TIOL-DDT 935 · 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 935 </font><br>
22.08.2008 <br>
Friday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Waiver of Pre-Deposit – No Licence to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>We</strong> have often come across the Departmental adjudicators confirming astronomical demands and when you approach the Tribunals, they routinely ask for pre-deposit of anything ranging from 40% to 80% of the duty/tax demanded, which the poor assessee will not be able to pay. If you approach the High Court, the usual stand is that the High Court should not interfere in these interim orders. You know you are sure to win the case, but you do not have money to make the pre-deposit; what do you do? Are you doomed? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner who imposed a penalty of Rs.50 Crores on a BHEL employee knew pretty well that he could not pay. Incidentally the Commissioner ruled that he could have imposed a penalty of Rs. 68 Crores, but being kind hearted, he imposed only Rs. 50 Crores. The Tribunal held that no penalty was imposable. Now what would have been the fate of this poor PSU employee if Tribunal was not kind enough to grant him waiver of pre – deposit? And the High Court would not interfere! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a case I argued in a High Court, I submitted that the assessee's factory was closed and the company dissolved and there was no way it could deposit a huge sum. The Court asked me, “what will happen if I lose the case?” I replied that the Department can take any action it deemed fit, but there was no money with the assessee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court ordered, “the petitioner – Industry is not working at present “as the same is closed since June, 2003”. This one fact undoubtedly may disclose the severe financial constraints and the financial hardship being faced by the petitioner on account of which it could not make necessary pre-deposit in terms of the Stay Order dated 19-04-2005 passed by the Tribunal. Normally, this Court in exercise of the jurisdiction under Article 226 of the Constitution of India does not interfere with such interlocutory order which creates any irreversible situation but having regard to the facts and circumstances and more particularly, the fact that the industry is closed ever since June, 2003 due to which the petitioner is not in a position even to make the pre-deposit, we consider it appropriate to modify the impugned order passed by the Tribunal and accordingly direct the Tribunal to hear the appeal preferred by the petitioner on merits” -<strong> <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2005/2005-TIOL-181-HC-HYD-CX.htm" target="_blank">2005-TIOL-181-HC- HYD - CX</a></font></strong>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe there should be some change in Law that there would be no requirement of pre-deposit till the stage of Tribunal- in any case when the assessee is required to pay duty, he is required to pay interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Yesterday,
the Supreme Court passed an important order on ‘waiver of pre-deposit',
which we will bring you tomorrow. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Supreme Court, in Assistant Collector of Central Excise v. Dunlop India Ltd. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-156-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-156-SC- CX</font></a> </strong>is a good read for all students of the subject. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Standards of Weights and measures – industrial/institutional consumers </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the Explanation to Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) <strong>Institutional consumer </strong>.– Means those consumers who buy packaged commodities directly from the manufacturers/packers for service industry like transportation [including airways, railways],hotel or any other similar service industry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) <strong>Industrial Consumer </strong> – Means those consumers who buy packaged commodities directly from the manufacturers/packers for using the product in their industry for production, etc. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There has been a request from the Trade to include intermediaries within the scope of industrial consumers/institutional consumers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department of Consumer Affairs has clarified that, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The manufactures/importers are primarily responsible for making declarations on the package. Accordingly, the declaration/non-declaration of information on the package as required under the Rules, as the case may be, can be decided at their level only, depending upon the requirement of the Rules. Alternately, the intermediaries in the supply chain are not supposed to make/alter declaration on the package.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So any proposal to include intermediaries in the 'Explanation' to industrial consumers/institutional consumers is prone to misuse. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Department regrets that it cannot concede to this request. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Is there any Excise implication to this in the context of MRP valuation? </strong></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/standard_weights.htm" target="_blank">No. WM-10(8)/2005 of the Department of Consumer Affairs , Dated: May 12, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Evasion of Custom duty on import of jelly cup & chocolate coated biscuits by way of misclassification – Delhi Customs case </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Delhi Customs detected a case where some assessees are importing jelly confectionery by declaring it as jelly cup by classifying it under chapter sub heading no.20079990 which attracts no countervailing duty (CVD) and no maximum retail price (MRP) based assessment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Delhi Customs feels that the goods are appropriately classifiable under Chapter Subheading No. 17049010 which attracts CVD @ 8% <em>ad valorem </em> and also attracts MRP based assessment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chief Commissioner, Delhi Customs (P) brings this to the notice of all concerned for keeping a close watch. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/evasioncustomsduty.htm" target="_blank">Delhi Chief Commissioner's F.No . Cus . Pev : VIII/Intelligence / Noida / 1/08/Pt Dated 19 June, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs
International Executive Management Programme (CIEMP) of Australian
Customs Service – IRS officers can apply before 27 th August! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Australian Customs Service has invited the Indian Customs Administration to nominate one “senior customs officer who has the potential to advance to a high level in customs management” for the Customs International Executive Management Programme ( IEMP) to be held from 13 th October to 14 th November 2008 in Canberra. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Australian Customs will bear all the expenditure and (so) spouse and other family members are not welcome. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC wants the applications to reach them by 27 th August 2008. This was communicated in a letter dated 21 st August – yesterday. This may probably reach the field by 28th a day after the last day is over! Is somebody already chosen? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An advance copy of the application can be mailed to <a href="mailto:Indiacustoms@gmail.com">Indiacustoms@gmail.com </a>. </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=70&filename=pitara/phoren_training/aus_cus.htm" target="_blank">CBEC F.No . 528/12013/2008- CUS / ICD Dated 21 August, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Air Customs – top corporate houses involved in aircraft import evasion </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Commissioner, Anoop Swarup , yesterday gave a media presentation on the Customs Duty evasion on import of private aircrafts and the alleged offenders are the Captains of India's Corporate world from India Bulls to India Hotels with the new aviation Giant GMR not excluded. The Customs has already collected around Rs. 55 Crores and has about a Thousand Crores in Bonds and Bank Guarantees. 13 aircrafts have been so far seized. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thankfully, the department is releasing all the Seized aircrafts – otherwise they would gather dust in Custom Houses and become un-usable. Incidentally, yesterday the DRI seized a ship and God knows where they are going to keep it – there is nobody to ask for a provisional release, the Captain is arrested and is in jail. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Agriculture Marketing Board is not 'local authority' after amendment to Sec 10(20) vide Finance Act, 2002; not eligible for exemption: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The latest decision of the Apex Court has settled this issue forever in favour of the Revenue. It has held that since AMC(s) is neither a Municipal Committee nor a District Board under the said Explanation to Section 10(20) of the 1961 Act, they are not entitled to exemption. In fact what makes it more abundantly clear is the fact that the Union Govt has vide Finance Act, 2008 exempted such bodies under sub-section 26AAB of Sec 10 w.e.f April 1, 2009. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Supreme Court delivered the judgement yesterday and we bring it to you today with our analysis! See today's <strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7756" target="_blank">Breaking News </a></strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7756">. </a></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"> –</font> <font color="#006600">Monday's cases </font><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></strong></font></p>
<p align="justify"><font color="#663366" 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>ST - Later inclusion of some aspect in scope of levy will have to be taken as non-inclusion of same earlier, when other portion remained the same – Fire Proofing service specifically included under category of ‘Erection, Commissioning or Installation Services' – Benefit of Notfn 12/03 claimed by the assessee available – CENVAT credit of input services not deniable - CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Tribunal observed that there is force in the contention of the appellant that later inclusion of some aspect in the scope of levy which will have to be taken as non-inclusion of the same earlier, when the other portion remained the same. The appeal was allowed by granting them the benefit of input tax credits on input services and benefit of Notification No. 12/2003. </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>Cement and bitumen used as construction material, not entitled for MODVAT; however MS Angles are entitled: High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> expression ‘in the manufacture' while refers to the items used in manufacturing of the final product, the expression ‘for the manufacture' covers the other items which may not be necessarily part of the new manufactured product, but used in the machinery or plant, for the purposes of manufacturing the final product.</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>I-T - JV between owner of property and builder - Mere grant of permissive right to build on land would not amount to transfer of capital asset - Rights will crystallize only if and when proposed multi-storeyed building would come into existence - Consideration received is merely an advance for sale consideration which is yet to come into existence - No capital gains tax leviable: Delhi HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN </strong>a land owner enters into an arrangement with a builder wherein the builder gets the right to construct a property and in return the landowner receives a certain sum of money as advance in addition to a part of the property proposed to be constructed thereon as consideration. In a recent judgment delivered by the High Court it held that such consideration cannot be treated as capital gains since a mere grant of a permissive right to build on a plot of land would not amount to any transfer of capital asset. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more<strong> DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend. </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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