TIOL-DDT 982 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 982</font><br>
31.10.2008<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC notifies exchange rates for November 2008</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC has notified the Exchange Rates for Imported Goods and Export Goods with effect from 1st November 2008. Notification NO.111/2008 (NT)-CUSTOMS, Dated: 26th September, 2008, is superseded.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Should this news be the top story in <strong>DDT</strong>? We were always under the impression that this is not big news, but we often get frantic calls from concerned Netizens when the announcement is delayed. Recently when the Board revised the exchange rates midmonth by Notification No. 114/2008 – Cus NT, dated 24.10.2008, we had anxious calls enquiring whether it was a fact and as to why the Notification was not carried by the Department's official website.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An importer told us that a Customs officer refused to accept the rates given in the notification carried by <strong>TIOL </strong> as there was no official communication. We advised the importer to follow the Department's objection and pay less duty.</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=24&filename=notification/custom/2008/cnt08_115.htm" target="_blank">Notification NO. 115/2008 (NT)-CUSTOMS, Dated: October 29, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>US wins wines dispute against India in WTO</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That does not mean India has lost. The nearly 100 pages verdict of the WTO's highest appellate forum, the Appellate Board released yesterday does not recommend any action. Does that mean India wins? Legal battles are same all over the world! India is one of the largest markets in the world for alcohol and imported <em><strong>daru</strong> </em> is made prohibitively expensive by taxes and duties of all types and sizes. The foreign liquor lobby is apparently not very happy.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Complaint by the United States</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 6th March 2007, the United States requested consultations with India with respect to “additional duties” or “extra additional duties” that India applies to imports from the United States, which include (but are not limited to) wines and distilled products (HS 2204, 2205, 2206 and 2208). The measures include:</font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Sections 2 and 3, and First Schedule, of the Customs Tariff Act, 1975 (“basic customs duty”, “additional duty” and “extra additional duty”;<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Section 12 of the Customs Act, 1962 (“basic customs duty”);<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Customs Notification No. 5/2004 (8 January 2004) (“basic customs duty” inter alia on spirits);<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Customs Notification No. 20/1997 (1 March 1997) (“basic customs duty” inter alia on wine);<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Customs Notification No. 32/2003 (1 March 2003) (“additional duty” inter alia on wine and spirits);<br>
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Customs Notification No. 19/2006 (1 March 2006) (“extra additional duty” inter alia on wine and spirits)</font></li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">as well as any amendments, related measures or implementing measures.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The United States claimed that the measures are inconsistent with Articles II:1(a) and (b), and III:2 and III:4 of the GATT 1994.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 16th March 2007, the European Communities requested to join the consultations. On 21st March 2007, Australia requested to join the consultations. Subsequently, India informed the DSB that it had accepted the request of the European Communities to join the consultations. On 24th May 2007, the United States requested the establishment of a panel. At its meeting on 4th June 2007, the DSB deferred the establishment of a panel. At its meeting on 20nd June 2007, the DSB established a panel. Australia, Chile, the European Communities, Japan and VietNam reserved their third-party rights. On 3rd July 2007, the panel was composed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Panel's report was circulated in June 2008.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appeal:</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the Panel, the United States claimed that the Additional Duty and the Extra-Additional Duty are inconsistent with India's obligations under Articles II:1(a) and II:1(b) of the General Agreement on Tariffs and Trade 1994 (the "GATT 1994") because the Additional Duty and the Extra-Additional Duty subject imports to ordinary customs duties ("OCDs") or other duties or charges ("ODCs") in excess of those specified in India's Schedule of Concessions.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In response, India contested the characterization of the Additional Duty and the Extra-Additional Duty as an OCD or an ODC within the meaning of Article II:1(b), arguing instead that the Additional Duty and the Extra-Additional Duty are charges equivalent to internal taxes imposed consistently with Article III:2 of the GATT 1994 in respect of like domestic products and, as such, fall within the scope of Article II:2(a). India further claimed that the Additional Duty is levied in lieu of state excise duties imposed in respect of like alcoholic beverages produced or manufactured in the state imposing the duty, while the Extra-Additional Duty is imposed to counterbalance sales taxes, value-added tax ("VAT") and other local taxes and charges.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Based on its review of the evidence and arguments before it, the Panel concluded that the United States had failed to establish that the Additional Duty and the Extra-Additional Duty were in the nature of OCDs or ODCs. As a result, the Panel found that the United States had failed to establish that the Additional Duty and the Extra-Additional Duty are inconsistent with Articles II:1(a) and II:1(b) of the GATT 1994. In the light of these conclusions, the Panel made no recommendations under Article 19.1 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"). However, recalling that India had issued new customs notifications making certain changes to the Additional Duty and the Extra-Additional Duty "to address concerns raised by [India's] trading partners", the Panel found it "appropriate" to note that its disposition of the United States' claims did not "necessarily imply that it would be consistent with India's WTO obligations for India to withdraw the relevant new customs notifications or otherwise re establish the status quo ante, i.e., the situation as it existed on the date of establishment of the Panel." The Panel further explained that it did not "wish to suggest that the entry into force of the new customs notifications necessarily implies that the [Additional Duty] on alcoholic liquor, to the extent it still exists, and the [Extra-Additional Duty] are WTO-consistent."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Both the United States and India are in appeal</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Findings and Conclusions</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Appellate Body rejected the United States' claim that the Panel limited the scope of the United States' challenge to the Additional Duty as imposed only through Customs Notification 32/2003, and the Extra-Additional Duty as imposed only through Customs Notification 19/2006; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards the Panel's findings with respect to the interpretation of Articles II:1(b) and II:2(a), the Appellate Body found that the Panel erred in its interpretation that Article II:1(b) covers only duties or charges that "inherently discriminate against imports.