TIOL-DDT 860 · 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 860 </font><br>
07.08.2008<br>
Wednesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cell phone Towers – No Cenvat credit </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC had written to all Chief Commissioners, DGST, DGCEI and all Service Tax Commissioners that it has been brought to the notice of the Board that telecom operators are availing Cenvat Credit on goods like angles, channels, beams, which are used for building transmission towers. Similarly, Cenvat Credit is also being availed on pre-fabricated building, shelters, PUF panels, etc., used for housing/storage of generating sets and other equipments. It appears that the telecom operators claim these items to be ‘inputs' for providing telecom services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And Board feels:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The items mentioned above are used for erecting towers, and making housing/storage units. Thus, these goods are used in making products that cannot be called as excisable goods, being attached to earth, and are not chargeable to excise duty. The items such as angles, channels, beams, etc., are this inputs for civil structures and as such, are not used for providing taxable service. Therefore, it is the considered view of the Board that credit of duty paid on such items is not available to the telecom service providers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board wants that such irregularly Availed Credit on this Account must be recovered expeditiously, within the current financial year. Compliance/difficulty faced in recovering such irregularly availed credit, if any, may be reported to Board. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Show Cause Notices must have already started flying. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In</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-1150-CESTAT-MUM.htm" target="_blank">2007-TIOL-1150-CESTAT-MUM</a>,</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the
Tribunal observed, <font color="#FF6633">“We find that a prima facie case has been made out as regards credit on Towers and parts of Towers and pre-fabricated shelter for protecting Transmission devices in the light of the order dated 31.1.07 of the Commissioner of Central Excise, Mumbai - the Department itself has expressed different views on the availability of Service Tax credit on these items.” </font></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=41&filename=notification/servicetax/2008/towers.htm" target="_blank">CBEC F.No.137/315/2007-CX.4 Dated February 26, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Duty free procurement of goods by EOUs – duty on goods not used </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has amended <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2003/etariff03_022.htm" target="_blank">Notification No. 22/2003. C.E</a> which exempts goods cleared to EOUs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Condition 4 (a) (ii), duty has to be paid </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) in the case of goods other than capital goods, such goods as are not proved to the satisfaction of the said officer to have been used in connection with the production or packaging of goods in accordance with SION for export out of India or cleared for home consumption within a period of three years from the date of procurement thereof or within such extended period as the said officer may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow: </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that- </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) where no SION norms have been notified, the generation of waste, scrap and remnants upto 2% of quantity of the inputs procured shall be allowed; </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) where additional items other than those given in the SION are required as inputs or where the user industry considers the existing SION as inadequate or where generation of waste, scrap and remnants is beyond 2% of the inputs procured, use of such goods shall be allowed on the basis of self-declared norms till such norms are fixed on ad hoc basis by the jurisdictional Development Commissioner within a period of three months from the date of self declared norms and the unit undertakes to adjust the self-declared/ ad hoc norms in accordance with norms as finally fixed by the Board of Approval with six months of fixation of ad hoc norms;</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is changed to </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“Provided that- </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) where no SION have been notified, the generation of waste, scrap and remnants upto 2% of input quantity shall be allowed; </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) where additional items other than those given in SION are required as input or where generation of waste, scrap and remnants is beyond 2% of the input quantity, use of such goods shall be allowed on the basis of self-declared norms till such norms are fixed on ad hoc basis by the jurisdictional Development Commissioner within a period of three months from the date of self declared norms and the unit shall undertake to adjust the self-declared/ ad hoc norms in accordance with norms as finally fixed by the Norms Committee for the unit. <strong>The ad-hoc norms will continue till such time the final norms are fixed by the Norms Committee; </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) in case of utilization of a large number of inputs, wide variation in quantum of consumption of inputs or such other factors which render such fixation of SION difficult in the case of a particular unit, the Norms Committee may refer the case to the Board of Approval for a decision.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Debonding </font></strong><font color="#FF6633">:</font> In case of failure to achieve positive NFE, depreciation shall be allowed on the value of capital goods in the same proportion as the achieved portion of NFE. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Norms Committee defined :</font> </strong>“Norms Committee” means the Norms Committee in the Directorate General of Foreign Trade, for recommending Input Output norms and value addition norms to be notified by the Director General of Foreign Trade. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similar amendments have been made in the <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2003/ctariff03_052.htm" target="_blank">Notification No. 52/2003-Customs</a>, dated the 31st March, 2003. </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_26.htm" target="_blank">Notification No. 26/2008-CX</a><strong>., and </strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_060.htm" target="_blank">60/2008 - Cus Dated May 5 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DTA clearances from EOUs – Textiles and Granite – excise duty applicable </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Textile and textile articles; Granite and granite articles cleared from EOUs to DTA will have to pay only the aggregate of the excise duties instead of aggregate of customs duties subject to certain conditions like </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the said goods are cleared into Domestic Tariff Area in accordance with sub-paragraphs (a), (d), (e), (g) and (k) of Paragraph 6.8 of the Foreign Trade Policy; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) the said unit has achieved positive Net Foreign Exchange Earning; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) the