TIOL-DDT 796 · the untouched capture
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<p><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 796 </font><font size="3"></font><font size="2"><br>
04.02.2008 <br>
Monday </font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FM inaugurates Chennai LTU </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Large Tax Payers Unit (LTU) will start functioningin Mumbai by the end of March and in Delhi by April 2008, our FM announced yesterday after inaugurating the country's second LTU in Chennai. Mr. Chidambaram said that the revenue department has been advised to adopt a friendly attitude while dealing with small and medium enterprises. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inaugurating the LTU, the Finance Minister said that LTUs are being setup with a view to find solution to the difficulties faced by big organisations having branches or units in many parts of the country. Such a system is being followed in 13 Asian countries, including Pakistan , Sri Lanka , Bangladesh and Nepal . This system is in operation in countries like Japan , Australia and western countries. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The country's first LTU was inaugurated in Bengaluru during October 2006. This LTU is functioning successfully and has collected Rs.1756 crores during the last financial year. Another 16-18 large taxpayers have evinced interest to join the Bengaluru LTU . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Twenty-five big tax payers have already registered themselves to avail the services of Chennai LTU . This LTU will collect taxes over Rs.8,000 crores.Chidambaram said efforts should be taken to bring all the units of large tax payers under this system by December 2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The FM said lower tax rate means better tax compliance. As the trend is the same all over the world, India is also moving in this direction, he added. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">LTU offers a single-window facility to payers of large amounts of tax, including central excise, service tax, corporate and income tax. Assesses who paid during preceding financial years central excise duty or service tax of Rs.5 crores or more, or advance income tax of Rs.10 crores or more, are eligible to join LTU. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Minister of State for Finance, S.S. Palanimanickam , spoke about the salient features of the LTU. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Senior Finance Ministry officials, including PV Bhide , Revenue Secretary, R. Prasad, Chairman – CBDT, S.K. Shingal, Chairman-CBEC, and Jayendranath, Chief Commissioner, LTU, Chennai, took part in the function. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Swanky office </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you think this is some swanky corporate office, you are mistaken – this is the Chennai LTU of the Revenue Department, which was formally inaugurated by the FM yesterday. </font></p>
<p align="justify"> </p>
<p align="center"><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"><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/ltubuilding.jpg" alt="Legal Corner Icon" width="600" height="400" hspace="5" border="0" align="center"></b></strong></b></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></p>
<p align="justify"> </p>
<p align="center"><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"><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/reception.jpg" alt="Legal Corner Icon" width="389" height="259" hspace="5" border="0" align="center"></b></strong></b></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></p>
<p align="center"> </p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bank guarantee for advance licence - clarification </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 3.1 of the Customs Circular No. 58/2004, the Bank Guarantee/cash security shall be taken as per the following norms for the purpose of permitting clearance of imported goods under Advance License/EPCG Schemes. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
</font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
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<td valign="top" width="81%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Category of Importer </strong></font></p></td>
<td valign="top" width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Quantum of Bank Guarantee/cash security </strong></font></p></td>
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<td valign="top" width="81%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) All exporters who have an export turnover (physical exports) of Rs 5 Crores in current or preceding financial year and having a good track record of three years of exports </font></p></td>
<td valign="top" width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nil </font></p></td>
</tr>
<tr>
<td valign="top" width="81%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Public Sector Undertaking </font></p></td>
<td valign="top" width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nil </font></p></td>
</tr>
<tr>
<td valign="top" width="81%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Star Export House </font></p></td>
<td valign="top" width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nil </font></p></td>
</tr>
<tr>
<td valign="top" width="81%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Manufacturer exporters registered with Central Excise, who have been exporting during the previous two financial years and have minimum export of Rs. 1 crore or more during the preceding financial year. </font></p></td>
<td valign="top" width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nil </font></p></td>
</tr>
<tr>
<td valign="top" width="81%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) Manufacturer exporters registered with Central Excise, who have paidcentral excise duty of Rs.1 crore or more during the preceding financial year. </font></p></td>
<td valign="top" width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nil </font></p></td>
</tr>
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<td width="81%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) Manufacturer exporters who are not covered under (a), (b),(c),(d) & (e) above. </font></p></td>
<td width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25% </font></p></td>
</tr>
<tr>
<td valign="top" width="81%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) Others </font></p></td>
