TIOL-DDT 882 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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 bgcolor="#FFFFFF">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 882 </font><br>
09.06.2008 <br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXPORT
DUTY ON IRON AND STEEL – BOARD CLARIFIES </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Export duty has been imposed on specified iron and steel items w.e.f 10.5.2008. The effective rates of export duty on various items have been prescribed through Notification No. 66/2008-Customs dated 10.5.2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The relevant entries in the Second Schedule as well as the notification specify only the product description to which the export duty is meant to apply. Representations have been received in the Board that there is lack of clarity about the scope/coverage of these entries and customs formations have sought to charge export duty on items such as forgings of iron and steel, structures and articles. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Second Schedule to the Customs Tariff Act, 1975 (i.e. the Export Schedule) is not aligned with the Harmonized System of Nomenclature (HSN) as a result of which it has not been possible to indicate the corresponding heading no/ sub-heading no. of the HSN in notification No.66/2008-Customs. However, the description of the relevant entries have been borrowed from the First Schedule or the Import Schedule. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since there is already a practice of asking the exporter to declare the six-digit classification on the Shipping Bill, the information provided in the Table can easily be used to determine whether or not export duty is applicable in a particular case. Further, the classification of various items in the First Schedule to the Customs Tariff Act is not a matter of any doubt, as the relevant principles are clearly announced in the Rules for interpretation of the First Schedule. The same guiding principles may be followed by assessing officers in deciding whether a particular iron/steel product will attract export duty or not. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board cannot classify the product but wants the field to do it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2008/steelexport.htm">CBEC F. No. 3414/41/2008- TRU, Dated: June 3, 2008 </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Year of assessment – whether relevant when the tax rates are same – frivolous appeal? </strong></font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In a decision rendered about 50 years ago, the Bombay High Court, speaking through Chief Justice Tendolkar in Commissioner of Income Tax, Delhi, Ajmer, Rajasthan and Madhya Pradesh vs. Nagri Mills Co. Ltd, observed as follows:- </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">We have often wondered why the Income tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income tax Act, raise disputes as to the year in which the deduction should be allowed. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A similar issue came up recently before the Delhi High Court with a question of Law, <font color="#FF6633">Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee had correctly charged to its Profit and Loss account for the assessment year 1982-83, the expenditure on account enhanced rate of purchase of gas for the period 1.7.79 to 15.9.80.</font> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
High Court observed (</font><strong><font face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2008/2008-TIOL-306-HC-DEL-IT.htm"><font size="1" face="Verdana, Arial, Helvetica, sans-serif">2008-TIOL-306-HC-DEL-IT</font></a></font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">), </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The situation does not seem to have changed over the last fifty years and the Revenue continues to agitate the question whether tax is leviable in a particular year or in some other year. This is hardly a question that should require us to exercise our minds particularly since there is no doubt that the tax has been paid and the rate of tax remains the same for both the assessment years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does the Revenue Departments exist for the sole purpose of promoting the profession of lawyers? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Betel Nuts – free </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Betel Nuts will be allowed freely if CIF value is Rs 35/- per Kilogram and above. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2008/dgft08not015.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification NO 15 (RE-2008) / 2004-2009, Dated: June 4, 2008 </font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Endorsement of permitted imports on duty credit scrips, issued under Target Plus Scheme - Procedure </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT has received representations from Trade and Industry that there is confusion with respect to ‘permitted imports' under the scheme. It has been decided to list the permitted imports. Accordingly under Target Plus Scheme (under FTP RE2004 / FTP RE2005), the following endorsement may be made by RA concerned on duty credit scrips issued under DFCE for the Scheme, upon requests received on the letter head of the applicant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“In terms of Para 3.7.6 of the FTP, the following are allowed to be imported under the scheme, provided these are freely importable under the ITC HS: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Any inputs (having nexus with exported products – Para 3.2.5 of HBP v1) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Capital goods including spares (having nexus with exported products – Para 3.2.5 of HBP v1), </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Office equipment, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Professional equipment, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Office furniture, </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Agricultural Products covered under Chapter 1 to 24 except (a) to (f) below. However, Import of all edible oils classified under Chapter 15, shall be allowed under the scheme only through STC and MMTC. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. Garlic, Peas and all other Vegetables with a Duty of more than 30% under Chapter 7 of ITC (HS) Classification of Export and Import items. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. Coconut, Areca Nut, Oranges, Lemon, Fresh Grapes, Apple and Pears and all other fruits with a Duty of more than 30% under Chapter 8 of ITC (HS) Classification of Export and Import items. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. All spices with a Duty of more than 30% under Chapter 9 of ITC (HS) Classification of Export and Import items (except Cloves). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. Tea, Coffee and Pepper as per Chapter 9 of ITC (HS) Classification of Export and Import items. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e. All Oil Seeds under Chapter 12 of ITC (HS) Classification of Export and Import items. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">f. Natural Rubber as per Chapter 40 of ITC (HS). </font></p>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft08cir010.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 10 (RE-2008)/2004-2009 Dated 5 th June, 2008</font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax and petro hike – truckers to go on strike </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All India Motor Transport Congress, the apex body of truckers in the country, threatened to go on a nationwide strike from July 2 if its demands for a fixed duty on diesel and exempting them from service tax are not met. AIMTC, which has over 2,000 individual truck operators with more than 40 lakh trucks plying across different parts of the country, said truck operators should be taken out <br>
of the ambit of service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cabs in Andhra Pradesh were recently on strike against the double taxation of Service Tax and VAT on them. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CCIT conference today – FM to inaugurate </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Minister Chidambaram is to inaugurate the 24th Annual Conference of Chief Commissioners & Directors General of Income Tax in Delhi today. The valedictory address will be given by Minister of State for Finance S.S. Palanimanickam. The Conference will discuss speeding up processing of tax returns, augmenting revenue collection, improving selection and quality of tax scrutiny, managing switchover to single national database, creation of knowledge bank and database of best practices, implementation of the Business Process Reengineering (BPR) report, and improving investigation techniques and oversight mechanism within the department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Direct tax collections at Rs.3,14,468 crore surpassed indirect taxes for the first time by about Rs.34,000 crore in the fiscal 2007-08. Higher direct tax collections have helped the government reduce fiscal deficit, meet the FRBM targets, and increase public investment in the social sectors. In view of the responsibility of being the primary contributor to the exchequer of the Government of India, the Income Tax department will discuss various issues relating to further improving direct tax administration during the Annual conference of Chief Commissioners and Directors General of Income Tax. </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></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><font color="#663399">Central Excise</font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Manufacture on job work Comparable price or cost construction method to be adopted (old valuation rules): Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee is a job worker. Raw material is supplied to it and after processing, the manufactured product is sent back to the depots of the supplier, viz., Hindustan Lever Ltd. For such products, valuation can be done on the basis of price of comparable goods under Rule 6(b)(i) or failing that under Rule 6(b)(ii) of the Valuation Rules on the basis of the cost of manufacture plus notional profit, in order to arrive at the nearest ascertainable equivalent of the price [stipulated under Section 4(1)(a)] as contemplated under Section 4(1)(b) of the Central Excise Act, 1944 </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Encashment of bank guarantee as security for duty in event of non-fulfilment of export obligation is not a payment of duty – refund to be granted: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Tribunal was whether in such a case time limit under Section 27 would apply. The Tribunal relied on the its own decision in the case of Commissioner of Customs, Chennai Vs Aristo Spinners Pvt. Ltd <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-870-CESTAT-MAD.htm"> <font size="1">2007-TIOL-870-CESTAT-MAD </font></a></strong>which was confirmed by the Madras High Court and in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2008/2008-TIOL-87-HC-MAD-CUS.htm"><font size="1">2008-TIOL-87-HC-MAD-CUS</font> </a></strong> and held that the amount paid in lieu of renewal of bank guarantee would not attract the mischief of time limit under Section 27 of the Customs Act. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Transfer of technical knowhow by non-resident company - since payment was made only for right to use and not sale of technical knowhow, it is revenue expenditure: Delhi HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE issue before the High Court is whether the payment made for transfer of technical knowhow to a non-resident company is revenue or capital expenditure? And having perused the clauses of the agreement the Bench has held that what was transferred to the Assessee was only a right to use the technical know-how and there was no sale of the technical know-how which the Assessee could exploit. The Assessee's rights were hedged in with all sorts of conditions, clearly making it a case of right to use the technology and not sale of the technical know-how. Therefore, the payment made by the Assessee to the non-resident company was revenue expenditure. </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 color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong> </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p>
</body>
</html>