TIOL-DDT 748 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 748</font><br>
26.11.2007<br>
Monday</b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Self
sealing of export containers - Board makes it mandatory - excise
shackles are preferable to Customs ones</b>
</font></p>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per CBEC circular no. 736/52/2003-CX dated 11.08.2003, the facility of self-sealing
was extended to all categories of manufacturer-exporters. In spite of this facility
being extended to all categories of manufacturer-exporters, it is found that
the manufacturers are reluctant to avail the facility. Why?
</p>
</font></div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">DDT</font></strong> spoke to an exporter. He said it is simple costing. Each
seal by the Central Excise officers involves costs like providing a vehicle for
the whole day and other incidental expenditure which may come to about Rs. 3000/-
per consignment. The exporters who have tried self sealing in protest against
the arrogant Central Excise officers have found that they are pious priests compared
to the Customs officers in the ports. The self sealed containers are subject
to checks in the Customs Ports, where they are practically ravaged, delayed and
cots are multiples of what it would cost to get them sealed by excise officers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But CBEC is again playing spoilsport. They find that with
too many exports, the <st2:place w:st="on"><st2:PlaceName
w:st="on">Central</st2:PlaceName> <st2:PlaceName w:st="on">Excise</st2:PlaceName> <st2:PlaceType w:st="on">Range</st2:PlaceType></st2:place> staff
is always away on export work and they don't have enough time to do the Range
work. What is the Range work? Sending reports to the Board on Revenue realised
yesterday, likely to be realised tomorrow, Cenvat credit taken on electronic
broom sticks during 1994 - 95, percentage of increase in Cenvat credit and
consequent fall in revenue with reasons thereof. And things like that.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has realised that even those manufacturer-exporters who have the option
of self-sealing make request for Central Excise sealing since the percentage
of examination at the port of export of such containers is substantially reduced.
However Board notes that as per its Circular No. 6/2002-Cus dated 23.01.2002,
where exports are against free shipping bills, no opening/examination of containers
is to be done at the port of export, except where there is intelligence/information
about any concealment, mis-declaration, etc
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now Board has decided that henceforth in case of exports under free Shipping
Bill, i.e., Shipping Bills wherein no export benefits are being sought, the manufacturer-exporter
shall mandatorily resort to self-sealing of containers. The central excise officers
shall not attend to the request of stuffing and sealing of export containers
in their presence, in case the exports are under free shipping bills. Further,
with a view to ensure safety and security of the export consignment, all such
containers should be sealed with tamper proof one time bottle seals as stipulated
vide Board's Circular No. 01/2006-Cus. dated 02.01.2006.
</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/excircular860.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC CIRCULAR NO<b>. </b>860/18/2007-Cx., Dated: November
22, 2007</font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Reversal of Cenvat Credit amounts to not taking credit. A Gracious Board bows
to <st2:Street w:st="on"><st2:address
w:st="on">Apex Court</st2:address></st2:Street>.</b>
</font></p>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Long years ago in the famous <b><i><font color="#FF0000">CHANDRAPUR MAGNETS</font></i></b> case, the Supreme
Court had held that the condition of not availing Modvat credit would be satisfied
by reversing the credit availed. But all these years, a reluctant Revenue refused
to accept the proposition and there are hundreds of cases routinely coming up
in Tribunals and courts even a decade after the Apex Courts decision.
</p>
</font></div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per notification No. 30/2004 dated 09.07.2004, several
textile articles are exempted from the excise duty subject to the condition
that no Cenvat credit is taken. CBEC vide circular no 845/2007 dt 01.02.2007
clarified that non availment of credit is a pre condition and if credit is
availed, the manufacturer would be ineligible for the exemption. <font color="#FF0000">"Reversal
of credit on a later date would not suffice to make them, eligible for this
exemption."</font> asserted the Board.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While discussing this Circular, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4910" target="_blank">DDT
544</a> asked “What is the difference between taking credit proportionately
for the consumables used in the dutiable goods as directed by the Board and
taking full credit but reversing the proportionate credit of the consumables
used in the exempted goods as is being done by certain manufacturers?”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently,
we reported another Supreme Court order in the case of <i>Bombay Dyeing</i> -
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2007/2007-TIOL-141-SC-CX.htm" target="_blank">2007-
TIOL-141-SC-CX</a> , wherein the Apex Court held that the reversal of credit
amounts to not taking credit at all, which had been the judicial view all through.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
a refreshingly welcome step, instead of retrospectively amending the law
to undo the effect of the <st2:Street
w:st="on"><st2:address w:st="on">Apex Court</st2:address></st2:Street> judgement,
the good Board has decided to accept the Supreme Court verdict and has amended
the Circular no 845 accordingly to allow the exemption, if the credit is reversed
before utilisation. Now what will happen if the credit is reversed after utilisation?
