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<div><p align="justify"><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font size="3">TIOL-DDT 865</font></strong></font> <font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><br/>14.05.2008 <br/>Wednesday </strong></font></p><p align="center"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2">
  Ratifying rebate given to goods manufactured under area-based exemption in Budget 2008 - job half done? The other half to be rectified soon?</font></strong></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">We carried an article on 1.3.2008, immediately after the Budget with the <a href="https://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&amp;newsid=6917">above caption</a>.</font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The issue was discussed as hereunder. </font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>THERE</strong> is an important lacuna in the budget proposal with regard to rebate of duty paid on goods manufactured under various area based exemption notifications. </font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">Clause 83 of the Finance bill seeks to amend rule 18 of CER 2002 with retrospective effect so as to allow rebate of duty paid on excisable goods cleared from factories under area based exemption for the period till 7th Dec 2006. </font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">It may be noted that vide Nfn No. 37/2007- CE (NT) dt 17.9.07 the rebate has been disallowed w.e.f from 17.9.07 for the goods cleared from factories under area based exemption. </font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">Prior to the issue of the above notification, Board has issued   letter F.No.209 /11/2005- CX -6 dated 08.12.06 denying rebate for the goods cleared from area based exemption based on the clarification given by the Law Ministry as under: </font></p><blockquote><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">Rule 18 of the Central Excise Rules, 2002, provides for grant of rebate of duty paid on exported goods. In terms of the Notifications mentioned above issued under Section 5 A (1) of the Central Excise Act, 1944, exemption from excise duty is available only to the extent, it is in excess of the amount paid out of CENVAT credit. However, the said exemption has been operationalised by way of paying the full amount of duty first and therafter granting of refund of duty paid in cash. A doubt has arisen as to whether the said payment of duty at first stage, which is subsequently refunded, can be considered, as “Duty Paid” in terms of Rule 18 or not. The matter was referred to the Law Ministry who have opined that the term “Duty Paid” used in Rule 18 does not include that portion of duty, which is subsequently refunded to the manufacturer. They have further opined that the amount so refunded to the manufacturer is to be treated as an exemption and rebate of the said amount cannot be paid. </font></p></blockquote><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">In view of the above statutory position it is hereby directed that all pending Show Cause Notices may be decided accordingly. Even, pending rebate claims should be decided as per said interpretation. Show Cause Notices may be issued in respect of sanctioned claims which are within the statutory time limit of one year. </font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">However, the relevant date for extending the benefit of rebate retrospectively in the Finance Bill was taken as upto 7.12.2006, may be because the Circular was issued on 8.12.2006. However, Notification No. 37/2007- CE(NT) was issued only on 17.9.07 and from this date only the rebate can be legally disallowed notwithstanding the Board's Circular which is not binding on the assessees. It would have been a noble gesture if the retrospective benefit is made applicable upto 16.9.2007 as the period from 8.12.06 to 17.9.07 will anyway end up in dispute. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Now Board seems to be contemplating to extend the period and has asked the field for particulars of the rebate claims pending. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The Good Board does react; it only takes time! </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&amp;filename=notification/excise/2008/amend.htm" target="_blank">CBEC's F. No. 209/11/2005- C X -6 , Dated May 2, 2008 </a></font></p><p align="center"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2">Service Tax Office – this way please </font></strong></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">CBEC wants the words, “Service Tax” displayed prominently in the official name boards of all offices dealing with Service Tax. So it should be now the “Office of the Commissioner of </font><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Customs, Central Excise and<strong><font color="#ff6633"> Service Tax</font></strong> ” </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">This move, according to the Board, will ensure awareness about the presence of Service Tax administration all over the country and would aid the trade, the service tax assesses, in particular, in identifying the office. It will also add to the effective publicity to 'service tax'. Therefore, the Board decided that all central excise field formations dealing with service tax would display the same in the official signboards. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Board wants the field to send a compliance report to the DGST who will send a collated report to the Board. </font></p><p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Will the Board have a board as “ Central Board of Excise, Customs and Service Tax”? </font></strong></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&amp;filename=notification/servicetax/2008/displayst.htm" target="_blank">CBEC's F.No . 137/ 20/2008- C X -4 Dated : April 15, 2008 </a></font></p><p align="center"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#006600">HIT ? </font></strong></font></p><p align="center"><font color="#006600"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2">No violence meant, it only means HELPLINE FOR INDIRECT TAXES </font></strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The Directorate of Publicity and Public Relations of the Customs and Central Excise Department has devised a HELPLINE model under the SEVOTTAM Scheme. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">This Directorate works on a time frame and had circulated its proposals to the Chief Commissioners for their comments and informed them that if their comments were not received by 1 st May, 2008, it would be assumed that the proposals have their tacit approval. </font></p><p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The Highlights of the scheme: </font></strong></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Each Helpline desk i.e. Customs, Central Excise, Service Tax and Technical (Electronic filing etc.) will have three helpline officers, two helpline heads and one helpline chief working on 24 X 7 days basis. No officer will be allowed to work for more than four hours on the helpline duty on any single day. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The officers eligible and certified to perform active duty in the helpline desk shall have to undergo rigorous written test and interview. In order to ensure transparency and avoid malpractices in selection, the whole selection process will be videotaped and will be available for inspection by any higher competent authority. As work in the helpline desk will require that the officers remain up-to-date with the latest developments in the department, selection will be valid only for the six months after which an officer will have to again go for written examination and interview if he is to continue to volunteer for service in the helpline centre. