TIOL-DDT 989 · 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">TIOL-DDT 989 </font><br>
11.11.2008 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export Duty – Valuation – Cum Duty till the year end – What thereafter? - CBEC Clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There has been a doubt whether export duty should be charged simply as a percentage of FOB price or whether the FOB price should be taken as the ‘cum-duty price' for determination of assessable value and duty due thereon. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In </font><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#0000FF" size="1"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7609" target="_blank">TIOL-DDT
913 - 22.07.2008</a></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>, </strong>we
raised this question:- </font></p>
<p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of taxes – the SEZ confusion continues </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now that SEZ units and developers are reconciled to payment of export duty in steel products cleared to SEZs , some new issues crop up. What is the valuation for calculating the export duty? Does the value include excise duty and VAT? Excise duty is either not payable or rebated and so should it be excluded? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the Revenue Department, especially the Super Intelligent DRI , is sure that export duty is payable, nobody seems to be sure, on what value the duty is to be calculated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is high time the Revenue Department clarifies such hot issues – but who is bothered? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board has clarified the position:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The practice was that the export duty and cesses were calculated by taking the FOB price declared by the exporter as the cum-duty price and working backwards from the FOB price. This methodology is based on instructions issued by the Board (contained in Appraising Manual) in 1966. This view was reconfirmed by the Board in 2000 while developing the software for Indian Customs EDI System (ICES-Exports) for the purpose of levy of cess under various enactments of different Ministries. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board asked <strong>ORACLE </strong> – the Law Ministry and the wise Ministry opined </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Section 14 of the Customs Act or the rules framed thereunder, do not specify any procedure for calculation of assessable value for the purpose of charging export duty in a situation where the exporter has not collected any amount in excess of what has been declared in the shipping bill/invoice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. As per practice in vogue for the last more than four decades, transaction value of export goods has invariably been taken as ‘cum-duty price'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. This practice is not in conflict with any of the statutory provisions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Amendments made in Section 14 of the Customs Act by the Finance Act, 2007 have also not brought any change in the procedure for calculation of assessable value for the purpose of charging export duty <strong>. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. <strong><font color="#000000">However, any decision on this issue is essentially a matter of policy on which decision is to be taken by the administrative department. </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, it is POLICY not LAW and the issue is back with the Board. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, Board has taken a Policy Decision – and you guessed it; it is against the trade! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has decided that till 31.12.2008, the existing practice of computation of export duty and cesses by taking the FOB price as the cum-duty price may be continued. All pending cases may be finalized accordingly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Board has a new year gift – Come January 2009 and this is going to change: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With effect from 1 st January, 2009, the practice of computation of export duty shall be changed. It is proposed that for the purposes of calculation of export duty, the transaction value, that is to say the price actually paid or payable for the goods for delivery at the time and place of exportation under section 14 of Customs Act 1962, shall be the FOB price of such goods at the time and place of exportation. For example if the transaction is at Rs 100 FOB, and the duty is 15%, the export duty will be 15% of FOB price, that is Rs 15. In case the transaction is on CIF basis, the FOB price may be deduced from the CIF value, and then the export duty be calculated as 15% of such FOB price. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any difficulties which are anticipated in the implementation of the change in computation of export duty from 1 st January, 2009 should be brought to the notice of the Board by 20 th November, 2008 positively. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But doesn't the law need to be amended or can the Board just say that the value changes on the midnight of 31 st December 2008 with nothing else changing? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All exporters should re bargain their prices – you have about 50 days time! </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_18.htm" target="_blank">CBEC Circular NO. 18/2008 in F. No. 467/45/2008- CusV - Dated: November 10, 2008 </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification for appointment of Chief Commissioners – yet another Departmental Appeal dismissed in Kolkata CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Hon'ble CESTAT observed, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
find that there is no Notification in the Official Gazette appointing either
Shri Amar Singh or Shri P.N.Vittal Dass as Chief Commissioner of Central
Excise for Ranchi and Bhubaneswar Zones. Such a requirement flows from the
statutory provisions contained in Section 2(b) of the Central Excise Act,
1944 and Rule 3 of the Central Excise Rules, 2002. This issue has been gone
into in detail by us the case of Commissioner of Central Excise, Kolkata-III
and others vs. M/s. Nafar Chandra Jute Mills Ltd. and Others - Order No.M
-242/A-915-917/ Kol /2008 dated 04.09.08 = </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-1805-CESTAT-KOL.htm" target="_blank">2008-TIOL-1805-CESTAT-KOL</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">,
in which, for the detailed reasons stated therein, we have held that unless
a person is appointed by a Notification in the official Gazette he cannot
be deemed to have been vested with the statutory powers to act as a Chief
Commissioner of Central Excise under the Central Excise Law. Consequently,
such a person cannot also exercise the powers under the Finance Act, 1994
dealing in Service Tax matters, as such powers are exercisable only by a
person appointed as Chief Commissioner of Central Excise in the manner known
to the law. In the present case, we have been shown only office Order No.186
/2007 dated 26.07.07 in respect of Shri Amar Singh and Office Order No.85
/08 dated 29.04.2008 in respect of Shri P.N.Vittal Dass ; but the Department
has not produced and Notification published in the official Gazette appointing
either of them as Chief Commissioner Central Excise. The arguments advanced
by learned Jt. C.D.R. , Dr. Gautam Ray are nothing new and these have been
duly considered by us in the case of M/s. Nafar Chandra Jute Mills (cited
supra). Learned Jt. C.D.R. states that the matter is under examination of
the Central Board of Excise and Customs, but he has no information as to
when such examination would be concluded and remedial action would be taken.
