TIOL-DDT 859 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 859 </font><br>
06.05.2008 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Metallised plastic film – non excisable – no need to reverse credit – but since when? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
METLEX (I) PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, NEW DELHI - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2004/2004-TIOL-77-SC-CX.htm" target="_blank">2004-TIOL-77-SC-CX</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>, </strong>the
Supreme Court on 12.02.2004 held that <font color="#FF6633">Metallising or
laminating of duty paid film does not amount to manufacture as it starts
with film and remains a film even after lamination; If no manufacture has
taken place mere filing of classification list does not mean that the assessee
is liable to pay duty</font> .
Now some assessees must have paid duty on the non excisable goods on pressure
from the Department and their buyers must have taken credit of the duty paid
and the same Department must have tried to deny credit on the ground that
what was paid was not duty as the goods were not excisable in the first place!
This is how the Department works! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Finance Act, 2007, a new Section 5B was inserted in the Central Excise Act, which reads as, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>5B . Non-reversal of CENVAT credit. - </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where an assessee has paid duty of excise on a final product and has been allowed credit of the duty or tax or cess paid on inputs, capital goods and input services used in making of the said product, but subsequently the process of making the said product is held by the court as not chargeable to excise duty, the Central Government may, by notification, order for non-reversal of such credit allowed to the assessee subject to such conditions as may be specified in the said notification: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that the order for non-reversal of credit shall not apply where an assessee has preferred a claim for refund of excise duty paid by him: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided further that the Central Government may also specify in the notification referred to above for non-reversal of credit, if any, taken by the buyer of the said product. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Making use of this Section, now, the Government has issued a Notification stipulating that </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">credit taken or utilized, of the duty or tax or cess paid on inputs , capital goods and input services used in the making of the said final product, shall not be required to be reversed, irrespective of the fact that the process of metallization of duty-paid film was held as not amounting to manufacture by the Supreme Court in Civil appeal Nos. 3224-3225 of 1998 with C.A. No. 5716 of 1998, decided on the 12th February,2004 in the case of M/s Metlex (I) Pvt. Ltd. Vs Commissioner of C.Ex . New Delhi, subject to following conditions, namely:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the said non-reversal shall be allowed only for the CENVAT credit taken upto the 12th February,2004 . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) the said non-reversal shall be allowed only when excise duty has been paid on removal of the said final product. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) the said assessee shall not prefer a claim of refund of the excise duty paid by him on the said final product: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that the CENVAT credit, if any, taken by the buyer of the said final product, of the excise duty paid by the said assessee on the said final product made and cleared upto the 12th February,2004 shall not be required to be reversed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, as per the Notification, only the credit taken on the duty paid up to 12.02.2004, need not be reversed, which means the duty paid after 12.02.2004 is not allowed. What is the logic? The Supreme Court declared on 12.2.2004 that the goods were not excisable. But then how do people of this country know the judgements passed by the Apex Court? The Government has no system of collecting and publishing them. Even the Government realised this after more than four years but it expects the assessees to know about the judgements immediately after the judgement is pronounced. Maybe now every assessee should keep a representative each in the Supreme Court, in all the High Courts and Tribunals and in the Board office! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board's benevolence will now launch a large number of Show cause Notices. </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_22.htm" target="_blank">Notification No. 22/ CX ., ( N.T. )., Dated May 2, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tariff Value of Brass scrap increased </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value of brass scrap has been increased from 4422 US Dollars to 4445 dollars. And that of poppy seeds decreased from 5759 Dollars to 4658 dollars. There is no change in the Tariff Values of other items. </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_040.htm" target="_blank">Notification No. 40/2008- Customs ( NT) , Dated the 2 nd of May 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Executive profile of IRS officers – Even Chief Commissioners and Commissioners don't give info </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT is in the process of creating a reliable database of executive profiles of all IRS officers. This profile will be of great value in future years as the basis for several HR or OD interventions. It was expected that all serving IRS officers will participate with enthusiasm in this onerous exercise, which is for the benefit of the entire cadre. However, the Board is dismayed to note that there are still several officers up to CIT rank who have not yet submitted their profiles. The Board has taken an adverse view of this fact and in this regard the Chairman, CBDT has written to all CCsIT ( CCA ) to personally monitor the same and ensure compliance vide his letter dated 2.5.2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has also been noted that very few CCsIT have submitted their executive profiles. This is probably due to the misconception that the database is to be used only for transfers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT has once again clarified that transfers & posting is merely one of the several future uses of the database that the Board has envisaged. It will be used for several other HR purposes such as training, special assignments etc. It is therefore requested that even CCsIT send their executive profiles for inclusion in IRS database </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=70&filename=pitara/sernews/order/guidelines_rechecking.htm" target="_blank">CBDT's F.No . A-35015/ 09/ 2008-Ad .VI Dated : May 02, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>How much Service Tax is collected? – No data really! