1. law, govt and politics

Bizsol UPDATE
November - 2014
FROM THE DESK OF THE CHAIRMAN
E
lections to the Haryana and Maharashtra
Assemblies are over and both states have new
Chief Ministers of BJP for the first time. In both the
states the elections were won single headedly by
Narendra Modi. The election to the Maharashtra
Assembly was a defining one for the state for more
reasons than one. All the parties forming part of one
coalition or the other have been cut to size. Even the
BJP to some extent. BJP expected to be within a
striking distance of an absolute majority mark, if not a
simple majority when they somehow or other
managed to break its alliance with Shiv Sena before
the Polls. That was not to be. It needs some party or
other to support it now. Shiv Sena was firmly under
the impression that the BJP was riding piggy back on
them all these years. That was proved wrong when
the results were out. The Congress expecting a rout
was only hoping for at least one seat more than its
erstwhile ally the NCP by projecting that it was the
natural party of governance and NCP a natural party
of corruption. NCP believed genuinely that it could
swing the electorate and get an impressive number
of sets if it could get rid of the baggage called the
Congress. With no ideology of its own other than
wanting to be part of a ruling dispensation, the party
has been brought down to earth by the electorate.
Even before the results were out it went to town to
declare its unilateral support to the BJP in the name
of stability and in the interest of the state! If this logic
of stability is to be taken to its logical conclusion there
should be no space or role for an opposition party in
any legislative set up. So eager was NCP to support
BJP it looked as if it was rushing to apply for
anticipatory bail. The reasons appear obvious. In this
milieu everyone was looking for the person who first
announced his own candidature for the post of Chief
Minister of the state even before the Elections
Commission formally announced the election
schedule - Raj Thackeray. The real test for BJP starts
now. If they, on the basis of the 'unconditional' support
extended by the NCP, continue to rule, the obvious
inference would be that nothing has changed in Indian
politics.
The day of reckoning is here and now for the Grand
Old Party for yet another reason. Sardar Patel is known
as the iron man of India for good reason. The iron
man is now stealing the show for the BJP right from
under the nose of the Congress to which he belonged
when he was alive. BJP is pitching the legacy of Patel
against that of Nehru. Congress, the party, cannot
object to any glorification of Sardar Patel. But at the
same time the sycophants who make up the party
cannot accept it for their own survival. In fact Nehru
and Gandhi (the new variety) are existential issues
for the party. The BJP is relishing the plight of the
GOP. The Congress needs to reinvent itself. It cannot
do so in a vacuum. The vacuum starts at the very top
of the party. A revolt or mutiny now appears inevitable
within the party. There is no one anywhere at the top
who remotely show the guts and gumption of an Indira
Gandhi when she was thrown out of power after
Emergency. No one gave her even an outside chance
to bounce back. Bounce back she did and how. In
August 1977 less than six months after she was voted
out of power Indira Gandhi visited Belchhi in Bihar
atop an elephant to see first-hand the after effects of
caste carnage - an image that transfixed the nation
long before television sets came to our drawing
rooms. Guts she had and gumption she had plenty.
After all, a surname can take you only so far. While
talking about the first family it is difficult to resist the
temptation of talking about the sons in law of the family.
Feroze Gandhi the son in law of the first PM of the
country had problems with his father in law and he
was considered a renegade by Nehru. History is
repeating itself now with the current son in law of the
family getting into all kinds of problems and dominating
the news for all the wrong reasons. It is anybody's
1
Bizsol UPDATE
November - 2014
guess whether the family considers him a renegade.
Whether the first family considers him an
embarrassment or not, he is indeed an
embarrassment to the Indian polity.
that a voluntary option of this nature help further the
career of a female employee. There is yet another
dimension that the success rate of such experiments
has been only 30% so far. The advantage that accrues
to the employer is clear. They get to retain trained
talent at her prime. The perceived advantage for the
employee concerned is that she can decide to have
a baby a little later in her career so that she does not
miss out on her opportunities in the rat race in the
corporate world. This latter argument looks a bit
facetious to me. More you climb the ladder in the
corporate world the less will be your inclination to take
a break for fear of losing all that you have built up by
dint of your hard work in the past. Issues associated
with work-life balance of a female employee after
having her child seems now to have been advanced.
The issue for her now is to whether to face the
challenge or to freeze the eggs.
People generally assume that countries in the entire
African continent are backward and we are perhaps
better off than them. It may be only partially true. One
important and fundamental yardstick people normally
deploy to measure the progress of a society is the
existence of rule of law. In turn, the rule of law is
normally assessed by the effectiveness of judicial
processes and the justice delivery mechanism
dispensed through courts of law. The world got an
opportunity to see how effectively the courts function
in South Africa during the trial of Paralympian Oscar
Pistorius, famously called the 'blade runner' as he runs
with two artificial legs. Pistorius was being tried for
murdering his girlfriend in cold blood. The trial was
as sensational as the murder itself. Pistorius was
found guilty of culpable homicide and sentenced to
five years in prison. That is only part of the story. What
was on display during the trial was the South African
judicial process and, believe me, it was fascinating. A
puny and frail looking black lady presided over the
Court trying a famous white man who killed
accidentally or otherwise his girlfriend. The entire
judicial process on display would have done any
country proud.
Unresolved legal issues are like festering wounds.
They inflict pain and inconvenience you all the time.
Recently the Supreme Court of India put to rest one
such issue concerning jurisdiction of courts in India
to try criminal cases arising out of bounced cheques
under the Negotiable Instruments Act. A similar
situation has arisen today under the Arbitration and
Conciliation Act. After having enacted with such fanfare
and noble intentions to reduce the workload on the
conventional dispute resolution mechanism through
courts, today this Act itself is at crossroads and is in
danger of being undermined. In a recent judgment in
the case of ONGC vs Western Geco International Ltd.,
the apex court widened scope and circumstances
under which a higher judicial authority can sit on
judgment on any award given by an Arbitration
Tribunal. Till recently the Court could intervene in the
arbitration process only under exceptional
circumstances involving certain specified matters or
in public interest. The Supreme Court in this case has
coined a loosely defined legal terminology called 'the
fundamental policy of Indian law' which is sought to
be brought under public policy. This principle is not
only nebulous in nature but is also prone to abuse
making this alternate dispute resolution mechanism
ineffective. In fact the industry was looking forward to
the Supreme Court to write down an earlier Order of
the same Court in the case of ONGC vs Saw Pipes
Ltd. Instead the Court thought it fit to enhance the
Dominating newspaper headlines is second nature
to both Apple and Facebook. But then recently both
of them were on the front pages of the newspapers
for somewhat strange reasons. These companies
have announced a new perk to their female
employees - free freezing of their eggs. Egg-freezing
is a relatively new procedure by which the ova are
taken out and frozen with the intention of delaying
pregnancy. In this process of manually combining an
egg with sperm and then transferring the fertilised
egg to the uterus is resorted to whenever the mother
is ready to have a baby. Depending on how you look
at it, this is technology at its best or at its worst.
Employers say that it is voluntary and they would pick
up the tag for the entire procedure. Critics say it not
about economics; but ethics. A furious debate has
erupted all over the world focussed on the ethical
dimension of this exercise. Even as some argue that
this is a case of interference with nature, others feel
2
Bizsol UPDATE
November - 2014
verdict given by the Court is correct. But then how far
is the verdict right? There is a difference between
what is correct and what is right. Correct is a clinical
judgment whereas 'right' is slightly more nuanced - a
moral or ethical dimension is attached to it like the
loss suffered by innocent investors, the loss to the
economy on account of shortage of coal, etc. The
Court's order probably is in line with the image of the
'Woman of Justice'. This woman is Themis, the Greek
goddess of divine justice blindfolded and holding the
scales in the left hand and a sword in the right hand.
The blindfold symbolises the fact that while giving a
judgment the court is guided only by law and not
swayed by any other consideration. So be it.
ambit and scope to intervene as an appellant authority.
These two ONGC cases could sound the death knell
to the alternate dispute resolution mechanism in India.
At a time when the courts are overburdened and the
foreign investors are looking for speedy resolution to
commercial disputes, this is definitely not a welcome
sign.
The Supreme Court has finally given its verdict on
the illegal coal block allocation. It has cancelled all
the allocations barring a few and has also ordered
payment of additional royalty for the coal mined in
the past by the allottees. This has opened a Pandora's
Box. There are genuine industrial units who have
invested in good faith in these mining companies. They
will incur huge losses consequent to the apex court
verdict for no fault of theirs. Obviously the court cannot
validate a right or entitlement obtained by anyone
through unfair or illegal means. To this extent the
Thank you.
Venkat R. Venkitachalam
3
Bizsol UPDATE
November - 2014
Chapter/
heading/
Sl.
