TIOL-DDT 976 · 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 976</font><br> 22.10.2008<br> Wednesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Revenue gets a breather – more time to file appeal in Supreme Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally revenue appeal are to be filed in the Supreme Court within sixty days – but sixty days is too short a time for the giant wheels of the Government machinery to move and appeals are routinely filed seeking condonation of delay extending to a couple of and more years.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is sweet music to the ears of those in Revenue Departments who are responsible for facing the music for delayed appeals.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court in an order delivered on 17.10.2008, decided,</font></p> <blockquote> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Generally this Court dismisses Civil Appeals/Special Leave Petitions beyond period of 200 days. However, keeping in mind the <strong>present exigency</strong>, we are relaxing this norm in respect of Civil Appeals/Special Leave Petitions filed in Tax matters after August, 2008 to 300 days<strong>. </strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Let us hope the Government will stick to the 300 days deadline and not seek further condonation of delay.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=37&filename=legal/sc/2008/2008-TIOL-199-SC-IT.htm" target="_blank">2008-TIOL-199-SC-IT</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC's obsession with Pan Masala continues…</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 is amended for the second time in three months. In the latest exercise, Rules 6 (1), 6(2), 6(6), 10, 13, 16 and 17 are amended.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier a new manufacturer had to file a declaration with regard to commencement of commercial production fifteen days in advance. Now this time frame is reduced to seven days. Further declarations filed under Rule 6 (1) were hitherto were approved after necessary verification and an order was to be passed by the Assistant/Deputy Commissioner determining the annual capacity within five working days. Now this is reduced to three working days.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier, any addition or deletion in the number of packing machines were to be notified by filing a fresh declaration at least fifteen days in advance to the Assistant/Deputy Commissioner, who will in turn re-determine the annual capacity of production. Now this time frame is reduced to ‘at least three working days'. In case a factory intends to take a break in production for a continuous period of fifteen days or more, prior to this amendment this had to be declared to the jurisdictional Central Excise officers at least seven days in advance. Now the time frame for this declaration is reduced to ‘at least three days'.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This seems to be a trade facilitation measure. Before this amendment, if someone wanted to start a Gutkha Unit in a week, he could not do so as he had to file declaration fifteen days prior to the commencement. It is very easy to start a new unit in Gutka/Pan masala very quickly unlike other factories. Similarly the reduction in time from seven days to three days for capacity determination is also a similar action. The maximum time for declaration filing + determination of capacity was earlier 15 days and now it is reduced to 7 days.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, Rule 16 is substituted to provide for the procedure related to permanent closure of the plant and surrendering of the registration certificate. Hitherto it was related to cessation of work on all machines installed in the factory.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier the word <strong>permanently </strong> was not there and also surrender of registration was not there. So the units could ….start ...stop …start …with the same registration. Now that the registration should be surrendered and considering the <strong>COST</strong> involved in getting a new registration, this amendment would stop such start… stop …start practice.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 17 (2) is also substituted to deal with unregistered units based on the packing machines found in the premises and the retail sale price of the pouches manufactured from such machines. Further the machines shall be deemed to be operative from July 1, 2008. Prior to this substitution, the duty liability would have been determined as if the goods were not assessed under s. 3A of Central Excise Act, 1944.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what will be the implication for the units which were unregistered and merrily manufacturing and clearing pan masala prior to July 1, 2008? At least the earlier rule dealt with this situation as if those goods are not assessed in terms of s. 3A and there was no ambiguity in dealing with demand of duty for production prior to July 1, 2008. In the amended rule, deeming the existence of packing machines from July 1, 2008 for the purpose of calculation of duty does not bring clarity for demand of duty for clearances effected prior to July 1, 2008.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">May be the revenue's experience in case of evaders proved that the duty payable under normal manner was less than under the capacity determination and it was wise to evade than to pay duty under these rules. That's how this amendment must have been made.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/exnt08_45.htm" target="_blank">Notification No. 45/2008-Central Excise (N.T) dated October 20, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Basis of levy of additional Customs duty (CVD) on import of Readymade Garments – CBEC clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been brought to the notice of the Board that in some cases of import of readymade garments, the additional duty of Customs (CVD) has been sought to be levied on the basis of the Maximum Retail Price (M.R.P)/Retail Sale Price (R.S.P) of the garments.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board reiterates some clear legal facts:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Imported goods are charged to additional duty of customs (CVD) on the basis of transaction value as per the provisions specified in section 14(1) of the Customs Act read with the Customs Valuation Rules, 2007.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. If any tariff value is prescribed by the Government for imported goods, then the CVD would be determined with reference to tariff value as prescribed.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In respect of certain specified goods which are notified under Section 4A of the Central Excise Act, and in respect of which the RSP/MRP is required to be declared, the excise duty, and the CVD , is charged on the basis of the Retail Sale Price (and not on the basis of the transaction value).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Readymade garments falling under Chapter 61 or 62 of the Customs Tariff are not specified under the Notification No.14/2008-CE (N.T) dated 1.3.2008 which prescribes the goods that are subjected to excise duty on the basis of retail sale price in terms of Section 4A of the Central Excise Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. It is clear that import of readymade garments would be subjected to CVD only on the basis of transaction value and not on the basis of retail sale price.