TIOL-DDT 752 · 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 752</font><br>
30.11.2007<br>
Friday</b> </font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Export SOPS – FM relents</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“The rupee appreciated 9.7% against the <st1:place
w:st="on"><st1:country-region w:st="on">US Dollar</st1:country-region> between <st1:date ls="trans" Month="4" Day="3" Year="2007" w:st="on">April 3, 2007 and <st1:date ls="trans" Month="11" Day="20" Year="2007"
w:st="on">November 20, 2007. On a year on year basis, between October 2006 and October 2007, the appreciation of the rupee against US Dollar has been 15.1%.”, the Finance Minister told the Parliament, “In many ways, the appreciation of the rupee reflects the strength of our economy going forward. The rupee appreciation has a positive side to it in terms of lower production costs in sectors involving imported raw material and intermediates, lower oil import bill and lower cost of external debt servicing. Nevertheless, the sharp appreciation of the rupee over the last several months has put pressure on the export sectors, particularly those with low import intensity such as leather, textiles, handicrafts and marine products. Government is sensitive to the pressures on these sectors, and is conscious of the need to offer support to export sectors to prevent job losses and to give time to these sectors to make a smooth adjustment to the changing economic scenario.”</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So he has announced packages of support in Customs and Service Tax.</font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs duty reduced for textile sector</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Polyester filament yarns and polyester staple fibres from 7.5% to 5%; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Other man made filament yarns namely, acrylic, viscose etc (excluding nylon filament yarns) from 10% to 5%;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Other man made staples fibres namely, acrylic, viscose etc (excluding nylon staple fibres) from 10% to 5%;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Spun yarns of man made staple fibres and filament yarns (excluding nylon fibres) from 10% to 5%;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Polyester chips from 7.5% to 5%; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Fibre intermediates viz. Dimethyl terephthalate (DMT), Pure terephthalic acid (<st1:stockticker w:st="on">PTA), and Mono ethylene glycol (<st2:GivenName w:st="on"><st1:stockticker w:st="on">MEG</st2:GivenName>) from 7.5% to 5%; and</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Para-xylene from 2% to zero.</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_115.htm" target="_blank">Notification No. 115/2007-Customs dated 29<sup>th</sup> November , 2007</a></u></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service Tax exemption for exports thru refund route - <em>cleaning services</em> and <em>storage </em>added to the list</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Already by Notification Nos 40 and 41/2007 – Service Tax, seven services used for exports are exempted and the exemption operates by a complicated refund scheme.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now two more services are added to the list:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <font color="#FF6666">Specialized cleaning services namely disinfecting, exterminating, sterilizing or fumigating of containers used for export of said goods provided to an exporter.</font> There are two conditions- the exporter should furnish a copy of the agreement with the buyer requiring such specialized cleaning and the service provider is accredited to provide such specialized cleaning services.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <font color="#FF6666">Services provided for storage and warehousing of said goods</font>. There are two conditions here too- goods are stored in a warehouse approved by the competent authority; and the storage or warehouse is exclusively used for the purpose of storage or warehousing of export goods.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The seven Services exempted as of now are</font></p>
<p align="justify" class=MsoListParagraphCxSpFirst style='text-align:justify;'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Port Services provided for export.[zn])</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Other port Services provide for export. [zzl]</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Services of transport of goods by road from ICD to port of export provided by Goods Transport Agency.[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. [zzzp]) </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. General Insurance Services provided to an exporter in relation to insurance of export goods. [d])</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Technical testing and Analysis Agency Services in relation to technical testing and analysis of export goods. [zzh])</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Inspection and Certification Agency Services in relation to inspection and certification of export goods. [zzi]</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_042.htm" target="_blank">Notification No.42/2007-Service Tax Dated <ST1:DATE u1:st="on" Year="2007" Day="27" Month="11" ls="trans"><st1:date
ls="trans" Month="11" Day="29" Year="2007" w:st="on">November 29, 2007</a></u></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Business exhibition; textiles; same exemption; same route; another notification</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This exemption is subject to the conditions that</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">prior to availment of exemption under this notification, the manufacturer has exported goods falling under Chapters 57, 61, 62 and 63 of the Central Excise Tariff Act, 1985 and is registered as exporter of said goods with any of the following organisations, namely, Apparel Export Promotion Council; Carpet Export Promotion Council; The Cotton Textiles Export Promotion Council; Handloom Export Promotion Council; The Indian Silk Export Promotion Council; Powerloom Development & Export Promotion Council; Synthetic & Rayon Textiles Export Promotion Council; Wool & Woollens Export Promotion Council; Wool Industry Export Promotion Council; Jute Manufacturers Development Council.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The other conditions are the same as in Notification No. 41/2007.</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_043.htm" target="_blank">Notification No.43/2007-Service Tax Dated <ST1:DATE u1:st="on" Year="2007" Day="27" Month="11" ls="trans"><st1:date