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Each helpline desk will be equipped with four CC TV cameras, 15 computers, sound amplification and recording systems, telephone/internet lines and required furniture. Initial cost for setting up these equipments in each desk is estimated to be below Rs. 50 lakhs. </font></p><p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Manner of functioning of helpline desk </font></strong></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The HELPLINE would try to give most satisfactory reply to almost all the queries irrespective of their nature. <font color="#ff6633"></font><strong><font color="#ff6633">The helpline officer shall not, repeat shall not, shirk away from replying to technical questions involving interpretation of law as is the usual practice in the department at present. [Are we dreaming?]</font> The officers shall be assured that no action will be taken against them if any of the interpretation or reply given by them is considered later to have not been legal or proper. C orrespondingly, it will also be made clear to the public that no penal action will be taken against an assesses if he acts bona fide on the advice or interpretation given by the HELPLINE.</strong> However, wherever duty or tax remain short paid on account of a helpline reply, such amount shall be payable with simple interest but without any penalty. Such a system will ensure that the helpline is in fact a helpline for the needy, without compromising in the matter of revenue. This system should not be confused with the advance ruling system in which the ruling is fully binding on both parties and there can be no recovery of duty short-paid on the basis of a ruling. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">All incoming call will be amplified to the helpline officers, helpline heads and helpline chief, all of when shall sit together in the same room. Depending on the nature of the query. Helpline Chief may signal any of the helpline heads or officers to reply to the query, or may himself reply to the query. Where the query is of very complex nature, a call may be kept on hold, but for not more than five minutes in any case, for the officers is deliberate on the proper reply. If it cannot be done in some rate cases in these five minutes, the phone number and e-mail address of the person concerned will be taken down and he will be assured that he will be called back, or given reply by e-mail if he so desires, within next two hours at the most. If it is not possible to reply within next two hours, the concerned helpline chief shall withdraw himself permanently from the HELPLINE duties. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>What a wonderful idea! You actually have Departmental officers answering your questions! </strong></font></p><p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2">But does anyone remember what happened to the “help centres” started with so much fan fare? Is a single help centre functioning? </font></strong></p><p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2">One failure does not mean that other projects cannot succeed. WE wish HIT a grand success. </font></strong></p><p align="center"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2">Income Tax raid or murderers on the prowl – Raid on Amar Singh in Kolkata </font></strong></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Yesterday, we were flooded with calls wanting to know why we had not covered the DRI raid on Samajwadi Party general secretary Amar Singh . DRI denied any raid; so it was assumed there was an Income Tax raid and party boss Mulayam Singh condemned the raid. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">But Amar Singh alleged that murderers were on the prowl posing as Income Tax officials, to kill him. He is said to have spoken to the Prime Minister, Home Secretary and IB Director and was informed that no Central agency had raided his house. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">A year ago, PTI reported that Mr. Singh had invited the Income Tax Department to raid his homes as that would give him political benefit! </font></p><p align="center"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#006600">Jurispruden</font><font color="#ff6633" size="5">tiol</font> <font color="#006600">– Tomorrow ' s cases</font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><img align="left" alt="Legal Corner Icon" border="0" height="160" hspace="5" src="https://taxindiaonline.com/RC2/image/stories/ddt_31.gif" width="191"/></b></font></strong></font></strong></font></strong></font></strong></p><p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><font color="#663399">Income Tax</font></font></strong></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Limitation under Sec 254 - S C sets aside High C ourt decision for counting period of pendency of ROM application to calculate the limitation period of four years </strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#ff6633">IN </font></strong>an interesting decision involving the powers of the Income Tax Appellate Tribunal (ITAT) under Sec 254, the Supreme C ourt has held that, for counting the period of four years limitation as engrained in the sub-section (1) of the Sec 254, the period of pendency of ROM application is not to be taken into account. Setting aside the Madras High C ourt decision which also counted the period of pendency for arriving at the limitation order, the Apex C ourt upheld the Tribunal's decision to allow an ROM application filed within the outer limit of four years as per the law. </font></p><p align="justify"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2">Central Excise </font></strong></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Exempted refined edible oil cleared in tin cans or plastic jars – credit availed on tin sheets &amp; HDPE granules – rule 6 of C C R , 2004 applicable, but no penalty under rule 15 for misfeasance of rule 6: Tribunal </strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">ONCE again, we come to our favourite Rule 6 of the Cenvat Credit Rules, 2004 as it existed prior to 01.04.2008. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Before we report the latest decision of the Tribunal let us discuss the facts and the inference that has been drawn by the Revenue &amp; that which could have been… </font></p><p align="justify"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2">Central Excise </font></strong></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Notification 67/95- CE is distinct from 217/86- CE – what is essential is that the goods should be capital goods as defined in rule 57Q of CER , 1944 – Tribunal allows Revenue appeal. </strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Notification 217/86- CE exempted goods (inputs) specified in column (2) of the Table annexed &amp; manufactured in a factory and used within the factory of production, in or in relation to the manufacture of final products specified in column (3) of the said Table, from the whole of the duty of excise leviable thereon subject to certain conditions. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The explanation (i) appearing in the said notification clarified that inputs' does not include “machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products;”. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">During the era of the said notification, the assessee had a similar problem on hand – they were denied the benefit of the notification 217/86- CE in respect of lifting tackles, trolleys, conveyors and measuring instruments such as gauges/templates manufactured by them for being utilized captively in the manufacture of final products.   </font></p><p align="justify"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2">See our columns tomorrow for the judgements </font></strong></p><p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Until Tomorrow with more <strong>DDT </strong></font></p><p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Have a nice day.</font></p><p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Mail your comments to</font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p></div>
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