No. sub-heading/
tariff item
CUSTOMS
Notifications:
and 323 of the Notification
No. 12/2012-Customs
dated 17.03.2012 is availed
Tariff
•
Time limit for furnishing of certificate from
jurisdictional Deputy Commissioner or the
Assistant Commissioner of Central Excise has
been extended from six months to twelve
months, to the effect that the Liquefied natural
gas (LNG) and Natural gas which has been
imported with NIL rate of Customs Duty under
Customer Notification 12/2012 dated 17.03.2012
and which is supplied has been utilized for
generating and supplying electrical energy by the
said generating company. [Notification No 30/
2014 -Customs dated 20-October-2014]
Tariff Value of Imported goods have been further
amended as given below:
Chapter/
heading/
Sl.
No. sub-heading/
tariff item
11
71 or 98
Silver, in any form, in
respect of which the benefit
of entries at serial number
322 and 324 of the
Notification No. 12/2012Customs dated 17.03.2012
is availed
12
080280
Areca nuts
551 per
kilogram
(US $)
2239 (US $
Per Metric
Tons)
[Notification No.100/2014-Customs (N.T),
Dated 31-October-2014].
Non-Tariff
•
Description of goods
Tariff value
US $
(Per Metric
Tonne)
Description of goods
Safeguards:
•
Tariff value
US $
(Per Metric
Tonne)
No New Notifications
Anti-Dumping Duty:
•
No New Notifications
1
1511 10 00
Crude Palm Oil
704
2
1511 90 10
RBD Palm Oil
737
Circulars:
3
1511 90 90
Others - Palm Oil
721
•
4
1511 10 00
Crude Palmolein
743
5
1511 90 20
RBD Palmolein
746
6
1511 90 90
Others - Palmolein
745
7
1507 10 00
Crude Soyabean Oil
837
8
7404 00 22
Brass Scrap (all grades)
3831
9
1207 91 00
Poppy seeds
3747
10
71 or 98
Gold, in any form, in respect
of which the benefit of
entries at serial number 321
391 per 10
grams
(US $)
4
Technical grade/ material shall not be insisted
upon with each imported consignment of
formulation of pesticides once such technical
grade/ material has been supplied for the
purpose of analysis and scrutiny prior to the
registration. Further, each consignment of
formulation which is imported should be verified
and tested so that it matches with the technical
grade material regarding specification and
quality. [Circular No. 10/2014-Customs dated
17.10.2014]
Bizsol UPDATE
November - 2014
Central Excise Act, 1944 read with provisions of
the Sale of Goods Act, 1930. Payment of
transport, inclusion of transport charges in value,
payment of insurance or who bears the risk are
not the relevant considerations to ascertain the
place of removal. The place where sale has taken
place or when the property in goods passes from
the seller to the buyer is the relevant
consideration to determine the place of removal.
[Circular No. 988/ 12/ 2014-CX dated 20th Oct
2014]
Instructions:
•
It is directed to discontinue certain reports
received to TRU through field formations which
are no longer required, list of said reports are as
specified in Central Excise portion of this update.
New system of Monthly Performance Report has
been laid down. Please relevant article in this
issue. [F.No.354/156/2014 dated 10-October
2014]
CENTRAL EXCISE
Instructions
Notifications
•
Tariff
•
No New Notifications
Non-Tariff
•
It is directed to discontinue certain reports
received to TRU through field formations which
are no longer required, list of said reports are as
under:
Sr.
No.
In view of restructuring of Commissionerate,
Divisions & Ranges and increase in the numbers
for better monitoring, Review Committee of
Commissioner of Central Excise has been
formed consisting of two Commissioners of
Central Excise for the areas falling within the
jurisdiction of the Commissioner of Central Excise
(Appeals). [Office Order No.5/2014-CE dated
22nd Oct 2014]
1
Monthly Report on Zarda Scented Tobacco (F. No. 341/24/
2010-TRU)
2
Monthly Statement in Respect of Clearance and Revenue
Realization of All Brands of Cigarettes (F. No. 352/4/84TRU)
3
Cigarette Data- Report (F. No. 341/24/2009-TRU)
4
Component Wise Monthly Revenue from Customs (F. No.
334/1/2005-TRU)
5
Information in Respect of Functioning of Compounded Levy
Scheme for Gutkha /Pan Masala (F. No. 336/27/2008-TRU)
6
Import of Vanaspati/Bakery Shortening etc. at nil rate of
duty from Nepal and Sri Lanka and at Customs duty of 30%
from Countries other than Nepal and Sri Lanka(F. No. 341/
4/2005-TRU)
7
Statement Showing Monthly Revenue Collection and Cess
Collected for Different Commodities (F. No. 333/11/93TRU)
8
Monthly Report regarding Import of Alcoholic Beverages.
(F. No. 334/1/2003-TRU)
9
Import Under Indo-Srilanka Free Trade Agreement Monitoring of Quota Allocation
10
Mechanism for Refund Scheme for the 4% Additional CV
Duty in those Cases where the Imported Goods are resold
and again subjected to Vat/Sales Tax-Monthly Report
(F.No. 354/129/2007-TRU)
Circulars
•
•
•
Department have accepted the decision of
Hon'ble High Court of Delhi dated 04.08.2014 in
case of M/s Travelite (India) [2014-TIOL-1304HCDEL-ST], thereby no service tax audit can be
conducted by departmental officers (other than
CERA/CAG). [Circular No. 986/ 10/ 2014-CX
dated 9th Oct 2014]
Facility of Export Warehousing has also been
extended at Bhuj Taluka, in Kutch District in the
State of Gujarat. [Circular No. 987/ 11/ 2014CX dated 15th Oct 2014]
CBEC finally appreciated contradiction in their
circular vis-à-vis legal provisions, therefore further
clarification has been issued. Accordingly
determination of Place of Removal has been
clarified and reiterated that the place of removal
needs to be ascertained in term of provisions of
5
Name of the Report
Bizsol UPDATE
Sr.
No.
and use their discretionary powers of pre-audits.
[Instruction F. No. 206/05/2014-CX.6 dated
3rd Nov., 2014]
Name of the Report
11
Data on Imports of Wheat (F. No. 354/88/2010-TRU)
12
Data on Export of Chromium Ores and Concentrates (F.
No. 334/1/2008-TRU)
13
Data in respect of Man-Made Fibers and Filament Yarn (F.
No. 335/2/2005-TRU)
14
Data on Revenue from Levy of 10% Excise Duty on Ready
Made Garments and Made Up Articles Bearing a Brand
Name or Sold Under a Brand Name Falling under Chapters
61,62 and 63 (F. No. 336/255/2011-TRU)
15
November - 2014
Trade Notice
•
Restructuring of Central Excise and Service Tax
of Pune, Kolhapur, Goa has been made with
effect from 15.10.2014 vide trade notice no 01
dated 10.10.2014. Copy of the trade notice is
already circulated by mail.
Considering your location select appropriate
Commissionerate, Division, Range and their
codes and ensure that:
Data in respect of Exports and Imports of Cotton and Cotton
waste (F. No.354/164/2006-TRU)
[Instruction F. No.354/156/2014-TRU dated
10th Oct, 2014]
•
At present there are more than 100 reports that
are being sent by the field formations on a
monthly basis to various Directorates and
sections of the Board. But, the present reporting
system within the Department suffers from the
problem of unreliability and susceptibility to error
as it involves manual compilation at various
stages as well as no two reports ever tally.
Therefore it is decided to lay down the strategic
roadmap for the development of the MIS. So that
to provide reliable, accurate and up-to-date
information, to help the policy makers in taking
accurate and fast decisions. The MIS will be
implemented in a phased manner, as stated
below:1.
First Stage: Online / Web-uploading of
information in predefined formats:
2.
Second Stage: Digital recording of critical
events:
3.
Third Stage: Integration of modules and
process automation:
Same is mentioned on your Excise Invoice
/ Service Tax Invoice
2.
Inform the above to all your vendors and
service providers
3.
Incorporate changes in the system
4.
File the return whenever due with correct
Range code, Division and Commissionerate
based on your location
Further, units will get the mail from respective
Jurisdictional Range Officers specifying Range
Division and also a map will be uploaded on
website of Pune Excise Commissionerate.
[Trade notice no 01 dated 10.10.2014]
SERVICE TAX
Notifications
•
Due date of filing of Service Tax Return for the
period from April 14 to September 14 has been
extended from 25th October 2014 to 14th
November 2014. [Order No 2/2014 F.No. 137/
99/2011 dated 24.10.2014]
Circulars / Instructions
•
Following clarification has been issued w.r.t. levy
of service tax on activities involved in relation to
inward remittances from abroad to beneficiaries
in India through MTSOs
Please read the relevant article in this issue.
[Instruction F. No. 296/127/2013-CX-9 dated
10th Oct, 2014]
•
1.
Avoidance of pre-audit of rebate claim cannot
be done and therefore filing number of rebate
claim less than Rs. 5 lacs will not avoid pre-audits,
since these can be clubbed by the authorities
6
S.No.
Issues
Clarification
1
Whether service tax is
payable on remittance
received in India from
abroad?
No service tax is payable per se
on the amount of foreign currency
remitted to India from overseas.