<td valign="top" width="18%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100% </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per par 10 of the Circular, BG exemption specified in para 3.1 above shall also be available in respect of past licenses where license holder had earlier filed BG but as on date he is entitled for BG exemption. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board now clarifies that </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These concessions are also available for his past licences. Under the circumstances, in case a licence holder has executed 100% 15% BG at the time of registration and he subsequently attains a status which entitles him for full/partial BG exemption under Para 3.1 of the Circular, the Custom House may return the earlier executed higher BG and accept the lesser/nil BG afresh, if the exporter makes such request. This facility may, however, be extended only if the licence holder fulfills the conditions of Para 3.2 of the Circular. These conditions would ensure that while genuine exporters would be facilitated, the unscrupulous exporters/defaulters would be kept under check. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2008/clarify01.htm">MFDR letter No. D.O.F. NO.605/61/2007-DBK Dated : January 30, 2008</a> </strong></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">– 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"><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></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>Goods cleared from warehouse for home consumption on payment of duty – duty paid goods retained in the warehouse as they are highly inflammable – subsequent increase in duty not applicable to these goods as they are no more warehoused goods : SC </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">is the relevant date for payment of Customs duty on warehoused goods? Revenue's attempt to collect more duty ends up in having to pay interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is a revenue appeal before the Supreme Court. The respondent imported Superior Kerosene Oil ( SKO ) on 15.5.1998. At that time, the duty payable on SKO was only CVD of 10% adv. The imported SKO was stored in a private warehouse belonging to IBP. On 20.05.1998 and 28.05.1998, ex-bond bills of entry were filed for release of the goods for home consumption. Appropriate duty was paid and the officer in-charge made an endorsement on the bills of entry for release. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As SKO is a highly combustible material and cannot be taken out to store elsewhere, the respondent made an application to the Assistant Commissioner of Customs for permission to store the duty paid released goods in the same warehouse – tank. The respondent was also registered as a Central Excise Dealer to issue invoices for Modvat purposes. In the Central Excise Registration Certificate, it was clearly mentioned that the SKO would be stored in the tank belonging to IBP. </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Subsidiary reimburses non-resident parent company for mobilisation and demobilisation charges - if TDS not deducted on payments, provisions of Sec 40(a)(i) are attracted : ITAT </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> India getting rapidly integrated to the global economy, making payments either for services or reimbursement to a non-resident company or individual has become common for the India Inc. But what has not become common is the practice of deducting tax at source ( TDS ) under Sec 195. And this case is illustrated best in the latest decision of the ITAT which has held that it is obligatory for the payer to a non-resident company to deduct TDS u/s 195 without going into any other aspect with regard to nature and taxability of the payment and rejected assessee i.e. payer's contention that reimbursements made by it were not in the nature of income in the hands of payee. As to the consequences of such non-deduction of TDS , it held that provisions of Sec 40(a)(i) are attracted as per which, any claim of such amount will not be allowed as deduction during computation of income of payer and can be claimed only on deduction and deposition of such tax which though is subject to subsequent assessment by the A.O. </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>It is not open to Excise authorities to doubt decision of competent authority under SWAM - 210 litres Barrel of Lubricating Oil not to be assessed under Section 4A of Central Excise Act : Tribunal </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">ASSESSING</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> excisable goods under section 4A <strong><font color="#FF6633">simply because they are notified </font></strong>does not make sound legal sense – as if legality always matters to the excise formations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee is a manufacturer of lubricating oils [Heading 2710 90] the same are notified goods for assessment based on MRP under Section 4A of the CEA '44. In respect of goods packed in sizes of 500ml, 1 ltr, 2 ltrs 5 ltrs, 50 ltrs etc., the assessee is paying central excise duty based on the retail sale price affixed on the packs viz. u/s 4A. However, when it came to assessment of 210 ltrs of lubricating oils, the assessee contended that since the same is a wholesale pack no retail price need be affixed hence paid duty by assessing the same in terms of Section 4 of the CEA '44. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Naturally, this was objected by the Revenue the adjudicating authority too held that the 210 ltr barrel cannot be held to be a wholesale package in terms of Rule 2(x)(ii) of SWAM Rules, 1977 that it is rightly required to be assessed in terms of section 4A of the CEA '44. </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="center"></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT's cartoon from Dr. Gopalakrishnanan, IAS (rtd) </strong></font></p>
<p align="center"><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"><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_cartoon_796.jpg" alt="Legal Corner Icon" width="316" height="490" hspace="5" border="0" align="center"></b></strong></b></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong> is now addicted to Dr. Gopal 's cartoons and somehow I cannot start the week without a cartoon from Dr. Gopal . Start the week with a smile. </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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