TIOL-DDT 886 · 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 886</font> <br>
13.06.2008 <br>
Friday</strong> </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service tax on bed rolls….. The activity of supplying bed rolls by contractors to Indian Railways for use by upper class passengers in trains is a taxable service says DGCEI and DGST.</strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI
and DGST are of the view that Service tax is leviable on the activity of
supplying bed rolls to upper class railway passengers. To highlight this
activity and the consequent evasion of service tax by such contractors, DGST
issued a modus operandi circular alerting the field formations about evasion
of service tax by certain railway contractors who are engaged in the activity
of providing bed rolls to the passengers travelling in upper classes in trains.
It was explained by the DGST that this activity of supplying bed rolls to
passengers travelling by Indian Railways amounts to provision of <strong><font color="#FF6633">customer
care services on behalf of the clients and would come under the purview of
Business Auxiliary service</font></strong>. The field is alerted that the
demands raised against such contractors have been confirmed and that appeals
against these Orders are pending in CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The moot point is which Adjudicating authority has the temerity to drop the demand notices issued to the assessees based on intelligence inputs from DGCEI. The Circular goes on to state that the assessees have appealed against the Orders and the same is pending in CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The CESTAT has in one case ordered pre-deposit of Rs. 20 lakhs. </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=70&filename=pitara/phoren_training/mo_circular.htm" target="_blank">F.No.V/DGST/21 (06)/M.O./2007/2225 MUMBAI dated 05/05/2008 </a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Officers of the Directorate General of Audit vested with powers of Central Excise Officers </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Board of Excise and Customs has appointed the Officers of Directorate General of Audit, Customs and Central Excise, as Central Excise Officers and invests them with all the powers of Central Excise Officer corresponding to their Ranks. They shall exercise these powers throughout the territory of India. </font></p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Serial No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Officer </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise officers whose powers are to be exercised </font></strong></p></td>
</tr>
<tr>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) </font></strong></p></td>
</tr>
<tr>
<td><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Additional Director General </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner </font></p></td>
</tr>
<tr>
<td><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Additional
Director </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Additional Commissioner </font></p></td>
</tr>
<tr>
<td><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Joint Director </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Joint Commissioner </font></p></td>
</tr>
<tr>
<td><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Deputy Director or Assistant Director </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Deputy
Commissioner or Assistant Commissioner </font></p></td>
</tr>
<tr>
<td><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Superintendent </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Superintendent </font></p></td>
</tr>
<tr>
<td><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inspector </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inspector </font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly, it may be noted that Rule 22 (1) of the Central Excise Rules, 2002 states that an Officer empowered by the Commissioner shall have access to the registered premises of the assessees and such assessees shall furnish a list of records as detailed in sub-rule (2) thereof, in duplicate. All the Officers working in the Audit wings of all the Commissionerates across the country are empowered by the Commissioners under this Rule. Now, pursuant to this Notification, the respective Additional Director Generals in charge of various jurisdictions across the country have to empower the Officers working under them with access to the registered premises. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This leads to an absurd situation because CBEC had issued a host of Circulars in the past outlining the guidelines to be followed by field formations in implementing and conducting Central Excise Audits and Service Tax Audits in the EA-2000 format in consultation with the DG (Audit). Hitherto, prior to the issue of this Notification these Officers working in various cells coming under the purview of DG (Audit) have been conducting regular Audits, especially Audits of assessees who had multi-locational units. Now does it mean that the Audits conducted by such Officers in the past were without jurisdiction and illegal? Are the visits of such Officers to the premises of the assessees without the authority of law? May be Board has an answer. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/exnt08_28.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO 28/2008-Cex., (N.T.), Dated: June 5, 2008</font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti-dumping duty on Potassium Carbonate, originating in, or exported from, the European Union (EU), the People's Republic of China, Korea RP and Taiwan extended till June 9, 2009. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Designated Authority had initiated a review on imposition of anti-dumping duty on Potassium Carbonate imported from EU, China, Korea and Taiwan by issuing a Notification on May 22, 20008 and pending such review, the Central Government has issued a Notification extending the anti-dumping duty on Potassium Carbonate by one more year , ie. upto June 9, 2009 (inclusive of this day). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Wondering how a Notification issued on 11th June 2008 for one year would expire on 9 th June 2009? Look at the wisdom of our babus in covering up their delays: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The original notification 37/2004 Cus dated 20-2-2004 expired on 9th June 2008 and the Notification extending the Anti Dumping duty should have been issued on 10th June 2008. But as the Notification extending the ADD was issued only on 11th June, they made it to expire on 9th June 2009, thereby indirectly imposing ADD on 10 th June 2008 the day on which there was no ADD as there was no Notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The correct position should be to issue the extending Notification on 10th June 2008 and make it expired on 9th June 2009. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_076.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO 76/ 2008-Cus., Dated: June 11, 2008 </font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">48th Fellowship programme for English speaking Customs Officers to be held in WCO Headquarters from September 29, 2008 to November 7, 2008 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The WCO has invited nominations from mid-level officers of Customs (from Assistant Commissioner to Additional Commissioner) upto the Age of 45 years for this unique Fellowship programme. The Ministry of Finance has called upon all the Chief Commissioners of Customs / Central Excise, All Directors General, All Officers of IRS (Cus & C.Ex) working in the Board to nominate suitable officer under their charge, strictly on merit. Interestingly, the WCO invitation and the programme guidelines stipulates that the nominated officers should be mid level managers with at least four years of service in Customs and with assessed potential for further advancement. Is there any middle level Officer in the country who is assessed and declared as not potential for further advancement? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The last date for submission of nominations to the WCO is June 20, 2008 and the Ministry wants the nominations from the field formations to reach its office by June 15, 2008 with a strict rejoinder stating that nominations received after June 15, 2008 will not be considered. Ironically, June 15, 2008 happens to be a Sunday and this itself is a good ground to break the strict norm imposed by the Ministry. Moreover, is there anybody working on a Sunday in North Block? These are not Budget days but rainy days. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/528_letter.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F.No. 528/12009/2008-CUS/ICD Dated June 9, 2008 </font></a></p>
<p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">Vizag,
all set for mega seminar! </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CBEC Chairman, Mr P C Jha, and Service Tax Commissioner, Mr Gautam Bhattacharya,
are to address the grand Seminar at Vizag tomorrow. The power packed
seminar will also have the services of eminent advocates Mr. Jai Kumar and
Mr. Prabhakara sastry apart from the TIOL leaders. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you details soon after the seminar is over. </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">– Monday'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 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_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></font></strong></font></strong></font></strong></font><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>Notification 6/2002-CE, Condition no. 53 – unjust CENVAT ‘enrichment' – it is not conclusively proved that Explanation to Rule 3 will be applicable – issue of interpretation – Pre-deposit waived by Tribunal. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Plain reading of the above said condition would indicate that the assessee who has availed the credit of duty paid on chassis will get covered under the said serial no. 214 but whether this will apply to person or assessee who has availed credit of inputs and capital goods needs to be examined in detail... The issue involves interpretation of the explanation and notification 6/2002, is an issue of interpretation of statute. As such, we find that the applicants have made out a case for the waiver of pre-deposit of the amounts involved. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of Services – Commission received by appellant from General Motors through Indian Railways in Indian Rupees in lieu of foreign exchange as less foreign exchange was released - Machinery of a statue should be interpreted so as to promote the object and purpose of the scheme – Denial of rule 4 not justified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is well settled that machinery of a statute should be interpreted so as to promote the object and purpose of the scheme. Further, once the legislative intention is properly understood, then the case should be decided in fulfilment with the legislative intention. In the present case, it is revealed from contract that the appellant would be paid USD equipment to non-convertible Indian. Rupee at the Rate of Exchange prevailing on the date of supply order. It is noted that the equivalent amount of foreign exchange payable to the appellant was not released to the Indian Railways, and therefore, the appellant complied with the provision of Rule 3(1)(b) of the Rules.</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>For deduction under Section 80I/80IA there must primarily be manufacture or production of articles or things involving a new undertaking or undertakings. The relevant tests in this behalf have been laid down by the Supreme Court as under : - </strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Investment of substantial fresh capital in the industrial undertaking set up; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Employment of requisite labour therein. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Manufacture or production of article in the said undertaking. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Earning of profits clearly attributable to the said new undertaking; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Above all, a separate and distinct identity of the industrial unit set up </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no doubt that the benefit of section 80-I/80-IA is not available to a unit or new unit unless the unit is in the nature of an ‘undertaking'. The term ‘unit', according to The New Oxford Dictionary of English, signifies an individual thing or person regarded as single and complete, especially for purposes of calculation… We have already considered identical issue and restored the same for a fresh consideration and decision to the file of the CIT (A). Following the same, the aforesaid issue is restored to the file of the CIT (A) for a fresh decision. Second issue relates to the exclusion of sales tax and excise duty from the total turnover for the purpose of working out the relief under section 80HHC… </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See
our columns Monday for the judgements </font></strong></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>
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