Another round of litigation culminating in the Supreme Court will hopefully
solve the problem one day.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, as this column has been repeatedly mentioning, Board is terribly
shy of making public its good deeds. This is an amendment to a circular and should
have been properly issued as a circular. But this is contained in a Private letter
from the Board to the Chief Commissioners.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Or is it that the board wants this information to be known only to the departmental
officers and not to the industry, for whose benefit this clarification has been
given.
</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/clarification_267.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F.No.267/01/2006-CX8 dated 8<sup>th</sup> Nov
2007.</font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CBEC fixes tariff value for imported Poppy Seeds</b>
</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has fixed 3927 US Dollars as the tariff value for imported Poppy Seeds.
</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_114.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION No. 114/2007-CUSTOMS (N.T.), Dated: 23<sup>rd </sup>November,
2007</font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DDT's cartoon</b>
</font></p>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today we bring you yet another cartoon from my friend <st2:PersonName w:st="on"><st1:title w:st="on">Dr. <st1:Sn w:st="on">Gopalakrishnan</st2:PersonName>,
the retired IAS officer who had perfected the art of laughing at oneself, in
spite of having been a stiff bureaucrat! Gopal writes on everything under the
sun, is an accomplished cartoonist, is a good painter - he learnt painting in
the company of twenty odd girls and in spite of the distraction, learnt to paint - some
of his paintings looked as good as Ravi varma's!</font>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I hope I will be soon successful in persuading Gopal to write for us, though,
he doesn't like editorial interference.</font></p>
</div>
<div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> <img border=0 width=300 height=428
src="http://taxindiaonline.com/RC2/image/stories/ddt_cartoon_748.gif" alt=image0.jpg v:shapes="Picture_x0020_0"> </b>
</p>
</font></div>
<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"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><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> <font color="#FF0000">Income Tax</font></b>
</font></p>
<p align="justify"><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sec 80HHC - 10% deduction from Indirect Costs incurred for earning exports
income and Other Income such as rent and exports incentive is allowable; Principle
of Attribution not omitted from Sec 80HHC(3)(b) : Supreme Court</strong>
</font></p>
<p align="justify"><font color="#FF9966"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVT</strong></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>had introduced Sec 80HHC in the Income Tax Act as a beneficial
Section for exports. But, for strange reasons, it turned out to be one of the
most contentious Sections over the years. The <st2:Street w:st="on"><st2:address w:st="on">Apex
Court</st2:address></st2:Street> has given many a judgements, bringing clarity
to the interpretation of various clauses of this Section. However, here comes
yet another new dimension where<strong> <font color="#FF9966">the Supreme Court has held that under
Sec 80HHC(b) one has to </font></strong><font color="#FF9966"><b>balance the principle of attribution with
the concept of allocation. The concept of allocation is meant to reduce the incentive.
However, when allocation has to be balanced with the principle of attribution,
the object is to reduce the incentive and not to eliminate it.</b>
</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF0000">Customs</font></b></font></p>
<p align="justify"><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Settlement Commission - Even confiscation involves assessment
- Fraud cases can also be covered under settlement - object of settlement
includes recovery of locked up Revenue early : Madras HC</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">What is a case?</font></b> A contention has been raised on behalf of the Department
that under Section 127-A, the terminology case has been defined to mean any proceeding
under this Act or any other Act for the levy, assessment or collection of customs
duty or any proceeding by way of appeal or revision in connection with such levy,
assessment or collection, which may be pending before the proper officer or Central
Government, can only be regarded as a case coming within the purview of Section
127-B since the present case is one of prima facie smuggling, there is no question
of levy, assessment and collection of customs duty and as such the dispute will
not come within the purview of Section 127-B, which contention was found in favour
of the Department by the learned single Judge.
</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 color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Depot price cannot be taken when factory gate price is available; No cum duty
benefit when cash recovered above invoice price - CESTAT</b>
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
tribunal found this plea to be untenable in view of the Supreme Court decision
in the case of <st2:PersonName
w:st="on"><st1:GivenName w:st="on">Amrit <st1:Sn w:st="on">Agro </st2:PersonName>which
clearly says that the cash recovered over and above the invoice price which
was never intended to represent duty will be addable. The adjudicating authority
should determine the quantum of duty at the applicable rate prevalent during
the relevant time on this account and the appellants should pay the amount
so calculated.</font>
<div align="justify">
<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>
</div>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT</font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"> Have a nice day.</font></p>
<p><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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