As the remittance comprises
Bizsol UPDATE
S.No.
2
3
4
Issues
Whether the service of
an agent or the
representation service
provided by an Indian
entity/ bank to a foreign
money transfer service
operator (MTSO) in
relation to money
transfer falls in the
category of intermediary
service?
Whether service tax is
leviable on the service
provided, by an
intermediary/agent
located in India (in
taxable territory) to
MTSOs located outside
India?
Whether service tax
would apply on the
amount
charged
separately, if any, by the
Indian bank/entity/agent/
sub-agent from the
person who receives
remittance in the taxable
territory, for the service
provided by such Indian
bank/entity/agent/subagent
November - 2014
Clarification
S.No.
Issues
Clarification
money, it does not in itself
constitute any service in terms of
the definition of 'service' as
contained in clause (44) of section
65B of the Finance Act 1994.
5
Whether service tax
would apply on the
services provided by way
of currency conversion
by a bank /entity located
in India (in the taxable
territory) to the recipient
of remittance in India?
Any activity of money changing
comprises an independent taxable
activity. Therefore, service tax
applies on currency conversion in
such cases in terms of the Service
Tax (Determination of Value)
Rules. Service provider has an
option to pay service tax at prescribed rates in terms of Rule 6(7B)
of the Service Tax Rules 1994.
6
Whether
services
provided by sub-agents
to such Indian Bank/
entity located in the
taxable territory in
relation to money
transfer is leviable to
service tax?
Sub-agents also fall in the
category of intermediary.
Therefore, service tax is payable
on commission received by subagents from Indian bank/entity.
Yes. The Indian bank or other
entity acting as an agent to MTSO
in relation to money transfer,
facilitates in the delivery of the
remittance to the beneficiary in
India. In performing this service,
the Indian Bank/entity facilitates
the provision of Money transfer
Service by the MTSO to a
beneficiary in India. For their
service, agent receives
commission or fee. Hence, the
agent falls in the category of
intermediary as defined in rule 2(f)
of the Place of Provision of Service
Rules, 2012.
[Circular No 180/06/2014-ST dated 14-102014]
•
Service provided by an
intermediary is covered by rule 9
(c) of the Place of Provision of
Service Rules, 2012. As per this
rule, the place of provision of
service is the location of service
provider. Hence, service provided
by an agent, located in India (in
taxable territory), to MTSO is liable
to service tax.
The value of intermediary service
provided by the agent to MTSO is
the commission or fee or any
similar amount, by whatever name
called, received by it from MTSO
and service tax is payable on such
commission or fee.
No New Instructions!!
FOREIGN TRADE POLICY
Notifications:
•
Yes. As the service is provided by
Indian bank/entity/agent/subagent to a person located in
taxable territory, the Place of
Provision is in the taxable territory.
Therefore, service tax is payable
on amount charged separately, if
any.
Export of Dried Silk Worm Pupae to EU has been
allowed subject to the following conditions:
(i)
A 'Shipment Clearance Certificate' is to be
issued consignment-wise by the CAPEXIL
indicating details of the name and address
of the exporter, address of the registered
plant, IEC No. of the exporter, plant
approval number, nature of export product,
quantity, invoice number and date, port of
loading (Name of the port) and destination.
(ii)
After the shipment is made, the exporter
shall also provide a 'Health Certificate"
consignment wise to the buyer giving details
of vessel name, shipping bill number with
date, etc. as per the requirement of EU. The
certificate would be issued jointly by
CAPEXIL & Regional Animal Quarantine
Officer, Department of Animal Husbandry,
Dairying & Fisheries, Ministry of Agriculture,
and Government of India.
[Notification No. 95 (RE-2013)/2009-2014
dated 22/10/2014]
7
Bizsol UPDATE
November - 2014
Public Notices:
•
•
Application for grant of exit permission (inprinciple approval) from SEZ Scheme
8.
Annual Performance Report (APR)
9.
Application for approval of Job-work (subcontracting)
No New Public Notices
Special Economic Zone
•
7.
Last date for receipt of application for the posts
of Joint Development Commissioner for Noida &
Indore SEZ and Deputy Development
Commissioner on deputation basis in NSEZ,
Noida, FSEZ, Kolkatta, MEPZ, Chennai, CSEZ,
Cochin,
KASEZ,
Kandla
&
VSEZ,
Vishakhapatnam has been extended from 10th
October, 2014 to 5th November, 2014.
[Notification No. F. No. A-4/6/2013-SEZ dated
01/10/2014]
10. Application for intimation of date of
commencement of production
11. Intimation of date of commencement of
production
12. Grievance form (this is available for all
entities)
[Notification No. F. No. D. [2/25/2012-SEZ
dated 28/10/2014]
•
All the SEZ Developers, Co-developers & Units
are required to make online applications for
various applications, permissions, approvals,
intimations, reporting required to & from the
Office of the Development Commissioner &
Department of Commerce with effect from 1st
November, 2014 which are as follows:
FOR SEZ DEVELOPERS:
1.
Application for approval of Authorized
operations (Form C7)
2.
Application for extension of the validity
period of Formal Letter of Approval (Form
C1)
3.
Application for Extension of the validity
period of in-principle Letter of Approval
(Form C2)
4.
Application for approval of Job-work (subcontracting)
5.
Quarterly/half-yearly returns (Form E)
All the SEZ Developers, Co-developers & Units
are requested to follow the standardised formats
for the following activities which are to be
monitored by all the zones:
1.
For utilization of the goods by the Developer/
Co-Developer (Certificate of Chartered
Engineer)
2.
For obtaining approval of material for
authorized operations by the Developer/Codeveloper (Certificate of Chartered
Engineer)
3.
Information required for renewal of LoA for
5 years.
4.
Lease Deed
5.
Annual Performance Report of the Unit
[Notification No. F. No. D. [12/25/2012-SEZ
dated 28/10/2014]
INCOME TAX
FOR SEZ UNITS:
Notification:
1.
Application for setting up units in SEZs
•
2.
Application for Renewal of LoA
CBDT has issued FORM 13 for Application by a
person for a certificate under sections 197 for
no deduction/collection of tax or deduction/
collection of tax at a lower rate. [Notification
46/2014 dated 24th Sept 2014]
•
Government of the Republic of India and the
Government of the Polish People's Republic
amended the Agreement between the
Government of the Republic of India and the
Government of the Polish People's Republic for
3.
Application for intimation of Jewellery
exhibitions abroad
4.
Application for permission of Jewellery
exhibitions abroad.
5.
Application for permission for setting up a
DRlBCP centre by IT units
6.
Application for permission for movement of
data backup tape by IT units
8
Bizsol UPDATE
November - 2014
the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes
on income. [Notification 47/2014 dated 29th
Sept 2014]
•
COMPANY LAW
Notifications
•
For financial years commencing on or after 1st
April 2015, the Auditor's Report shall also state
about existence of adequate internal financials
control system and its operating effectiveness.
Provided that the auditor of the company may
voluntarily include such statement for audit of FY
April 14 to March 15. Accordingly the Companies
(Audit & Auditors) Rules, 2014 have been
amended. [Notification G.S.R. -(E) dated 14th
Oct 2014 ]
•
The provisions w.r.t preparation of consolidated
financial statements shall not be applied to an
intermediate wholly owned subsidiary, other than
a wholly-owned subsidiary whose immediate
parent is a company incorporated outside India.
Accordingly the Companies (Accounts) Rules,
2014 have been amended. [Notification G.S.R.
-(E) dated 14th Oct 2014]
•
Now the activities towards 'Contribution to the
Swach Bharat Kosh' set-up by the Central
Government for the promotion of sanitation as
well as 'Contribution to the Clean Ganga Fund'
set-up by the Central Government for
rejuvenation of river Ganga are allowed to be
inserted in CSR policy by the Companies.
[Notification G.S.R. -(E) dated 24th Oct 2014]
•
Amendment in Company Law Board (Fees on
Applications and Petitions) Rules, 2014 as under:
Principal Director General or Director General
or Principal Director or Director will be the person
authorized for the purposes of calling and
verifying of information in its possession relating
to any person under section 133C i.e. in case of
proceeding under Survey. [Notification 48/2014
dated 30th Sept 2014]
Circular:
•
Technical manpower is also considered as asset
at par with plant & machinery but limit has been
enhanced from 20% to 50%. It means, existing
technical manpower can be shifted to SEZ Unit
which will not be considered as splitting up of
business. [Circular 14/2014 dated 8th Oct
2014]
•
The concessional rate of withholding tax has
been extended to borrowing by way of any long
term bonds, not limited to a long term
infrastructure bond, if the borrowing is made on
or after 1st day of October, 2014. Further, the
concluding date of the period of borrowings
eligible for concession under Section194LC
which was earlier 01/07/2015 has been extended
to borrowings made before the 1st day of July,
2017. [Circular 15/2014 dated 17th Oct 2014]
MVAT
Sr.No. Particulars of Application
Notification:
34
•
Dealer who are liable to file the return and have
not uploaded the requisite annexure along with
monthly return for the period April 14 to July 14,
and quarterly return for the period April 14 to
June 14, shall electronically upload the
annexures alongwith the return for the period
ending 30th Sept 14 in the templates, provided
on the website. [Notification VAT/AMD 2014/
1B/Adm 8 Dt. 16th October 2014.]
