Jurispruden tiol – Tomorrow's cases

By Vijay Kumar

Customs

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

‘Passport' is not what you need to go out of the country; ‘Black and white' has nothing to do with your income; VAT is not related to taxes; Black Dog is not exactly what Maneka Gandhi would fight for and there is nothing really special about Something Special.

They are all brand names of premium alcoholic drinks and were all together in the intaxicating precincts of the CESTAT.

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.

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.

Income Tax

Commission paid to foreign agents – assessee not liable to TDS : ITAT

THERE 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.

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.

Central Excise

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

FRAMING a law is no easy task and when you substitute the provisions at a later date – out of greed that is, you even tend to lose what you were achieving in the first place!

The Central Excise law is a bouquet of such instances and we need not elaborate further.

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 May, 1997 to September, 1998 . 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.

See our columns Tomorrow for the judgements