053.htm" target="_blank">DGFT Notification No 53 (RE-2007)/2004-09, Dated: <st1:date ls="trans" Month="11" Day="21"
Year="2007" w:st="on">November 21, 2007</a></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>EOUs - deemed exports for NFE</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 6.9 (h) of the Foreign Trade Policy, Supplies of <b><font color="#FF9966">accessories including</font></b> tags, labels, printed bags, stickers, belts, buttons or hangers to DTA Unit for<br>
export, effected from EOU / EHTP / STP / BTP units to DTA will be counted for fulfillment of positive NFE:</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is amended to change the <b><u><font color="#FF9966">accessories including</font></u> </b>to <b><u><font color="#FF9966">items like</font></u><font color="#FF9966">. </font></b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So now the tags need not be accessories.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2007/dgft07not054.htm" target="_blank">DGFT Notification No 54 (RE-2007)/2004-09, Dated: <st1:date ls="trans" Month="11" Day="21"
Year="2007" w:st="on">November 21, 2007</a></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>LPG supplied to domestic consumers under <st1:stockticker u1:st="on"><st1:stockticker
w:st="on">PDS - counted for fulfilment of positive NFE</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Supply of LPG produced in an EOU refinery to Public Sector domestic oil companies for being supplied to household domestic consumers at subsidized prices under the Public Distribution System (<st1:stockticker u1:st="on"><st1:stockticker w:st="on">PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by the Ministry of Petroleum and Natural Gas vide notification No. E-20029/18/2001-PP dated 28.01.2003 (<st1:stockticker u1:st="on"><st1:stockticker w:st="on">PDS Scheme) will also be counted for fulfilment of positive NFE subject to the following conditions:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Only supply of such quantity of LPG would be eligible for which Ministry of Petroleum and Natural Gas declines permission for export and requires the LPG to be cleared in DTA; and </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) The Ministry of Finance by a notification has permitted duty free imports of LPG for supply under the aforesaid <st1:stockticker u1:st="on"><st1:stockticker
w:st="on">PDS Scheme</font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2007/dgft07not055.htm" target="_blank">DGFT Notification No 55 (RE-2007)/2004-09, Dated: <st1:date ls="trans" Month="11" Day="21"
Year="2007" w:st="on">November 21, 2007</a></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Accounting Standards upheld by Supreme Court - TIOL will bring the marathon judgement on Monday.</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether Accounting Standard 22 (AS 22) entitled accounting for taxes on income insofar as it relates to deferred taxation is inconsistent with and ultra vires the provisions of the Companies Act, 1956 (the Companies Act), the Income-tax Act, 1961 (I.T. Act) and the Constitution of India?</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was a question answered by the Supreme Court, a couple of days ago. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Supreme Court said,</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:metricconverter u1:st="on" ProductID="9. In"><font color="#663399">In the backdrop of globalization and liberalization the world has become an economic village. Today, the capital market all over the world knows no barriers. Fiscal distances and barriers have been removed by developments in transport, communication and e-commerce. In this backdrop, Convergence of Accounting Standards is aimed at removing barriers in the flow of financial information and capital. Based on the above developments in the global economy and the Indian economy, the conceptual differences and consequent deviations in the National Accounting Standards and IFRS have got to be eliminated. For example, exchange difference in respect of unpaid liability for acquisition of an imported asset has been allowed in the past to be adjusted with the carrying costs of the fixed assets instead of recognizing the exchange difference in the profit and loss account.</font></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The judgement running into 220 pages is with TIOL and we will be proud and glad to present it to you on Monday. While you have a nice weekend, our boys will be typing the 220 pages for you.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Reduce excise duty to 12% - FICCI wish list</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Federation of Indian Chambers of Commerce and Industry (FICCI) in a wish list presented to <st1:PersonName w:st="on"><st1:PersonName u1:st="on">Revenue Secretary <st2:GivenName w:st="on"><st2:GivenName u1:st="on">PV</st2:GivenName></st2:GivenName> <st2:Sn w:st="on"><st2:Sn u1:st="on">Bhide</st2:Sn></st2:Sn> has sought</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. slashing of corporate tax to 25 percent from 30 percent</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Reduction of excise duty to 12%</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Abolition of dividend distribution tax and minimum alternative tax</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Exemption from service tax on oil exploration and production activities.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does the FICCI really hope the government to concede to these demands? Instead of a 12% excise duty, the trade may get a 16% Service Tax!</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner - Monday's 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"><strong><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif">Failure to deduct <st1:stockticker u1:st="on"><st1:stockticker
w:st="on">TDS - No <i>mens rea</i> required for penalty - what is reasonable cause? - Payment of tax ultimately does not absolve the deductor : ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court in the case of Gujarat Travancore Agencies, had held that "unless there is something in the language of the statute indicating the need to establish, the element of mens rea it is generally sufficient to prove that a default in complying with the statute has accrued; in our opinion there is nothing in section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision".</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><O:P></O:P>The payment of taxes by the payees will not absolve the assessee from the responsibility of deducting tax at source. Acceptance of this argument would make the provisions relating to collection of taxes by way of <st1:stockticker w:st="on"><st1:stockticker u1:st="on"><ST1:STOCKTICKER u2:st="on">TDS redundant.</font></p>
<p align="justify" ><font color="#FF3366" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>FERA</b> </font></p>
<p align="justify"><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>FERA violations - ED imposes penalty of Rs 64 Cr - Tribunal orders pre-deposit of 25% - Tribunal order is perfectly in order - SCN issued at Chennai, first order passed at Mumbai, appellate order passed in Delhi, Madras HC has jurisdiction : HC</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Cause of action" consists of a bundle of facts, which give cause to enforce the legal inquiry for redress in a court of law. It must include some act done by the parties within the appropriate court of jurisdiction. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For waiving pre deposit two significant expressions in the statute have to be considered - "undue hardship to such person" and "safeguard the interests of revenue"</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"><b><font color="#FF9966">Clandestinely removed goods were exempted! Tribunal sets aside Rs 8.91 Crores - <i>the adjudicating authority had decided to impose penalties till the ink in his pen drained out! </i></font></b></font></p>
<p align="justify"><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>WE</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> </b>reported this case on the 18<sup>th</sup> June of this year when the Stay application had come up for hearing before the Tribunal, West Zonal Bench <b>[</b><a
href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-800-CESTAT-MUM.htm">2007-TIOL-800-CESTAT-MUM</a><b>]</b>. Suffice to say that the Tribunal had while granting an unconditional Stay held thus - "<i>Even if the fact remains that the goods have been removed clandestinely, the question of confirmation of demand will not arise as the goods are entitled for full exemption</i>". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter came up for final hearing recently and the result is obvious. The order of the Commissioner, Central Excise, Nashik was set aside and all the appeals allowed. Nothing exceptional about these appeals except that they were against an order confirming duty liability of Rs.8.91 crores, an equivalent penalty on the manufacturer & liberal imposition of penalties on the various company officials right from the authorized signatories to the Despatch & Stores In-charge, the Marketing Manager, Marketing Co-ordinator & last but not the least the Executive Director & the Director of the company.<font color="#FF9966"> <b><i>It was as if the adjudicating authority had decided to impose penalties of amounts till the ink in his pen drained out! </i></b></font></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns Monday for the judgments</u></b></font></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT</font></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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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