Cover October 2013 - Bizsolindia Services Pvt.Ltd · 2017. 11. 10. · Party of the country. Why Rahul Gandhi did what he did will always be shrouded in mystery or a matter of conjecture,

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Bizsol UPDATE October - 2013

The rules for the game of politics appear to be thesame everywhere in the world. Politicians in India

can take heart in the fact that their counterparts inthe US are as bad as themselves when it comes toplaying the game ofbrinkmanship in politics. For themparty interest and self-preservation are far moreimportant than the country's future. The USgovernment from its hibernation mode over the lastcouple of months has transited to the shutdown mode.However, unless something unprecedented happensthings are unlikely to get worse beyond this point. ThePresident is unlikely to give in easily as Obama wantshis signature Medicare initiative to define hispresidency and that is one legacy he would notbarterfor anything else in the world especially since he rodeto his presidency for a second term promising thismassive welfare programme. In essence thisshowdown is more than mere political posturing bothfor the legislators in the Congress and the President.Republicans want minimum government whereas theDemocrats swear by a government which takes thewelfare route thereby becoming big and bloated. Thedemographic layout of the population being what itis,the principled, yet inflexible stand of the Republicanswould be tested to its limit.If and when they give in tothe Democrats on this issue the fabled Americandream would be refined and redefined from being anentrepreneurial and individualistic culture to a welfareoriented state with big government spendingdominated by socialistic ideologies which areanathema to those who believe in the virtues ofpristine capitalism.

Such a lot of things have happened over the last onemonth, suddenly you start seeing some light at theend of the tunnel. Indian democracy, after all doesnot look that fragile any more, though it may be inorder to remind oneself that it is too premature tocelebrate. Be that as it may, there are developmentswhich augur well for the Indian state. One of the

FROM THE DESK OF THE CHAIRMAN

defining moments in Indian democracy was whenRahul Gandhi virtually tore an Ordinance passed bythe cabinet to shreds and tore into the Prime Ministerof the day with such disdain and contempt rarelyassociated with the heir apparent of the Grand OldParty of the country. Why Rahul Gandhi did what hedid will always be shrouded in mystery or a matter ofconjecture, for the uncrowned prince of the Congressparty there was no need to resort theatrics to makehimself heard. It is not about the content of what hesaid but the way he went about doing it. When DrManmohan Singh was abroad and especially whenthere was no one to question any decision taken bythe Gandhi scion he need not have gate-crashed intoa press-meet organised by his own party's Ministerin the cabinet and label the Ordinance as an utternonsense. As if he did not want to be misquoted hereturned to the press-meet to repeat what he saidearlier and emphatically. Ajay Makhan, the ministerconcerned,would go down in history as the mostcomical figure in this bizarre theatre of the absurd.He was defending the Ordinance one moment withall the passion he could muster just before RahulGandhi stormed into the gathering only to endorsethe diametrically opposite views of his young leaderwhen the latter trashed the Ordinanceunceremoniously! That is the Indian dynastic varietyof politics for you.

Rajiv Gandhi was the original Mr. Clean for the mediabefore Bofors came along. Now his son will be knownas Mr. Nonsense for what he did to the Ordinance onthat fateful day more for the way he did it. Themeasure to shield corrupt legislators through anamendment to the Representation of Peoples Act byitself was bad. What was worse was it was sought tobe brought in through an Ordinance. It was likeapplying salt into a wound. It is obvious that thepoliticians are not in sync with the mood of the nation.No doubt the intent behind the Ordinance and the

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Ordinance itself deserved to be trashedunceremoniously. In one stroke, perhapsunknowingly, Rahul Gandhi may turn out beinstrumental in a long process of cleansing the corruptpolitical system in the country. Before the mikes ofthe press meet could be switched off two powerfulconvicted politicians were led away to the nearest jailincluding Lalu Prasad Yadav. There are more to follow.However, the events which followed Rahul Gandhi'stheatrics raise more questions than answers. WhyRahul Gandhi had to resort to these methods? If hewere to become the Prime Minister one day how safeare we if he tends to become so reckless regardlessof consequences? What kind of a man is our presentPrime Minister - a man without a modicum of self-respect? His was a pathetic puppet-show in full glory.

It is natural to feel gratified that the apex court in ourcountry still gives us a chance to look ahead and hope.The judgment of the Supreme Court which the Cabinetthought of overturning through an Ordinancereflectsnot only the legal position but also the mood of thenation. By enacting laws to suit the corrupt legislatorsthe polity has evolved itself into a cosy club of thepowerful corroding the social fabric of the nation. TheCourt once again proved that law after all is logical,even if it is an ass. If a convicted person cannot beelected to the legislative body there is no logic whyhe can continue to be an MLA or MP post a conviction.Suddenly theterm banana republic does not seem toapply to our Republic any more. More so when yousee the occupant of the Rashtrapati Bhavan actingas a sieve to trap political Ordinances from goingthrough. Strange that a non-political Prime Minsterbeing stopped on his tracks from further criminalisingthe polity and undermining the Constitution by apolitical person occupying a non-political constitutionalposition!

The good news does not end there. The SupremeCourt in another landmark judgment held that a voterhas a right to reject the candidates offered to him orher in an election. It may not sound as sensationaland profound as the right to recall. In terms ofcleansing the system this will do a world of good.Firstly, the political parties will need to apply their mindbefore deciding on the candidates. In a society whichis becoming increasingly cynical in its outlook andcritical of the political class, the suggestion made by

the apex court to provide a NOTA (None Of TheAbove) option is bound to become a favourite onewith the voters. There is also another unintendedconsequence. All those who do not take the troubleof going to the polling booths on an election day onlybecause they do not like any of the candidates (whichis quite often) will now get an opportunity go andregister their protest vote in the form of NOTA. A greatsatisfaction indeed - you exercise your franchise; youdo not have to forcibly vote for an undeservingcandidate and what is more you have the sadisticsatisfaction of exercising a negative vote against allthe candidates. End of the day, however, for this allimportant decision of the court to be truly meaningfulthe law makers have to come out with necessarylegislations in cases of overwhelming NOTA votes.Currently that may be too much to expect from thepolitical class. For starters let us scrutinise themanifestoes of various parties to see how many ofthem promise to bring out the necessary legislativeamendments to deal with the true implications ofNOTA. One thing is for sure - Indian politics is slowingtransiting from NOTE to NOTA.

Andhra Pradesh is burning on the issue of Telengana.Parties are busy taking politically convenient positions.A smooth partition of the state may be too much toexpect from a government with no credibility left, agoverning party out of sync with the masses, a PrimeMinister who has become a pathetic caricature andhis colleagues in the cabinet mired in all kinds ofcorruption scandals. Invariably comparisons will bemade when three new states were carved out duringVajpayee's tenure as Prime Minister which washandled with much more finesse with very littleopposition.

The irrepressible Sushil Kumar Shinde has done itagain. By playing the communal card no so subtly hehas courted controversy once more. He asked thestates to be extra careful while arresting the youth ofthe minority community. When it comes toemployment in India, they say the real problem is notunemployment; but unemployables. This axiom is truefor our Central cabinet also. There is a serious dearthof talent. How else would one justify such gaffe-pronepeople like Shinde holding such important portfolioslike Home affairs?

At long last you see some sane developments in the

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international scene. The speech delivered by Obama,the U S President to the UN General Assembly wasremarkable on two counts. One was that the speechwas lighted and littered with optimism and hope andwas more statesmanlike than ever before andsecondly he seemed to answer every shade of criticismlevelled against the US projecting it as a bully in thecomity of nations. This was a clear departure fromthe past where the US Presidents used talk down andpatronisingly from every platform. The arrogance ofthe sole super power was missing when Obamaaddressed the gathering at the UN. Obama appearsto be working overtime to define the contours of hispresidential legacy or is trying to justify his Nobel Prizea little belatedly. Either way it augurs well for the world.Obama appears to have taken the initiative to re-establish ties with Iran. That should be great newsfor countries like India who depend heavily on Iranianoil imports.

The glass ceiling is cracking. And it shows. Even asChristine Lagarde continues as the Managing Directorof the International Monetary Fund, the news iscoming in that another woman Janet Yellen has beennominated by Barack Obama to head of the FederalReserve, the most powerful Central Bank in the worldwhen Ben Bernanke retires in January next. Closerhome Arundhati Bhattacharya has taken over as theChairperson of the State Bank of India, the largestbank in India which accounts for more than a quarterof the country's banking business.

What's in a name? A lot, it seems. When oneSrinivasan from Chennai with an exotic designation

like the President-in-Exile of the Board of Control forCricket in India was arraigned by the Supreme Court,there was his namesake of Indian origin in the USbeing nominated as a federal judge by Barack Obamaand being considered as a strong contender for aseat on the Supreme Court Bench should a vacancyarise in the apex court in the near future.

On judgment day in the case of one of the mostsensational trials recently, a trial court sentenced todeath all the accused except the juvenile accused todeath. That by in itself is not the issue here. After thetrial court verdict the demand for similar deathsentence for the juvenile accused was raised all overagain. That also is not the issue here. Most of thosewho argued for death sentence, even if justifiedconsidering the savage nature of the crimecommitted,were doing so based on retributive justice- a crime has to be visited by punishment. Those whoargue harsh punishments are unaware of the fact thatwhile dealing with crime and punishment ourdispensation of justice is dictated as much by areformatory process and it is not only is aboutpunishing the guilty. Even those who argued againstthe 'eye-for-an-eye' solution could not articulate thebasic essence of our legal system when it comes tocrime and punishment effectively. The abysmal stateof affairs of the juvenile homes and the apathy thesociety shows towards those found guilty and undertrail also does not help matters. Unfortunately so.

Thank you.

Venkat R. Venkitachalam

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CUSTOMSNOTIFICATIONS

Anti Dumping

• Anti dumping duty has been imposed on SodiumPerchlorate exported & originated from thePeople's Republic of China (hereinafter referredto as the subject country) and imported into Indiafor period of five years. [Notification No. 20/2013-CUS (ADD) dated 06/09/2013]

• Anti-dumping duty has been imposed on importsof Zinc Oxide (hereinafter referred to as thesubject goods) falling under tariff items 28170010 or 3812 3030 of the First Schedule to theCustoms Tariff Act 1975, (51 of 1975), originatingin, or exported from, the Peoples Republic ofChina (hereinafter referred to as the subjectcountry)for a period of five years. [NotificationNo. 21/2013-CUS (ADD) dated 06/09/2013]

Safeguard DutyNo new notification.

