TIOL-DDT 792 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 792 </font><br>
29.01.2008 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise invoice – names of proprietors or HUF to be mentioned in the invoice – excise registration is for a person (legal or juristic ) and not a firm or HUF – Central Excise Rules amended </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
a landmark judgement, President Abichandani (as he then was) of the CESTAT
observed in the case of <strong>M/s VASHIST ISPAT PRODUCT</strong> <strong>- </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-992-CESTAT-DEL.htm" target="_blank"><strong>2007-TIOL-992-
CESTAT-DEL </strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Registration can be done only of such prescribed person, and not of a sole-proprietary concern, which by itself is not a person. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <strong>The practice of giving registration in the name of a proprietary concern and not the person, who is the proprietor, is contrary to the provisions of the said Act and is capable of perpetuating frauds due to the real name of the person concerned, being camouflaged by the assumed proprietary name. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. None of the provisions of the Act or the Rules warrants recognition of mere sole proprietary name as manufacturer or assessee, who would be liable to pay the duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Only a person living or juristic can be registered for the purposes of the Act and will be liable to assessment and payment of duty irrespective of any name/names that he may adopt for doing the proprietary business. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. All the excise registrations and assessments under the Act and the Rules are required to be done in the name(s) of the persons concerned even when they run their proprietary business in different names. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. <strong>In fact, the practice of registering manufactures in the name of proprietary concerns appears to have been unwittingly recognized by a seemingly innocuous but a most damaging instruction in note 5 which has crept in the prescribed Form A1 , which was substituted w.e.f . 1.10.2002. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. The said form is prescribed for application for central excise registration, in the context of Rule 9 of the Central Excise Rules, 2002. Surprisingly, though Section 6 of the Act clearly contemplated registration of a person who is engaged in the production or manufacture of excisable goods, the newly introduced instruction no. 5 of the proforma application A1 requires that, <strong>name of the registrant should be the name and style in which the registrant is likely to carry out the business. </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">8. <strong>This shady instruction 5 was wholly uncalled for and is contrary to the scheme of the Act and the Rules, and is capable of perpetrating mischief and fraud by shielding the names of the real persons who are engaged in the manufacture of excisable goods and are required to be registered under Section 6 </strong> of the Act read with Rule 9 of the Central Excise Rules, 2002, which refer to the registration of the person who produces or manufactures the excisable goods. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. There was absolutely no scope for registering the name of any "non-person"; and the details of the properties, persons, directors as the case may be, were also required to be given. In the same way, even in the still earlier proforma in Form R1 under the Central Excise Rules of 1944, the application for registration was required to be made by the person in whose name the registration certificate was required to be issued. The application was to be made in the name of the person (living or juristic) applying and not in any other name. Thus, there never was any possibility of giving excise registration in the names of sole-proprietary concerns. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. <strong>In view of the substantive provisions of Section 6 of the said Act and Rule 9 of the said Rules, instruction No. 5 in the proforma application Form A1 is ultra vires the scope of the said statutory provisions. All excise registrations and assessments are required to be done in the name(s) of the persons concerned even when they run proprietary business in different names. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. <strong>It will be for the Parliament, the rule making authority, the Board and the excise officials to recognize the potential mischief and large scale abuse that is caused by allowing the excise registrations and doing assessments in the names of proprietary concerns and not in the names of the real persons who are the manufacturers and assessees, and take appropriate remedial measures. </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Registrar was directed to forward a copy of this judgment to the Government of India, Ministry of finance, North Block, New Delhi . </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>We carried this order of the CESTAT on July 22, 2007 . </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Again Justice Abichandani speaking for the Larger Bench over which he presided, observed in the case of <strong>GOPAL INDUSTRIES LTD - </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-932-CESTAT-DEL-LB.htm" target="_blank">2007-TIOL-932- CESTAT - DEL -LB </a></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The issue involved in this case is whether outgoing partners are liable to pay excise duty assessed against a registered partnership firm, which was dissolved. Having regard to the importance and wide repercussions of the question involved the appeal has been placed for disposal before this Larger Bench. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. There is no dispute about the fact that there is no reference express or implied in the Central Excise Act or the Rules for assessment of a partnership firm, unlike in the provisions of the Income Tax Act in which Section 2(31) provides an inclusive definition of "person", which includes a "firm". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The assessment of partnership firm under the Income Tax Act is separate from the assessment of individual partners as regards their own income. Section 189(1) of the Income Tax Act provides that when a firm is dissolved, the assessing officer shall make an assessment of total income of the firm as if no dissolution had taken place. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <strong>There is no such provision under the Excise Act and the Rules treating a partnership firm as a separate assessable entity. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Excise registration is done of any "prescribed person" as provided by Section 6 of the Act, and the word "assessee" in Rule 2(d) of the Central Excise Rules means any person who is liable for payment of duty assessed or a producer or a manufacturer of excisable goods or a registered person of a private warehouse including his authorized agent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Since no provision has been made in the Excise Act or Rules made thereunder, treating a partnership firm as a distinct assessable entity, every partner would be liable jointly with all other partners and also severally, for all acts of the firm, done while he is a partner, as provided by Section 25 of the Indian Partnership Act, 1932. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">We carried this judgement also in July 2007. </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously, Government realised the mistake but wants to go very slow and started with an amendment to the Central Excise Rules – a proviso is added to Rule 11(2) as, </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“Provided that in case of a proprietary concern or a business owned by Hindu Undivided Family, the name of the proprietor or <strong>Hindu Undivided Family </strong>, as the case may be, shall also be mentioned in the invoice.