said goods are produced or manufactured by the unit wholly from the raw materials produced or manufactured in India except the use of duty paid imported inputs upto 3% of the FOB value of exports of the said unit in the preceding financial year; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) the said unit exercises an option in terms of Para 6.8 (l) of the Foreign Trade Policy for availing this exemption by informing in writing to the jurisdictional Deputy/Assistant Commissioner of Customs or Central Excise: </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=29&filename=notification/excise/2003/etariff03_023.htm" target="_blank">Notification No. 23/2003- Central Excise</a> , dated the 31st March, 2003, is amended. </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_26.htm" target="_blank">Notification No. 26/2008-CX., Dated May 5 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exemption to re-imported cut and polished diamonds - rescinded </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 55/2001-Customs, dated the 16th May, 2001, exempts cut and polished diamonds falling within Chapter 71 of the First Schedule to the Customs Tariff Act, 1975 when re-imported into India after certification/ grading by the laboratories / agencies. Now this notification is withdrawn. </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=23&filename=notification/custom/2008/ctariff08_059.htm" target="_blank">Notification No. 59/2008-Cus., Dated May 5, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti dumping duty on rubber Chemicals </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has imposed provisional anti dumping duty on certain rubber chemicals, namely MBT (having chemical description 2-Mercapto Benzothiazole), CBS (having chemical description N-Cyclohexyl-2-Benzothiazole Sulphenamide), TDQ (having chemical description Polymerized 2,2,4 – Trimethyl-1,2- dihydroquinoline), PVI [having chemical description N-(Cyclohexylthio) Pthalimide], TMT (having chemical description as Tetramethylthiuram Disulfude) and PX-13 (6PPD) [having chemical description N-(1,3-dimethyl butyl)-N Phenyl P-1], falling under Chapter 29 or 38 of the First Schedule to the Customs Tariff Act originating in or exported from, the People's Republic of China and Korea RP. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The anti-dumping duty shall be effective upto and inclusive of the 4 th November, 2008, and shall be payable in Indian currency. </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=23&filename=notification/custom/2008/ctariff08_061.htm" target="_blank">Notification No. 61/2008-Cus., Dated May 5, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Revised Citizen Charter for CBEC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC is to issue a new Citizen Charter. The draft has been circulated for comments from Commissioners. The Board states, “Please note that we would not be able to dilute the standards laid down in the earlier Citizen charter.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before embarking on a new Charter, the Board should do a stock taking and understand how far the present Charter is working. Or for that matter how many in the Department know about the existence of the charter and what it contains. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/sevottam.htm" target="_blank">Draft Charter. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Today's case </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FBT - Non-resident company providing transportation to employees from residence outside India to place of work and back home - Supreme Court upholds Advance Ruling that exemption provisions not applicable to sub-section(2) of Sec 115WB. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you today an important judgement of the Supreme Court on FBT. IN the first ever case involving the new and most contentious Fringe Benefits Tax (FBT), the Supreme Court of India has partly upheld the decision of the Authority for Advance Ruling (ARA) given, in December 2006, against the non-resident assessee doing business through a Permanent Establishment (PE) in India. The issue was whether the assessee was liable to pay FBT for providing transportation and movement of offshore employees for their residence and home countries outside India to the place of oil rig in India and back home? </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="#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>Film Production - deduction of the cost of production of the film is to be allowed to the extent of the amount realized during the number of days of commercial exhibition in that year and the balance has to be allowed in the next year - Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That if a film is not released for exhibition on a commercial basis at least 180 days before the end of such previous year, the cost of production of the film insofar as it does not exceed the amount realized by the film producer by exhibiting the film on a commercial basis, is to be allowed as a deduction in computing the profits and gains of such previous year and the balance, if any, is to be carried forward to the next following previous year and allowed as a deduction in that year. </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>Vodafone Essar seems to be on the path to victory – Stay granted in Rs 9.7 Cr Customs case by Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The excise guys had their fill when it came to charging Central Excise duty on the erected BTS/BSC Cell sites [<font size="1"><strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-208-CESTAT-MUM.htm" target="_blank">2008-TIOL-208-CESTAT-MUM</a></strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-208-CESTAT-MUM.htm" target="_blank"></a></font> ] – they lost their case all through! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, it is the turn of the Customs officials – seems to be. The relevant facts are that the applicants imported mobile telephone equipment viz. Base Trans-receiver Station (BTS), Base Station Controller (BSC) and Mobile Switching Centre (MSC) falling under Chapter Heading 85.17 of the Customs Tariff Act. It is alleged by the revenue authorities that the applicants suppressed the fact that these equipments contained software essential for these equipments so as to avoid duty on the value component of the software. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The adjudicating authority did the needful – the duty held payable Rs.9.73 crores & Rs.1 crore for redeeming the confiscated equipments. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>All activities of C&F agent are not covered under C&F service – Revenue appeal dismissed: High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">THE</font> </strong>revenue has filed this appeal challenging the order dated 20-6-2005 passed by the CESTAT raising the following substantial questions of law :- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Whether the service provided by M/s. United Plastomers, Amristar to M/s. IPCL as dealer/ commission agent is covered under the ‘clearing and Forwarding Agent Service' as defined under Section 65 of the Act as any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Whether the penalty is imposable when the party deposits the service tax before the issue of the show cause notice after department has caught them for non-payment of service tax?” </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more DDT <br>
<br>
Have a nice day. <br>
<br>
Mail your comments to</font> <font color="#0000FF">vijaywrite@taxindiaonline.com </font></font></p>
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