Fees (Rs)
Allowing any period other than April to
March as financial year.
5,000
35
Rectification of register of members.
500
36
Directing the company to pay the sum
due or for any loss or damage incurred
as a result of such non-payment.
100
37
Allow further time as considered reasonable to the company to repay the deposit.
5,000
[Notification G.S.R. - dated 3rd Nov, 2014]
Circular
Circulars:
•
•
No new circular
9
Ambiguity in the provision w.r.t. refund of the
deposit of Rs. 1 Lac received from the person
Bizsol UPDATE
November - 2014
other than retiring director who stands for
directorship in Section 8 Companies formed for
charitable objects, it is clarified that, if the said
director fails to secure more than twenty five per
cent of the total valid votes then the Board of
directors should decide as to whether the deposit
made by or on behalf of said person is to be
forfeited or refunded. [General Circular No.38/
2014 dated 14th Oct 2014]
•
•
•
FEMA (Important Circulars)
•
In respect of manner of presentation of notes in
Consolidated Financial Statements (CFS), it has
been clarified that Schedule lll to the Co's. Act
2013 read with the applicable Accounting
Standards does not envisage that a company
while preparing its CFS merely repeats the
disclosures made by it under stand-alone
accounts being consolidated. In the CFS, the
company would need to give all disclosures
relevant for CFS only. [General Circular No.39/
2014 dated 14th Oct 2014]
As per Circular No. 28 [A. P. (FL/RL Series)
Circular No. 02] dated February 6, 2008 and the
Annex to the A.P. (DIR Series) Circular No 88
dated January 9, 2014, limited transactions as
per guidelines under Part (B) Permitted
Transactions of Annex to A.P.(DIR Series)
Circular No.88 dated January 9, 2014 were
permitted through exchange houses.
It has been decided by the RBI to permit
remittances to the Prime Minister's National Relief
Fund through the Exchange Houses subject to
the condition that remittances are directly credited
to the Fund by the banks and the banks maintain
full details of the remitters.[RBI/2014-15/257 A.P.
(DIR Series) Circular No.35 October 9, 2014]
•
The Company Law Settlement Scheme 2014 for
filing of pending Annual Returns and Financial
Statements by defaulting companies with
concessional penalties at 25% has been
extended up to 15th Nov 2014. [General Circular
No.40/2014 dated 15th Oct 2014]
As per Regulation under Circular no. 117 dated
April 4, 2014 and the Foreign Exchange
(Compounding Proceedings) Rules, 2000
notified by the Government of India vide
G.S.R.No.383 (E) dated 3rd May 2000,
regarding delegation of powers to the Regional
Offices of the Reserve Bank of India to
compound the contraventions of FEMA.
In Notification of the RBI dated 16 October, 2014,
it has been decided to delegate further powers
to Regional Offices (except Kochi and Panaji) for
compounding the Contraventions under FEMA
Regulations without any limit on the amount of
contravention. Kochi and Panaji Regional offices
can compound contraventions for amount of
contravention below Rupees one hundred lakh
(Rs.1,00,00,000/-).
It has been clarified that, in case of companies,
who have filed their balance sheets and annual
returns on or after 01.04.2014 but prior to launch
of CLSS-2014 then disqualification of directors
as per clause (a) of sub-section (2) of Section
164 of Companies Act, 2013 shall apply only for
the prospective defaults if any by such
companies. [General Circular No.41/2014
dated 15th Oct 2014]
The modifications mentioned in the Notification
have come into force with immediate effect. For
more details see the Notification. [RBI/2014-15/
266 A.P. (DIR Series) Circular No.36 October
16,2014]
10
Bizsol UPDATE
November - 2014
CBEC Notified Exchange Rate for Conversion of Foreign Currency w. e. f. 06th
November 2014 [Notification No.101/2014-Customs (N.T) Dated 05th November-2014]
SCHEDULE - I
Rate of exchange of one unit of foreign currency
equivalent to Indian rupees
S.No.
Foreign Currency
(For Imported Goods)
(For Export Goods)
54.50
53.00
167.55
158.40
1.
Australian Dollar
2.
Bahrain Dinar
3.
Canadian Dollar
54.55
53.30
4.
Danish Kroner
10.50
10.20
5.
EURO
78.00
76.15
6.
Hong Kong Dollar
8.00
7.85
7.
Kuwait Dinar
218.05
205.65
8.
New Zealand Dollar
48.75
47.50
9.
Norwegian Kroner
9.10
8.85
10.
Pound Sterling
99.50
97.30
11.
Singapore Dollar
48.20
47.15
12.
South African Rand
5.70
5.40
13.
Saudi Arabian Riyal
16.85
15.90
14.
Swedish Kroner
8.45
8.20
15.
Swiss Franc
64.85
63.30
16.
UAE Dirham
17.20
16.25
17.
US Dollar
61.90
60.90
SCHEDULE-II
Rate of exchange of 100 units of foreign currency
equivalent to Indian rupees
S.No.
Foreign Currency
(For Imported Goods)
(For Export Goods)
1.
Japanese Yen
54.65
53.40
2.
Kenya Shilling
70.50
66.55
11
Bizsol UPDATE
November - 2014
ALERT - DEPARTMENT OF REVENUE
RESTRUCTURED, HAVE YOU?
By CMA Ashok B. Nawal
Towards the path of GST, Central Excise & Service
Tax department is getting augmented and therefore
more Commissionerate & more divisions have been
made by way of restructuring. Separate Service Tax
Commissionerate & Audit Commissionerate has been
made.
iv.
Separate post for Principal Chief Commissioner &
Principal Commissioner has been created. Now, 8
Principal Chief Commissionerate at office has been
made at Chennai, Delhi, Hyderabad, Lucknow,
Mumbai - I, Kolkata, Vadodara, Large Taxpayer Unit
(LTU). Number of Commissionerate has been created
so as to reduce geographical area and similarly
number of divisions have been made. Number of
inspectors have been promoted as Superintendent
and number of Superintendent have been promoted
as Asst. Commissioner of Central Excise mainly with
the object of stricter monitoring of implementation of
the law. Audit divisions are separately made and they
have been empowered for audit as well as issuance
of Show Cause Notice.
Staffing Norms:
The proposed sections in the Audit Headquarters will
be:
i.
Planning and coordination section to look after
scheduling and support in conduct of MCM
(Monitoring Committee Meeting), maintenance
and Updation of Assessee Master File,
maintenance of Records / Registers and
submission of reports to look after formation /
constitution of audit groups and deployment of
officers matching skills with audit requirement,
maintenance of database of officer's profile,
training needs of officers.
ii.
Administration, Personnel & Vigilance section to
look after administrative matters, transfer, leave,
allowances, budgetary grants, vigilance matters
etc.
iii.
Technical section to look after draft Show Cause
Notices, audit follow up, court cases, Board's
circulars, instructions etc.
Risk Management and Quality Assurance
section to look after risk based selection of units,
use of Third Party Source of Information,
maintenance of Audit database of units to be
audited, selecting them / issues for audit,
performance appraisal and Quality Assurance.
1.
Headquarters shall be manned by one
Commissioner, two Additional or Joint
Commissioners and three or four Deputy
Commissioners.
2.
Each Audit Circle shall be headed by Deputy or
Assistant Commissioner and will also comprise
of Audit Groups. The Audit Groups deployed for
large units should comprise of 2-3
Superintendents and 4-6 Inspectors. For Medium
units the Audit Group should include 1 - 2
Superintendents and 2 - 4 Inspectors. For Small
units the Audit Group should include, 1
Superintendent and 1 - 2 Inspectors.
3.
Groups for Large units, Medium units and Small
units should be in such number that the following
distribution of manpower deployment in audit
groups is achieved.
a.
50% of manpower to Large units
b.
30% of manpower to Medium units
c.
10 % of manpower to Small units
d.
10% of manpower for planning, coordination
and follow up.
Functions of Audit Commissionerate
1.
12
Monitoring Committee Meeting (MCM) should be
convened by Audit Commissionerate, for which
the Executive Commissioner or his representative
will be invited to attend. The decision with regard
to settlement of an audit objections after recovery
of all dues or dropping of the unsustainable audit
objections shall vest with the Audit
Commissioner. Approved audit objections
Bizsol UPDATE
November - 2014
Executive
Commissionerates.
Audit
Commissionerates may refer, with the approval
of the MCM, any case arising out of audit where
detailed investigation is necessary to the
Executive Commissionerates.
including those in which show cause notices are
proposed to be issued should be conveyed to
the Executive Commissioner in the form of
Minutes of the MCMs, who shall respond to these
objections conveying his agreement/
disagreement within 15 days of the receipt of the
minutes of the MCM.