Tariff• Regularization of default in non-fulfillment of

export obligation has been introduced vide ofDGFT Public Notice No. 22 (RE-2013)/2009-2014 dated the 12th August, 2013, accordinglythe corresponding Notifications of Customsissued for implementation of various exportspromotion scheme has been amended.[Notification No.46/2013-CUS dated26/09/2013]

• There was an exemption from safeguard dutyand anti-dumping duty to the material importedunder the DFIA (Duty Free Import Authorization)which were non-transferable, now thoseauthorization made transferable w.e.f

18.04.2013, hence exemption to safeguard dutyand anti-dumping duty has been withdrawn w.e.f.17.09.2013. However, material transferredduring 18.04.2013 to 17.09.2013 is liable forpayment of duty along with interest @15%.Fromthe date of clearance of goods from the port ofImports.[Notification No. 45/2013-CUS dated17/09/2013]

• Customs duty has been increased from 7.5% to15% on import of articles of jewelry and partsthereof, of precious metal or of metal clad withprecious metal and articles of goldsmiths' orsilversmiths' wares and parts thereof, fallingunder headings 7113 and 7114 respectively ofthe First Schedule to the Customs Tariff Act,1975.[Notification No. 44/2013-CUS dated 17/09/2013]

• Basic Customs duty @5% has been imposed onimport of Sugar beet seeds, thereby earlierexemption provided as per notification 17/2012dated 17th March, 2012 with drawn on import ofSugar beet seeds to the extent as mentionedabove. [Notification No. 43/2013 -CUS dated13/09/2013]

• Exemption customs duty including additionalcustoms duty has been granted up to01.01.2016 for import of Machinery, equipment,instruments, components, spares, jigs, fixtures,dies, tools, accessories, computer software, rawmaterials and consumables required for the LongRange Surface to Air Missile (LR-SAM)Programme of Ministry of Defence. [NotificationNo. 42/2013-CUS dated 30/08/2013]

Non-Tariff• New drawback rate has been introduced w.e.f.

21.09.2013 subject to notes & conditionsmentioned in Notification. [Notification No. 98/2013-CUS dated 14/09/2013]

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Details of reduction & increase of rates areseparately mentioned in this issue.

• Drawback inadmissibility, restriction ondetermination of rate of drawback for Dairyproduce bearing Tariff heading 0401 to 0406,Glues under Tariff heading 3501 have beenremoved and has been imposed on wheat fallingunder tariff 1001. [Notification No. 97/2013-CUS dated 14/09/2013]

• Tariff value for imported goods fixed for certainproducts [like Palm oil, soyabean oil, palmolien,brass scraps, poppy seeds, Gold, silver andareca nuts] by the Central Government havingregard to the trend of the value of such or likegoods. [Notification No. 96/2013-CUS dated30/09/2013 and 102/2013-CUS dated 30/09/2013]

CIRCULARS• Procedure, Guidelines and agencies/entities/

banks who can import gold and Golddore barshave been prescribed/specified. [Circular No.34/2013 dated 04/09/2013]

• In case of granting drawback on re-export ofimported goods speaking Order-in-Original to beissued clearly covering how the provisions, of thevarious sub-rules of said Rule 5, are satisfied ornot satisfied, as also other attendant aspectsrelevant to sanction of the re-export drawback,should also invariably be covered in the speakingorder in original issued by the officer. [CircularNo. 35/2013 dated 05/09/2013]

• The Board is of the view that Bluetooth Wirelessheadsets for mobile phones / cell phones are tobe classified in heading 85.17, subheading8517.62, by application of GRI 1 (Note 3 toSection XVI), 3(b) and 6. [Circular No. 36/2013dated 05/09/2013]

• All Industry rate of Drawback have been revisedw.e.f 21.09.2013 vide Notification No. 98/2013dated 14/09/2013. [Circular No. 37/2013 dated14/09/2013]

• Guideline for Arrest and Bail in relation tooffences punishable under Customs Act hasbeen revised. [Circular No. 38/2012 dated 17/09/2013]

INSTRUCTION• It has been reiterated that no export

consignments packed with raw or solid woodpackaging material shall be allowed clearancewhich is found deficient on meeting phytosanitaryrequirements ISPM. [F. No.450/19/2005-Cus.IVdated 16/09/2013]

CENTRAL EXCISENOTIFICATIONS

Tariff• The scope of exemption has been enhanced in

case of rotor blades and now extended tointermediates parts & sub parts of rotor blades,for wind operated electricity generators, undernotification 12/20012 CE. [Notification No.27/2013 CE dated 12/09/2013]

Non-Tariff• On removal of capital goods as waste & scrap

on which cenvat credit has been taken, centralexcise duty on transaction value will have to bepaid henceforth. Prior to this amendment cenvatcredit after deduction of allowed depreciation wasrequired to be reverse or duty on transactionvalue, whichever is higher, was required to bepaid. [Notification No.12/2013 CE NT dated27/09/2013]

CIRCULARS• CBEC has advised to sanction rebate claim within

30days from the date of receipt of the claimcomplete in all respect, except those requiringpre-audit. [F. No. 267/39/13-CX.8 dated01/10/2013]

• Board has come out with a circular clarifyingvarious issues on arrest and bail under CentralExcise Act, 1944. Since arrest takes away theliberty of an individual, the power must beexercised with utmost care and caution and onlywhen the exigencies of the situation demandarrest. Such cautions are mentioned thereinalong with the procedure to be followed for sucharrest. [Circular No. 974/08/2013 CE dated 17/09/2013]

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Please read the detail Article in this issue

• The mischief of Rule 6 of Cenvat Credit Rules,2004, will not be applicable when goods arecleared without payment of duty but debiting thesame in the duty free scrip covered under FPS,FMS & MLFPS or any scrip issued under chapter3 of Foreign Trade Policy and under ofnotifications no. 29/2012-CE, 30/2012-CE, 31/2012-CE, 32/2012-CE and 33/2012-CE all dated9th July, 2012. [Circular No. 973/07/2013 CEdated 04/09/2013]

SERVICE TAXNOTIFICATIONS• Service tax has been exempted when services

are provided to the National Skill DevelopmentCorporation set up by the Government of India ;a Sector Skill Council approved by the NationalSkill Development Corporation; an assessmentagency approved by the Sector Skill Council orthe National Skill Development Corporation; atraining partner approved by the National SkillDevelopment Corporation or the Sector SkillCouncil. [Notification No 13/2013 ST dated10/09/2013]

AD HOC EXEMPTION ORDER• On account of increasing the tourism at

Uttarakhand after natural disaster at Badrinath& Kedarnath, exemption has been granted toservices Services by way of renting of a room ina hotel, inn, guest house, club, campsite or othercommercial place meant for residential or lodgingpurposes and Services provided in relation toserving of food or beverages by a restaurant,eating joint or mess by service providers ofUttarakhand. This exemption is available for theperiod from 17/09/2013 to 31/03/2014. [Ad HocExemption Order No. 01/01/2013]

CIRCULARS• Other auxiliary educational services such as

hostel, canteen, house keeping, security andallied services provided to educational instituteand renting of immovable property will beexempted from payment of service tax, therefore

unnecessary dispute raised by tour operator, renta cab will be avoided & no service tax will bepayable under reverse charge by sucheducational institute. [Circular No.172/7 /2013-ST, Dated 19/09/2013]

• Board has come out with a circular clarifyingvarious issues on arrest and bail under FinanceAct, 1994. Since arrest takes away the liberty ofan individual, the power must be exercised withutmost care and caution and only when theexigencies of the situation demand arrest. Suchcautions are mentioned therein along with theprocedure to be followed for such arrest.[Circular No.171/6 /2013-ST, Dated 17/09/2013]

Please read detail Article in this issue.

FOREIGN TRADE POLICYNOTIFICATIONS• Category of ineligible exports for FMS has been

expanded to encompass export of Cotton, Exportof Cotton Yarn and exports which are subject toMinimum Export Price or Export Duty underchapter 3 of FTP. Benefit of Incremental ExportIncentivisationScheme for the year 2013-14 willbe limited to a scrip of a value not exceeding Rs.1 Crore per IEC. Claims in excess of this valuewill be subjected to greater scrutiny by RegionalAuthority. Further Benefit of Incremental ExportIncentivisationScheme for the last quarter of2012-13 will be limited to 25% growth orIncremental growth of Rs. 10 crores in value,whichever is less. Claims in excess of abovestated value will be subjected to greater scrutinyby Regional Authority. [Notification No. 43/2013-(RE-2013)/2009-2014 dated 25/09/2013]& [Notification No. 44/2013-(RE-2013)/2009-2014 dated 25/09/2013]

• The Central Government, designates ShriJaikantSingh, Additional Director General of ForeignTrade as Authorised Officer under Rule 3(1) ofSafeguard Measures (Quantitative Restrictions)Rules, 2012. [Notification No. 42/2013 -(RE-2013) / 2009-2014 dated 25/09/2013]

• Minimum Export price for export all varieties ofonions has been increased to USD 900 per MT.

