TIOL-DDT 862 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 862 </font><br> 09.05.2008 <br> Friday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Recovery Mechanism for 8% (10%) under Rule 6 of the Cenvat Credit Rules – <em>Due Course </em> means five years for the Board. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Circular No. 739/2003 dated 28.8.2003, the CBEC had informed that the issue relating to payment of 8% in terms of rule 6 of CENVAT Credit Rules, 2001 and rule 57CC of erstwhile Central Excise Rules, 1944 was not free from doubt in view of the Tribunal judgment in the case of Pushpam Forgings vs. Commissioner of Central Excise, Mumbai-II </font><font face="Verdana, Arial, Helvetica, sans-serif"><font color="#000000" size="1"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2002/2002-TIOL-276-CESTAT-MUM.htm" target="_blank">2002-TIOL-276-CESTAT-MUM</a></strong></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> and accordingly the Board had informed the field formations that matter would be further examined by the Board and<font color="#FF6633"> <strong>the decision taken shall be communicated in due course. </strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The decision was either not taken in <em>due course </em> or not communicated in <em>due course </em>. It seems some vigilant field formations have reminded the Board about this <em>due course </em> commitment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now after five years, Board has woken up from its deep slumber and informs the field that the issue had been settled by the retrospective amendments in the Finance Act, 2005 (Sections 82 and 83) which provided for recovery mechanism, if the assessee does not pay the required amount of 8%. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, Board requests that cases, if any, kept pending on this issue in terms of Board's Circular dated 28.8.2003, may be adjudicated in the light of the retrospective amendment carried out in the Finance Act, 2005. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is hopeful that adjudications must be pending for more than three years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However it must be said to the credit of the field officers that they do not have much respect for Board instructions and most often treat them with contempt. So, many of them have not waited for the <em>due course </em> clarification of the Board and have adjudicated the cases based on the 2005 Finance Act amendments. </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=31&filename=notification/excise/2008/claarify739cir.htm" target="_blank">CBEC . F. No. 267/22/2008- CX -8 , Dated April 3, 2008 </a></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">List of agencies authorised to issue certificates of origin- non preferential </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Federation of Andhra Pradesh Small Industries Association ( FAPSIA ) has been added to the list. </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=47&filename=notification/dgft/2008/dgft08pn014.htm" target="_blank">DGFT PUBLIC NOTICE No. 14 (RE-2008) /2004-09, Dated: May 8, 2008 </a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of betel Nuts from Myanmar </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of betel nuts from Myanmar, under provisions of Public Notice No. 289 ( PN )/ 92-97, dated 10.04.1995 for Border trade, shall not be subject to Port Restrictions notified under Notification No 49 (RE-2006)/ 2004-09 dated 20.02.2007, Notification No.12 (RE-2007)/2004-2009 dated 10.07.2007 and Notification No.25 (RE-2007)/2004-2009 dated 29.08.2007. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This exemption from application of port restriction is made effective retrospectively, from 20.02.2007. </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=45&filename=notification/dgft/2008/dgft08not007.htm" target="_blank">DGFT Notification No. 7 / (RE-2008)/2004-2009, Dated: May 8, 2008 </a></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">Apropos our DDT-859 story " Metallised plastic film – non excisable – no need to reverse credit – but since when? ", a netizen who closely follows our column sent us an interesting piece titled <strong><font color="#FF6633">" Is section 5B of the CEA '44 really required to confound the problem of metallization?" </font></strong>See this in <strong> <font color="#FF6633">Breaking News</font> </strong>tomorrow. </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"></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> – Monday's cases </strong></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></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>No limitation u/s 201 - Revenue loses case against non-resident company as Delhi HC upholds Tribunal's view of a reasonable limitation period of four years </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN the latest case decided in the case of NHK Japan Broadcasting Corporation, the Delhi High Court has pointed out the inadequacies in the TDS provisions of Income Tax where Sec 201 of the Act does not prescribe any limitation period under which orders holding an assessee in default may be passed by the Assessing Officer. The Tribunal has in various cases taken a view that where limitation is provided under the Act a reasonable period time period must be read in by the courts. A reasonable time frame of four years from the end of financial year has been read in as a limitation under which orders u/s 201 may be passed by the revenue. Although a contra view was taken by the Tribunal in the case of Thai Airways International Public Co. Ltd. <font size="1"><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=53&filename=legal/itat/2005/2005-TIOL-74-ITAT-DEL.htm" target="_blank">2005-TIOL-74-ITAT-DEL</a>)</strong></font>, but the controversy was by and large set at rest by the orders of ITAT in the case of the assessee itself in which after considering all the above precedents a view in favour of assessee was taken. And this view of the Tribunal was upheld by the HC which found it quite reasonable. </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>Exempted refined edible oil cleared in tin cans/plastic jars – credit availed on tin sheets & HDPE granules – rule 6 of CCR , 2004 applicable, but no penalty under rule 15 for misfeasance of rule 6 – Tribunal. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee is before the Tribunal with the following submission – </font></p> <div align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ That there is no question of invoking rule 6 of the CCR , 2004 in the facts of the case & the duty that is required to be paid is on the plastic jars, tin containers viz. the packing material as these captively consumed goods are not entitled for the benefit of the notification 67/95-CE as the final products viz. Refined edible oils are exempted from central excise duty. </font></div> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Even otherwise, as against the demand of 10%, they had paid an amount of Rs.4.38 lakhs before issuance of the notice & the balance amount paid thereafter & that penalty under rule 15 of the CCR , 2004 is not envisaged in cases concerning payment of 10% amount </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Supplementary invoices raised & differential duty paid thereon – later, it is detected that higher price was wrongly fixed – since duty already recovered from customers, no cause for refund – Tribunal. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When it comes to supplementary invoices, the Revenue always tries to play the big brother for it wants interest too. No doubt, although the Tribunal in case of Rucha Engineering <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2006/2006-TIOL-885-CESTAT-MUM.htm" target="_blank"><strong><font size="1">[2006-TIOL-885-CESTAT-Mum</font></strong></a><font size="1"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2006/2006-TIOL-885-CESTAT-MUM.htm">]</a></strong></font> had held there is no question of paying any interest under section 11AB , the Revenue took the matter to the Bombay High Court in Central Excise Appeal no. 42/2007 only to find that the HC also affirmed the Tribunal decision. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"To invoke provisions of Section 11AB of Central Excise Act, 1944 there must be an order of determination of duty under Section 11A ( 2) ibid or else duty must be paid on own account in manner prescribed under Section 11AB (2) ibid - No case of any non-payment , short levy or short payment as envisaged under Section 11A (1) ibid - Section 11AB (1) ibid not applicable" – <strong> <font color="#FF6633">this is what the Tribunal had held. </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the story went a step further. The assessee paid differential duty on the supplementary invoices issued on account of subsequent upward revision effected under amended purchase orders & the consignee took the credit. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Later, it was detected that the price was wrongly fixed & such a differential duty was not required to be paid at all! </strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend. </font></p> <p align="justify"><font color="#FF6666" 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> </body> </html>