TIOL-DDT 904 · 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 904 </font><br>
09.07.2008 <br>
Wednesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Effective Rate of Duty on Cement – CBEC clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Notification No. 4/2006-CE dated 1.3.2006, the duty on cement is as follows:- </font></p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
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<td valign="top" width="11%"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1A . </font></p></td>
<td valign="top" width="22%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2523 29 </font></p></td>
<td valign="top" width="66%" colspan="2"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All goods, whether or not manufactured in a mini cement plant, not covered in S.No . 1 and cleared in packaged form,- </font></p></td>
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<td valign="top" width="74%" colspan="3"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne equivalent retail sale price not exceeding Rs. 3800; </font></p></td>
<td valign="top" width="25%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs. 350 per tonne </font></p></td>
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<td valign="top" width="74%" colspan="3"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. of retail sale price exceeding Rs. 190 per 50 kg bag or of per tonne equivalent retail sale price exceeding Rs. 3800 </font></p></td>
<td valign="top" width="25%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12% of retail sale price </font></p></td>
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<td valign="top" width="11%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1B . </font></p></td>
<td valign="top" width="22%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2523 29 </font></p></td>
<td valign="top" width="40%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All goods, manufactured in a mini cement plant, other than <br>
those cleared in packaged form; </font></p></td>
<td valign="top" width="25%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rs.250 per <br>
tonne </font></p></td>
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<tr>
<td valign="top" width="11%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1C . </font></p></td>
<td valign="top" width="22%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2523 29 </font></p></td>
<td valign="top" width="40%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All goods, whether or not manufactured in a mini cement <br>
plant, not covered in S.No.1B , other than those cleared in <br>
packaged form; </font></p></td>
<td valign="top" width="25%"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14% or Rs.400 per tonne, whichever is higher. </font></p></td>
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</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Explanation adds, </font></p>
<blockquote>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">“retail sale price” means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and <br>
the price so printed is the sole consideration for the sale: </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that if the goods are cleared in wholesale packages containing a number of standard packages with retail sale price declared on them, then, such declared retail sale price shall be taken into consideration for determining the rate of duty under respective S.Nos . referred to above: Provided further that if the declared sale price on wholesale package and on the standard packages is different in terms of per tonne equivalent sale price, then, the per tonne equivalent sale price of the wholesale package or per tonne equivalent retail sale price of the standard packages, whichever is higher, shall be taken into consideration for determining the rate of duty: </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided also that where the retail sale price of the goods are not required to be declared under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged form; </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board clarifies, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the provisions of Standard of Weight and Measures Act, 1976 and the rules made thereunder, in the following circumstances sale of goods even in packaged form will not attract the provisions of said act or the rules made there under : </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) In case the size of the bag is more than 50 kg . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) Where the sale is to an Institutional/Industrial consumer as defined under SWMR (PC) rules; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii) The sale is not a retail sale as per the definition of 'retail sale' under the aforesaid rules. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No RSP is required to be printed on the goods in respect of above mentioned categories of sale. Hence they will be covered under Sl. No. IB or IC of the notification No. 4/2006- CE by virtue of second proviso to Explanation II in the notification No. 4/2006 dated 1.3.2006 as amended. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants all pending disputes to be settled on the basis of the above clarification. </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=31&filename=notification/excise/2008/cement.htm" target="_blank">CBEC 's Letter F. No. 124/02/2008- CX -3 Dated: June 12, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Submission of multiple applications and part payments for claiming deemed export benefits – DGFT clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per paras 8.3.1(ii) and (iv) of HBP V I, claims for deemed export benefits should be filed within a period of twelve months from the date of payment / date of receipt of supplies by project authority. It is also laid down that 100% Terminal Excise Duty refund may be allowed after 100% supplies have been effected physically and payment received at least up to 90%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been pointed out by Trade and industry that in case of project supplies, there are large number of supplies and it will be difficult if only one application within 12 months time is allowed, as is being interpreted by some RAs. Another issue raised is that claims on the basis of part payments are being disallowed by some authorities on the ground that as per PN 102 dated 16.1.08, 100% TED may be allowed after 100% supplies have been made physically and payment received upto 90%,. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has clarified </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. To reduce the paper work and ensure proper monitoring, there is necessity to limit the number of applications which an applicant may file within a financial year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In respect of all the claims arising for a particular calendar month /quarter (as per option of applicant), a single consolidated application should be filed within the stipulated time period. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. This may cover claims arising in respect of more than one EPCG licence and /or Invalidation letters / ARO , project supplies etc. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Any subsequent application filed later on, in respect of claims arising in the same calendar month / quarter (as per exercised option of applicant) will be treated as supplementary claim for the purpose of applying cut as in para 9.4 of HBP v1 . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Further, the condition of 100% supplies and 90% payment apply for 100% TED refund. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Accordingly, TED reimbursement on <em>pro - rata </em> or actual basis whichever is less, would be admissible for part payments received, subject to production of documents evidencing payment of TED . </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft08cir017.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular NO 17 (RE-2008) 2004-09, Dated: July 4, 2008 </font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Average Export Performance – Subsequent EPCG </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has amended the Handbook of Procedures, 2004-09 Vol.I (RE 2008), to stipulate that, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Exports made against an EPCG licence/authorization, which have not been redeemed, shall not be added up for calculating the average export performance for the purpose of subsequent EPCG authorization." </font></p>