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[Notification No. 41/2013-(RE-2013)/2009-2014 dated 19/09/2013]

• It has been specified that every import underAdvance Authorisation /DFIA has to be followedby a corresponding export. Further It isnecessary that every import under AA/DFIA mustbe duly accounted for by corresponding exportswithout insisting on the sequence: importpreceding export. Notification has been issuedIn accordance with Guidelines given in RBICircular No.25 dated August 14, 2013[Notification No. 40/2013-(RE - 2013)/2009-2014 dated 06/09/2013]

PUBLIC NOTICE• Item of imports has been replaced from 'Aqueous

Dispersion of Vinylidene Chloride (Total solidcontent 60+/-1%)' to "Aqueous Dispersion ofPolyvinylidene Chloride (Total solid content 60+/-1%)" for export product PVDC coated PVC film.[Public Notice No.29/2013-(RE - 2013)/2009-2014 dated -01/10/2013]

• Format of ANF 3F with this revision (claims forthe period 2013-14 vis a vis 2012-13) has beenmade applicable for fi l ing claims underIncremental Exports Incentivisation Scheme forthe period 2013-14. Greater and more andintensive scrutiny will require for claims beyondvalue of a scrip not exceeding Rs. 1 Crore perIEC for 2013-14 & in case of the last quarter of2012-13 value of a scrip will be limited to 25%growth or Incremental growth of Rs. 10 crores invalue, whichever is less. A list of indicativedocuments for such scrutiny has been given.[Public Notice No.28/2013-(RE - 2013)/2009-2014 dated -25/09/2013]

• A typological error has been corrected in Sl. No.22 of Para 2(iii) of Public Notice No. 30(RE-2012)/2009-2014 dated 16.11.2012 which is tobe read as "Three Wheelers/Cars below 1000CC", in place of "Three Wheelers/Cars below 100CC". Thereby it is clarified that Three Wheelers/Cars below 100 CC is included in the list oftradable itemsin Indo-Myanmar Border Trade.[Public Notice No.27/2013-(RE-2013)/2009-2014 dated -20/09/2013]

• Geo-Chem Far East Pte. Ltd.,Singapore-139947,PSIA is being de-lilsted from Appendix5 and made ineligible to issue Pre-ShipmentInspection Certificate.[Public Notice No.26/2013-(RE - 2013)/2009-2014 dated -20/09/2013]

• The exporters/importers can import/get their 20%gold consignment (under customs bond)released without waiting for the realization, if theother two requirements like E.P. copy of theshipping bill and Customs attested invoice asproof of export as perpara 4A.8(a) are satisfied.[Public Notice No.25/2013-(RE - 2013)/2009-2014 dated -06/09/2013]

• Export of finished leather, Wet Blue and EITanned leather may also allowed through Airports.[Public Notice No.24/2013-(RE - 2013)/2009-2014 dated -05/09/2013]

POLICY CIRCULAR• It has been brought to the notice of this

Directorate that some importers/exporters areeffecting imports/exports by using IECs issuedto others which is a complete violation ofprovisions of Foreign Trade PolicyImporters/exporters as well as all other stake holders arecautioned to comply with the provisions ofFT(DR) Act and Rules made thereunder whileusing their IEC Number. Non-compliance/violation of these provisions would attract actionin the form of suspension/cancellation of IEC orimposition of penalty, as appropriate, under therelevant provisions of FT(DR) Act andRules.[Policy Circular No.6 (RE-2013)/2009-2014 dated 16/09/2013]

TRADE NOTICE• The list of 539 firm / applicant to whom quota of

rough marble and travertine blocks have beenallocated for the FY 2013-14 in terms ofNotification No.37 dated 26.8.2013 has beenissued. Issue of import authorisation by RAs ofDGFT would commence from 20th September2013 & end on 25th September 2013. [TradeNo.7 (RE-2013)/2009-2014 dated 19/09/2013]

SEZ• Policy & procedures have been defined for SEZ

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units carrying on recycling of plastic or waste.[No. C.6/10/2009-SEZ dated 17/09/2013]

MVATNOTIFICATIONS

No New Notifications.

CIRCULARS• Procedure for cross check of transactions of the

sellers who have filed incomplete annexure J1for the FY 2009-10 and 2010-11 have beenprescribed. [Circular No. 9A of 2013 dated 01/10/2013]

• Procedure for cross check of transactions of thesellers who have filed incomplete annexure J1for the FY 2008-09have been prescribed.[Circular No. 1A of 2013 dated 01/10/2013]

• Profession Tax Information Form has been madeavailable in Mahavat Website to update PAN,TAN, Latest address, Telephone Nos. email Id,PTRC and PTEC nos. of all the profession taxpayers which is to be updated by all the VAT/CST dealers, PTRC/PTEC holders within onemonth. [Circular no. 6T of 2013 dated01/10/2013].

INCOME TAXNOTIFICATIONS• Department has revised forms 15CA & 15 CB

under Rule 37BB on Income Tax Rules, 1962for specifying the information by the personresponsible for making payment to a non-resident, not being a company, or to a foreigncompany. [Notification 67/2013 dated 02/09/2013]

• Department has issued form 63AA under newRule 12BA for statement of income distributedby the securitization. [Notification 68/2013dated 04/09/2013]

• Department has notified Rajasthan ElectricityRegulatory Commission, a body constituted bythe Government of Rajasthan for the incomearising to commission namely "amount receivedas petition fees & interest earned on investment"for claiming exemption u/s 10(46) of Income Tax

act, 1961. [Notification 69/2013 dated 18/09/2013]

• Department has notified the Jurisdiction ofincome-tax authorities of Commissioner ofIncome-tax (TDS)-l & II, Delhi along withTerritorial areas, Persons or class of personscovered& Powers and functions. [Notification70/2013 dated 18/09/2013]

• Department has notified the Jurisdiction ofincome-tax authorities of Director of Income Tax(Intelligence)rankfor Guwahati, Pune, Bengaluru,Hyderabad & Kochi along with Territorial areas,Persons or class of persons covered& Powersand functions. [Notification 71/2013 dated18/09/2013]

• Government has issued Safe Harbours Rule forspecified eligible international transactions asspecified in the Rules. [Notification 73/2013dated 18/09/2013]

• Government has entered into Avoidance DoubleTaxation with Australia. [Notification 74/2013dated 20/09/2013]

• Government has issued new rule 10U specifyingprovisions to which Chapter X-A shall not apply.[Notification 75/2013 dated 23/09/2013]

• Department has issued new form 34EA forapplication for obtaining an advance ruling underSec 245Q (1) of Income Tax Act, 1961.[Notification 76/2013 dated 24/09/2013]

CIRCULAR• No new circulars.

INSTRUCTIONS• Hon'ble Delhi HC in the case 'Court on Its Own

Motion vs. UOI & Ors-CPC(TDS)/AOs(TDS) hasissued the directions that to issue the letters tothe deductors, in whose case TDS challans areunmatched, with a view to verify and correctthese challans. If necessary, the deductors maybe asked to file correction statements, as perthe procedure laid down and necessary followup action be taken. [Instruction No. 11 dated27/08/2013]

• Department has issued Standard Operating

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Procedure for cases under Non-filers MonitoringSystem ('NMS') [Instruction No. 14 dated 23/09/2013]

COMPANY LAWNOTIFICATION• Till the time National Company Law Tribunal is

constituted under section 434(1) of CompaniesAct, 2013: the Board of Company LawAdministration shall exercise the powers of theTribunal under sections 24,58 and section 59 inpursuance of the second proviso to sub-section(l) of section 465 of the said Act. [Notificationdated 20th September 2013]

CIRCULARMinistry of corporate Affairs has notified 98sections forimplementation of the provisions ofthe companies Act, 2013 (the said Act,)on12.9.2013. Certain difficulties have beenexpressed by the stakeholders intheimplementation of following provisions of thesaid Act. With a view to facilitateproperadministration of the said Act, it is clarified that -

1. Registrar of Companies may register thoseprivate companies as per definition of clause ofPrivate Company under the Company Act, 1956where MOA & AOA is received before11.09.2013.

2. The companies which have issued Notices ofgeneral meeting on or after 12.09.2013, thestatement to be annexed to the Notice shallcomply with the additional requirements asprescribed in section 102 of the Companies Act2013.

3. Till the time of Accounting Standards prescribedby Central Government in consulation&recommendation of NFRA, AccountingStandards notified under Companies Act, 1956shall continue to apply.

4. In respect of requirements of special resolutionunder Section 180 of the said Act, 2013, asagainst ordinary resolution required by theCompanies Act 1956, if notice for any such

general meeting was issued prior to 12.9.2013,then such resolution may be passed inaccordance with the requirement of theCompanies Act 1956. [General Circular No.15/2013 dated 13/09/213]

• The companies Act, 2013, came in force on 29thAugust 2013, but for proper implementation ofthe Act following sections are made applicablew.e.f. 12th September 2013.

Chapter Chapter SectionsNo. Name applicable

2 Incorporation of Company and matters 2, 19, 21, 22incidental thereto

3 Prospectus and allotment of Securities 23, 24, 25, 29 -32, 33, 34, 35,36 - 38, 39, 40

4 Share Capital and Debentures 44, 45, 49-51,57-60, 65, 69,

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6 Registration of Charges 86

7 Management and Administration 91, 100, 102,103, 104, 105,106, 107, 111,112, 113, 114,

116

8 Declaration and payment of Dividend 127

9 Accounts of companies 133

11 Appointment & Qualification of Directors 161-163

12 Meetings of Board and its Power 176, 180-183,185, 192,194, 195

13 Appointment and Remuneration of 202managerial Personnel

22 Companies incorporated outside India 379, 382,383, 386

23 Government Companies 394

25 Companies to furnish information or 405Statistics

27 National Company Law Tribunal and 407-414Appellate Tribunal

28 Special Courts 439, 443-446

29 Miscellaneous 447-453, 456-463, 467-470

[Notification dated 20th September 2013]

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• Till the time National Company Law Tribunal isconstituted under section 434(1) of CompaniesAct, 2013: the Board of Company LawAdministration shall exercise the powers of theTribunal under sections 24, 58 and section 59 inpursuance of the second proviso to sub-section(l) of section 465 of the said Act. [Notificationdated 20th September 2013]

CIRCULAR• Ministry of corporate Affairs has notified 98

sections for implementation of the provisions ofthe companies Act, 2013 (the said Act,) on12.9.2013. Certain difficulties have beenexpressed by the stakeholders in theimplementation of following provisions of the saidAct. With a view to facilitate proper administrationof the said Act, it is clarified that -

– Registrar of Companies may register thoseprivate companies as per definition of clauseof Private Company under the Company Act,1956 where MOA & AOA is received before11.09.2013.

– The companies which have issued Noticesof general meeting on or after 12.09.2013,the statement to be annexed to the Noticeshall comply with the additionalrequirements as prescribed in section 102of the Companies Act 2013.

– Till the time of Accounting Standardsprescribed by Central Government inconsulation & recommendation of NFRA,Accounting Standards notified underCompanies Act, 1956 shall continue toapply.

– In respect of requirements of specialresolution under Section 180 of the said Act,2013, as against ordinary resolutionrequired by the Companies Act 1956, ifnotice for any such general meeting wasissued prior to 12.9.2013, then suchresolution may be passed in accordancewith the requirement of the Companies Act1956.