ls="trans" Month="11" Day="29" Year="2007" w:st="on">November 29, 2007</a></u></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>But a few questions!</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Why this piecemeal exemption?</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Why all services used for exports can't be exempted?</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.Why is it that the most obvious service used for exports – Custom House Agents service not exempted?</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, the FM told Parliament that notifications are being issued and immediately after the FM's speech, the PIB issued a PRESS RELEASE and announced that <font color="#FF6666">Notification No.115/2007-Customs, notifications No. 42/2007-Service Tax and 43/2007-Service Tax all dated 29<sup>th</sup> November, 2007 are available on the CBEC website</font> <a
href="http://www.cbec.gov.in/">http://www.cbec.gov.in</a> . </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I write this at 3<st1:time Hour="2" Minute="00" w:st="on"> am today and I have just checked the CBEC website and the notifications are nowhere in site (pun intended)! And strangely the PIB site has those notifications. Obviously PIB knows the value of news, which is not the case with CBEC.</font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise officers accused of bribing <st1:stockticker w:st="on">CBI – Supreme Court directs filing of affidavits </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st2:GivenName w:st="on">P.</st2:GivenName> <st2:Sn w:st="on">Subramani</st2:Sn>, Commissioner and D Gautam, inspector of Central Excise were accused of offering a bribe of <st2:GivenName w:st="on">Rs.</st2:GivenName> One lakh to <st1:stockticker w:st="on">CBI Inspector Yadav who was investigating a case against Subramani. The Special Judge (for <st1:stockticker w:st="on">CBI cases) held that prima facie, the case had been proved, but he discharged the accused as the <st1:stockticker
w:st="on">CBI had prosecuted the accused without sanction. The <st1:stockticker w:st="on">CBI took the matter to the Bombay High Court at <st1:place w:st="on">Goa and the High Court agreed with the Special Judge. The perseverant <st1:stockticker w:st="on">CBI took the matter in appeal to the Supreme Court. The <st1:Street w:st="on"><st1:address
w:st="on">Apex Court has asked the Central Excise officers to file their counter affidavit and the case is posted for 11.01.2008.</font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Jurispruden<font color="#663399" size="4">tiol</font></b> <b>– Monday's cases<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></b></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 color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs - Refund due to wrong classification - appeal against CESTAT order lies with SC- Ground that refund was claimed without challenging assessment raised for first time before HC - not maintainable : Karnataka HC</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF9966">THE</font> </b>assessee filed a refund claim on the ground that the goods were assessed under the wrong sub heading. As usual, the Deputy Commissioner rejected the claim. On appeal, the Commissioner (Appeals) allowed the claim. Aggrieved revenue took the matter in appeal to the Tribunal for the huge amount of Rs. 18,633/-! The Tribunal dismissed the Revenue appeal. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue has enough money to waste and they took the matter in appeal to the High Court. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent's counsel took a preliminary objection that the appeal was not maintainable as it involved a question of the rate of duty. </font></p>
<p align="justify" ><font color="#FF3366" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income Tax</b></font></p>
<p align="justify" ><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Mobilisation fee paid by ONGC is not reimbursement - Income Tax payable on 10% of the total amount as per Section 44BB - High Court</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF9966">THE</font> </strong>appellant, a non-resident company entered into agreement with the ONGC, India, for drilling contract between the ONGC and Sedco Forex, which is referred to in the contract as Operator and the assessee referred to in the contract as Contractor. The assessee was assessed by the Assessing Officer for the Assessment Year 1986-87 on amount of Rs. 99,04,000/- and for the Assessment Year 1987-88 on Rs. 64,64,530/- under Section 44BB of the Income Tax Act, which included the mobilization charges in the relevant assessment years.</font></p>
<p align="justify" ><font color="#FF3366" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service Tax </b></font></p>
<p align="justify" ><font color="#FF9966" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Stevedoring licence issued by Port cannot be treated as authorization by port under Section 42 of Major Port Trust Act – services of loading and unloading of cargo provided by stevedores are not port services : CESTAT</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“port service" means any service rendered by a port or other port or any person authorised by such port or other port, in any manner, in relation to a vessel or goods<br>
<br>
What is this authoirsation by Port? Well, nobody really knows. But to err on revenue side, several stevedores who undertake the loading and unloading of the export/import cargo in the ports were slapped with demand notices. Even the premier investigating agency DGCEI made a good recovery of revenue under port services from the stevedores. The ground taken is that the license issued by the port for stevedores is considered as authorization by port. But the demands are all set to fall like pack of cards with the CESTAT consistently viewing that the licence given by the port cannot be treated as “authorization” to classify the service as port service.</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns Monday for the judgements</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 color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"></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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