2.
On points of difference, further consultations
may be held for a maximum period of 15 days.
In case the difference persists, the final decision
to issue show cause notice rests with the Audit
Commissioner.
3.
Audit Commissionerate shall issue the show
cause notice, wherever necessary, after the audit
objections are confirmed in the MCMs. The show
cause notice shall be answerable to and
adjudicated by the Executive Commissioner or
the subordinate officers of the Executive
Commissionerate as per the adjudication limits
prescribed the Board. Audit function will end with
the issuance of show cause notice and further
action including adjudication and follow-up shall
be the responsibility of Executive Commissioner.
4.
Litigation after adjudication proceedings
(including defending the order before the
appellate forums-Commissioner (Appeals)/
Tribunals/Courts) shall be the responsibility of
Executive Commissioner. However, Audit
Commissionerates shall remain closely
associated and provide inputs wherever required.
5.
The function of pre-audit/post-audits of refunds,
rebates and brand rate fixation of drawback shall
continue with the jurisdictional Executive
Commissionerate.
6.
CERA audit shall be attended by the Executive
Commissionerate by compiling necessary
information and replying to the audit objections
raised by C&AG. Audit Commissioners will have
no role either in compiling / furnishing
information to CERA or replying to the C&AG
objections. However, it is desirable that Audit
Commissionerate is aware of the objections
raised by C&AG. Therefore, copy of the
objections received from CERA and replies
furnished by the Executive Commissioner shall
be forwarded to the Audit Commissionerate by
the Executive Commissionerate.
7.
Anti-evasion functions shall continue with the
8.
Special Audit shall be ordered by the Audit
Commissionerates. Section 14A / 14AA of CEA,
1944 and Section 72A of the Finance Act, 1994
provide for such special audits in the specified
circumstances by Cost Accountants / Chartered
Accountants. The Audit Commissioners shall be
the competent authority to order Special Audit,
either on their own satisfaction or on a reference
received from the Executive Commissioner.
9.
Audit should be so conducted that the assessee
is least inconvenienced. Documents as
prescribed in the manual should be called and
preparatory work finalized ahead of audit. Audit
should be completed expeditiously and as soon
as the Final Audit Report is prepared, it should
be ensured that a copy of the Final Audit Report
including 'NIL' report is dispatched or provided
to the assessee under acknowledgement to be
kept in Assessee Master File.
10. Currently, audit is undertaken for each tax
separately even though the business and
financial records verified during the audit remains
common for all the three tax administered by the
Board . In order to improve the efficiency of audit
process, it has been decided that coordinated
and integrated audit covering two or more taxes
for assessees having common PAN shall be
carried out. Necessary legal enablement has
been provided in the notification conferring
territorial jurisdiction to the Commissionerates
such that Service Tax Audit Commissionerates
can audit Central Excise assessees within a zone
and vice-versa. An assessee who is registered
under Central Excise, Service Tax and Customs
need not be subjected to three separate audits.
The information about his various registrations
is available and such assessees would be
subjected to a complete audit by the designated
Audit Commissionerate. For this purpose the
Principal Chief Commissioner / Chief
Commissioner will assign the audit of an
assessee to a particular Audit Commissionerate,
based on payment of Central Excise duty or
Service tax whichever is higher. Following the
13
Bizsol UPDATE
November - 2014
same principle OSPCA would be also be carried
out by the designated Central Excise or Service
Tax Audit Commissionerate, in an integrated
manner.
11.
availability of data for data-mining to the
concerned officer should be minimized. Since
scrutiny of return is one of the core functions, it
should be properly monitored at zonal level.
It is proposed to issue risk based audit norms in
due course of time. In the interim the existing
audit norms may be used to ensure that audit
functions continue efficiently.
6.
The criteria for selection of units for audit should
take into account the antecedents of the unit. If
a unit has complied with legal and procedural
requirements, then, whether such unit could be
considered for exemption from audit for a year
or more need to be examined. It was explained
that present system allows for giving Accredited
Status to the units (to be audited mandatorily), if
such units are legally and procedurally compliant.
7.
Recovery arising from non-fulfillment of export
obligation be reported by TAR as recovery of
arrears, if not being done already. CH (EC)
pointed out that computerization of TAR is very
important, and a database of defaulters would
help in monitoring progress.
In other words frequency of audit, time span of audit
will be increased and it will be more focused on record
based control with ERP system.
Moreover, Conference of Chief Commissioners have
decided certain action agenda some of which are
briefly given below:
1.
Chief Commissioners should strictly monitor the
key result areas, have regular interactions with
the major tax payers (to ascertain the projected
revenue), re-deploy the staff with in their zone
as per the need and if required, Board approval
can be sought for such temporary redeployment.
2.
There should be sharing of best practices across
the country through greater interaction amongst
the field formations. It was impressed upon
officers that the Board should be informed about
any major changes affecting the revenue
collection.
3.
Non-sanctioning of refund/drawback claim in the
guise of revenue drive is not acceptable. All
refund / drawback claim should be sanctioned
within the time limit prescribed for such claims.
4.
Since ownership of process is important, DG
(Insp) should be made the process owner for
monitoring revenue augmentation through return
scrutiny.
5.
Moreover, Monthly Performance Reports for Central
Excise Service Tax and customs are separately
prescribed which provides the information w.r.t.
Revenue, Anti-evasion, audit, adjudication, legal &
TAX arrears Pending adjudications are required to
be submitted and the same will be analyzed by Chief
Commissioner & Principal Chief Commissioner.
To conclude, department is now well organized to find
out the evasion whether intentional or un-intentional
and provisions of arrest with non-bailable and bailable
have been incorporated in the law. Similarly,
provisions for recovery has been made stricter mainly
to ensure 100% statutory compliance.
Now, it is the duty of each assessee to be 100%
statutory compliant by way of establishing full proof
computerized system, regular internal checks, regular
audits by experts and built in internal control.
An SOP for use of Returns Scrutiny by Ranges /
Divisions to augment Revenue to be made by
Pune-III, for circulations to all field formations.
Since EDW software license (Business AuthorQuery Studio) is expensive, hence, initially such
licenses can be procured for divisional level
officer. Member (CX) suggested that suitable
modification should be made by DG (Systems)
in the existing system so that a pre-defined query
can be built-in for data mining and retrieval tool
at par with EDW system. It was also suggested
that time lag between filing of returns and
Assessee will have no option but any person doesn't
get equipped and works in the same manner as he/
she is working, then hard days are ahead. In the era
of liberalization at one end Govt. has introduced selfassessment system and "Inspection Raj" is removed,
on another end Jurisdictional Geographical area has
been reduced for stricter monitoring the assessee and
therefore it is a high time to tighten the belt and
introduce better controls.
14
Bizsol UPDATE
November - 2014
CENTRAL EXCISE
v
v
Appeal to High Court against non-speaking
and unreasoned order maintainable even if
issue involved related to determination of
rate of duty not directly involved : Even if
issue which arose in appeals was not in relation
to rate of Customs duty or to value of goods for
the purpose of assessment, appeal is
maintainable before the Hon'ble High Court. In
the present case, dispute being about the
carotenoid content i.e. beta carotene in imported
crude palm oil for the purpose of determination
of rate for levy of duty, Hon'ble CESTAT held
that such question did not have a direct and
proximate relationship to the rate of Customs
duty or to value of goods for the purpose of
assessment. While passing impugned order,
Hon'ble Tribunal relied upon the report of private
laboratory for holding that carotene content was
under 500 mg/kg having reduced due to passage
of time, change in atmosphere condition and
temperature, though possibility of such reduction
was not mentioned in the Standard Technical
Literature. Hence, appeal held maintainable
before High Court, more so, when order passed
by the Tribunal was non speaking order and
unreasoned. [2014(307)E.L.T.852(Guj.)]
Valuation of job worked goods: Goods are
sold by the Principal Manufacturer to the buyers.
Buyers of goods are not related parties and price
is the sole consideration. Value of goods shall
be transaction value of goods sold by the
Principal Manufacturer. Assessee has
discharged duty on sale price of principal
manufacturer hence, provisions of Rule 10A(i)
of the Central Excise Valuation (Determination
of Price of Excisable Goods) Rules, 2000 will
attract. Since, Assseess has rightly valued the
goods hence, demand has been set aside.
[2014(307)E.L.T. 915(Tri. Mumbai)]
15
v
Scope of Show Cause Notice: Department has
issued show cause notice for undervaluation of
goods. At the time of adjudication, issue of
classification of goods was not considered by
adjudicating authority on the ground that
classification issue was not raised in show cause
notice. But assessee's submission is that if issue
of classification decided in assessee's favour,
then there would be no question of duty demand
based on undervaluation. Since, while passing
the order, Appellate authority has not considered
all the facts, matter remanded to adjudicating
authority for considering classification of goods
issue. Further, it has been also held that
determination of cost of production be determined
on the basis of CAS-4 standard of ICWAI.