[General Circular No.15/2013 dated 13/09/213]

FEMA/RBI

Circular Number Date ofIssue Department Subject Meant for

RBI Circulars September - 2013

RBI/2013-2014/304A.P.(DIR Series)Circular No. 59

30.9.2013 Foreign ExchangeDepartment

External Commercial Borrow-ings (ECB) Policy - Refinanc-ing / Rescheduling of ECB

The Chairman / Manag-ing Director Head Office(Government AccountsDepartment) State Bankof India and AssociatesAll Nationalized Banks(Excluding Punjab andSind Bank & AndhraBank) Axis Bank Ltd./ICICI Bank Ltd./HDFCBank Ltd./Stock HoldingCorporation of India Ltd.(SHCIL)



External Commercial Borrow-ings (ECB) Policy - Review ofall-in-cost ceiling

The Chief Executive Of-ficer All Primary (Urban)Co-operative Banks

RBI/2013-2014/302A.P. (DIR Series)

Circular No. 57


External Commercial Borrow-ings (ECB) Policy - ECB pro-ceeds for acquisition of sharesunder the Government's disin-vestment programme of PSUs- Clarification

The Chief Executive Of-ficer All Primary (Urban)Co-operative Banks

1 1



RBI/2013-2014/301A. P. (DIR Series)

Circular No. 56


Trade Credits for Imports intoIndia - Review of all-in-costceiling

The Chief Executive Of-ficers All Primary (Ur-ban) Co-operativeBanks


Circular No. 55


Deferred Payment Protocolsdated April 30, 1981 and De-cember 23, 1985 between Gov-ernment of India and erstwhileUSSR

All Category - IAuthorised DealerBanks



Overseas Foreign CurrencyBorrowings by AuthorisedDealer Banks - Enhancementof limit


RBI/2013-2014/292DBS.CO.PPD No. 3578

/11.01.005/2013-14

25.9.2013 Department ofBanking

Supervision

Pernicious practices of selectbanks deterring customer pro-tection and accounting integrity

The Chairman/Chief Ex-ecutive All ScheduledCommercial Banks (Ex-cluding RRBs) / LocalArea Banks

RBI/2013-2014/291DBOD.Dir.BC.No. 57/

04.02.001/2013-14

25.9.2013 Department ofBanking

Operations andDevelopment

Export Credit in Foreign Cur-rency

All Scheduled Commer-cial Banks and EximBank (excluding RRBs)



Trade Credits for Import intoIndia




Exim Bank's Line of Credit ofUSD 22.50 million to the Gov-ernment of Burkina Faso




Export of Goods and Services- Project Exports



Circular No. 50


Opening of Trading Office /Non-Trading Office / BranchOffice/ Representative Officeabroad


RBI/2013-2014/278FMD.MOAG. No. 86/

01.01.001/2013-14

20.9.2013 Financial MarketsDepartment

Liquidity Adjustment Facility -Repo and Reverse Repo Rates

RBI/2013-2014/278FMD.MOAG. No. 86/

01.01.001/2013-14

RBI/2013-2014/277FMD.MOAG. No. 87/

01.18.001/2013-14

20.9.2013 Financial MarketsDepartment

Marginal Standing FacilityRates

RBI/2013-2014/277FMD.MOAG. No. 87/

01.18.001/2013-14

RBI/2013-2014/276MPD No.BC.368/07.01.279/2013-14

20.9.2013 Monetary PolicyDepartment

Standing Liquidity Facilities forBanks and Primary Dealers

RBI/2013-2014/276MPD No.BC.368/07.01.279/2013-14

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External Commercial Borrow-ings (ECB) Policy -Liberalisation of definition ofInfrastructure Sector

RBI/2013-2014/270A.P.(DIR Series)Circular

No. 48

RBI/2013-2014/266A.P.(DIR Series)Circular No.47



RBI/2013-2014/266A.P.(DIR Series)

Circular No.47


Circular No. 46


Overseas forex trading throughelectronic / internet trading por-tals

RBI/2013-2014/265A.P. (DIR Series)Circular No. 46




RBI/2013-2014/266A.P.(DIR Series)

Circular No.47


Circular No. 46


Overseas forex trading throughelectronic / internet trading por-tals

RBI/2013-2014/265A.P. (DIR Series)Circular No. 46



Memorandum of Instructionsgoverning money changing ac-tivities - Location of ForexCounters in International Air-ports in India

All Authorised Personsin Foreign Exchange

RBI/2013-2014/258DPSS. CO. AD. No.627/

02.27.005/2013-14

13.9.2013 Department ofPayment andSettlement Sys-tem

Implementation of Section 51-A of UAPA, 1967 - Updates ofthe UNSCR 1988 (2011) Sanc-tions List

CEOs of all the Pay-ment System OperatorsAuthorised under thePSS Act, 2007

RBI/2013-2014/257DPSS. CO. AD. No.

626/02.27.005/2013-14


Anti- Money Laundering (AML)/ Combating of Financing ofTerrorism (CFT) - Standards

Chief Executive Officersof All the Payment Sys-tem OperatorsAuthorised under thePSS Act, 2007

RBI/2013-2014/256DPSS. CO. AD. No.628/

02.27.005/2013-14


Implementation of Section 51-A of UAPA, 1967 - Updates ofthe UNSCR 1267 (1999) /1989(2011) Committee's AlQaida Sanctions List and Con-solidated List

CEOs of all the Pay-ment System OperatorsAuthorised under thePSS Act, 2007

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Circular No.44


Foreign Direct Investment(FDI) in India - Review of FDIpolicy - definition for control andsector specific conditions



Circular No.43


Export of Goods and Services- Simplification and Revision ofDeclaration Form for Exports ofGoods/Softwares

All Authorised Dealers inForeign Exchange

RBI/2013-2014/251A. P. (DIR Series)

Circular No.42


Foreign Investment in India -Guidelines for calculation oftotal foreign investment in In-dian companies, transfer ofownership and control of Indiancompanies and downstreaminvestment by Indian compa-nies

All Category-IAuthorised DealerBanks


Circular No.41


Overseas Direct Investment -Amendment




Overseas Foreign CurrencyBorrowings by AuthorisedDealer Banks - Enhancementof limit




Export and Import of Currency All Category - IAuthorised DealerBanks



Purchase of shares on therecognised stock exchanges inaccordance with SEBI (Sub-stantial Acquisition of Sharesand Takeover) Regulations


RBI/2013-2014/231DPSS.CO.PD.No.563/

02.14.003/2013-14

5.9.2013 Department ofPayment andSettlement

System

Cash withdrawal at Point ofSale (POS) - Prepaid PaymentInstruments issued by banks

The Chairman and Man-aging Director / ChiefExecutive Officers AllScheduled CommercialBanks including RRBs /Urban Co-operativeBanks / State Co-opera-tive Banks / DistrictCentral Co-operativeBanks /All Card NetworkProviders



Issue of Bank Guarantee onbehalf of person resident out-side India for FDI transactions

To, All Category - IAuthorised Dealer banks



Risk Management and InterBank Dealings


1 4



RBI/2013-2014/226UBD.BPD. (PCB).Cir.No.9/09.29.000/

2013-14

4.9.2013 Urban BanksDepartment

Secondary Market Transac-tions in Government Securities- Intra-day short selling

The Chief Executive Of-ficers of All Primary (Ur-ban) Co-operativeBanks


Circular No. 35


Anti-Money Laundering (AML)standards/Combating the Fi-nancing of Terrorism (CFT)Standards - Cross Border In-ward Remittance under MoneyTransfer Service Scheme

All Authorised Persons,who are Indian Agentsunder Money TransferService Scheme



Anti-Money Laundering (AML)standards/Combating the Fi-nancing of Terrorism (CFT)Standards - Money changingactivities

All Authorised Persons






Circular No.32


Liberalized RemittanceScheme - Clarifications

All Authorised DealerCategory-I Banks


Circular No.31


External Commercial Borrow-ings (ECB) from the foreignequity holder

All Authorised DealerCategory-I Banks


Circular No.30


Overseas Direct Investments- Rationalization/Clarifications


Lighter Moments

Help-desk guy speaking to a lady user …

Help-desk : double click on "My Computer".

Lady : I can't see your computer..

Help-desk : No .. Click on "My Computer" on your computer.

Lady : How the hell can I click on your computer from my computer ??? !!

Help-desk : There is an icon labelled "My Computer" on your computer .. double click on it.

Lady : What the hell is your computer doing on my computer ?

1 5


CBEC Notified Exchange Rate for Conversion of Foreign Currency w. e. f.3rd Oct. 2013 (Notification No. 103/2013-Customs (N.T.) dt. 04.10.2013)

SCHEDULE - I

S.No. Foreign Currency

Rate of exchange of one unit of foreign currencyequivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1. Australian Dollar 58.95 57.55

2. Bahrain Dinar 169.25 160.00

3. Canadian ollar 60.85 59.30

4. Danish Kroner 11.50 11.15

5. EURO 85.35 83.35

6. Hong Kong Dollar 8.05 7.95

7. Kuwait Dinar 226.35 213.65

8. New Zealand Dollar 52.20 50.90

9. Norwegian Kroner 10.50 10.20

10. Pound Sterling 101.90 99.70

11. Singapore Dollar 50.20 49.15

12. South African Rand 6.35 6.00

13. Saudi Arabian Riyal 17.00 16.10

14. Swedish Kroner 9.90 9.60

15. Swiss Franc 69.65 68.00

16. UAE Dirham 17.35 16.40

17. US Dollar 62.55 61.55

S.No. Foreign Currency

Rate of exchange of 100 units of foreign currencyequivalent to Indian rupees

SCHEDULE-II

(For Imported Goods) (For Export Goods)

1. Japanese Yen 64.30 62.75

2. Kenya Shilling 73.45 69.40

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Avoidance of Arrest & Provision of Bail inthe Era of Indirect Taxation

By CMA Ashok B. Nawal

Arrest & Bail in relation to offenses under Customs Act 1962, Central Excise Act 1944 and Finance Act 1994 (ServiceTax) & Recovery Provisions were incorporated in this year's budget and inspite of protest from no. of sectors,Parliamentarian, without discussing any of the suggestion have passed the Finance Bill 2013 in the LokSabha andRajyaSabha and Hon'ble President of India has also given the assent to the Finance Bill 2013 on 10.05.2013, therebyimplementation of following proposals have become the law of the land through Finance Act 2013 and all amendmentsas suggested in Finance Bill 2013 have become effective from 10.05.2013.

