TIOL-DDT 909 · 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 909 </font><br>
16.07.2008 <br>
Wednesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Another
Corporate Czar in Customs' net – walks through Green Channel with goods
worth over Rs 20 Lakhs </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a
couple of hours, this news is going to be all over the place. Based on DRI
intelligence, the Delhi IGI Airport Customs last evening arrested another
high-profile corporate czar for carrying high-value dutiable goods in baggage
but not declaring the same to the Customs. The Chairman of the Jai Bharat
Maruti Group, Mr. SK Arya was arrested by the Customs on the alleged charges
of smuggling in dutiable goods and walking through the Green Channel without
making any declaration. Mr Arya was returning from London with his wife and
daughter who have been let off after the Customs decided to arrest him. He
will be produced before the Magistrate today. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr Arya was intercepted by the Customs acting on specific intelligence after he walked through the Green Channel and was about to exit the Customs area. When his baggage was examined, it was found to contain very expensive wrist watches, expensive perfumes and cosmetics worth Rs 20 lakhs. When <strong>TIOL </strong> spoke to the Customs, it was told that on a conservative estimate the value has been pegged to Rs 20 lakhs and it would be more if one goes by the VAT refund collected in UK. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The high value shoppers in Europe's posh malls should realise that when they claim VAT refunds at Airports , the Indian Customs comes to know about it and they simply cannot fool the Customs by slipping away through the Green Channel. Something like this happened last year when Amitabh Bachan tried something similar. And it requires tremendous courage for the poor Customs officers to actually check the undeclared baggage of the rich and powerful, especially during this troubled times. One small complaint; and their career is at risk. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT
PN 52 dated 27.9.2007 not to have retrospective application</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By the above PN, DGFT stipulated that, “in SIONs where import of relevant fabric is permitted in terms of Square meters per Unit of an Export Product, the import of relevant fabric be limited to (10% + actual utilization in Sq. meters) or quantity permitted in SION, whichever is lower. Actual utilization in Square Meters can be calculated from GSM declared on shipping bill and net weight of export consignment using the formula Square Meter = Net weight * 1000 / GSM”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was argued that the above methodology was nowhere mentioned either in the Policy or the Handbook of Procedures. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Aggrieved by Public Notice No. 52 dated 27.9.07, a number of petitions have been filed by the exporting community in various High Courts, challenging its implementation for exports made prior to the issuance of this Public Notice No. 52. As an alternative mechanism to consider such cases, Petitioners approached the Grievance Redressal Committee ( GRC ), an Inter-Ministerial Committee. GRC , after detailed examination, passed a direction to DGFT to consider these cases for calculation of duty free import entitlement based on the SION and the Appendix 23 Declaration, whichever is lower, and not to apply the provisions of Public Notice No. 52 dated 27.9.2007 for those shipments which have been affected prior to the issuance of this Public Notice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So DGFT now clarifies that “it has been decided that the restrictions imposed vide Public Notice No. 52 dated 27.9.2007 shall be made effective for exports on or after 27.9.07. Regional Authorities (RAs) shall process and dispose of all such pending cases accordingly.” </font></p>
<p align="left"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft08cir019.htm" target="_blank">DGFT Policy Circular No. 19 (RE-2008) 2004-09, Dated: July 15, 2008</a></font></p>
<p align="center">
<font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty on Titanium Oxide - extended </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The anti dumping duty on Titanium Dioxide, originating in or exported from the People's Republic of China was imposed vide notification No. 54/2004–Customs, dated the 19th April, 2004, with effect from 11 th July, 2003 and would have expired on 10 th July 2008. (There are divergent views on the life of these Anti Dumping Notifications). Any way this time around, the Government has extended it well within time. The Notification is now to be valid till 10th July, 2009. </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=23&filename=notification/custom/2008/ctariff08_085.htm" target="_blank">NOTIFICATION NO. 85/2008-Cus., Dated: July 11, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Wind - fall Tax – What is it? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a wind and some trees fall on your property and you make some money – should the Government get a share? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A tax levied by governments against certain industries when economic conditions allow those industries to experience above-average profits. Windfall taxes are primarily levied on the companies in the targeted industry that have benefited the most from the economic windfall, most often commodity-based businesses. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The benefits of a windfall tax include proceeds being directly used by governments to bolster funding for social programmes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to Wikipedia, “A windfall profits tax is a tax on profits that ensue from a sudden windfall gain to a particular company or industry.