TIOL-DDT 766 · the untouched capture
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<p><font size="2"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 766 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
20.12.2007 <br>
Thursday </font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Agricultural grade zinc sulphate - section 11C exemption- who pays for government's mistakes? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Agricultural grade zinc sulphate ordinarily used as micronutrient classified under chapter 28 attracted NIL rate of duty prior to 1st Jan, 2007. Due to changes made in Central Excise Tariff w.e.f . 1.1.2007 the said product attracted full rate of duty. However it has been exempted vide Notification No. 36/2007-CE dated 9th Oct., 2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But what happens for the period between 1.1.2007 and 8.10.2007? Obviously the Government had no intention of collecting this duty during this period, but the fact remains that there was no exemption during this period. Why? The Government was not careful while bringing in the 8 digit tariff. And who suffers? Invariably the poor assessee. When they give an exemption notification after realising that there was a mistake, why can't they immediately issue a section 11C Notification for the period not covered? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is not as simple as you think! The exemption notification is manufactured by TRU , but the Section 11C notification is produced in another factory/section - And rarely do they meet. Before giving a Section 11C Notification, Board should get a representation that there was a mistake on the part of the Board for which the assessee may kindly be pardoned by the benign Board. Then the Board should get a report from all the Chief Commissioners as to how many units had not paid how much duty which they were not required to pay and how many SCNs were issued, how many adjudicated, how many yet to be adjudicated, how much duty realised ....... After compiling all the data, the Board will invariably make an exemption notification for the uncovered period. Why can't all this be avoided and the great Section 11C notification issued along with the original notification or even as part of it? But that is not how the government works. A friend tells me the scheme is "food for work" - to keep the army of babudom active and alive, you need such procedures. And now the Board has called for these particulars. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But it is ungrateful and unfair for DDT to write about all this. What would this column contain if the bureaucracy had a little concern for the taxpaying citizens? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case you don't remember what a Section 11C Notification is, it is a notification granting exemption for a past period when no duty should have been actually levied. </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/2007/11c_instruction.htm" target="_blank">F No. 106/3/2007- CX -3 Dated : November 8, 2007 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Gutkha Evasion - CBEC's new initiative </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taking note of the rampant evasion prevalent in this sector, the Chairman, Central Board of Excise and Customs had recently issued instructions to the field formations for verification of the packing machines present in the factory, the number of such machines working, and for sealing of non-working machines. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a part of the strategy of the indirect tax administration to encourage voluntary tax compliance, at the same time providing a sharp and uncompromising response to non-compliance, the CBEC has introduced a new scheme under which:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ an option has been provided for payment of Rs. twelve lakh as duty per month per packing machine per line for Gutkha pouches of RSP upto Rs. 1.50. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Similarly, the duty per machine per line per month for Pan Masala pouches carrying RSP up to Rs. 1.50 has been fixed at Rs. ten lakh . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Different duty slabs have been provided for pouches priced upto Rs. 6. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In case of multiple track/line packing machine , the rate of duty would be multiplied accordingly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A manufacturer opting for this scheme has to file an application giving details of the packing machine installed in the factory to the jurisdictional Assistant/Deputy Commissioner of Central Excise. Once this option is exercised by a manufacturer, it will remain effective for the entire financial year. Any addition or removal of packing machines can be made only under the physical supervision of the officer authorised for this purpose. In case a manufacturer opts for this scheme, there will normally be no inspection or search of his premises in a routine manner. Detailed instructions have also been issued to the field formations highlighting the salient features of this scheme. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As usual, after issuing the notification and instructions, the CBEC has gone into its shell and for love, money or bandwidth, you can't get them anywhere. We will try to bring them to you later in the day. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of vehicles used in off-highway operations such as mining, industrial undertakings, irrigation, general construction etc - DGFT clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The doubt is whether the conditions at Licensing Note No.1 and 2, of Chapter 87 of ITC (HS) Classification, are applicable on import of off-highway special purpose vehicles. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per these notes, </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The
vehicle shall conform to the provisions of the Motor Vehicle Act, 1988 and
the rules made thereunder. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT clarifies that:- </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Vehicles which are designed for off-highway operations in mining, industrial undertaking, irrigation and general construction though modified and manufactured with "on or off" or "on and off" highway capabilities, but are equipped to be driven on road on their own power and come on public road, even incidentally, and for a short duration, are motor vehicles within the meaning of Section 2 (28) of the Motor Vehicle Act and are required to meet all the requirements under Central Motor Vehicle Rules, 1989 including homologation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Those vehicles which are purely off-highway construction equipment vehicles designed and adapted for use in enclosed premises, factories or mine other than road network and are not equipped to travel on public road on their own power, shall not be deemed as motor vehicle and as such fall outside the purview of Motor Vehicles Act, 1988 and Central Motor Vehicles Rules, 1989. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, if a vehicle cannot travel on public road on its own power and works exclusively in the enclosed premises is not required to meet the provisions of Motor Vehicle Act, 1988 and Central Motor Vehicles Rules, 1989. </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=46&filename=notification/dgft/2007/dgft07cir021.htm" target="_blank">DGFT POLICY CIRCULAR NO. 21 (RE-2007)/2004-09, Dated: December 14, 2007</a> </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CIC warns Central Excise Inspector against foul language </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While disposing of an appeal by D.N. Parmar , Inspector, Central Excise, Division Jhansi, in which Anil Bhatnagar , Chief Commissioner of Central Excise & Appellate Authority, was the respondent, the Central Information Commission observed, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. The Commission considers it necessary to warn the appellant that he shall not be allowed to freely pass motivated judgements about the character, conduct and the functioning of other officers in the guise of seeking information. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. It is ironical that when it is the appellant who is charged with corruption and a vigilance enquiry against him is going on, he arrogates to himself the right to call in question the integrity of all others. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii. In future, any attempt by this appellant or any other, to use foul language about others, shall not be allowed, and appropriate action shall be ordered. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv. It is also directed that no appeal-petition containing offensive language, invectives, unsubstantiated charges, etc. shall be admitted by the Commission. These should be returned by the Registry at the admission stage itself and should be admitted only after modifications are carried out. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">v. What holds true in respect of an appeal or a complaint before the CIC , must also hold true in respect of an appeal before the First Appellate Authority or an application before the CPIO . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">vi. The CPIO and the First Appellate Authority shall be absolutely at liberty to return applications which contain inappropriate language, invectives, abuses and expressions causing offence to other persons, third-parties and officers serving in public authorities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/2007-HRIOL-15-CIC.htm" target="_blank">CIC's F.No.CIC /AT/A/2007/01036 Dated, the 24th October, 2007. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax Seminar in Mumbai tomorrow - FAQ on Service Tax to be released </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ASSOCHAM sponsored Seminar on Service Tax is to be held tomorrow in Mumbai, where the FM is scheduled to release an FAQ on Service Tax prepared by the DGST . Senior officers of the Department including CBEC Chairman SK Shingal are scheduled to address the gathering. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Orissa CM wants excise exemption </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Orissa CM Naveen patnaik pleaded for increased central assistance , while addressing the National Development Council ( NDC ) meeting in New Delhi , yesterday. He demanded income tax and central excise exemption for industrial units set up in the Korput-Bolangir-Kalahandi ( KBK ) region as was being done for Special Category States. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Jurispruden</font><font color="#663399" size="5">tiol</font><font size="5"></font><font color="#006600">- Tomorrow's cases</font></b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><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></b></font></b></font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cenvat Credit not available on Welding Electrodes used for repairs and maintenance - judicial propriety requires that Bench follows law declared by Larger Bench and not to adjudge correctness or otherwise of the same : Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">SOMETIMES</font></strong> some things never show any sign of change. As they say, change is constant! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If we are not wrong, a great majority of the decisions in our library concern credit on inputs & the one figuring prominently is "Welding Electrodes". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, what is the case that is being reported. It goes thus - the assessee is engaged in the manufacture of Cement and availing the facility of Modvat credit on duty paid inputs. The dispute relates to availability of Modvat credit in respect of Welding Electrodes which are used for re-welding or furnishing and rehabilitating/repairs of parts of machinery and equipments that get dilapidated during the manufacturing process. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Central Excise - Rural area for purpose of SSI exemption eligibility - who decides? </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>Central Government for the purpose of allowing SSI exemption to units set up in rural area, vide Explanation (H) of Notification No.8 / 2003CE Dated: 1.3.2003 as amended, defined the term "rural area" to read: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">" rural area" means the area comprised in a village as defined in the land revenue records, and<font color="#FF6633"> <strong><em>excluded </em></strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i . the area under any municipal committee, municipal corporation, town area committee, cantonment board or notified area committee, or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. any area that may be notified as an urban area by the Central Government or a State Government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is an interesting case decided by CESTAT in favour of the assessee </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Relief for British Airways; ITAT holds since AO recorded no satisfaction in assessment order, initiation of penalty proceedings u/s 271 was bad in law </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee British Airways PLC , is a company incorporated in United Kingdom and is a tax resident of that country. It is mainly engaged in the airline business and has been operating in various countries including India . During the assessment years under consideration, the business so carried on in India comprised of ( i ) Operation of aircraft in international traffic for transportation of passengers, goods and mail to and from India and (ii) Rendering of engineering and ground handling services to aircrafts operated by other airlines. The profit derived by the assessee company from the business of operation of aircrafts in international traffic was undisputedly not taxable in India in view of Article 8 read with Article 7(9) of the Double Taxation Avoidance Agreement between India and United Kingdom (in short "the DTAA ") which provides that such profit shall not be taxed in the source country i.e. India and the same was thus taxable only in the residence country i.e. United Kingdom in terms of Article 7(1) of DTAA . <strong><font color="#FF6633">However, the issue of contention is with regard to the profit derived from the business of provision of engineering and ground handling services to other airlines </font></strong><font color="#FF6633">,</font> which according to the AO, was not covered within the ambit of Article 8 of DTAA and the appellant company contended that the profit so derived by it from the business of provision of engineering and ground handling services to other airlines was not taxable in India as the same was also exempt from tax under Article 8 of DTAA . </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tomorrow is a holiday - In fact Government of India is on a long vacation - we will be back with more DDT on Monday </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See
our columns on Monday for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until then 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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