• Who can be arrested?If any information or suspicion w.r.t. violation of law is with the Proper Officer then following persons can be arrested:

Sr.No. Type of persons Who can be arrested1 Proprietary Firm Proprietor, any officer looking after customs, central excise,

service tax.2 Partnership Firm Partners, any officer looking after customs, central excise,

service tax.3 HUF (Hindu Undivided Family) Karta of the family, Members of the family, any officer looking

after customs, central excise, service tax4 LLP (Limited Liability Partnership) Designated Partners, any officer irrespective of designation

looking after customs, central excise, service tax.5 Companies incorporated under Chairman, Managing Director, Whole time Directors & any

Companies Act 1956 or Companies officer irrespective of designation looking after customs,Act 2013 central excise and service tax.

6 Trust All trustees, any officer irrespective of designation lookingafter customs, central excise, service tax.

7 Co-operative Societies Managing Committee members, any officer irrespective ofdesignation looking after customs, central excise, servicetax.

I will reproduce the related provisions of recovery through attachment or from third party and arrest & bail provisions asmade effective from 10.05.2013:

1. Custom Act 1962

SectionNo./

Rule No.

Nature ofAmendment Amendment in Existing / New Provision Author's Analysis

SEC 104 Power to Notwithstanding anything contained in the Code of Alleged offences listed inArrest Criminal Procedure, 1973, an offence punishable a, b, c, d will be treated

under section 135 relating to- as cognizable offence and(a) evasion or attempted evasion of duty exceeding hence non-bailablefifty lakh rupees; or though intension is good(b) prohibited goods notified under section 11 which but considering existingare also notified under sub-clause (C) of clause (i) bureaucracy it may beof sub-section (1) of section 135; or used as coercion, adverse

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Sec.No./Rule No.

Nature ofAmendment Amendment in Existing / New Provision Author's Analysis

3. Service Tax (Finance Act 1994)Sec.No./ Nature of Amendment in Existing / Author's AnalysisRule No. Amendment New Provision

78A New Provision "78A. Where a company has committed any of thefollowing contraventions, namely:-(a) evasion of service tax; or (b) issuance of invoice,bill or, as the case may be, a challan without provisionof taxable service in violation of the rules made underthe provisions of this Chapter; or (c) availment andutilization of credit of taxes or duty without actual re-ceipt of taxable service or excisable goods either fullyor partially in violation of the rules made under theprovisions of this Chapter; or (d) failure to pay anyamount collected as service tax to the credit of theCentral Government beyond a period of six monthsfrom the date on which such payment becomes due,then any director, manager, secretary or other officerof such company, who at the time of such contraven-tion was in charge of, and was responsible to, the com-pany for the conduct of business of such companyand was knowingly concerned with such contraven-tion, shall be liable to a penalty which may extend toone lakh rupees."

Director, manager, secretary orother officer of such company,who are looking after ServiceTax function and conduct ofthe business will be held per-sonally responsible for contra-vention and penalty upto onelakh rupees will be imposed oneach of them.

collection drive and harass-ment.

2. Central Excise Act 1944Sec.No./ Nature of Amendment in Existing / Author's AnalysisRule No. Amendment New ProvisionSection 9 Offences and Offences and penalties for contravention of Section Earlier period of

penalties. 8, evasion of payment of duty, clandestine removal, imprisonment has beenpossession of or dealing in transporting, depositing, extended from 3 years toskipping, concealing, selling etc. of the goods, which 7 years.liable for confiscation,wrong availment & utilization ofCenvat credit,non-supply of information & documentsor abetting for above, amounting to evasion morethan 50 Lakhs imprisonment upto 7 years.

Section 9A Non- For the offences and penalties as mentioned above Draconian provision,cognizable in Section 9, if the amount is upto 50 Lakhs, it is which will be used for un-Offences non-cognizable offence and if it exceeds 50 Lacs, it due collection of duty,

is cognizable offence & non-bailable. coercion and harassment

(c) import or export of any goods which have not beendeclared in accordance with the provisions of this Actand the market price of which exceeds one crore ru-pees; or (d) fraudulently availing of or attempt to availof drawback or any exemption from duty provided un-der this Act, if the amount of drawback or exemptionfrom duty exceeds fifty lakh rupees, shall be non-bail-able.(7) Save as otherwise provided in sub-section (6),all other offences under this Act shall be bailable

SEC 135 Monitory Limitfor Duty eva-sion underSec 135

When evasion or attempted evasion exceeding 50 Lakhor fraudulently availing drawback or exemption exceed-ing 50lakhs are liable for imprisonment upto 7 yearswith fine

Amount has been increasedfrom 30 lakhs to 50 lakhs.

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Sec.No./ Nature of Amendment in Existing / Author's AnalysisRule No. Amendment New Provision

charge of, and was responsible to, thecompany for the conduct of business ofsuch company and was knowingly con-cerned with such contravention, shall beliable to a penalty which may extend toone lakh rupees."

83 83. Application of certainprovisions of Act 1 of 1944- The provisions of the fol-lowing section of the 8 [Cen-tral Excise Act, 1944],as inforce from time to time, shallapply, so far as may be, inrelation to service tax asthey apply in relation to aduty of excise: - 9[9A, 9AA, 9B, 9C, 9D, 9E,11B, 11BB, 11C, 12, 12A,12B, 12C, 12D,10 (12E, 14,15, 31, 32, 32A to 32P (bothinclusive), 33A, 34A, 35EE,35F)] 11 [35FF,] to 35O(both inclusive}, 35Q, 12[35R,] 36,36A,37A, 37B,37C, 37D 13 [38A] & 40. 14[83A Power of adjudication.

83. Application of certain provisions ofAct 1 of 1944-The provisions of the following sectionof the 8 [Central Excise Act, 1944],as inforce from time to time, shall apply, sofar as may be, in relation to service taxas they apply in relation to a duty of ex-cise:- 9 [9A (2), 9AA, 9B, 9C, 9D, 9E,11B, 11BB, 11C, 12, 12A, 12B, 12C,12D,10 (12E, 14, 15, 31, 32, 32A to 32P(both inclusive),33A, 34A, 35EE, 35F)],11 [35FF,] to 35O(both inclusive}, 35Q,12, [35R,]36,36A,37A, 37B, 37C, 37D 13 [38A] and40. 14 [83A Power of adjudication.

Offences under Section 9 willnot be treated as Non-cogni-zable Offence for the purposeof taking the criminal action forviolation of Service Tax. Sec-tion 9 covers offences and pen-alties for evasion of duty, wrongavailment of Cenvat Credit,non-supply of information andattempting to commit the of-fences. These offences will beunder Cognizable Offence,which is having prosecutionprovision.

89 (1) 89. Offences and Penalties. "(i) in the case of an offence specified inclauses (a), (b) or (c) where the amountexceeds fifty lakh rupees, with imprison-ment for a term which may extend to threeyears:Provided that in the absence of specialand adequate reasons to the contrary tobe recorded in the judgment of the court,such imprisonment shall not be for a termof less than six months;(ii) in the case of the offence specified inclause (d), where the amount exceedsfifty lakh rupees, with imprisonment for aterm which may extend to seven years:Provided that in the absence of specialand adequate reasons to the contrary tobe recorded in the judgment of the court,such imprisonment shall not be for a termof less than six months;(iii) in the case of any other offences withimprisonment for a term, which may ex-tend to one year."

For the offences covered un-der sub-section 89 (1)(a) knowingly evades the pay-ment of service tax under thisChapter(b) avails and utilizes credit oftaxes or duty without actualreceipt of taxable service orexcisable goods either fully orpartially in violation of the rulesmade under the provisions ofthis Chapter; or(c) maintains false books ofaccount or fails to supply anyinformation which he is requiredto supply under this Chapter orthe rules made thereunder or(unless with a reasonable be-lief, the burden of proving whichshall be upon him, that the in-formation supplied by him istrue) supplies false information;where amount exceeds fiftylakhs rupees, imprisonment fora term which may extend tothree years

1 9



89 (2) (2) If any person convictedof an offence under this sec-tion is again convicted of anoffence under this section,then, he shall be punishablefor the second and for ev-ery subsequent offence withimprisonment for a termwhich may extend to threeyears:Provided that in the absenceof special and adequate rea-sons to the contrary to berecorded in the judgment ofthe court, such imprison-ment shall not be for a termless than six months.

"(2) If any person is convicted of an of-fence punishable under-(a) clause (i) or clause (iii), then, he shallbe punished for the second and for everysubsequent offence with imprisonment fora term which may extend to three years;(b) clause (ii), then, he shall be punishedfor the second and for every subsequentoffence with imprisonment for a termwhich may extend to seven years."

For the offence covered undersec 89 (1) (d) collects anyamount as service tax but failsto pay the amount so collectedto the credit of the Central Gov-ernment beyond a period of sixmonths from the date on whichsuch payment becomes due,where the amount exceeds fiftylakh rupees, with imprisonmentfor a term which may extendto seven years.Department made stringentpunishment for the offence cov-ered under Sec 89 (1)(d).

If evasion of duty is more thanRs. 50.00 Lacs when collectedfrom the Recipient of the Ser-vice but not deposited, thenimprisonment can be upto 7years instead of 3 years foreach subsequent offence.

90 New Provision "90. (1) An offence under clause (ii) ofsub-section (1) of section 89 shall becognizable.(2) Notwithstanding anything contained inthe Code of Criminal Procedure, 1973,all offences, except the offences speci-fied in sub-section (1), shall be non-cog-nizable and bailable.

Offence under Section 89 (1)(i) is non-cognizable whereasoffence under Section 89 (1) (ii)is cognizable and non-bailable,it means if amount is collectedbut not deposited and amountexceeds Rs. 50.00 Lacs, it isa cognizable non-bailable.

91 New Provision 91. (1) If the Commissioner of CentralExcise has reason to believe that anyperson has committed an offence speci-fied in clause (i) or clause (ii) of sub-sec-tion (1) of section 89, he may, by generalor special order, authorize any officer ofCentral Excise, not below the rank ofSuperintendent of Central Excise, to ar-rest such person.