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And so clarifies that for the purpose of uniformity in assessment, presently the additional duty of Customs (CVD) is chargeable on import of readymade garments on the basis of transaction value i.e. C.I.F. price plus landing charges and not on the basis of Retail Sale Price/Maximum Retail Price.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2008/cuscir08_17.htm" target="_blank">CBEC Circular No.17/2008-Customs Dated: October 21, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI arrests Lawyer allegedly taking Rs. 1 Crore Bribe</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In what could be its biggest trap case, the CBI yesterday arrested a Kolkata Lawyer while accepting a bribe of Rs. 1 Crore – in hard cash for helping Dinesh Dalmia released on bail. If you do not know who Dinesh Dalmia is, he is languishing in a Chennai Jail since February 2006 in a Rs. 594 Crores Stock scam and all his attempts to get bail have failed. Last month the Madras High Court had directed the Additional Chief Metropolitan Magistrate, Egmore, to complete his case within six months.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the mean time, perhaps the bail bargain must have started rolling and there is a lawyer and a trader who will also spend some time in jail now.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the Share market, the one who helps you make money is called a ‘broker' – either he is broke or he ensures you are.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can know more about Dinesh Dalmia in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4353" target="_blank">TIOL-DDT 464 06 10 2006</a></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And also have a look at </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2007/2007-TIOL-697-HC-MAD-FEMA.htm" target="_blank">2007-TIOL-697-HC-MAD-FEMA</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Non-Filing of Income Tax Returns – Big Brother is Watching</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Information Branch of the Income Tax Department collects information relating to financial transactions from various sources like banks, registration authorities etc. This information is utilised for identification of persons not filing their return of income.<br> <br> This information was given by the Minister of State for Finance S.S. Palanimanickam in reply to a question raised in Rajya Sabha yesterday.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Today's case</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When it comes to Supreme Court cases, we cannot resist the temptation of bringing them to you as soon as possible. Today we bring you a decision that was delivered by the Apex Court yesterday – with our detailed summary. The Editor of a popular print journal told me, “for you, the earliest is tomorrow, for us, it is after a fortnight!” – Well. This is what Internet and TIOL is all about. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax – Penalty – What is material in the tax jurisprudence is the evasion of the tax, not the beneficial lawful adjustment. Law permits the contracting parties to lawfully change their stipulations – <em>mens rea </em> has to be shown for penalty under Section 273(2)( a) – Supreme Court.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Law permits the contracting parties to lawfully change their stipulations – What is material in the tax jurisprudence is the evasion of the tax, not the beneficial lawful adjustment therefore. In the commercial world, the parties are always free to vary the terms of contract and, therefore, the assessee and the vendee had no legal impediment in modifying the terms of their contract. Merely because by Resolution the assessee agreed to defer the payment of interest, would not mean that it tried to evade the tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mens rea</strong> has to be shown for penalty under Section 273(2)(a): there has to be a satisfaction of the Assessing Officer that the estimate of advance tax furnished by the assessee was not only untrue, but the assessee also knew or had reason to believe the same to be untrue. While the levy of interest under Section 215 of the Act is automatic, that is not the case with the penalty under Section 273(2)(a) of the Act, where the <strong>mens rea</strong> on the part of the assessee would have to be shown to the extent, it has been indicated in the language of the Section, where, therefore, there was some scope for the assessee to justify the estimate given by it and that the penalty could not be inflicted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See Our <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8044" target="_blank">Breaking News</a></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>CESTAT</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CESTAT members changing order after it was signed by both Members, amounts to tampering with judicial record - Tribunal should ensure that such unsavoury incidents should not occur in course of their conduct of judicial proceedings: Delhi High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong> has been done in this particular case does not behove of judicial proceedings.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once an order is passed and it is signed by the members, the same cannot be altered unless law provides for a review of the same and that too only after hearing the parties.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal should ensure that such unsavoury incidents should not occur in the course of their conduct of judicial proceedings.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is hoped that the President of the Tribunal shall inform the other members of the Tribunal about the passing of this order.</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>EOUs – generating computer designs amounts to manufacture for the purpose of exemption under Section 10B in view of the expanded scope by Section 10BB – ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is getting technical requirements from its foreign clients for the plant/equipment lay out, which is transferred to it by means of electronic files. Thereafter, the assessee's engineers produce specific designs/drawings with the help and application of computer software for CAD System and then deliver the final design and drawings back to the clients through E-Mail or FTP. From the narration of the above facts, it is manifest that the assessee is involved in the ‘management of electronic data'.</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>Cutting and slitting of steel sheets and polyester films used for lamination purposes do not amount to manufacture according to Board Circular which is <font color="#663399" size="3">binding</font> on the Department. – Supreme Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> later Circular dated 2nd March, 2005 accepts the judgment of the Delhi High Court and withdraws the earlier Circular dated 7th September, 2001. Thus, the position is now made clear that cutting and slitting of steel sheets and polyester films used for lamination purposes do not amount to manufacture according to Board which is binding on the Department.</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>