[2014(307)E.L.T. 904(Tri.Del.)]
v
Duty of plastic waste and scrap arising as a
by-product: Demand of duty on plastic waste
and scrap arising as a by-product has been set
aside by the authority and department has filed
appeal against the said order on the ground that
once cenvat credit having been taken on inputs,
the inputs became non duty paid and such that
condition of exemption under Notification No. 53/
88-C.E. had been violated. Hon'ble CESTAT held
that no where in the Central Excise Act, 1944 or
Rules it has been stated that once credit is taken,
the inputs become non duty paid and this fact
cannot be erased or obliterated by what happens
subsequently. Hence, benefit of Notification No.
53/88-C.E. cannot be denied on waste and scrap
of plastics manufactured from duty paid products.
Further, Hon'ble Bench held that plastic waste
and scrap arising in the course of manufacture
of BOPP films cannot be considered as final
product, thus credit rightly taken on inputs
contained in the waste and scrap of plastics
which arose as a by-product. [2014(307)E.L.T.
961(Tri. Mumbai)]
v
Cenvat credit on inputs loss during transit
is admissible: Assessee's inputs i.e. Lube base
Bizsol UPDATE
November - 2014
oil was transported through pipeline. If any goods
are transported through pipeline or by any other
means of transports, if they are not solid, there
is every chance of loss of quantity of goods by
way of evaporation. Transit loss is varying
between 0.01 and 0.72% which is admissible and
hence, assesse is entitled for cenvat credit on
the inputs as shown in invoices. [2014(307)
E.L.T.919 (Tri. Mumbai)]
v
v
v
straightway cannot be said to be admission on
behalf of the assessee accepting duty liability,
as there would be no question of further
adjudication by Central Excise Officer.
[2014(308)E.L.T.407(Guj.)]
Admissibility of 100% Cenvat credit on the
capital goods in first financial year: Assessee
has availed 100% Cenvat credit on the capital
goods in the first financial year while being eligible
to avail credit of only 50% of central excise duty
paid. Department has demanded the duty
alognwith interest and penalty. When issue was
only of availment of entire credit in first financial
year and not the eligibility to avail credit, such
contravention needs to be condoned. Further,
Assessee has already paid appropriate interest
on the amount of excess credit, hence, such issue
of recovery of excess credit does not arise.
[2014(307)E.L.T.889(Tri.Ahmd.)]
Appeal itself decided at the stage of hearing
stay application by a cryptic order not
proper-CESTAT order set aside and matter
remanded: Hon'ble CESTAT has disposed off
the appeal itself in favour of the assesse at the
stage of consideration of stay application by two
paragraphs order containing to reasoning
virtually in one paragraph, without referring to
background facts. Though assesse could draw
some support case laws cited by them, but that
aspect was vital and Tribunal should have
adverted to rival contentions on same and
thereafter passed reasoned order. It was more
so as that case law was prima facie distinguishable. Hence, order passed by the Hon'ble
CESTAT being inadequate with cryptic reasoning
set aside. [2014(308)E.L.T.416(Bom.)]
v
Remission of duty: Semi finished goods/work
in process destroyed in fire accident. Assessee
not liable to pay duty of semi finished goods as
such no requirement to file remission application.
Commissioner(Appeals) has not confirmed any
duty against assessee and therefore, rejection
of application not to adversely effect assessee.
[2014(308)E.L.T.431(Tri.del.)]
v
Date of effect of Amalgamation when not
specified by the High Court: Hon'ble High Court
has not specified specific date of amalgamation
in their Order dated 01.10.1997. In such case
effective date of amalgamation transfer should
be 22.10.1997, the date when the transfer
company filed the certified copy of court's order
dated 01.10.1997 with the Registrar of the
Companies. Thus, date of amalgamation transfer
will be 22.10.1997 and consequently Assessee
are eligible for SSI exemption Notification up to
21.10.1997.
Further, in spite of written request by the assesse,
Adjudicating Authority has not supplied the
copies of challans seized by the Department.
There are no evidences produced that copies of
all records were supplied to the Assessee to
explain their case. Since Adjudicating Authority
has confirmed the demand by violating the
principals of Natural justice, demand has been
set aside and matter remanded for readjudication. [2014(308)E.L.T.421(Tri.Ahmd.)]
Material produced before Settlement
Commission admissible as evidence even if,
proceedings before it failed: Evidentiary value
of material produced before settlement
Commission will be there when proceedings
before settlement commission failed. Whatever
is admitted by the assesse while submitting
application before Settlement Commission under
Section 32E of Central Excise Act, 1944
16
v
Post sale expenses not includible in
Assessable Value: Goods are manufactured
under Joint Venture agreement and 100% sold
to buyer. Advertisement and sales promotion
expenses borne by buyer of the goods. Buyer
marketed goods to ultimate consumers. No
evidence of any flowback of consideration from
Buyer to Assessee. Hence, post export expenses
such as advertisement and sales promotion not
includible in the assessable value of the goods.
[2014(308)E.L.T.61(Tri.Mumbai)]
v
Job worker to be treated as manufacturer:
Assessee got steel racks and trollyes
Bizsol UPDATE
November - 2014
comes up for consideration, party likely to be
adversely affected by same and party should be
given an opportunity of rebut new findings/facts.
No such opportunity was given to the assesse,
hence, principles of natural justice violated.
[2014(308) E.L.T.99 (Tri .Del.)]
manufactured in their factory through bonafide
Industrial works on job work basis out of raw
material supplied by them and besides supplying
raw material, they have also provided to job
worker the drawings and designs of trollyes and
racks to be fabricated. In respect of workers,
employed by job worker, it is the job worker who
is responsible for providing the benefits under
ESI and PF scheme to the workers employed by
him. Department has not provided the evidences
that job worker is dummy unit floated by assessee
or is an agent of assessee. Hence, job worker to
be treated as the manufacturer and just because
the raw materials and drawings and designs of
racks and trolleys to be fabricated were supplied
by them the assessee would not become the
manufacturer. [2014(308)E.L.T.151(Tri.Del.)]
v
v
v
Export rebate: Exporter has paid duty on CIF
value and filed rebate claim for the same. Ocean
freight and Insurance incurred beyond the port,
being place of removal cannot be part of
transaction value in terms of statutory provisions,
and hence, rebate of excess duty paid on said
portion of value which was in excess of
transaction value was rejected. Once the place
of removal is decided within the geographical limit
of country, it cannot be beyond the port of loading
of export goods. Re-credit of excess paid duty
may be allowed in cenvat Credit account from
where it was paid subject to compliance of
provisions of Section 12B of Central Excise Act,
1944. [2014(308)E.L.T.198(G.O.I.)]
Charges of clandestine removal are required
to be established by tangible and
corroborative
evidence
and
mere
confessional statement of employee is not
sufficient: Assessee not having weigh-bridge
in their factory premises. Contention that raw
materials/finished goods accounting was done
only on eye estimation basis is to be accepted in
as much as there was no record that goods were
taken outside the factory for weighment purpose.
Neither weighment slip produced by revenue nor
buyers stands identified by the Revenue to
suggest clandestine removal of their final
products, hence demand not sustainable.
[2014(308)E.L.T.154(Tri.Del.)]
Principles of adjudication: As per guidelines
of adjudication manual, when any new facts
17
v
Reversal of Cenvat credit alongwith interest
on common inputs used for manufacture of
exempted as well dutiable goods: Assesse
has used inputs in manufacture of dutiable as
well as exempted goods. Since, they not
maintained separate records, they have reversed
Cenvat credit with interest in respect of inputs
used in manufacture of exempted final products
cannot be said to have taken credit of inputs used
in or in relation to manufacture of exempted final
products. Hence, Assessee need not pay an
amount @8% or 10% of sale price of exempted
final products. Hence, matter remanded for
verification of assessee's claim of reversal of
cenvat credit on inputs attributable to
manufacture of exempted final products.
[2014(308) E.L.T.81 (Tri .Ahmd.)]
v
Hon'ble High Court allows rebate on fuel
supplied to foreign-run aircrafts from airport
fuelling station: Notification No. 19/2004-CE
(N.T.) allows rebate on excisable goods exported
after duty payment, directly from factory /
warehouse except as otherwise permitted by
CBEC. In the present matter factual findings of
lower authorities as regards supply of Aviation
Turbine Fuel (ATF) to aircrafts on foreign run
from Aviation Fueling Station (AFS), denotes
compliance with Notification No.19/2004. Hence,
no necessity of looking into any other compliance
and Revenue's contention that assessee failed
to establish co-relation of goods cleared from
factory to those supplied to foreign run aircrafts
requires remand of matter. Hon'ble High Court
directed for disbursal of refund claim stating that
Govt. should not indulge in harassing its own
arm/entity. [TS-503-HC-2014(BOM)-EXC]
v
CESTAT Allows SAD exemption & Education
Cess credit utilization on EOU - DTA stock
transfer: Hon'ble CESTAT allows Special
Additional Duty (SAD) exemption on stock
transfer by EOU to units in DTA under Notification
No. 23/2003-CE. A plain interpretation of
condition that 'goods must not be exempted by
Bizsol UPDATE
November - 2014
State Govt. from sales tax / VAT' in said
Notification, must to determine exemption
eligibility. Refuses to examine leviability of sales
tax on stock transfer as contended by Revenue,
since assessee paid tax on such clearances.