89. Offences and Penalties.

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(2) Where a person is arrested for anycognizable offence, every officer autho-rized to arrest a person shall, inform suchperson of the grounds of arrest and pro-duce him before a magistrate withintwenty-four hours.(3) In the case of a non-cognizable andbailable offence, the Assistant Commis-sioner, or the Deputy Commissioner, asthe case may be, shall, for the purposeof releasing an arrested person on bail orotherwise, have the same powers and besubject to the same provisions as an of-ficer in charge of a police station has,and is subject to, under section 436 ofthe Code of Criminal Procedure, 1973.(4) All arrests under this section shall becarried out in accordance with the provi-sions of the Code of Criminal Procedure,1973 relating to arrests."

Now, Department of Revenue have started implemented this provision and issued the following circulars :

1. Circular No. 38/2013-Customs dated 17.09.2013

2. Circular No. 974/08/2013-CX dated 17.09.2013

3. Circular 171/6/2013-Service Tax dated 17.09.2013

The above Board Circulars clarifies the instances when arrest to be made, how to grant the bail for non- cognizableoffence, what should be done in case of cognizable offence, procedure for arrest post arrest formalities and reportingsystem thereafter.

I give below the analysis thereon :Sr.No. Particulars Custom Act 1962 Central Excise Act 1944 Finance Act 1994

(Service Tax)

1 When arrest can bemade and bail can begranted? (non - cogni-zable offence)

(a) Outright smuggling ofhigh value goods such asprecious metal, restricteditems or prohibited items orgoods notified under section123 of the Customs Act,1962 or foreign currencywhere the value of offendinggoods exceeds Rs. 20 lakh.(b) In a case related to im-portation of trade goods (i.e.appraising cases) involvingwillful mis-declaration in de-scription of goods/conceal-ment of goods/goods cov-ered under section 123 ofCustoms Act, 1962 with aview to import restricted orprohibited items

Offences and penaltiesfor contravention of Sec-tion 8, evasion of pay-ment of duty, clandestineremoval, possession of ordealing in transporting,depositing, skipping, con-cealing, selling etc. of thegoods, which liable forconfiscation, wrongavailment & utilization ofCenvat credit, non-supplyof information & docu-ments or abetting forabove, amounting to eva-sion less than 50 lakhs.

For the offences coveredunder sub-section 89 (1)(a) knowingly evades thepayment of service taxunder this Chapter(b) avails and utilizescredit of taxes or dutywithout actual receipt oftaxable service or excis-able goods either fully orpartially in violation of therules made under the pro-visions of this Chapter; or(c) maintains false booksof account or fails to sup-ply any information whichhe is required to supplyunder this Chapter or therules made thereunder or

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Sr.No. Particulars Custom Act 1962 Central Excise Act 1944 Finance Act 1994

(Service Tax)S P and where the CIF value of

the offending goods exceedsRs. 50 lakh.(c) import or export of anygoods which have not beendeclared in accordance withthe provisions of this Actand the market price ofwhich exceeds one crorerupees; or(d) Fraudulently availing ofor attempt to avail of draw-back or any exemption fromduty provided under this Act,if the amount of drawback orexemption from duty ex-ceeds fifty lakh rupees.

(unless with a reasonablebelief, the burden of prov-ing which shall be uponhim, that the informationsupplied by him is true)supplies false informa-tion;For the offence coveredunder sec 89 (1) (d) col-lects any amount as ser-vice tax but fails to paythe amount so collectedto the credit of the Cen-tral Government beyond aperiod of six months fromthe date on which suchpayment becomes due,where the amount ex-ceeds fifty lakh rupees,with imprisonment for aterm which may extend toseven years.Department made strin-gent punishment for theoffence covered underSec 89 (1)(d).

2 When arrest can bemade which is non- bail-able and thereforehanded over to nearestpolice station within 24hrs? (cognizable of-fence)

(a) evasion or attemptedevasion of duty exceedingfifty lakh rupees; or(b) prohibited goods notifiedunder section 11 of the Cus-toms Act, 1962 (asamended) which are alsonotified under sub-clause (C)of clause (i) of sub-section(l) of section 135 of the Cus-toms Act, 1962 (asamended); or(c) import or export of anygoods which have not beendeclared in accordance withthe provisions of this Actand the market price ofwhich exceeds one crorerupees; or(d) fraudulently availing of orattempt to avail of drawbackor any exemption from dutyprovided under this Act, ifthe amount of drawback orexemption from duty ex-ceeds fifty lakh rupees.

(i) evasion of the pay-ment of any duty payableunder this Act;(ii) Contravention of anyof the provisions of thisAct or the rules madethere under in relation tocredit of any duty allowedto be utilized towards pay-ment of excise duty onfinal product.(iii) When amount ex-ceeds to more than 50laks in (i) & (ii) above.Evasion of duty can bethrough(a)Finance Act 1994 (Ser-vice Tax) clandestineremoval of manufacturedgoods;(b) removal of goodswithout declaring the cor-rect assessable valueand receiving a portion ofsale price in cash whichis in excess of invoice

If evasion of duty is morethan Rs. 50.00 Lacs whencollected from the Recipi-ent of the Service but notdeposited, then imprison-ment can be upto 7 yearsinstead of 3 years foreach subsequent offence.where amount exceedsfifty lakhs rupees, impris-onment for a term whichmay extend to three years

2 2



(Service Tax)price and not accountedfor in the books of ac-count;(c) taking Cenvat Creditwithout the receiving thegoods specified in the in-voice;(d) taking Cenvat Crediton fake invoices;(e) Issuing Cenvatableinvoices without deliver-ing the goods specified inthe said invoice.

3 When immediate arrestprovision to be resorted?

(i) to ensure proper investi-gation of the offence;(ii) to prevent such personfrom absconding;(iii) cases involving orga-nized smuggling of goods orevasion of customs duty byway of concealment;(iv) masterminds or key op-erators effecting proxy/benami imports/exports inthe name of dummy or non-existent persons/IECs, etc.

There is no provision ofimmediate arrest withoutpermission of Commis-sioner in writing.

There is no provision ofimmediate arrest withoutpermission of Commis-sioner in writing.

4 Whose permissionshould be taken forarrest?

Commissioner of Customsor Additional Director Gen-eral

Commissioner Commissioner / Assis-tant Commissioner

5 When permission ofarrest can be granted?

After ensuring utmost care& caution and there is rea-son to believe based on in-formation and suspicion thatsuch person has committedan offence under the Actpunishable under the sec-tions 132 or 133 or 135 or135A or 136 of the CustomsAct, 1962.

After ensuring utmostcare & caution and thereis reason to believebased on information andsuspicion that such per-son has committed anoffence under the Act.

After ensuring utmostcare & caution and thereis reason to believebased on information andsuspicion that such per-son has committed anoffence under the Act.

6 Whether arrest memo tobe given?

In accordance with Hon'ble Supreme Court India decision in the case of "D.K Basuvs. State of W.B." reported as 1997 (1) SCC 416, it has been held that :Quote35. In addition to the statutory and constitutional requirements to which we have made areference, we are of the view that it would be useful and effective to structure appropriatemachinery for contemporaneous Recording and notification of all cases of arrest anddetention to bring in. transparency and accountability. It is desirable that the officer arrest-ing a person should prepare a memo of his arrest at the time of arrest in the presence of atleast one witness who may be a member of the family of the arrestee or a respectableperson of the locality from where the arrest is made. The date and time of arrest shall berecorded in the memo which must also be counter signed by the arrestee.

Unquote: And therefore, it is the right of the arrestee to demand for the arrest memobefore the arrest is made.

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(Service Tax)7 What arrest memo

should contain?(a) brief facts of the case;(b) details of the person arrested;(c) list of evidence against the person;(d) relevant Section (s) of the Act or other laws attracted to the case and to thearrestee(e) the grounds of arrest must be explained to arrestee and this fact noted in thearrest memo;(f) a nominated person (as per details provided by arrestee) of the arrestee should beinformed immediately and this fact also may be mentioned in the arrest memo;(g) the date and time of arrest may be mentioned in the arrest memo and the arrestmemo should be given to person arrested under proper acknowledgement;(h) a separate arrest memo has to be made and provided to each individual/arrestee.

8 What care should betaken after arrest?

(i) Female offender should be arrested by or in the presence of woman Customsofficers.(ii) Medical examination of an arrestee should be conducted by a medical officer inthe service of Central or State Government and in case such medical officer is notavailable, by a registered medical practitioner soon after the arrest is made. If anarrested person is a female then such an examination shall be made only by, orunder supervision of a female medical officer, and in case such female medicalofficer is not available, by a female registered medical practitioner.(iii) It shall be the duty of the person having the custody of an arrestee to takereasonable care of the health and safety of the arrestee.

9 What should be the postaction of arrest?

a) If arrest is made which is bailable, then bail bond to be taken from the arrestee.Amount of bail bond and surety for bailable offence should not be excessive. Condi-tions of the bail should be informed in writing to the arrestee and nominated personon telephone. Arrestee should be allowed to talk to the nominated person after fulfill-ing all the condition, arrestee can be released immediately. If conditions are notfulfilled then, he should be produced before appropriate Magistrate, without unnec-essary delay but within 24 hrs. or to the nearest police station for safe custodyduring night under proper challan and nominated person of the arrestee may beinformed and to be produced before Magistrate on the next day,b) If the arrest is made for non bailable offence, then he should be handed over tothe nearest police station with arrest memo with proper challan and after informationto be given for the nominated person of the arrestee.

Where reporting of thearrest to be made?

Arrest information to be sentby Chief Commissioner /DGRI to concerned memberof CBEC within 24 hrs. ofthe arrest and monthly reportof all person arrested in thezone should be sent byChief Commissioner to DRI(HQ) in the prescribed for-mat within 5th of subsequentmonth and to Anti-Smug-gling Unit of CBEC by 10thof every month.

Arrest information to besent by Chief Commis-sioner to Zonal Member inthe prescribed report andmonthly report of all per-sons arrested in the zoneto be sent by Chief Com-missioner to DGCEI (HQ)in prescribed format by5th of subsequent month.

Commissioner / Assis-tant Commissionershould send the informa-tion of persons arrestedto Chief Commissionerwith copy of DGCEI (HQ)on the same day or nextday.Chief Commissionershould send the report ofeach arrest to Zonal mem-ber within 24 hrs. of thearrest and also reportmonthly in the prescribedformat to DGCEI (HQ)New Delhi, by 5th of sub-sequent month.

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It can be noted from the above information that arrest inthe case of service tax cannot be made if amount involvedis less than 50 lakhs whereas, in case of Central Exciseand Customs, arrest can be made irrespective of amountinvolved in offences.

