TIOL-DDT 877 · 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
877 </font><br>
02.06.2008 <br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Under
a thana (police station), no crime can take place without the knowledge or connivance
of at-least one officer – FM at the Chief Commissioner's conference.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Inaugurating the two-day conference of Chief Commissioners and Directors General
of Customs & Central Excise Department, the Finance Minister, P. Chidambaram,
expressed his unhappiness over the consistent short-fall in Central Excise Revenue.
He refused to agree with the view that there is something wrong in the target
fixation. He also refused to agree that Commissioners and Chief Commissioners
are over-worked. He wanted them to gear-up and identify evasion. Apart from
misuse of the cenvat credit facility, he wanted officers to ensure that clandestine
removal is arrested.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
meeting started with a performance report by the Chairman of the CBEC Mr. P.
C. Jha. Several presentations were made at the meeting by DGs and other senior
officers on</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(1) Action taken report on last year's recommendations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Performance
appraisal.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Automation
initiatives in CBEC.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4) Issues
related to SEZ. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5) Integrity
Management in CBEC.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(6) Service Tax</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(7) Legal & judicial matters.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(8) Current Commercial and Smuggling Frauds</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
There was a general consensus that DGCEI and DRI should be strengthened, especially
as they had been responsible for huge recovery of duties. The Finance Minister
was of the opinion that it was the field formations which have to be strengthened
as DRI and DGCEI had limited roles. He, however, appreciated the fact that revenue
collections improved after the DGCEI or DRI booked cases. He specifically mentioned
the Rajkot Tiles case where evasion had been going on unchecked for years and
after the DGCEI booked the case, there was a spurt in revenue. Thus, the cases
registered by these agencies are only samples and field formations should identify
similar cases and recover revenue. In this context, the DG (DRI) made a
fervent appeal to the field that the DRI should be seen as a support system
and not as an adversary. He requested the Chief Commissioners to provide
manpower to the Directorates.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The DG (Systems) said that ACES – Automation in Central Excise & Service
Tax with a powerful data warehouse will be a reality soon.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>SEZs – What is the role of Customs?</strong> This was an interesting
topic discussed in the meeting. At present, only Deputy Commissioners of Customs
are posted in the SEZs. Who will adjudicate cases beyond the powers of the DCs?
Will the jurisdictional Customs & Central Excise officers adjudicate cases
relating to unauthorised operations in the SEZs? These were some of the questions
raised in the conference. However, the question whether clearances to SEZ are
liable for export duty was not a topic for discussion. May be the revenue officers
are convinced that duty is liable and there is no doubt on that.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Though the conference had not taken any decisions as such, many participants
felt that the conference was very useful as it had thrown up a lot of issues
on which the Board should now take decisions.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Delivering the valedictory address, the Minister of State for Finance, Mr. Palanimanickam,
said that these conferences were held with the same agenda year after year. He
suggested that the agenda should be finalized in consultation with the field
formations. He emphasized the importance of training and said that training
should not be considered as a dumping ground.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
See you next year with the same agenda and same issues.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
Importance of Training</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The Chief Commissioners' conference ended with the MOS making a fervent appeal
that the training should be given due importance and not treated as a dumping
ground. Was there any indication of these lofty goals in the transfer orders
issued immediately after the conference?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
In the famous Z. B. Nagarkar case, the Supreme Court observed,</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
“there is a charge of mis-conduct against the Collector of Central Excise. While
the disciplinary proceedings are pending against him he was transferred to
National Academy of Customs, Excise & Narcotics to guide the probationers. It
is certainly a paradoxical situation that a man who is not fit to hold the
post of Collector is fit enough to impart training to the probationers entering
the service. Best talents should be sent to the academy to teach the
probationers. Posting to the academy should be considered as an honour and
not punishment”.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
It is nearly ten years since the Hon'ble Supreme Court gave this sage advice
and the honourable MOS has expressed the same feelings to the Chief Commissioners.