Further, Hon'ble Bench allows utilization of
Education Cess and Secondary & Higher
Education Cess credit for duty payment on DTA
clearances, excise duty aggregate of customs
duties leviable u/s 3 of Central Excise Act. In this
case ratio of Larger Bench's Moser Baer ruling
inapplicable as EOU exempt from local sales tax
ab initio in that case and on the other hand,
Hon'ble Bench refers to AAR decision in GE India
Industrial Pvt. Ltd. [TS-494-Tribunal-2014-EXC]
finalizing the Bill of Entry for the purpose of
assessment, authority is bound to inform importer
about variation proposed and the reasons for the
same. The said process would meet the essence
of fair play, such that no person would think itself
a target for arbitrary and unfair behavior on the
part of authorities. Hence, Hon'ble High Court
has set aside the said order and directed for
issuance of fresh order of finalization of
assessment after following principles of Natural
Justice. [2014(307)E.L.T.874(Bom.)]
v
Strictures against Department for failure to
comply with Tribunal's Order: It has been
observed by the Hon'ble Bench that in most of
the cases due to absence of instructions from
the field and Revenue, Departmental
Representatives cannot defend the case as they
are helpless without the instructions from the field
staff. Hence, Bench directed that Chief
Departmental Representative to take up the
matter before higher authorities so that
Departmental Representative shall be prepared
with full information and instruction to assist the
Bench. [2014(307)E.L.T.914(Tri.Del.)]
v
Natural Justice: At the time of adjudication
process Department has denied the cross
examination of two officers of assessee. Although
assessee has filed reply to show cause notice,
on the last day of hearing when the assesse was
prevented to appear for hearing, order was
passed on next day. Further, the said order did
not taken into consideration various grievances
raised in reply to show cause notice. After
considering all these facts, Hon'ble Bench has
asked Assessee to file a note justifying the
reason why cross- examination is required and
also the chronology of dates on which assessee
was required to appear and outcome thereof.
Further, prayer of assessee to allow opportunity
to produce certain documents allowed by the
Hon'ble Bench. [2014(307)E.L.T.913(Tri.Del.)]
v
Provisionally released imported machines
can be used for manufacturing activity:
Assessee has evaded customs duty on the
software required for operation of machine and
hence, that goods are seized by the Department.
However, those goods are provisionally released
to the assessee for safe keeping subject to
rigorous conditions. Assessee has filed petition
CUSTOMS
v
v
Mere issuing or dispatch of SCN not
sufficient - Receipt or deemed receipt of the
Notice necessary: When goods are proposed
to be confiscated or penalty imposed, person
concerned has to be notified of the ground
thereof. This can only happen when the person
from whom goods have been seized, receives
the notice and understands the grounds
proposed. Notice can be regarded as having
been 'given' only when it is actually received or
deemed to be received by the person from whom
the goods have been seized and same gives the
person an opportunity to make a representation
in writing so that order confiscating or not
confiscating the goods may be passed. Thus,
mere issuance or dispatch of notice would not
amount to 'giving' of notice, instead, 'giving' would
be complete if the notice reached the person
concerned or if notice after having been
tendered, had been refused. [2014(307)
E.L.T.837(Del.)]
Finalization of provisional assessmentDepartment bound to inform the assessee
before changing provisional assessment:
Provisionally assessed Bill of Entry were finalized
by the Department ex-parte by making an
endorsement thereon on a basis different from
that claimed by Importer. Assessee has
challenged the said assessment through Writ
Petition before Hon'ble High Court on the ground
of non speaking order. After considering all the
facts, Hon'ble High Court has held that, while
18
Bizsol UPDATE
November - 2014
seeking permission for use of goods since
substantial duty liability had already been
recovered and relaxation sought of the bank
guarantee furnished therefor. When sizeable
sum had already been recovered, further
condition of bank guarantee for use of software
pending further investigation and possible
adjudication not justified. Hence, assesse
allowed to use such seized machinery alongwith
the installed software for its manufacturing
activity, subject to modified conditions.
[2014(308)E.L.T.391(Guj.)]
v
any specific role during investigation on the part
of the Assessee No. 4, hence penalty on
Assessee No. 4 has been set aside.
[2014(308)E.L.T.113(Tri.Mumbai)]
Baggage - body of passenger cannot be said
to be a baggage, hence, gold ornaments worn
by the passenger not a baggage: Ornaments
worn by the Foreign Tourist entering into India
has been confiscated. Assessee has challenged
the confiscation on the ground that when gold
ornament was worn and not carried in its
baggage, it was not required to be declared as
body of passenger cannot be said to be
baggage. Further, considering the stipulations
in Section 77, 80 and 81 of Customs Act, 1962
held that same have no application when foreign
tourist had on its body a gold chain which was
worn and not concealed. Neither the Customs
Act, 1962 nor the Baggage Rules, 1998 stipulate
that a foreign tourist entering India cannot wear
gold ornaments on its person. [2014(308)
E.L.T.394(Ker.)]
v
Clarification issued by DGFT: There was
classification dispute of items in ITC (HS) or
HBPv1 or HBPv2 or schedule of DEPB rates. In
this regard Hon'ble Bench held that, if any
clarification/opinion issued by the DGFT then it
will be binding on Customs. However, clarification
issued by DGFT may not be binding on customs
for classification of same goods under Customs
Tariff Act, 1975 which is sole domain of customs
authorities. [2014(308)E.L.T.418(Tri. Ahmd.)]
v
Penalty not imposable on employees when
acting on directions of Superiors: Assessee
has mis-declared export price with intent to avail
higher DEPB benefit. Assessee No. 4 was
working as Export Manager/Business
Development Manager and only salaried
employee of the Assessee No. 1 and 2. He was
working as per the direction of the Assessee No.
1 and Assessee No. 2 and Bench did not find
19
v
Rejection of refund as invoice for goods had
been raised prior to clearance of goods:
Department has rejected refund claim in respect
of special additional duty of Customs paid on
import of goods on the ground that invoice for
goods had been raised prior to clearance of
goods such that goods sold under invoice were
not the same as goods imported. In this matter
Hon'ble Bench held that in view of the registration
certificate granted by the Delhi Pollution Control
Committee for import of hazardous waste,
assesse was required to clear imported waste
directly to actual users from the port of import.
Assessee raised invoice on 19.05.12, expecting
clearance on that very day as duty was paid by it
on 19.05.12, however, there was delay is
passing out of charge order and same was given
on 22.05.12. Merely because there was delay in
passing out of charge order, the invoice raised
on 19.05.12 cannot be said to be in respect of
some other goods. [2014(308)E.L.T.186
(Tri.Del.)]