• How to avoid arrest? - Be Statutory Complaintthrough taking appropriate steps . Some of thesteps has been given below :

I. Service TaxRecently, Voluntary Compliance Encouragement Schemeis operative and therefore in the interest of self, one shouldintrospect and check all the records from 01.10.2007 till31.12.2012 and find out any errors & omissions and availthe benefit of the scheme and also implement for future.

Similarly, such exercise can be taken for finding any errors& omissions till date and pay voluntarily duty along withinterest for the period 01.01.2013 onwards.

It is important to avail the benefit from this scheme andtake the following steps:

1. Get all transactions scrutinized so as to ascertaincorrect service tax liability as a service provider andrecipient of service where liability to pay service taxis on recipient of the service under reverse chargemechanism.

2. Scrutinize all the correspondence with Service Tax /Central Excise Department to ensure eligibilitycriteria.

3. Analyze all the SHOW CAUSE NOTICE received bysuch persons and ORDER - IN - ORIGINAL receivedby such person.

4. Arrange for the funds to the extent of 50% of theservice tax liability stated in the declaration and paythe same before 31.12.2013 balance 50% to be paidon or before 30.06.2014. Otherwise it needs to bepaid along with interest from 01.07.2014 till the dateof payment. Needless to say, all payments to bemade on or before 31.12.2014.

5. Submit the true declaration in the form VCES 1 alongwith detailed calculation in the form Part B of ST 3return on or before 31.12.2013.

6. Obtain the acknowledgement in the form VCES 2 onsubmission of declaration.

7. Obtain discharge certificate from designated authorityonly after 100% payment of service tax liability andinterest if applicable, i.e. if paid after 01.07.2014 butprior to 31.12.2014.

8. Avail cenvat credit on service tax liability if it iscovered under definition of input services in case ofservice tax payment under reverse chargemechanism.

9. Issue subsidiary invoices under Rule 4 A for thepayment of service tax on service recipient if possible,to minimize the loss.

It is important to note that, in the Era of Negative List ofServices, all activities other than Negative List and goods& services, almost all activities are covered and hence itis mandatory to have built systems as well as periodicalinternal controls and checks.

There is a need to analyze the transaction with respect to:

• Purchase

• Sales

• Expenses

• Income

• Capital Expenditure and also analyze all expendituresand income from Source - Invoice / Debit Notes,Service Provider, Nature of Contract, Account Head.

Moreover, it is necessary to take the following actions:

• Creation of Matrix - Service Provider, Nature ofExpense and A/c Head.

• Creation of New accounting codes.

• Standard Accounting Entries.

• Inter Group / Inter Unit Transaction Analysis.

• Identification of Transactions between TaxableTerritory and Non Taxable Territory.

• Analysis of Transactions for Import of services andtaxability in view of Place of Provision of ServiceRules, 2012.

• Analysis of Transactions for Export of Service andtaxability in view of Rule 6A of Service Tax Rules,1994.

• Analysis of Ageing of Service Creditors andentitlement of Cenvat Credit thereto.

• Aging Analysis of Service Debtors and decision ofcredit notes and adjustment of the service taxpayment.

• Rebate of Service and Linkage with Input Services /Inputs].

It should be ongoing process and system to :

• Review of the Trial Balance and identification of the

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Accounts for further review and analysis of eachtransactions reflecting in Books of Accounts.

• Review of Contracts with various Service Providersincluding job-workers, WCT, transportation, etc.

• Review of each of the identified Accounts and thetransactions there under.

• Review of the mechanism for availment of ServiceTax Credit.

• Impart Continuous Training to the Accounts team andIndirect Tax team for implementation of the newsystem in the New Era of Negative List of Services.

II. Central Excise

It is observed that returns filed under Central Excise Laware hardly reconciled with Financial Accounts, CostingRecords, MIS and ERP Systems.

Some of the key areas need reconciliation otherwise ofissues may arise:

• Production

• Clearance vis-à-vis sales

• Stock

• Cenvat entitlement vis-à-vis availment

• Cenvat Utilization

• Cenvat Balance

• Duty payments

• Removal of inputs as such

• Removal of capital goods vis-à-vis Gross block

• ER-4/5/6/7 and quantitative details and disclosuresto the notes to the Accounts, Cost Audit Report &Other Reports submitted to Other StatutoryAuthorities.

Similarly, following areas need constant review:

• Valuation of goods received from & sent to relatedparty.

• Valuation of goods used for captive consumption orto related party, revision mechanism and reconcilingwith Cost Records.

• Stock transfer to & from units enjoying area basedexemption.

• Applicability of exemption notifications & impactthereof on Cenvat under Rule 6 of Cenvat Credit

Rules, 2004.

• Clearance under End Used based exemptionnotifications.

• Import / procurement under IGCRD.

It has been also observed lot of unnoticed irregularitieslike:

v Export Promotion Capital Goods Scheme - UnfulfilledExport Obligation

• Installation Certificate and yearly reportmandatory requirement.

• Block wise export obligation to be fulfilled alongwith average export obligation.

• On shortfall, demand of duty, interest andpenalty.

• Year wise export performance vis-à-vis exportobligation get unnoticed and unreported andtherefore liability is not provided.

v Export Promotion Scheme Like Focus MarketScheme, Focus Product Scheme, Market LinkedFocus Product Scheme, Served From India Scheme,Vishesh Krishi And Gram Upay Yojana

• Entitlement vis-à-vis application and revenuerecognition thereof

v Advance Authorization For Physical Exports AndDeemed Exports

• Adhoc Norms and ratification thereof, vis-à-visactuals.

• Quantity imported vis-à-vis quantity exported ina year / Excess imports or short exports andtreatment in the books of accounts.

• Violation of actual user condition.

• Short consumption vis-à-vis SION andtreatment thereof in the books of accounts.

• Process of redemption and monitoring of openauthorizations / licenses.

v Duty Free Import Authorization

• Pre-export - same as Advance Authorization.

• Post export - obtaining duty free scrip andrealization thereof, vis-à-vis accountingtreatment.

v EOU :

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• Conditions of notification for duty free import /indigenous procurement

• Domestic Tariff Area Sale entitlement

• Wastage Norms

• Installation of capital goods

• Non moving stock - more than 3 years

• Subcontracting and fulfillments of its condition

• NFE

• Separate books of accounts including bankaccounts vis-a-vis report in form 3CD forcalculation of exempted profit.

• Cenvat

• ER-2 Returns reconciliation with books ofaccount

v SEZ :

• Authorized operations and procurement ofgoods and services

• Returnable goods

• Disposal to Domestic Tariff Area and rate ofduties thereof

• Service tax exemption vis-à-vis Exemption byway of refund

v GENERAL (FOR INTERNAL AUDIT ANDCONTROL) :

• Export documentation, pre and post exportformality.

• Proof of Export

• Bank Realization Certificate

• Recognition Status

III. Customs - Imports & Exports

Whenever importation or exportation is planned importantfactors like item description, conditions for imports orexports, tariff classification & description, description asper company master file as well as supplier's master file,relationship between importer & exporter, valuation anddocumentation, etc. are the key factors.

After November, 2011 Era of Self-Assessment started andaccordingly, suitable changes to Section 17, 18, 46 & 50of the Customs Act, 1962 has been made.

Key elements of Self-Assessment of imported / exported

goods

• Description of goods

• Classification

• Levy of duty / Cess

• Nature of the goods

• Whether the notification benefit is conditional or otherwise?

• Whether countervailing duty is applicable based onMRP?

• Whether anti-dumping duty or safeguard duty isapplicable?

• Whether duty benefit is available under a Free TradeAgreement?

• Whether duty benefit is available as Project Import?

• Whether duty benefit is available under ExportPromotion schemes?

• Valuation

• Import and export restrictions and licensing

• Compulsory Compliance Requirement (CCR)

• Selection of Export Promotion Schemes

It is important to understand the following information underthe said regulation.

a) 'audit' means examination of bills of entry, shippingbills, invoices, packing lists, import licences, booksof account, and other records of transaction relatingto imported and export goods, and may includeinspection of goods at the premises, if available andwhere necessary, drawal of samples;

b) 'books of account' includes ledgers, day-books, cashbooks, account-books and other accounts whetherkept in the written or printed form and data stored ona floppy, disc, tape or any other form in electro-magnetic data storage device;

c) 'premises' includes the place at which imported orexport goods and connected books of account,records of transaction and other documents areordinarily kept by an importer or exporter, as the casemay be, and his registered office or the premisesindicated in his Importer Exporter Code (IEC) issuedby the Ministry of Commerce and Industry and theplaces wherever the imported or export goods, asthe case may be, are ordinarily kept;

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Key Aspects Check Points

1) Check description of goods matches with ERP system / Store Accounting Systems, PurchaseOrders, Brand, Grade, Specification. If brand, grade and specifications are not properly declaredvalue can be rejected under Rule 12 of Customs Valuation (determination of value of importedgoods) Rules 2007.

2) The description should be generic based merely on description of the drawback schedule. Itshould provide descriptive and technical details of export / import goods.

Description ofgoods

1) General principle of classification is to match correct and complete description of goods withthat of Custom Tariff Act.

2) Classification should be inconsonance with International Convention of Harmonized Systemof Nomenclature as made effective.

3) Product technical literature, application catalogues, certificate of analysis, in-house test report,sales invoices, composition of raw-material / intermediate goods, manufacturing of finishedgoods, using the raw-material / intermediate goods also will be subjected for audit for verifyingimport / export consignments.

Classification

Importer / Exporter are required to carefully verify whether their items of import / export is liablefor any duties / cess and also ensure correct rate of duty considering the Notification issuedunder Section 25 of Customs Act, 1962.

Levy of duty/Cess

While considering the Tariff Rate of Duty or Effective Rate of Duty, plain many of the languageused in the Notification is to be taken to decide applicability of the Notification and should not bestretch to avail the benefit which is not intended in the Notification.

Nature of thegoods

1) Quantity and unit of measurement as mentioned in the Bill of Entry or Shipping Bill at the timeof import or export as the case may be should be the same and match with the books ofaccounts as mentioned above and all records manual or electronics, electronically maintained.

2) It has been observed that the quantity reported in system / books of accounts are differentthan that of reported in declaration made at the time of import /export and therefore suchgoods are liable for confiscation and there will be litigation and demands of duty, penalty andinterest and fine in lieu of confiscation.

