TIOL-DDT 895 · 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
895 </font><br>
26.06.2008 <br>
Thursday </strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">MRP
valuation – CBEC bows to Apex Court and revises Circulars</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the celebrated <em>Jayanti Food Processing </em>case, the Supreme Court
decided several issues relating to MRP valuation and demolished the views of
the Board. This judgement was delivered on 22.08.2007 and we brought this to
you on 24.08.2007. Now the Board has accepted the decision of the Supreme Court
and has withdrawn some of the circulars issued earlier.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
circular no. 843/01/2007 dated 17.01.07, Board had clarified that bulk sale
of ice cream in packages to hotel/catering industry etc. is required to comply
with the provisions of Standards of Weight & Measures (Packaged Commodities)
Rules, 1977, and accordingly, the assessee is required to declare the retail
sale price on such packages.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Supreme Court in the judgement held that <font color="#FF6633">Package
which was sold by assessee could not be termed as “retail package” nor the sale thereof
be termed as a “retail sale” and as such there was no requirement
of mentioning the “retail sale price"</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has realised that the said circular has become redundant and advises
the field so.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Circular No. 625/16/2002 dated 28.02.02, paras 3 and 4, Board
clarified that,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In respect of <strong>telephones</strong> falling under heading
85.17 and notified u/s 4A it was noticed that the manufacturers also make bulk
supplies of telephone instruments to the Deptt. of Telecommunication (DOT)
and the MTNL, who in turn provide these instruments, on rental basis, to the
telephone subscribers. In these cases valuation will have to be done under
sec.4 of the C.E. Act, 1944.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Supreme Court held that, assessment is
to be done under Section 4A.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So these paras 3 and 4 of Circular No. 625/2002
have become redundant.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is commendable that the Board has decided to amend
its circulars. Board should undertake a review of all its circulars and remove
all the redundant ones.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are instances where there are Supreme Court decisions
which are contradictory to Board Circulars and as the Board Circulars are not
withdrawn, the field continues to issue Show Cause Notices based on these circulars.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT
was witness to an Additional Commissioner directing a Superintendent to arrange
to file an appeal before the CESTAT, even though the issue had been finally
decided by the Supreme Court in favour of the assessee, just because there
was a redundant circular of the Board which was not withdrawn. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2008/excircular873.htm" target="_blank">CBEC
Circular No. 873/11/2008-CX., Dated: June 24, 2008</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">No Drawback for HSD and Furnace Oil supplied to SEZ</font></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has amended <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_068.htm" target="_blank">Notification
No. 68/2007 – Cus NT</a>, to make the
drawback rate from Rs. 1160/- to “nil” for <em>High Speed Diesel
and Furnace Oil supplied by domestic oil companies to the Units located
in Special Economic Zone</em>. </font></p>
<p><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_078.htm" target="_blank"><strong>Notification No. 78/ 2008-Cus.,(N.T.), Dated: June 24, 2008</strong></a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Export
of sandal wood oil – time
extended till 31.12.2008</font></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Public Notice No.38/2006 dated 31.7.2006, the DGFT
had permitted export of 1 MT of sandalwood oil by M/ s.Tamil Nadu Forest
Plantation Ltd., Tiruchirapalli and Private Companies who purchased Sandalwood
Oil from M/s. Tamil Nadu Forest Plantation Ltd till 31.03.2007. Apparently
not even 300 kgs of the oil could be exported. So the DGFT has extended the
validity for the balance quantity of 710 Kgs till 31.12.2008.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly
by Public Notice No.95 (RE-2005)/2004-2009, dated the 30th March, 2006, a
quantity of 10 MT of "Sandalwood Oil" for export was allowed
till 31.12.2007 exclusively by manufacturer exporter. This date has also
been extended till 31.12.2008, for the balance quantity of 1143.5 Kgs.</font></p>
<p><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn031.htm" target="_blank">DGFT Public Notice No. 31</a></font></strong><font size="2"> and <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn032.htm" target="_blank">32 (RE-2008)/2004-09,
Dated: June 24, 2008</a></strong></font></font></p>
<p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">ONGC is highest Income Tax payer</font></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As Oil Companies
are reeling under price pressure, Oil producer has become the highest tax payer
by paying an advance Income Tax of Rs. 1333 Crores. The Second and Third places
also go to State owned State bank Of India and SAIL, with SBI paying Rs. 663
Crores and SAIL paying Rs. 457 Crores.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The collection from corporate income
tax stands at Rs 30,655 Crore, growing by 39.81 per cent over previous year,
while the collection from personal income tax stood at Rs 18,756 Crore showing
a growth rate of 49.82 per cent over previous year, the statement said.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden<font color="#FF6633"> tiol</font> – Tomorrow's cases </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central
Excise</font></strong> </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><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></strong></strong></strong></strong></strong></strong></strong></font><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">Sr
Executive leaving office for personal engagements - Since Appellant is a
Public Ltd Co, any other authorized person could have taken steps for purpose
of filing appeal – Appeal rightly rejected as being time barred:
Tribunal</font></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Take
a look at the affidavit filed by the Senior Executive of the company narrating
the reasons for the delay –</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"That
due to sudden fixing of engagement of my only sister's daughter at my native
place (Kota - Rajasthan), I was forced to leave immediately from Jammu
on 21st January, 2006 and immediately marriage was also fixed for 13th
February, 2006. Looking to the circumstances and being only close relative
from maternal side, I could not join my duties before 20th February, 2006. "</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal observed that the Commissioner (Appeals) was
right in taking a view that the reasons for delay is not convincing and had
correctly reached a finding that since the appellant is a corporate unit, the
other persons could have taken steps for the purpose of filing the appeal.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Prosecution in Central Excise case permissible even when demand dropped
by Commissioner on limitation - Board's instructions on monetary limits not
binding on courts: Madras High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Monetary limits for prosecution: </strong>It was argued that as per
Board circular F.No.208/31/97- C X.6, dated 12.12.1997, prosecution limit is
Rs. 25 lakhs and as the duty here was less than that, the prosecution deserves
to be quashed. The High Court was not impressed as such a circular is binding
on the Department and not on the Criminal Court. . If it is a case relating
to prosecution in respect of non payment of duty alone, then the circular may
be utilised by the accused. But, in this case, the Prosecution is not only
for evasion of duty but also for non-furnishing of the information etc., which
have got nothing to do with the monetary limits mentioned in the circular</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income
Tax</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Income Tax loses yet another Transfer Pricing case; Tribunal re-establishes
supremacy of principles of FAR; Revenue not justified in selecting oversized
comparables with abnormal profit margins for adjustments</font></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN
the latest Transfer Pricing (TP) case, a new genre of taxation within the
Income Tax, the Tribunal has once again established the supremacy of the
concept of FAR (Functions, Assets & Risks)
in working out the Arm's Length Price (ALP). In no uncertain terms the
Tribunal held that the Revenue should opt for robust and comprehensive
FAR analysis for choosing comparable companies and if need be, the necessary
adjustements can also be made in the operating profits of the comparable
companies.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Tribunal ruled that while comparing the controlled and uncontrolled transactions
under the Transactional Net Margin Method (TNMM), the differences having tangible
bearing on costs, price or profit are to be given weightage to make reasonable
adjustment to eliminate them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>While holding it against the Revenue the Bench observed that the Revenue
had no legitimate ground for picking up oversized companies in order to compute
the average profit of the industry for TP purposes.</strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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