TIOL-DDT 960 · 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 960</font><br>
26.09.2008<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EOUs -CENVAT Credit on the duty paid on Capital goods at the time of de-bonding to be allowed</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has amended the CENVAT Credit Rules to stipulate that,</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“the CENVAT credit shall be allowed to be taken of the amount equal to central excise duty paid on the capital goods at the time of debonding of the unit in terms of the para 8 of notification No. 22/2003-Central Excise, dated, the 31 st March, 2003.”</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When an EOU gets debonded and becomes a DTA unit, it is made to pay the duty on the Capital Goods purchased free of duty and the natural corollary is that such duty paid should be allowed as credit to the DTA unit.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board created a confusion in 1996 by issuing Circular no. 185/19/96-CX dated 19/03/96 clarifying that<font color="#FF6633"> MODVAT Credit can be allowed to the extent CVD paid on imported capital goods or procured from domestic market</font>. As is well known there cannot be any CVD paid on Capital Goods procured from the domestic market. The alert Central Excise officer was quick to deny the Credit equal to the Central Excise Duty paid on Capital Goods procured from the domestic market.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The 12 year old dispute is now sought to be settled.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal of course had already decided this issue in favour of the assessee. In the <strong>Rajdhani Fab Pvt Ltd </strong>case - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-1919-CESTAT-MUM.htm" target="_blank"><font size="1">2007-TIOL-1919-CESTAT-MUM</font></a><strong>, </strong>the Tribunal extracted the order of the Commissioner (Appeals),</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In this regard, it is seen that the Board vide Circular no. 185/19/96-CX dated 19/03/96 has clarified that MODVAT credit can be allowed to the extent of CVD paid on imported capital goods or procured from domestic market and this does not talk of denial of MODVAT credit of the amount equal to the Central excise duty paid at the time of de-bonding of capital goods. At the time of de-bonding the amount equal excise duty which is paid has to be treated as payment of excise duty only. This is sufficiently clear on a combined reading of para 6.20 of Exim Policy 2002-07 and para 29.1 of Appendix 14-1 of Exim Policy 2002-07. There is, therefore, no merit in the stand of the department. In view of the above, the appellants are entitled to CENVAT credit of Central Excise duty paid at the time of de-bonding of the capital goods. As the demand does not survive, interest and penalty also do not survive."</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">and agreed with it.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal's order is now given legal sanctity. The Government should have clarified that this amendment has retrospective effect to avoid further litigation.</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=30&filename=notification/excise/2008/exnt08_35.htm" target="_blank">Notification NO. 35/2008-CX., (N.T.), Dated: September 24, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Gangavaram Port goes to Customs</strong></font></p>
<p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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/gangavarams.jpg" alt="Legal Corner Icon" width="307" height="230" hspace="5" border="0" align="middle"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Gangavaram near Vizag is the most modern all weather, deepwater, multi-purpose world-class port facility in India. The depth that other ports get after expensive dredging is available naturally in Gangavaram. This is the port of the future. But there was a Customs dispute – whether the Port would be under the jurisdiction of the Vizag Customs or Central Excise. The Port is outside the jurisdiction of the Municipal Corporation and therefore there was a view that the Port should be under the control of Central Excise and not Customs. Incidentally in Vizag, there is only one Chief Commissioner for Customs and Central Excise.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Officers from the Central Excise and Customs wings were vociferous in their demand for jurisdiction and had sought support from <strong>TIOL </strong> – a few months ago <strong>DDT </strong> asked the CEO of the Port about this problem – He said it did not make any difference to him whether the Port was under Central Excise control or Customs control. It was for the Department to sort out the issue.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally the Government has sorted out the problem and has now given the jurisdiction of the Port to Vizag Customs.</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=24&filename=notification/custom/2008/cnt08_108.htm" target="_blank">Notification NO. 108/2008 – Cus (N.T.) Dated: September 23, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of Dairy Products from China - Prohibited</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has prohibited the import from China of Dairy Products including milk and milk products appearing under Chapter 4 of Schedule – I of ITC(HS) Classifications of Export and Import Items for three months with immediate effect and until further orders.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please note the import is prohibited for <strong><font color="#FF6633">three months</font> </strong> and <strong><font color="#FF6633">until further orders</font>.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the kind of clarity that government notifications convey.</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=45&filename=notification/dgft/2008/dgft08not046.htm" target="_blank">DGFT Notification NO. 46/(RE-2008)/2004-2009 Dated: September 24, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exchange rates – Hong Kong Dollar and Japanese Yen revised</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has revised the exchange rates for exports and imports in respect of Hong Kong Dollar and Japanese Yen.</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=24&filename=notification/custom/2008/cnt08_110.htm" target="_blank">Notification NO. 110/2008 – Cus (N.T.) Dated: September 25, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – Dispute Resolution – The Cleavage</strong></font></p>
<p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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/cleavage.jpg" alt="Legal Corner Icon" width="188" height="195" hspace="5" border="0" align="middle"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Picture is from the ad the Service Tax Department has given in many TV Channels about the Service Tax Dispute Resolution Scheme – who says Govt ads are dull?</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">– MONDAY's cases</font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurisdiction to complete block assessment under section 158BC is conferred on A.O. only on physical handing over of all books of account, documents and assets requisitioned under section 132A– High Court decision binding on Tribunal: ITAT SB</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITHOUT </strong>delivery of the requisitioned material, the statutory mandatory requirement of section 132A of the Act is not met with. As specifically held in <strong>"Chandra Prakash Agrawal"</strong>, the provisions of Chapter XIV-B of the Act, i.e., assessment of search cases, would come into play only when the requisitioned material is actually received by the A.O. pursuant to the requisition made under section 132A. Jurisdiction to complete block assessment under section 158BC is conferred on the A.O. only on the physical handing over of all the books of account/documents/assets requisitioned under section 132A, to the income tax authorities concerned.</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><em>Suo motu </em> taking of credit when duty inadvertently paid twice over - Proper course of action is filing a refund claim – Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> charges in the show cause notice, as has been reproduced above, it can be seen that what has been demanded from the appellant is not the refund wrongly claimed by him, but the amount of credit which was taken on letter which is not a duty paying document. To my mind lower authorities have held correctly that the appellant is in eligible to avail the credit in RG 23 Part-II on its own.</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>Goods
stolen from 100% EOU – Remission of ‘Customs' Duty – since matter referred
to Larger Bench , Tribunal grants Stay. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Tribunal in CCE, Belapur vs. C.G.International Pvt. Ltd. (100% EOU) <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-665-CESTAT-MUM.htm" target="_blank">2008-TIOL-665-CESTAT-MUM</a></font> while rejecting the appeal of the Revenue held that there was no cause to effect recovery of duty in terms of Section 72 of Customs Act when a consignment of Diamond Studded Jewellery destined for export from 100% EOU was waylaid and robbed by an armed gang.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more<strong> DDT</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</font></p>
<p align="justify"><font color="#FF6633" 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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