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1980, United States federal legislation was passed that levied such a tax on oil companies because of the profits they earned as a result of the sharp increase in oil prices brought about by the OPEC oil embargo. Since then, the tax has not been re-enacted, however with gas prices once again reaching record levels there is renewed pressure on the U.S. government to bring back the tax. Amid low oil prices, the tax was ended in 1988 by President Ronald Reagan . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are not to be confused with the excess profit taxes of World War I, World War II, and the Korean War eras. Windfall Profit Taxes are more of an excise-type of tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The etymology of the phrase is from colonial times. "The crown precluded the colonists from using any lumber, one foot or wider except whereby an act of God, such as a severe storm, a tree falling on one's own property. If that happened, the colonists could use the tree that fell down on their property during a storm or they could sell it for a significant amount. So if you had a big storm on your property back in colonial days, and a lot of trees fell down, the resulting monetary reward was called 'a windfall profit.' It was a beneficial thing to a property owner, because they had limits on how much lumber they could use. But if an act of God came down and knocked a bunch of trees, they could use whatever they had. There were no limits on it and they could sell it or use it for their own construction purposes, hence windfall profit. </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 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="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No exemption from service tax on air tickets for Haj pilgrims – Service tax paid before issue of SCN and O-I-O – No penalty as case is fit to be considered under Sec 80: Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants had paid the major portion of the service tax before the issue of show cause notice and the balance amount even before the Orders-in-Original was issued. In the facts and circumstances of this case, we would deem it proper to take a lenient view in the matter and feel that the provisions of Section 80 of the Finance Act could have been used in this case. In any case, the appellants are liable to pay their interest. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Money Circulation! </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Money circulation scheme – Cheating charges – no interference against framing of charges: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">HERE is another quick buck scheme. Pay Rs. 625/- and get lottery tickets worth Rs. 350/- and after a few months get back double your investment and may be win a lottery! If you think there are no gullible people to believe the scheme, the organisers collected more than Rs. 500 Crores in a few months and are in the Supreme Court against charges framed by a Magistrate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants are partners of M/s LIS, Ernakulam, a partnership firm engaged in the business of sale of lotteries and magazines after collecting advance money. They floated a scheme known as "LIS Deepasthambham Scheme". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The scheme was simple in its conception. A person has to pay Rs.625 /- and purchase one unit of lotteries from the promoters. The promoters will make use of Rs.350 /- to purchase 35 lottery tickets of the Kerala State Government each of Rs.10 /- for the unit holder for the next 35 weeks. If the unit holder wins any prize up to Rs.5 ,000 /- in the 35 draws, the promoters shall collect the amount and pay the same to the unit holder. If the unit holder wins any prize above Rs.5 ,000 /-, the ticket shall be handed over to the unit holder for collection of the amount. The balance of Rs.275 /- ( Rs.625 - Rs.350 ) will be used to make the unit holder a subscriber of a magazine by name ` Thrikalam ' for one year. The said magazine would reproduce relevant and important materials from other magazines. It would also furnish necessary information about the lottery tickets which have won prizes. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NDPS </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Search, seizure and arrest under NDPS – Authorised officer can himself make the search or authorise his subordinate to do so: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under Section 41(2) only a Gazetted Officer can be empowered by the Central Government or the State Government. Such empowered officer can either himself make an arrest or conduct a search or authorize an officer subordinate to him to do so but that subordinate officer has to be superior in rank to a peon, a sepoy or a constable. </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>It is option of the assessee to adopt a particular method of valuation of closing stock, cost or market price, whichever is lower, as per settled principles of commercial accounting: Gujarat HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> question before the High Court was </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether, the Tribunal has erred in law and on the facts and failed to appreciate the circumstances prevailing on the valuation date i.e. 30.6.1983 for the purpose of valuation of two transformers ordered by Punjab State Electricity Board having regard to the material on record and thereby erred in holding the manner in which the company valued the closing stock of two transformers, and that such market value is not justified. </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more<strong> DDT </strong></font></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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