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a high profile meeting held by the Revenue Secretary recently with the top CBEC officers and the Principal Chief Controller of Accounts, the Chairman CBEC explained that Pr. CCA complies revenue collection upto the last day of the month, whereas, central excise duty and service tax for the month is to be paid by 5th /6th of the following month. As a result, Pr.CCA makes available the figures for the month of January only by 5th of March. Central Excise revenue figures are collected from field formations. In Central Excise, there are 93 field Commissioners with divisional and range offices who are able to collect revenue data from about 90,000 assessees. This would not be possible for service tax since there are about 9-10 lakh registered service tax assessees, out of which about 5.5 lakh are active assessees. He suggested that the Pr.CCA could try to make available service tax revenue collected upto 10th of the month, by the 15th of the same month. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Principal Chief Controller of Accounts </strong>stated;- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Service tax revenue collected upto the 10th of the month shall be made available by 12th of the same moth. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Service Tax revenue collection upto the last day of the month shall be made available by 4th of the following month as per current practice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Revised revenue data for a month shall be provided by 15th of the following the following month when these are reported to the Controller General of Accounts ( CGA ). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Service wise revenue figures shall be complied and made available before 15th of the following month. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Instruction shall be issued to all PAOs to make available the above information to the respective Jurisdictional Commissioners. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. All the above information shall be forwarded to Chairman (CBEC), Member (Excise), Member (Service Tax) and Joint Secretary ( TRU -II) for information. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>7. The work of compilation of revenue may be outsourced to an outside agency. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is it so difficult that the top officers of the country have to discuss this issue? Can't the banks be asked to send a report by mail to the Board every day? Can't we develop software that can capture data from all banks as soon as they accept payment? Maybe the Chairman, Revenue Secretary and the FM can every morning see in their computers the total Revenue collected till the previous day. In fact this can be made a public site and every citizen should be able to see the data. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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 color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><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></font></strong></font></strong></font></strong></font></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden <font color="#FF6633" size="5">tiol</font> – tomorrow's cases </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VAT </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VAT classification - Kerala VAT Act is aligned with Customs Tariff which in turn is aligned with HSN and consequently each product in question was required to be seen in context of HSN Code and judgments based thereon: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE short question involved in this Civil Appeal is whether mosquito repellents and other items fall under Entry 44(5) of Schedule III to Kerala VAT Act, 2003. Under Section 6 of 2003 Act, goods specified in the Second and Third Schedules are charged to duty at the rates specified therein whereas goods not falling within the said two Schedules are assessable to duty under separate Notifications to be issued by the State Government. The narrow controversy in the present case which arose for determination before the High Court was: Whether the above enlisted items fall under para 44(5) read with Section 6(1 )( a) of the 2003 Act? According to the appellant, the said items fall under Para 44(5) which, at the relevant time, attracted duty at the rate of 4%, whereas, according to the Department, the said items came under Section 6(1 )( d) read with Notification No.82 of 2006 - Entry No.66 which attracted the rate of duty of 12.5%. </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>Since, department has accepted earlier adjudications on same issue for part of period, Revenue cannot be permitted to re-agitate the same point for a part of remaining period: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No two proceedings on the same issue : </strong> Since, the department has accepted the earlier adjudications on the same issue for part of the period, revenue cannot be permitted to re-agitate the same point for a part of the remaining period. There cannot be second proceedings raising the demand for the same period. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Undervaluation – related person : </strong> even if ATL & ITCL are taken to be related persons [Court is not holding so], it has not influenced the price. There is no under- valuation. ATL has been selling the product to ITCL and Indian Railways at or about the same price. </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>For debts to be classified as 'bad', assessee has only to write it off as irrecoverable in accounts, if subsequently any part of written off debt is recovered, same to be charged to tax; primary power, rather obligation of Tribunal, is to dispose of appeal on merits & incidental power to remand is only an exception and should be sparingly used: Third Member </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bad Debts : </strong> The net effect of change made in the statutory provision w.e.f . 1.4.1989 is that it was necessary for the assessee to establish that debt had become bad in the previous year before amendment, whereas now for debts to be classified as 'bad', the assessee has only to write it off as 'irrecoverable' in its accounts. If subsequently any part of written off debt is recovered, the same would be charged to tax by virtue of section 41(4) of the Income-tax Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ITAT – Remand Powers : </strong> The primary power, rather obligation of the Tribunal, is to dispose of the appeal on merits. The incidental power to remand is only an exception and should be sparingly used when it is not possible to dispose of the appeal for want of relevant evidence, lack of finding or investigation warranted by the circumstances of the case. Remand in a casual manner and for the sake of remand only or as a short cut, is totally prohibited. It has to be borne in mind that litigants in our country have to wait for long to have fruit of legal action and expect the Tribunal to decide on merit. It is, therefore, all the more necessary that matter should be decided on merit without allowing one of the parties before the Tribunal to have another inning, particularly when such party had full opportunity to establish its case. Unnecessary remands, when relevant evidence is on record, belies litigant's legitimate expectations and is to be deprecated. Having regard to aforesaid principle, it is necessary to look into records to see whether there is sufficient material on record to dispose of the issue on merit and there is no need to remand the issue to provide a fresh inning to the Revenue. </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="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p>
<p align="justify"><font color="#FF6633" 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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