TIOL-DDT 92 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#0000FF" size="3">TIOL-DDT
92</font><br>
11 04 2005<br>
Monday</b></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Service Tax - Goods Transport- DGST causes further confusion</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>WHAT</b>
will the poor assessees do if the officers who are meant to be there to solve
their problems themselves create confusion? Most of the Central Excise assessees
who are also required to pay Service Tax on goods transport have been paying
tax only on 25% of the value in terms of Notification No. 32/2004-Service
Tax, Dated : December 3, 2004 and <b>they are right</b>. Now the DG, Service
Tax has issued a clarification to all the Chief Commissioners that this exemption
is available only if the transport agency pays the tax and not if the consignor
or consignee pays it. The learned honourable and totally confused DG does
not mention, why he thinks so. The notification does not insist on any such
condition. Sadly the DG’s understanding of the notification is different,
but the moot question is, what is the DG’s authority for issuing such
a clarification? Of course thankfully his clarification is contained in a
letter to the Chief Commissioners who have been asked to share this wisdom
with their Commissioners. Now the Commissioners or at least their Superintendents
will have a lot of explaining to do in the field to convince the assessees
that they have to pay tax on the full value and not 25%, because the Honourable
DG, Service Tax thinks so. The DG is not the Board and therefore his clarifications
are not binding even on the department let alone the assessees. But the field
is certainly not going to keep quiet. DDT asked a senior officer who felt
that the DG’s clarification is patently wrong whether he was going to
implement it. “Of Course, I am”, he said. “But Why Sir?,
He is not the Board and you are not bound by his clarifications” , DDT
asked. “<b>HE is going to be in the Board soon and that is good enough
reason”, </b>was the cryptic reply<b>.</b><br>
<br>
Before the field goes on the rampage, it is hoped that the CBEC will come
with a proper clarification. Some time back the CBEC had issued a direction
to the Commissioners not to issue Trade Notices. The Board should come with
such a clarification that DGs should not give clarifications -especially on
important issues like notifications. This should be the exclusive purview
of the Board – after all they make these notifications and they know
the intention. Further they can obtain the views of the Law Ministry and also
amend notifications even with retrospective effect, if necessary. This one
small clarification of the DG will result in thousands of Show Cause Notices,
if the Board does not come up with an urgent clarification.<br>
<br>
Please see an article on the issue by our noted columnists Jai Kumar, Natarajan
and Karthikeyan in today’s <a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1457">TIOL
SPECIAL</a><br>
<br>
<font color="#FF6666"><b><font color="#FF9933">For every problem, there is
a solution that is simple, obvious</font></b></font><font color="#FF9933">,</font>
<b><font color="#FF0000">and wrong</font></b><br>
<br>
<b><font color="#006633">Target Plus Scheme – CBEC issues notification</font></b><br>
<br>
In a swift move, immediately after the changes were announced in the Foreign
Trade Policy, CBEC has come out with a notification granting exemption for
goods imported under the Target Plus Scheme, subject to certain conditions.<br>
<br>
1. Exemption available only to Star Export Houses on the basis of incremental
growth in FOB;<br>
<br>
2. exemption shall not be admissible if there is insufficient credit in the
certificate for debiting the duties leviable on the goods;<br>
<br>
3. the certificate and goods imported against it shall not be transferred
or sold: Goods can be used by a supporting manufacturer whose name figures
in the licence.<br>
<br>
4. Certificate of installation to be produced from Central Excise AC/DC. In
case of units not registered with Central Excise, certificate can be issued
by Chartered Engineer.<br>
<br>
5. ICDs and CFSs added to the list of ports.<br>
<br>
6. the importer shall be entitled to avail of the drawback or CENVAT credit
of additional duty leviable under section 3 of the said Customs Tariff Act
against the amount debited in the said certificate.<br>
<br>
<b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_032.htm">NOTIFICATION
No. 32/2005-CUSTOMS dated 8.4.2005</a></b><br>
<br>
<font color="#006633"><b>Has the Tribunal any discretion to reduce the amount
of penalty under Section 11 AC? <br>
</b></font><br>
The Department’s view is that the penalty equal to the duty under Section
11AC of the Central Excise Act is mandatory and there is no discretion. Though
it is nine years since the section came into force, strangely this question
is not so far decided by the Supreme Court or any High Court. The famous Escorts
JCB case - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2002/2002-TIOL-26-CESTAT-DEL.htm">2002-TIOL-26-CESTAT-DEL</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
– was all about valuation, but there was a very interesting decision
made by the Tribunal in that case. The Tribunal held that the penalty equal
to duty is the maximum and not mandatory. <b>It is not mandatory that in all
cases such maximum should be imposed as penalty.</b> Authority is having discretion
to impose lesser penalty. And the Tribunal reduced the penalty from Rs 30
Lakhs to Rs 10 Lakhs. The party took the matter in appeal to the Supreme Court
on the issue of demand and Revenue also took the matter to Supreme Court challenging
the reduction in penalty. The Supreme Court allowed the party’s appeal
and so there was no demand and consequently no penalty – mandatory or
otherwise. Therefore there was no decision on the Revenue appeal. Tribunal
continued to hold that mandatory penalty was not all that mandatory. And Revenue
is constantly aggrieved. A few reference applications are pending in various
High Courts. On the 1st of April 2005, the Supreme Court had another occasion
to decide this issue in <b>COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I v
M/s DABUR INDIA LIMITED.</b> This was also a case where the Tribunal reduced
the penalty. The Supreme Court did not find any reason to interfere with the
Tribunal’s order and dismissed the Revenue appeal with the remarks,
<b>We leave open the question whether the Tribunal has power to reduce penalty
to be decided in an appropriate case. <font color="#006633"><br>
</font></b><br>
Till then Tribunal will give relief.<br>
<br>
</font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2005/2005-TIOL-64-SC-CX-LB.htm"><font color="#000000" size="2"><b>See
full text of Judgement </b></font>2005-TIOL-64-SC-CX-LB</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<br>
<font color="#FF6666"><b>Until Tomorrow with more of DDT<br>
<br>
Have a Nice Time<br>
<br>
Mail your comments to</b></font> <b>vijaywrite@taxindiaonline.com </b></font>
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