TIOL-DDT 974 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 974</font><br> 20.10.2008<br> Monday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Board Circulars vs Supreme Court Orders</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can the Revenue Boards issue Circulars which are not in tune with the decisions of the Supreme Court and are such circulars binding? The issue was referred to a Constitutional Bench of the Supreme Court which has now held that once the Supreme Court lays down the law, Board Circulars cannot prevail.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Circulars were not anyway binding on the</font></p> <blockquote> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Assessees</font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Tribunals</font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. High Courts and</font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Supreme Court</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now perhaps they are not binding even on the Board itself.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Constitutional Bench Decision will have far reaching consequences in all the Revenue Departments.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this landmark judgement today.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see our <strong>TIOL TOP </strong> and <strong>Breaking News</strong>.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Issue pertaining to CNG manufacturers – CBEC clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <strong>Single Registration</strong>: - Notification No. 43/2008-CE(NT) dated 06.10.2008 has been issued to amend the notification No. 35/2001-Central Excise(N.T) dated 26.06.2001, to provide for single registration to the manufacturers of Compressed Natural Gas (CNG) for all the manufacturing premises falling under the jurisdiction of one Chief Commissioner of Central Excise. Consequently, notification No. 44/2008-CE(NT) dated 06.10.2008 has also been issued to amend the notification No. 14/2002-Central Excise (N.T) dated the 8th March, 2002, to extend the jurisdiction of the Commissioner of Central Excise under whose jurisdiction a CNG manufacturer obtains single registration, to that of the jurisdiction of the <strong>concerned </strong> Chief Commissioner of Central Excise.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. CNG manufacturers, whose premises fall under jurisdiction of more than one Chief Commissioner, will have to take separate registrations under the jurisdiction of each Chief Commissioner. Such registration can be taken in any of the Commissionerates within the jurisdiction of such Chief Commissioner. Therefore, it has been provided in the notification that CNG manufacturer, who is already registered under the earlier provisions, may apply for fresh registration or file amendment to the existing registration as the case may be, as per the new provisions, if required.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <strong>Availability of CENVAT credit</strong>: - In the case of CNG manufacturers, central excise registration is to be given only in respect of those premises, where CNG is actually manufactured i.e. where compressor is installed to convert natural gas into CNG. Registration is not to be given for premises where CNG is merely dispensed (commonly known as daughter stations) after being transported in mobile cascades. Accordingly, the CENVAT credit can be taken only on those inputs/capital goods, which are used in registered premises, where actual manufacturing takes place, and not on capital goods goods/inputs at daughter station. The legal position holds good for the period prior to the amendment also.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <strong>Practice of measurement of CNG production</strong>:- Section 3 of the Central Excise Act, 1944 read with rule 4 of the Central Excise Rules, 2002, requires a manufacturer to pay duty on the quantity manufactured and removed from the factory. Therefore, the quantity sold to the buyer at daughter stations (whether belonging to same entity or other) cannot be taken as a basis for determining the duty payable, and the quantity of CNG manufactured/cleared by a manufacturer at the registered premises itself should be the basis for calculating the quantum of duty payable on such clearances. Accordingly, it has been decided that whenever CNG is transported in the mobile cascades to the daughter stations, the quantity filled in the mobile cascades should be measured at the registered premise by installing <strong>suitable measuring device </strong> at the point of filling the mobile cascade. For the purpose of accountal of daily production, a single invoice at the end of the day for the total quantity filled in cascades may be prepared. However, when CNG is also dispensed at the registered premises itself (where CNG station is situated in the same premises where compression facility is situated) and where both the compression and CNG dispensing unit belong to the same legal entity, the quantity of CNG actually dispensed/sold from the dispensers can be considered for payment of excise duty.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the above provisions/instructions to be brought to the notice of the CNG manufacturers as well as field formations. Board also wants the issues to be discussed with the representatives of CNG manufacturers.</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/excircular875.htm" target="_blank">CBEC NO. Circular No. 875/13/2008- CX Dated: October 16, 2008</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Audit of EOU/STP/EHTP unit under Customs control- DGEP clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">EOUs including EHTP and STP unit situated within the municipal limit of the port cities are under administrative control of the Commissioner of Customs and in other places (except Bangalore), under the administrative control of the jurisdictional Commissioner of Central Excise as per Board's circular No. 31/2003- Cus dated 07.04.2003. In Bangalore, they are under the control of the Bangalore Customs Commissioner.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">EOUs/STP/EHTPs avail different concessions/exemptions and could be source of leakage of revenue. Many measures have already been taken to safeguard revenue. These include, interalia, accountal of inputs in accordance with SION, filing of return E.R.-2 consisting of details of inputs received, consumed, cleared as such and closing balance.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another measure could be regular audit of these units.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since, the Customs formations having control over EOUs are not conducting audit of such units at the premises of the unit, the Board vide circular No. 693/9/2003- CX dated 13.02.2003 had instructed that EA-2000 audit of such units under Customs control shall be conducted by the jurisdictional Central Excise Commissionerate.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of these instructions, the Directorate General of Export Promotion reiterates that the audit of EOUs under Customs control need to be undertaken regularly by the audit parties of the jurisdictional Central Excise Commissionerates and these audit parties are also to be provided with copies of C&AG reports on EOUs/STPs/EHTps etc.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGEP advises the Central Excise filed formations to carry out audit of EOUs at prescribed periodicity notwithstanding the fact that some of these EOUs may be under the administrative control of Customs formations.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now will this not lead to a conflict between the Customs and Excise wings? When the units are under the Customs control, how can the Central Excise officers go about auditing these units? With what authority can the Central Excise officers enter the EOUs under Customs control?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>F.No. DGEP/EOU/120/2007 of DGEP Dated: August 22, 2008</strong></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>Sales Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>If software whether customized or non-customized satisfies Rules as 'goods', it will also be 'goods' for purpose of Sales Tax: Madras High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOODS</strong> may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customised or non-customised satisfies these attributes, the same would be goods.</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>Rent received by aircraft operator payable to AAI - No income in hand of aircraft operator chargeable to tax: ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>contention of appellant is that it is not subject to tax in India in terms of Article 8 of the DTAA between India and Netherland. It is also contended that the receipt by way of recovery of rent from CSC India P. Ltd. (CSC) in respect of rent payable to Airport Authority of India (AAI) is not chargeable to tax and even if so, the rent paid to AAI is to be reduced from the rent recovered from CSC which brings the taxable income to nil.</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>Once gate passes clearly show that duty has been recovered from customers, there is no need of looking into balance sheet to find out as to whether duty so paid was considered as a receivable or not - Refund hit by unjust enrichment: Tribunal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOTH</strong> the lower authorities and the Commissioner (Appeals) have referred to the gate passes issued by the appellants during the relevant period which shows breakup of the assessable value and the duty paid on the assessable value and the total price reflected in the gate passes inclusive of duty matched with the corresponding price reflected in commercial invoices which establishes that the duty has been recovered from the customers.</font></p> <p align="justify"><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>Plea of ignorance cannot be taken when fact remains that respondents collected service tax from their customers and pocketed the same - Penalties imposable - Tribunal allows revenue appeal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is not a simple case where the respondents were just not aware because of newly introduction of Service Tax; On the other hand, the respondents were not only aware but were also recovering service tax from their customers and not paying to department; They were actually pocketing the same and it was on detection by the department that the amount of tax and interest was paid; In such a case the plea of ignorance cannot be accepted as they could have enquired the same from the department and paid the service tax; There is no ground for leniency as shown by Commissioner(Appeals) by setting aside the entire amount of penalties.</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 color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</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> </body> </html>