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now they have brought in a new concept – the HUF . The CESTAT had pointed out the blunder in the Instruction No. 5 in the Application for registration and the Board had proposed a change in that too – maybe that too is the pipeline. We will bring it to you as soon as it is made public by the private Board! </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=30&filename=notification/excise/2008/exnt08_07.htm" target="_blank">NOTIFICATION.NO.7 /2008-Central Excise( N.T. ), Dated:January 25, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Her right arm is broken – the child is headless – DRI alerts </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">She is standing beneath a mango grove and has a child on her left arm. Her right front arm is broken. The child is headless and its left arm is broken. She is wearing a Karand Mukuta and is having elaborate ornaments, namely: Kundala Keyura , necklace, kati bandha , mekhala , bangels and payal and foot. Another child is seated on a lion. There are other humans on both sides. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nothing grotesque. It's only an antique sculpture which had been stolen from Centrally Protected Monument Sidheshwar Temple, Nemawar , Distt , Dewas ( M.P. ). The central image along with the child has been chipped off and stolen. The foot portion and the surrounding frame as well as the mango grove portion remains as left over. The sculpture made of Bluish Black Stone belongs to 11th-12th Century A.D. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DRI wants the field formations to be alerted to thwart any attempt to export the above mentioned antique <strong>illegally </strong> (can it be exported legally?). Results achieved, if any, may please be intimated to this Directorate in due course. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> Storing The Secret Data Of Purchase And Sale Of Unaccounted Goods In Memory Cards Used In Mobile Phones And Servers Through Internet </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGCEI has information that some <strong><font color="#FF3333">unscrupulous</font> </strong> manufacturers have been adopting a novel modus operandi to defraud the Government exchequer by keeping data pertaining to unaccounted purchase and sale of their products in USB pen drives or Memory cards used in Mobile phones as well as storing data on external sever through internet. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The modus operandi detected by the DGCEI is:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) The data is stored in USB pen drives or Memory cards used in mobile phones. The memory cards used in mobile phones can be connected with computer through memory card reader (multi-slot) and accessed. The capacity of these pen drives / memory cards may be upto 10 GB. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The data is also stored on external servers through internet and the account is protected by a secret password. The person having password and address of the servers only can view and retrieve the data. These servers may be situated in foreign countries also. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are other simple methods which the DGCEI is perhaps not aware –they can simply keep the data in their e-mails </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGCEI alert is not without its humour. The DG wants the field formations to be alerted to this modus operandi. Results achieved in this regard may be communicated to this Directorate in due course. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What results are to be achieved? What is the field supposed to do? Request the assessee to disclose the server where he keeps the secret data and then give them his password? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why can't the DG tell the officers what exactly is to be done. Now raiding parties will seize mobile phones along with computers. Seized computers are rarely (if at all) returned in good condition. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a saying in Sanskrit <font color="#FF6633">पुस्तकम वनिता विततम परहस्तम गतम गतः</font> – A book, a woman or money, once it changes hands is gone forever – there is a proviso to this theory; In the unlikely event of their coming back, the book will come back torn, the woman will come back spoiled and money will come back ruining the friendship. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Goods seized by the Department will (if at all) come back in worse shape. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5"> tiol</font><font color="#006600" size="2">– Tomorrow's cases</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font></strong></font></strong></font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Compounding is to be allowed only in cases of doubtful benefit to the Revenue and to prevent needlessly proliferating litigation and holding up of collections – Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue has won a big case in the Supreme Court against its own Chief Commissioner who allowed compounding. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The compounding mechanism in Section 137(3) is to be allowed only in cases of doubtful benefit to the Revenue and to prevent needlessly proliferating litigation and holding up of collections. Compounding cannot be allowed if there are apparent contradictions, inconsistencies or incompleteness in the case of the applicant before the Compounding Authority. It is the duty of the Compounding Authority to ascertain such contradictions before compounding is ordered. In the present case, different versions given by Anil in his statement under Section 108, in his first bail Application and in his Application for compounding itself disqualifies Anil from claiming the benefit of compounding under Section 137(3) of the 1962 Act. </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>After joining reassessment proceedings, assessee's claim that notice was not served cannot be accepted - No Income Tax or wealth tax on a house used for business can be levied, nor notional rent to be charged to tax : ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The requirement of the law for initiation of re-assessment proceedings are that if the Assessing Officer has reason to belief that any income chargeable to tax has escaped assessment for any year, he may subject to provision of section 148 to 153 assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which come to his notice subsequently in the course of the proceedings under this section. Considering the facts of the case in the light of the judicial decisions, it is clear that there was no basis whatsoever for initiating reassessment proceedings in these assessment years under appeals. </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>Only Reliance – wins big case - Fuel used in generating electricity used for residential purposes and supplied to Gujarat Electricity Board – assessee asked for clarification; judicial opinion was in assessee's favour – no suppression – no penalty : CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE appellant, the one and only Reliance, is engaged in the manufacture of various petroleum products and has set up a captive co-generation power plant for the production of steam and electricity. Fuel is one of the main inputs to be used in the said power plant. With effect from July ' 99, appellants started producing fuel themselves, which was being used by them captively in the above power plant. They were availing the benefit of Notification No.67 /95-CE, dt . 16.3.95, in as much as the fuel was being used captively. In as much as, a part of the fuel so used was for the manufacture of electricity, which in turn was used for residential purposes and supplied to Gujarat Electricity Board,, the benefit of said notification was allegedly not available. . </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></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 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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