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Appellate Body</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. found that the Panel erred in interpreting the term "equivalent" in Article II:2(a) as requiring only a qualitative comparison of the relative function of a charge and internal tax, thereby incorrectly excluding quantitative considerations relating to their effect and amount;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. found that the United States was required to present arguments and evidence that the Additional Duty and the Extra-Additional Duty are not justified under Article II:2(a), and that India, in asserting that those duties are justified, was required to adduce arguments and evidence in support of its assertion;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. considered the Additional Duty would not be justified under Article II:2(a) of the GATT 1994 insofar as it results in the imposition of charges on imports of alcoholic beverages in excess of the excise duties applied on like domestic products; and, consequently, that this would render the Additional Duty inconsistent with Article II:1(b) to the extent that it results in the imposition of duties in excess of those set forth in India's Schedule of Concessions;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. considered that the Extra-Additional Duty would not be justified under Article II:2(a) of the GATT 1994 insofar as it results in the imposition of charges on imports in excess of the sales taxes, value-added taxes, and other local taxes or charges that India alleges are equivalent to the Extra-Additional Duty; and, consequently, that this would render the Extra-Additional Duty inconsistent with Article II:1(b) to the extent that it results in the imposition of duties in excess of those set forth in India's Schedule of Concessions;</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Appellate Body made no recommendation, in this case, to the Dispute Settlement Body.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Strictures: </strong>The Appellate Body noted that the Panel had to work despite the failure of both the United States and India to provide specific information about the excise duties.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was noted that:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. There was no specific information before the Panel regarding the "excise duties actually levied by different States on alcoholic liquor." Nor was there evidence before the Panel regarding the form and structure of the rates of such duties.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. There was no evidence in the record to demonstrate that, on the date of establishment of the Panel, there were Indian states permitting the sale of alcoholic beverages that did not levy an excise duty on alcoholic beverages subject to the Additional Duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. There was no evidence in the record to demonstrate that excise duties were, in fact, imposed in the Indian states on imported alcoholic beverages.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. the Panel noted India's statement that the rates of Additional Duty specified in Customs Notification 32/2003 are the result of a "process of averaging, whereby the Central Government tried to ensure that to the extent possible, the rate was a reasonable representation of the net fiscal burden imposed on like domestic products on account of the excise duty payable on alcoholic liquor".</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. This "could have meant that the rate of [Additional Duty] for alcoholic liquor exceeded the rate of excise duty applicable to like domestic alcoholic liquor in some States and in some price bands." India had not provided "further particulars" regarding the averaging process or the fiscal burden imposed in different states on low and high-priced alcoholic liquor.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Correction of Clerical Mistakes - Complicated Judicial process: </strong>If you think, we have a complicated judicial system, see this part of the litigation:</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">By letter dated 20 August 2008, the United States requested authorization from the Appellate Body Division hearing the appeal to correct certain "clerical errors" in its appellant's submission, pursuant to Rule 18(5) of the <strong>Working Procedures</strong>. On 22 August 2008, the Division invited all participants and third participants to comment on the United States' request. None of the participants or third participants objected to the United States' request. On 27 August 2008, the Division authorized the United States to correct the "clerical errors" in its appellant's submission.</font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VI Pay Commission – incentive for absconding IAS officer to return?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A very senior officer (HONEST) told me the other day that thanks to the Pay Commission arrears, he could perform his daughter's marriage without much fiscal difficulties.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An IAS officer, who had gone missing in the year 2000, has surfaced last week and a generous government has given him a posting. As per the Personnel Ministry's website, this officer was on leave from 1.8.2000 – How many years leave are these officers entitled to?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems the officer just left Government in 2000 and had taken up a job in the US and now in October 2008, things are not exactly rosy in Bushland and things are much brighter for the Indian Bureaucrat and so our IAS officer is back in service. Now he can safely retire from Government service after a couple of years and earn a huge pension from the government month after month.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you think IAS officers are haughty and they can do anything they want, similar things have happened in the IRS.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bureaucracy is all about Network.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>When a big tree falls</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“When a big tree falls, the earth is bound to shake”, said Rajiv Gandhi – this is the day 24 years ago when that big tree fell and shook the Earth.</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="#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>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ATMs are not computer - not eligible for 60% depreciation; Can a factory be called a Computer? - 'No', says Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO</strong> substance in the submission of the assessee that any instrument or plant and machinery of which function is based on computer technology can be said to be ‘computer'. If this submission of the assessee is accepted then in cases of all units where their large manufacturing process is controlled by computer such units are also to be called as ‘computer'.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise and Customs</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>High Court cannot condone delay in filing appeal: Bombay High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue was already decided by the Supreme Court in <em>COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, NOIDA Vs M/s PUNJAB FIBRES LTD, NOIDA </em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2008/2008-TIOL-24-SC-CX.htm" target="_blank"><font size="1">2008-TIOL-24-SC-CX</font></a>.</strong></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>Recovery of Erroneously granted refund – there are no optional routes available for Revenue - Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MERE</strong> succeeding in appeal before Commissioner (A) cannot get back erroneously granted refund – Demand a must; Provisions of Section 11A specifically cover the situation; clearly mention that a show cause notice has to be issued for recovery of erroneous refunds.</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 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>