In the meantime, in the absence of any Gazette Notification appointing the
two signatories to the impugned Review Order as Chief Commissioner of Central
Excise, following our earlier order in the case of M/ s.Nafar Chandra Jute
Mills (cited supra), we have no option but to hold that the direction to
file the present Appeal has been issued without having the necessary statutory
power and jurisdiction and the same is, therefore, non- est in the eyes of
law. Consequently, the appeal filed pursuant to such direction is not maintainable
and the same is rejected at the threshold without going into the merits of
the case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As we had mentioned earlier, if the Government does not wake up fast all the appeals in all the Benches of the Tribunal will be dismissed. It will be very difficult to restore the dismissed appeals. Will the Board act soon? </font></p>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See</strong></font> <strong><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-1837-CESTAT-KOL.htm">2008-TIOL-1837-CESTAT-KOL</a></font></strong>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest on Duty paid on Supplementary Invoices </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government is often worried more about the interest than duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5012" target="_blank"><font size="1">TIOL-DDT 556 21.02.2007</font></a>, </strong>it was reported, </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Issue of Show Cause Notice for demanding interest and power of adjudication of such cases - CBEC relies on a nonexistent letter </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been noticed that there is a practice in certain industries, especially those manufacturing motor vehicle parts, that many a time vendors raise supplementary invoices on account of revision of prices. The differential duty is paid by the vendor on the value of such supplementary invoices but interest is not paid on said differential duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the issue and Board says it had examined the issue and by letter F.No.574 /CE/5/ Misc.2003 , dated 28.07.2003 clarified that interest under section 11AB of the Central Excise Act, 1944 is payable on such differential duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fact is <strong><font color="#FF6633">Board had never issued such a letter. DDT is well aware that a couple of years ago there was an effort to trace this mysterious letter and they could not find it. Strangely, Board now relies on this non existent letter to advise the field on how to recover interest. </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no equity in taxation. If for any reason, the assessee has to refund some money to his customer, he will not get a refund from the department, but if his customer pays him some money after some time, he has to pay duty as well as interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Tribunal has referred the matter to a Five Member Bench. What started from a nonexistent circular has travelled through all possible Judicial Corridors and is now before a Five Member Bench – which certainly not the end – you still have the High Court and Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What started in 2003 has reached a VERY LARGER Bench in 2008 and may reach the Supreme Court in 2015! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why can't the Board amend the Law as it wants and avoid future litigation? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this landmark judgement (which directs you to another land and mark) today. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <strong>Breaking News </strong>. </font></p>
<p align="center"><font 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><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="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Writ Jurisdiction </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Just because Article 227 was mentioned in the writ appeal instead of Article 226, writ should not have been dismissed: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court seems to have gone by the nomenclature i.e. the description given in the writ petition to be one under Article 227 of the Constitution. The High Court did not consider the nature of the controversy and the prayer involved in the Writ petition. The prayer was to quash the order of assessment passed by the Assistant Commissioner, Commercial Tax levying purchase as well as Entry Tax - there is no manner of doubt that the orders and proceedings of a judicial court subordinate to the High Court are amenable to writ jurisdiction of the High Court under Article 226 of the Constitution. </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>Exemption for captive consumption - emergence of by products, no reason to deny credit - methane and ethane automatically emerging during cracking of naphtha: Apex Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal's finding that the ethylene and propylene used as refrigerant has been used in or in relation to the manufacture of the same goods. The inevitable and automatic emergence of ethane and methane, therefore, by itself is no ground for denying the exemption contained in the notification. The Tribunal came to the categorical finding that the respondent could not have manufactured ethylene and propylene without manufacturing its by-products ethane and methane. The Tribunal held that in any technology the emergence of ethane and methane was inevitable and hence while it is no doubt correct to say that the ethylene and propylene have been used in or in relation to the manufacture of ethane and methane, the identical quantity of the same goods has simultaneously been used in the manufacture of ethylene and propylene. The emergence of ethane and methane, therefore, cannot be a ground to deny the benefit of exemption to the respondent </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>When AO completes assessment proceedings verifying all material facts he cannot retrace his steps to allege that appellant failed to disclose fully and truly all relevant facts – Notice issued under Sec 148 quashed - Delhi High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mere reason to believe that the income had escaped assessment is not a sufficient ground to reopen assessment beyond the four year period under s.147 . It should also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly, in the absence of which no action under s.147 could be taken against them. </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>Import of cars – Import Policy required a certificate from a Japanese Ministry which refused to give certificate; law cannot ask a person to do the impossible – Revenue Appeal dismissed: Delhi High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the Import Policy the importers were required to obtain the Type Approval Certificate/ COP from the international accredited agency of the country of origin of the goods. In this case the cars have been imported from Japan and, therefore, it was only the Ministry of Land, Infrastructure and Transport which could have issued the Type Approval Certificate/ COP. The respondents had applied to the said Ministry for the Type Approval Certificates/ COPs but the Ministry had flatly refused in so many words. In such a situation the respondents could not be expected to submit the Type Approval Certificate/ COP from the said agency </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="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day. </font></p>
<p align="justify"><font color="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
</body>
</html>