But does anybody ever consider these sentiments while making transfers. Officers
are posted to NACEN not because they are good for training but mostly because
they are not wanted in the field.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The future of the department is shaped in the hallowed portals of NACEN and
we cannot afford to take risks with posting incompetent and unwanted officers
in the academy. If a doctor fails, a patient may collapse; if an engineer
fails, a bridge may collapse; if a teacher fails, a whole generation collapses.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
No Duty Drawback for Iron & Steel, Rice and Cement</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 have
been amended to stipulate that No amount or rate of drawback shall be determined
in respect of any of the goods falling within Chapter 72 (Iron & Steel)
or heading 1006 (Rice) or 2523 (cement) of the First Schedule to the Customs
Tariff.</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_064.htm" target="_blank">Notification
No. 64/2008-Cus.,(N.T), Dated: May 29, 2008</a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
Export warehousing extended to Bidadi in the Bangalore Rural District, Karnataka</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Board is of the view that extension of the facility of export warehousing to
Bidadi in the Bangalore Rural District, Karnataka would facilitate the trade
and industry. And so be it.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2008/excircular871.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
CBEC Circular No. 871/9/2008-CX,Dated: May 30, 2008</font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
Stayed officers can stay put till AGT - CBDT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
CBDT vide its letter dated 31.3.2008 had directed all CCs and DGs that officers
whose transfer orders had been stayed on some ground or the other, should be
allowed to continue till 30.5.2008 or the Annual General Transfer (AGT) 2008,
<font color="#FF6633"> <strong>whichever is earlier</strong></font>. Now the
Board has changed it to <font color="#FF6633"><strong>whichever is later</strong></font>.</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/relieving_officers.htm">F. No.A-35015/6/2008 – Ad. VI, Dated: May 30, 2008</a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
CST at last reduced to 2% - And it's true.</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
On the basis of the discussions between the Empowered Committee (EC) of State
Finance Ministers and the Union Finance Minister regarding the compensation
package, the Government of India, has issued a notification on 30th May, 2008
to bring into effect from 1st June, 2008 the new reduced rate of CST of 2 per
cent on inter-State sales of goods. The notification of new CST rate of 2 per
cent in place of earlier 3 per cent is in accordance with the announcement made
by the Union Finance Minister in his budget speech in Parliament in February
2008 that the rate of Central Sales Tax would be reduced.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The rate of CST on inter-State sale of goods to registered dealers (against
Form-C) shall now be at 2 percent. This reduction forms a part of the roadmap
for phasing out CST completely by 31st March, 2010 in preparation of introducing
Goods & Services Tax (GST), the roadmap for which is being worked out by
the EC of State Finance Ministers together with the Union Finance Ministry.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The Central Government and the Empowered Committee of State Finance Ministers
have further agreed that the compensation for revenue loss to the States in
any year arising from the lowering of CST will be limited to the proportionate
loss based on the actual collection of CST in the relevant year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
There was rumour that the notification was withdrawn, but It's true; we have
the notification for you.</font></p>
<p align="justify">
<font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/cst_notification.pdf" target="_blank">Notification No. 1/2008 – CST –F. No../28/11/2007 – ST Dated May 30, 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><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></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 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 color="#663399"><strong>Service
Tax</strong></font></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>Tribunal cannot reduce penalty below mandatory minimum; When Commissioner
(A) dismisses an appeal for failure to make pre-deposit, Tribunal cannot decide
appeal on merits; Rajasthan High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Where the two limits have been prescribed, being the minimum and upper limit,
then obviously the free play is available between the two limits only, and the
discretion can be exercised, within those limits, but then, that does not mean,
that the authorities have any power to impose penalty less than the minimum
prescribed by the Section.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>When Commissioner (Appeals) dismisses an appeal for failure to make
pre-deposit, Tribunal cannot decide the appeal on merits –</strong> admittedly
the requirement of pre-deposit has not been complied with. Even the Tribunal
has not recorded any finding in this regard, and on the face of language of
Section 35F, there is no escape from the conclusion, that the appeal was rightly
dismissed by the learned Commissioner, and the learned Tribunal could not entertain
the appeal on merits.</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>Conversion of sales tax liability into loan – no additional Income Tax
liable - where a return is filed, law applicable would be law as it stood on
date of filing of return – ITAT Third Member</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
When additional tax has the imprint of penalty the Revenue cannot say that levy
of additional tax is automatic under section 143(1A) of the act. If additional
tax could be levied in such circumstances it will be punishing the assessee
for no fault of his. That cannot ever be the legislative intent.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">
Central Excise</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>Interest is paid as a measure of compensation to make good loss for
delayed payment – Commissioner (A) holding that assessee is liable to pay interest
from month following month in which provisional assessments were finalized is
out and out in conflict with mandate of law: Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The expression "consequent to order for final assessment" in the rule, is suggestive
of something which is too obvious. The liability to pay interest arises only
when assessment is made but it does not mean that for the period prior to the
date of assessment, interest will not be charged. At the stage of final assessment,
the assessee may be held entitled to refund or liable to pay the difference
between the amount paid on provisional assessment and the amount finally determined
as duty payable. In either case, the interest will be paid to the assessee or
charged from him, as the case may be, from the first day of the month succeeding
the month for which such refund or duty is determined. This is the result of
a combined reading of sub-rules (4) and (5) of Rule 7. Whether the assessee
is liable to pay any differential amount or is entitled to refund can be found
only when the final assessment is made. But it does not mean that interest is
to be charged from the first day of the succeeding month when the amount is
determined i.e, the assessment is finalized, as held by the Commissioner. The
<strong>determination merely quantifies the liability.</strong></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">
See our columns tomorrow for the judgements</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<font color="#FF6600">Until Tomorrow with more <strong>DDT</strong></font></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
Have a nice Day.</font></p>
<p align="justify"><font color="#FF6600" 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" target="_blank">vijaywrite@taxindiaonline.com</a>
<br>
</font></p>
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