TIOL-DDT 835 · 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 835 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
31.03.2008 <br>
Monday </font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mathematician in Board </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">First it was the formula to determine the amount reversible under Cenvat Credit Rules – people are still struggling to find the missing links in the formula. And now comes another complicated formula to calculate the exemption available to North East, J&K etc ,. Within two hours of the Notifications being made available, we carried a thorough analysis of the Notifications in our <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7089" target="_blank">Guest Column</a> , which can still be accessed there. Have a look </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Area Based exemptions – PLA : Cenvat ratio Vs Value addition. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is another view of the notifications. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Notifications have been amended to prescribe the value addition for refund of duty paid in PLA . Instead of refunding the entire amount paid in PLA , the refund will now be made as per the value addition prescribed. In case where four fifth ( 80 %) of the actual value addition is more than the prescribed value addition, the individual manufacturers can claim for fixing the value addition in each case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, there seems to be some problem in the whole exercise. The rate prescribed in the table are not the value addition percentage per se, but the percentage of the total duty payable. The duty payable on value addition ( which will be refunded) has been defined as: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The duty payable on value addition shall be equivalent to the amount calculated as <strong>a percentage of the total duty payable on the said excisable goods </strong>of the description specified in column (3) of the Table below (hereinafter referred to as the said Table) and falling within the Chapter of the said First Schedule as are given in the corresponding entry in column (2) of the said Table, <strong>at the rates specified in the corresponding entry in column (4) </strong> of the said Table. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, let us see where the entire theory went wrong. Lets us assume the value of raw material as Rs 100/- and value addition is also 100%. </font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value of the raw material </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 100/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cenvat available </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 16 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value addition </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 100/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total value </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 200/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total duty payable </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 32/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Duty payable in PLA </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 16/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PLA percentage to total duty </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">50% </font></p></td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the above example, we can see that at the rate of 100% value addition, the PLA percentage to the total duty is only 50%, but not 100% as presumed by the Board. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us also analyse for Value addition of 50% </font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value of the raw material </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 100/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cenvat available </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 16 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value addition </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 50/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total value </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 150/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total duty payable </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 24/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Duty payable in PLA </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs 8/- </font></p></td>
</tr>
<tr>
<td class="Normal" valign="top" width="197"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PLA percentage to total duty </font></p></td>
<td class="Normal" valign="top" width="110"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">33.33% </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From the above two examples, we can see that the percentage of value addition is not the same as the PLA percentage. But it is more than the PLA percentage. The rates fixed in the table in effect give more value addition than the normal industry rates and thus in most of the cases, there will not be any problem with the rates prescribed as the payment in PLA will be less than the ceiling fixed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The percentage of value addition is in fact equal to the percentage of PLA in Cenvat, but not the total duty. In case 2 above, 50% (the value addition percentage) is the percentage of PLA to the Cenvat. (50% of Rs 16 = Rs 8). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The methodology adopted has one more problem. It is not necessary that all the raw materials and the consumables are cenvatable to fix the duty to be refunded based on the value addition. The raw materials may be non excisable or excisable but obtained from small units availing the exemptions. In such cases, the PLA payment will be more, though the value addition is normal as fixed in the Notifications. These manufacturers will be badly hit by the new amendments as they are going to lose the duty paid in PLA in excess of the amount fixed in the notifications. To put it simply, for the same percentage of value addition a manufacturer using cenvatable inputs will pay less in PLA than the one who uses the non cenvatable inputs, but both of them will get the same amount of refund. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Chapter wise value addition </strong></font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Chapter </strong></font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PLA </strong></font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cenvat </strong></font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Total duty </strong></font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Value of finished goods </strong></font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RM value </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(100X cenvat /16) </strong></font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Value addition </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(Value of FG – Value of RM ) </strong></font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>% Value addition </strong></font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">29 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">29 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">71 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">443.75 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">181.25 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">41 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">30 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">56 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">44 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">275 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">350 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">127 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">33 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">56 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">44 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">275 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">350 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">127 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">34 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">38 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">62 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">387.5 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">237.5 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">61 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">38 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">34 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">66 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">412.5 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">212.5 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">52 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">39 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">74 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">462.5 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">162.5 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">35 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">40 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">41 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">59 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">368.75 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">256.25 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">69 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">72,73 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">39 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">61 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">381.25 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">243.75 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">64 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">74 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">85 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">531.25 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">93.75 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">76 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">36 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">64 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">400 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">225 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">56 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">85 </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">31 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">69 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">431.25 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">193.75 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">45 </font></p></td>
</tr>
<tr>
<td class="Normal" valign="bottom" width="77"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any chapter </font></p></td>
<td class="Normal" valign="bottom" width="55"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">36 </font></p></td>
<td class="Normal" valign="bottom" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">64 </font></p></td>
<td class="Normal" valign="bottom" width="60"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100 </font></p></td>
<td class="Normal" valign="bottom" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">625 </font></p></td>
<td class="Normal" valign="bottom" width="117"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">400 </font></p></td>
<td class="Normal" valign="bottom" width="91"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">225 </font></p></td>
<td class="Normal" valign="bottom" width="74"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">56 </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>And at least one major pink paper thought that the exemptions have been withdrawn. </strong></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/etariff08_16.htm" target="_blank">Notification Nos 16,</a> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_17.htm" target="_blank">17</a> ,<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_18.htm" target="_blank">18</a> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_19.htm" target="_blank">19</a>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_20.htm" target="_blank">20,</a><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_21.htm" target="_blank"> 21</a> ,<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_21.htm" target="_blank">22</a> <strong>and</strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_23.htm" target="_blank">23 C.E. dated 27 th March 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Duty on Jute Twine – retrospective exemption granted. </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A little history. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5525" target="_blank">TIOL-DDT 621 25.05.2007</a><strong>, </strong> mentioned about an inadvertent omission which made jute twine dutiable all of a sudden. <strong>DDT has learnt that demand notices are already flying in West Bengal where majority of jute mills are located and the fire is fast spreading. Unless the Government attempts to stop it in the beginning, it is bound to be a big forest fire. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5643" target="_blank">DDT 638 19.06.2007</a> mentioned, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are very happy to report that the Government has very graciously understood the problem and has stopped the big forest fire. Now they have issued a notification whereby Twine of jute or other textile bast fibres of heading 5303, is exempted from the whole of the duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This brings a lot of cheer to the harassed jute manufacturers of Kolkotta and other places. Reports have reached us that after seeing our flash yesterday, dancing assessees have gone to Central Excise offices and distributed sweets. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC deserves all praise for correcting this inadvertent lapse, but but there is another problem. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is now exempted; but what about the last five and a half months when there was no exemption? <strong>The Government has to give a Section 11C notification and they will ultimately give it. May be after hundreds of Show Cause Notices are issued and many consultants have made enough money! Why can't they do it now and save this country some paper and a lot of time of the department and the rest of us. Already a Central Excise officer called us up and informed us that this exemption only proves that duty had to be paid till now and he is going to issue Show Cause Notice immediately even alleging suppression and intent to evade duty! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will be happy to report as soon as possible that the exemption is with retrospective effect from 1.1.2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Well, we are happy to report that Board has finally issued the 11C Notification, ten months after we reported the lapse. Well it takes time to rectify a lapse! Anyway, thank you Board for putting to rest several SCNs . </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New Income Tax returns notified </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Forms for Return of Income are assessment year specific. Central Board of Direct Taxes have prepared and notified following eight Return Forms for assessment year 2008-09. The changes made by the Finance Act 2007 have been incorporated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) <strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr1.pdf" target="_blank">ITR-1</a></strong> - For Individuals having salary and interest income and no other income.<br />
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(ii) <strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr2.pdf" target="_blank">ITR-2</a></strong> - For Individuals and HUFs, having income from any source except from business or profession.<br />
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(iii) <strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr3.pdf" target="_blank">ITR-3</a></strong> - For Individuals and HUFs being partners in firms and not having proprietory business or profession.<br />
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(iv)<strong> <a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr4.pdf" target="_blank">ITR-4</a></strong>- For Individuals and HUFs having proprietory business or profession.<br />
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(v)<strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr5.pdf" target="_blank"> ITR-5</a></strong> - Combined Form For return of income and fringe benefits for Firms/AOP/BOI.<br />
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(vi) <strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr6.pdf" target="_blank">ITR-6</a></strong> - Combined Form for return of income and fringe benefits for Companies.<br />
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(vii) <strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr7.pdf" target="_blank">ITR-7</a> </strong>- Combined Form for return of income and fringe benefits for Charitable / religious trusts, political parties and other non- profit organizations.<br />
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(viiii) <strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/forms/itforms/formitr8.pdf" target="_blank">ITR-8</a></strong> - Stand alone form for return of fringe benefits for persons who are not liable to file return of income but are liable to file return of fringe benefits.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The return of income has to be filed by using the applicable form without any annexure (except for Form ITR -7) so as to facilitate electronic filing. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">E-filing initiative of the Department has been received well and for Assessment Year 2007-08 over 20 lakh E- Returns have been filed, out of which more than 64% E- Returns have been filed voluntarily by the tax payers. In terms of the taxes paid, these returns account for over 65% of total taxes collected. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Electronic filing of returns for assessment year 2008-09 is compulsory for corporate tax-payers and for firms liable to tax audit u/s 44AB . These tax-payers may either file their return electronically under digital signature or may transmit the data of the return electronically and thereafter submit a one page verification Form which contains a summary of the return transmitted electronically. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All other categories of taxpayers (other than charitable trusts, institutions, etc.) will have the option to file the return in a paper form or electronically, as mentioned above, or in a bar-coded return form. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government urges taxpayers to use the e-filing option, since it will help the Department to serve them better. Any takers? </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=35&filename=notification/cbdt/2008/cbdtnot.htm" target="_blank">Also see Notification dated 28th March 2008 amending the IT Rules. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Special Counsels for Income Tax cases – Board instructions </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants proposals for engagement of Special Counsels should be sent only in the cases where, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) important/complex question(s) of law having wide ramification(s) is/are involved or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) any statutory provision is under challenge or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) large quantum of revenue is at stake or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) other important issues are involved necessitating such engagement. </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=67&filename=notification/cbdt/2008/instruct0803.htm" target="_blank">CBDT Instruction No.3 /2008 Dated March 25, 2008. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cases to be argued by Commissioner (Appeals )( Drs) before ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board specifies that the following types of cases have to be argued by the Commissioner (Appeals )( DRs ) before the ITAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) All appeals relating to core cases of Search/Block assessment and such other cases of search, as are assigned by the CCIT . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) All appeals referred to a Special Bench or Third Member Bench of ITAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) All appeals filed against order passed under sec 263. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) <strong>All appeals, in which the aggregate of the additions made by the A.O. which are under dispute/subject matter of appeal in a case, is more than; </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. <strong>Rs. 2 crore in the cities of Mumbai and Delhi. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. <strong>Rs. 1 crore in the cities of Chennai, Kolkata, Ahmedabad , Hyderabad, Bangalore and Pune and, </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. <strong>Rs. 50 lakhs in other cities." </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) All Scam related cases. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DRs are to submit a monthly performance report. Why can't the Board think of paying them a small amount of money for every case they argue? </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=67&filename=notification/cbdt/2008/instruct0804.htm" target="_blank">CBDT Instruction No.4 /2008 Dated March 25, 2008. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exchange rates notified </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has notified the exchange rates for Imported Goods and Export Goods for the month of April 2008. </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=24&filename=notification/custom/2008/cnt08_032.htm" target="_blank">Notification No.32 /2008 cus NT Dated March 27, 2008. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty on Caustic Soda </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the recommendations of the Designated Authority, definitive anti dumping duty has been imposed on Sodium Hydroxide commonly known as Caustic Soda originating in, or exported from, Qatar for a period of five years from 27.03.2008 </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_040.htm" target="_blank">Notification No.40 /2008 cus Dated March 27, 2008. </a></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> </strong></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 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"><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"><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"><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"><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></strong></font></strong></font></strong></font></strong></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><font color="#FF6633">ICICI Bank's remittance towards rating fees to Moody's Investors Service is not assessable to tax in India and not liable to TDS u/s 195 : ITAT </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether the remittance of US $45,000 towards rating fees to Moody's Investors Service is an income in the hands of the recipient and is assessable to tax in India and whether the assessee is liable to deduct tax under section 195 of the Act on such remittance? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commercial information with regard to ratings as per international practice was supplied to the assessee. For bringing the remittance or fees within the definition of ‘fee for included services', it should be against the availability of technical knowledge, expertise, skill, know-how or process or consist of the development and transfer of a technical plan or technical design. Unless and until the non-resident made these items available to the assessee, fees paid inter alia on that would not fall within the definition of fees for included services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Likewise consultancy service is in the context of advisory service. Categories of technical and consultancy services are to some extent overlapping because consultancy service can also be technical service. However, the category of consultancy service also includes advisory service, whether or not expertise in technology is required to perform it. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Remittances made in the instant case are not in the nature of ‘fees for included services' as such are not taxable in India . The assessee cannot be held to be responsible/liable for deduction of tax under section 195 of the Act. </strong></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 size="2" face="Verdana, Arial, Helvetica, sans-serif">Otis ordered to pay pre-deposit of Rs 50 lakhs in Central Excise valuation case by Tribunal </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">THE</font> </strong>appellants are engaged in the business of manufacture of parts and components of elevators/lifts, erection/installation of lifts and also maintaining/servicing of already erected lifts/elevators. They were clearing parts and components of lifts on payment of duty for erection at the site. The duty on these parts and components of lifts was being paid on the basis of cost of production, margin of profit as per the applicants say. Price list declarations from time to time supported by the Chartered Accountant certificate were being filed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The departmental internal audit was of <em>prima facie </em> opinion that<font color="#FF6633"> <strong><em>head office expenses ought to be proportionately included in the assessable value </em></strong> </font>to determine the cost of production of the parts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequently, the jurisdictional machinery churned out several show cause notices alleging the above audit contention. Simultaneously, the department also initiated proceedings against the appellants for the alleged <strong><em><font color="#FF6633">non-inclusion of research and development expenses in the assessable value of parts/components manufactured by them </font></em></strong><font color="#FF6633">. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise - Rail Assembly front Seat and Adjuster Assembly slider seat – parts of motor vehicles, not seats: SC </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Classification </font></strong><font color="#FF6633">: <strong>rail assembly for seats:</strong></font><strong> </strong> It is clear that Chapter Heading 8708.00 covers parts and accessories of motor vehicles and this chapter heading is wide enough in its scope so as to cover all accessories of motor vehicles whereas Chapter heading 9401.00 covers all type of seats and parts thereof. Chapter 9401 covers all types of seats and not only the seats of a car and a seat is complete even without the rail assembly front seat, adjuster/assembly slider seat and rear back lock assembly. They are not essential parts of the seat. Chapter heading 9401 covers only the parts of seats and not accessories to the seats. A 'part' is an essential component of the whole without which the whole cannot function. Chapter heading 8708 covers both the 'parts' as well as 'accessories'. The items manufactured by the assessee are only adjuncts. These are to be affixed on the floor of motor vehicles. When seats are affixed on these rails, seats can slide back and forth with the operation of a lever forming part of other rail assembly front seat adjuster. This enables the driver or the passenger, to adjust the position of the seat to suit his comfort and convenience. </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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