v
CESTAT denies concessional duty benefit on
homeopathic medicines import due to nonfulfilment of condition of "credit nonavailment": CESTAT allows Revenue's appeal
regarding homeopathic medicines imported into
India not eligible for concessional rate of
Additional Customs Duty (ACD) @ 1% under
Notification No. 1/2011-CE. Exemption
Notification must be construed strictly. Condition
regarding CENVAT credit non-availment under
said Notification not met as there is Settled
principle that goods are exported, not taxes, and
burden of proof that imported goods did not avail
CENVAT remission in exporting country not
discharged by assesse. Manufacture of like
goods liable to excise duty in India, hence, levy
of ACD @ 5% justified to counter-balance such
excise duty.[TS-470-Tribunal-2014-CUST]
v
Cost reimbursement of Customs officers at
Cargo Terminal not ultra vires Constitution /
Customs Act: Bombay HC upholds
constitutional validity of Regulation 5(2) of
Bizsol UPDATE
November - 2014
of restricted goods either under Section 125 of
Customs Act or under Section 11(9) of Foreign
Trade (Development and Regulation) Act, upon
payment of fine in lieu of confiscation /
redemption charges. Further, import of
hazardous waste without Central Government
permission deemed illegal under Hazardous
Material Rules and such waste can be ordered
to be re-exported. [TS-467-HC-2014(MAD)CUST]
Handling of Cargo in Customs Areas Regulations
2009. Since custodianship transferred from
Airport Authority of India and Air India Ltd. to
assessee, it is obligated to bear charges of
Customs staff posted at Cargo Terminal, on cost
recovery basis, absent grant of specific
exemption. None of the functions under Customs
Act can be discharged / carried out, nor the power
exercised in that behalf except by Customs
officers, thus charges / expenses in relation
thereto have to be paid and that is how Circulars,
Guidelines and Regulations must be read and
interpreted. Though, it is denied that cost is in
nature of tax/fee, its recovery is supported
assuming to be fee by correlating it with services
provided by Customs officers. [TS-478-HC2014(BOM)-CUST]
v
v
SERVICE TAX
Erroneous finding or omission to consider
contentions not render CESTAT's order 'nonspeaking': Hon'ble High Court dismisses
assessee's appeals, an erroneous finding on
merit by CESTAT or failure on its part to consider
some contentions does not render its order 'a
non-speaking' one. Assessee declared goods
imported as ROM i.e. mixture of iron ore fines
and lumps and later filed a refund claim seeking
benefit of exemption available w.r.t. iron ore
fines. Failure on part of CESTAT to consider fact
that assessee paid duty under protest is an
observation on merits of matter which does not
enable this Court to entertain this appeal. Defect
of this nature must be demonstrated to Court
competent to entertain statutory appeal against
it. However, an appeal before SC cannot be
avoided, no conclusive finding recorded on issue
of payment of duty absent existence of
jurisdiction. [TS-471-HC-2014(BOM)-CUST]
Permits provisional release of prohibited
second hand machine, subject to eventual
adjudication: HC allows assessee's writ, permits
assessment and provisional release of second
hand Digital Multifunction Print and Copying
Machines, a prohibited item, subject to eventual
adjudication. Prohibited goods can be imported
subject to conditions, upon fulfillment of which,
goods cease to be prohibited and automatically
become non-prohibited goods. No bar on release
20
v
Money remittance from overseas not
'service'; However, MTSO agents taxable as
'intermediaries: HC waives pre-deposit in
relation to service tax leviability on 'lump sum
lease premium' received by Maharashtra Govt
undertaking u/s 65(105)(zzzz) as "renting of
immovable property service". Tribunal cannot
secure Revenue's interest especially when case
prima facie in assessee's favour, in light of
Greater Noida Industrial Development Authority
ruling. Final view of Tribunal's Principal Bench is
that service tax is applicable on quantum of rent
paid monthly / yearly, not lease premium (a onetime lump sum payment. Reserving any opinion
on correctness of the view in said ruling, HC sets
aside Tribunal order directing deposit of Rs. 20
Cr out of total demand of Rs 136 Cr. [TS-479HC-2014(BOM)-ST]
v
Tax discharged by Division on parent
company's behalf prima facie sustainable:
Discharge of service tax for use of brand name
under 'intellectual property service' category by
a division on behalf of parent company prima
facie allowable, since it is part and parcel of such
parent entity. Revenue contention that tax liability
ought to have been discharged by assessee and
not its division unsustainable, absent any
provision in law to support the proposition that
division cannot discharge liability. Relies on coordinate bench ratio in Mahindra Logistics Ltd.
that separate divisions of legal entity cannot be
considered as separate legal entities and
discharge of tax liability by head office sufficient.
So long as division has received consideration
from service recipient and discharged service tax
Bizsol UPDATE
November - 2014
off under Rule 41D of Bombay Sales Tax Rules,
1959. Condition to Entry A-23 of Notification
issued u/s 41 of Bombay Sales Tax Act extends
exemption to sale of such goods subject to nonavailment of set-off. Goods either taxable or tax
free, and taxable goods either chargeable to tax
or exempt from tax. Since taxable goods include
exempt goods and assessee did not claim any
exemption from sales tax, said condition not
imposable. [TS-474-HC-2014(BOM)-VAT]
thereon, the same cannot be called wrong
discharge of tax liability / mis-utilization of
CENVAT Credit. [TS-480-Tribunal-2014-ST]
v
Supply of services to HAL taxable absent
'PSU' status; directs pre-deposit: Services
rendered to Hindustan Aeronautics Ltd. (HAL)
taxable under Finance Act. HAL not a public
sector undertaking (PSU) since it has been
incorporated under Companies Act, 1956.
Service tax applies on services rendered to any
commercial undertaking, and HAL runs as a
company having own balance sheet, profits. No
provision in law grants exemption / exclusion from
levy of tax in respect of Defence PSUs, hence
assessee's attempt to escape liability on this
ground unsustainable. [TS-472-Tribunal-2014ST]
Miscellaneous
v
National Tax Tribunal Act, 2005 declared
unconstitutional by Supreme Court: Section
5 of NTTA mandate that National Tax Tribunal
would ordinarily have its sitting in National Capital
Territory of Delhi. It was against mandate of law
declared by Hon'ble Supreme Court in S. P.
Sampath Kumar [1987(27)E.L.T.1(S.C.) and L.
Chandra Kumar [1997(92)E.L.T.318(S.C)] that
permanent Benches needed to be established
at seat of every jurisdictional High Court, and if
that was not possible, at least CIRCUIT Bench
required to be established at every place where
aggrieved party could avail of his remedy. Since
Section 5, 6, 7, 8 and 13 of the said Act having
been held illegal and unconstitutional, remaining
provisions were rendered otiose and worthless
and hence, entire NTTA declared to be
unconstitutional. [2014(308)E.L.T.209(S.C.)]
v
Petition to CAT can be filed on the basis of
communication received under RTI: Section
23 of the Right to Information Act, 2005 does
not bar a challenge to the contents of a
communication obtained under the Right to
Information Act, 2005, it only bars the jurisdiction
of Courts other than Administrative Tribunal in
the matters which could be the subject matter of
challenge in issuing the information under the
Right to Information Act, 2005. Hence,
communication received under RTI can be
subject matter of proceedings under Section 10
of the Administrative Tribunals Act, 1985. Formal
order is not required for the same.
[2014(308)E.L.T.5(Bom.)]
CST
v
v
Interest chargeable from 'return date' on Form
C non-production, not 'assessment' under
CST Act: Hon'ble High Court quashes Tribunal
order stating that interest is chargeable from the
date of furnishing monthly returns in case of
default in furnishing 'C' Form declarations
claiming concessional rate under Central Sales
Tax (CST) Act. Tribunal misread SC judgement
in J. K. Synthetics wherein liability to pay tax and
interest thereon was held to arise only after
adjudication and not earlier to it. In instant case,
assessee aware of liability on inter-state sale,
hence tax paid pursuant to assessment order
ought have been paid alongwith return, as
prescribed under CST Act. Having failed to do
so, State deprived of revenue and hence, interest
payable from the date when assessee became
liable to pay tax to compensate the delay. Also it
rejects assessee's contention that no interest
payable due to absent of provision in CST Act,
on the ground that it very clear that power
conferred to levy interest flows from statutory
provision. [TS-499-HC-2014(KAR)-VAT]
Disallowance of set-off on export
unsustainable when sales tax exemption not
claimed: Export sales of fountain pens and ball
pens cannot be considered for disallowing set
21
Bizsol UPDATE
November - 2014
v
Service Tax ST-3 Return filing due date extended to 14th November 2014 by CBEC.
v
Department has taken friendly move towards tax payers; Department has directed its officials to fix meetings
with assesse in such manner so that they do not have to wait.
v
Out of Court settlement won't absolve financial fraudsters; such offences are crime against society , can
lead to economic crisis.
v
Jurisdiction of Excise & Customs Officials re-notified after creation of new post of Principal Chief
Commissioners and Principal Commissioner.
v
Kaushal Srivastava appointed as Chairman of CBEC.
v
Anita Kapur appointed as Chairperson of CBDT.
v
Hypothecation of machine does not change ownership of goods for cenvat credit.
v
Graft information can be sought from CBI under RTI.
v
Lucknow DRI seizes 55,000 kg Red Sanders worth Rs. 25 Cr. from export container lying at Tughlakabad
ICD; Four persons arrested.
v
Trichy Airport Customs seizes gold bars worth Rs. 82 lakhs abandoned in gents' toilet.
v
Frustrated Central Excise Superintendents to demonstrate before residences of Top Bosses.
v
CIC issues showcause notice to Sonia Gandhi, Amit Shah in RTI case.
v
CBI arrests a Superintendent and Inspector, both of Central Excise in a bribery case.
22
Bizsol UPDATE
v
November - 2014
Who are you talking to?
A man joined a big Multi National Company as a
trainee.
On his first day, he dialed the kitchen and shouted
into the phone: "Get me a cup of coffee, quickly!"
The voice from the other side responded: "You fool;
you've dialled the wrong extension! Do you know
who you're talking to?
"No" replied the trainee.
"It's the Senior Officer of the company, you idiot!"
The trainee shouted back: "And do you know who YOU are talking to, you IDIOT?"
"No!" replied the Senior Officer angrily.
"Thank God!" replied the trainee and kept the phone down…..
i i i i i
v
A young businessman had just started his own firm. He rented a beautiful office and had it
furnished with antiques. Sitting there, he saw a man come into the outer office. Wishing to
appear the hot shot, the businessman picked up the phone and started to pretend he had a
big deal working.
He threw huge figures around and made giant commitments. Finally he hung up and asked
the visitor, "Can I help you?"
The man said, "Yeah, I've come to activate your phone lines."
23
Bizsol UPDATE
November - 2014
NOTES
24