</blockquote>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn039.htm" target="_blank">DGFT PUBLIC NOTICE No. 39 (RE-2008)/2004-2009 Dated 4 July, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EOUs – Subcontracting of production process abroad </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 6.21.5 the Handbook of Procedures, 2004-09 Vol.I (RE 2008) reads as follows:- </font></p>
<blockquote>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">"In case of sub-contracting of production process abroad, goods may be exported from sub-contractor premises subject to conditions that job work charges shall be declared in export declaration forms, invoices etc. and full repatriation of foreign exchange. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is amended to read as, </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">“In case of sub-contracting of production process abroad, goods may be exported from sub-contractor premises subject to conditions that at the time of clearance of goods, the EOU / EHTP / BTP / STP shall declare </font></p>
<blockquote>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the transaction value of the finished goods to be cleared from the sub-contractor's premises abroad; </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) job work charges to be paid to the sub-contractor abroad; and </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) value of intermediate goods, supported with documents like </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) sale price contract/or invoice for the finished goods, </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) job work contract and </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) the basis of arriving at the value of intermediate goods. </font></p>
</blockquote>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">The EOU / EHTP / BTP / STP shall also ensure full repatriation of foreign exchange declared as the transaction value of the finished goods cleared from the sub-contractor's premises abroad.” </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=47&filename=notification/dgft/2008/dgft08pn040.htm" target="_blank">DGFT PUBLIC NOTICE No. 40 (RE-2008)/2004-2009 Dated 4 July, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Flakes of Potatoes – eligible for additional duty credit - DGFT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has amended Table 13 of Appendix 37 A which provides that, “ <strong><font color="#FF6633">For exports made w.e.f 1.4.2008, the following products shall be entitled for an additional duty credit scrip of 2.5%, over and above the normal VKGUY entitlement</font>.</strong>” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“FLAKES OF POTATOES” is added to the list at Sl. No. 15. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn041.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT PUBLIC NOTICE No. 41 (RE-2008)/2004-2009 Dated 4 July, 2008 </font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden<font color="#FF6633" size="5"> tiol</font> </strong> <strong>– Tomorrow's cases </strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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 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></strong></font></strong></font></strong></font></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Something Special - Seagram's third round in CESTAT - appellant cannot be put in a position worse than they were before filing an appeal before CESTAT – Comparable price; commissioner's order upheld- Adjustments required to be made based on quantity and difference in retail price </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">‘Passport'</font> </strong>is not what you need to go out of the country; <strong><font color="#FF6633">‘Black and white'</font> </strong> has nothing to do with your income; <strong><font color="#FF6633">VAT</font> </strong> is not related to taxes; <strong><font color="#FF6633">Black Dog</font> </strong> is not exactly what Maneka Gandhi would fight for and there is nothing really special about <strong><font color="#FF6633">Something Special. </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They are all brand names of premium alcoholic drinks and were all together in the intaxicating precincts of the CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant imported concentrates of alcoholic beverages (CAB) from M/s Joseph Seagram and Sons Ltd., Scotland which is wholly owned subsidiary of Seagram Company Ltd., Canada. The strength of CAB imported was about 60%. The appellant is admittedly a related person to the supplier and the same fact was declared to the Customs authorities. The assessment was made provisional. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It all started in 1999, when DRI commenced investigation, culminating in a Show cause Notice demanding over Rs. 50 Crores and had seen several rounds of litigation through different temples of justice, with the Show cause Notice being challenged in the High Court. </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>Commission paid to foreign agents – assessee not liable to TDS : ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">THERE</font> </strong> is a controversy in Service Tax as to whether Service Tax is payable on commission paid to foreign agents procuring orders. A similar issue has arisen in Income Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee company is a manufacturer of asbestos cement products and engineering products. Apart from domestic sales, the assessee has export sales also effected through agents based in foreign countries. During the years under consideration, the assessee had paid commission to certain parties. During the survey conducted u/s 133A on 24-7-2000, it was noticed that no tax was deducted at source u/s 195 on such foreign remittances made on account of commission to foreign agents. It was also noticed that no application whatsoever was made to the Income tax authorities u/s 195(2) or 195(3) whereby the assessee could be exempted from deducting tax at source. The assessee's explanation was that it was remitting such commission since three decades without any deduction of tax at source and never had the department raised any objection for the same. It was contended that the agents did not render any service in India and reference was made to the Board's circular Nos.23 and 786 dt.23 -7-69 and -2-2000 respectively. The contention was that if the sum payable to the non-resident was not chargeable to tax in India, sec.195 was not applicable. </font></p>
<p align="justify"><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>Recovery of interest in case of duty evaded by fraud prior to 11.05.2001 – Since old section 11AB (1) has been substituted without a saving clause, no interest payable – section 6A of General Clauses Act, 1897 inapplicable – ROM dismissed by Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">FRAMING </font></strong> a law is no easy task and when you substitute the provisions at a later date – <strong><em><font color="#FF6633">out of greed that is,</font> </em></strong> you even tend to lose what you were achieving in the first place! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Excise law is a bouquet of such instances and we need not elaborate further. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, there was a duty demand made of Rs. 1 ,27,283 /- being the Modvat credit availed on 6344.12 kgs ., of resins removed clandestinely without payment of duty by the appellants from <strong><em><font color="#FF6633">May, 1997 to September, 1998</font> </em></strong>. The duty was confirmed by the lower authorities together with direction for recovery of interest under the provisions of Rule 57I (5) of the Central Excise Rules, 1944 read with Section 11AB of the Central Excise Act, 1944, and a penalty of an amount equal to duty was imposed under Rule 57I (4) read with Section 11AC and penalty of Rs. 1 lakh was also imposed upon the appellants under the provisions of Rules 173Q (1)(bb), 52A and 226 of Central Excise Rules, 1944. </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<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 size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p>
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