Quantity and Unitof Measurement

1) Importer should closely examine the records like Bill of Lading / Air Way Bill, Country of OriginCertificate, Contract Copy, Sales Brochure and Catalogues, Invoices etc to ascertainedmanufacture - supplier or exporter, country of origin of imported goods,

2) Test Reports, Certificate of Analysis, Brochures and Catalogues, Sales Invoices will also beaudited to ascertain the correctness of declaration and assessment of Anti-Dumping Duty andSafeguard Duty.

Whether anti-dumping duty orsafeguard duty isapplicable

Conditions applicable to the exemption of Notification to be fulfilled either Pre-Import Or Post-Import or Pre-Export Or Post-Export as the case may be. Since the audit will be conducted afterone year it is easy to verify fulfillment of the conditions by the Customs Officers.

Whether the noti-fication benefit isconditional orotherwise

No. 44 (RE 2000)/ 1997 -2002dt. 24/11/2000 not been strictly followed and the casual declara-tions are made. Since the goods will be available for inspection and audit proper declaration ofMRP at the time of payment of CVD and affixing / printing of the label on the goods is therequirement under Legal Metrology Act and should be complied with.2) Proper records to be kept for verification of MRP declared at the time of imports and the pricelist of such items otherwise unnecessary litigation will arise.

Whether counter-vailing duty is ap-plicable base donMRP

1) Importer needs to be confirming the Tariff Notification for the Rate of Duty applicable onspecific goods imported under Free Trade Agreement with Japan, Korea, Singapore, Asian,Malaysia, Thailand, EU, Australia, New- Zealand, SAARC countries.

2) Importer needs to obtain necessary GSP as per countries specific Rules Of Origin and fulfillthe conditions before claiming such benefits under the notification.

Whether dutybenefit is avail-able under a FreeTrade Agreement

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If duty benefit under project import has been availed, then conditions of project import approvalsneeds to be fulfilled and proper documentation of installation and start-of commercial productionneeds to be complied with.

Whether duty benefit isavailable as ProjectImport:

1) If duty benefit is availed under various schemes under Chapter 3 of Foreign Trade Policy likeSIS, FMS, FPS, MLFPS, Hi-Tech, SHIS, VKGUY etc. the script and utilization thereof needsto ensured even after imports.

2) Similarly if duty exemption benefit has been availed under Chapter 4 & 5 of Foreign TradePolicy then the records import / export and conditions of the authorization needs to be fulfilledand records should be available in the premises of importer / exporter and match with therequirement.

3) It has been observed that records of consumption either not maintained or do not match withBooks of accounts / ERP system. Moreover the inputs mentioned in the SION are importedbut not been utilized can be well verified from ERP system or Store Accounting Systems,Costing Systems, Bill of Material and Number of internal documents including designs andtherefore proper care has to be taken to avoid litigations and allegations of mis-declaration orsuppressions of facts which will result into confiscation of goods and such goods are notavailable during audit still it is liable for confiscation and redemption fine along with duty,interest and penalty will be applicable.

4) If goods are imported claiming exemption under Chapter 6 of Foreign Trade Policy i.e EOU /STPI / EHTP /BTP during audit fulfillment of conditions of the notification will be verified andtherefore internal records should be in line with the conditions therein.

5) Product technical literature, application catalogues, certificate of analysis, in-house test report,sales invoices, composition of raw-material / intermediate goods, manufacturing of finishedgoods, using the raw-material / intermediate goods also will be subjected for audit for verifyingimport / export consignments and such consumptions also will be checked with declarationsmade at the time of making application with DGFT, declarations filed at the time import /export, and actual books of accounts including system reports / records.

Whether dutybenefit is avail-able under ExportP r o m o t i o nschemes

1) Importer / Exporter needs to declare the value in accordance with Section 14 of Customs Act,1962 read with Customs Valuation (determination of valuation of imported goods) Rules 2007/ Customs Valuation (determination of value of export goods) Rules 2007.

2) The transactions with related parties needs to be declared correctly and value to be assess interms of (1) above. Most of the time it has been observed that declarations and facts madebefore adjudicating officer while fixation of value by SVB /GATT Cell are different and thereforethe said order may not be valid and hence it has to be ensured if facts are different then it hasto be brought to notice before SVB Cell otherwise value can be rejected at the time of auditalso.

3) Importer / Exporter has to be aware of the Data Bank of recent imports and the prices thereofso as to determine identical value / similar value / deductive value / computed value otherwisethere may be possibility during audit to determine value based on the principles of residualmethod and differential duty interest penalty may be demanded. Under the self-assessmentonus of determining the correct value in sequential method and providing evidence has beenshifted on the importer from custom offices.

4) When exports are made under various export promotion schemes or exemption schemes orremission schemes then it is utmost important to declare correct FOB value in accordancewith Rule 3 of Export Valuation Rules 2007.

5) If exports are made to the related party then onus will be on exporter that price will not influencedue to relationship otherwise exporter has to provide the evidences of determining the valuesequentially in terms of Rule 4, 5 / 6 of Export Valuation Rules, 2007

6) The export value declared on excise return i.e ER- 1 / ER-2 should be matched with / reconcilewith Shipping Bill, Bank Realization Certificate, Books of Accounts, Notes to Accounts.

7) Exporter needs to take due care while filing the declaration which should be accurate, true andcomplete.

Valuation

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8) In case of High Sea Sales transactions value as accounted and received from buyer will bealso subject for audit.

9) The cost of pre-goods and services in accordance with Rule 9 can be verified from the booksof account, similarly treatment of royalty, technical know-how, discounts, payment / receiptsin foreign exchange various agreements and contacts will be subjected to audit for verificationof value declared at the time of self-assessment.

1) Under Section 2 (33) of the Customs Act prohibited goods are defined and such goods eithershould not be imported or exported. In accordance with Section 111 (d) Section 113 (d) suchgoods are liable for confiscation and also the importer / exporter is liable for imprisonment.

2) The goods covered under prohibited / restricted goods should be under licensing provisionsand conditions to be strictly fulfilled.

Import and exportrestrictions andlicensing

During audit Custom Officer can verify the Compulsory Compliance Requirement as applicableunder various laws as give below:

• Explosives Act, 1884and Explosive Rules, 1983.• Live Stock Importation Act, 1898.• Drugs and Cosmetics Act,1940 and Drug and Cosmetics Rules,1945• Copyright Act,1957 and Copyright Rules, 1958• Arms Act, 1959.• Atomic Energy Act, 1962.• Insecticide Act, 1968.• Patents Act,1970 and Patent Rules, 2003• Wild Life Protection Act, 1972.• Gas Cylinder Rules, 1981 and S&MPV (Unfired) Rules, 1981.• Environment (Protection) Act, 1986 and Rules, 1986• The Bureau of Indian Standards Act, 1986 and Rules, 1987• Motor Vehicles Act, 1988• Plants, Fruits and Seeds (Regulation of Import in to India) Order, 1989.• Trade Marks Act, 1999.• Hazardous Waste (Management and Handling) Rules, 2003.• Plant Quarantine (Regulation of ImportInto India) Order, 2003.• Food Safety and Standards Act, 2006.• Legal Metrology Act, 2009 and Legal Metrology (Packaged Commodities) Rules,2011

C o m p u l s o r yCompliance Re-quirement (CCR)

Importer /exporter needs to respond to the proactive system of building, trust and record base self-assessment systemand audit thereof and therefore substantial change in operating procedures and practices of custom clearance of import/export consignments needs to be made and issues mentioned therein above needs to be addressed without any delayto avoid any litigation and payment of differential duty, interest, penalty and redemption fine in lieu confiscationMost of time it is observed that, Custom House Agent (CHA) / Custom Broker signs on behalf of the importer / exporterwith / without the authorization of importer / exporter and documents as mentioned above is either not available oravailable in the scattered form which will hamper the audit process and complianceAll such precautions as mentioned above are repeated in my earlier articles also but it was important to re-emphasizeand ensure 100% statutory compliance through following actions :a) Study of existing system followed and take the corrective action to make full proof systemb) Try to generate report through system (not excel, word, etc ) and have the control checksc) Before payment of duty, ensuring concurrent audit and thereafter pay appropriate dutyd) Preparation of monthly returns and reconcile the same with financial accounts before due date of submissione) Quarterly audit from independent personIf above actions are followed, then there is almost zero possibility of arrest and any person can avoid the arrest throughensuring the above steps.

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Background:Arguably the most important aspect of the newlyenacted Companies Act 2013 is the measuresintroduced by the Government to transform theerstwhile statute from being a purely complianceoriented law to a piece of legislation to goad thecorporate sector to conform to higher standards ofethical behavior. In its effort to do so the Governmenthas introduced certain measures in the new Act whichwould ensure good standards of corporategovernance. Similar provisions have been there insome of the collateral legislations like The Securitiesand Exchange Board of India Act for listed companies.There are a number of provisions in the CompaniesAct 2013 which aim to usher in an era in which thecompanies behave as responsible corporate citizens.One such measure is the need to appoint IndependentDirectors on the Boards of certain class of companies.

Role of Independent Directors:The objective of mandating the appointment ofIndependent Directors is to ensure that an elementof impartial and objective perspectives are broughtinto the deliberations and decisions of corporateboards which otherwise tend to get packed bypromoters and their cronies. Through this measurethe Board get an opportunity appoint professionalexperts who bring their skills and knowledge to bearon the decisions taken by the Board. One of thebiggest criticisms against corporate Boards is that theygive scant respect to the interest of the minorityshareholders. Independent Directors can be expectedto safeguard the interest of such class ofshareholders. Above all,the presence of IndependentDirectors on the Boards can act as a strong deterrentto those who treat the corporates they manage astheir private fiefdom.

Provisions under the Companies Act 2013:There are a number of provisions under the newCompanies Act which deal with Independent Directorswhich among others include provisions relating tothedefinition of an independent director besides their

appointments, remuneration, the number of suchdirectorships they can hold, etc. Some of the importantprovisions governing Independent Directors in theCompanies Act 2013 are enumerated below:

1. All listed companies and those notified by theCentral Government must have independentdirectors on their Boards which shall not be lessthan one-third of the total strength of the Board.The draft Rules specify that public companieswith a capital in excess of Rs.100 Crores andthose who have borrowings/deposits/debentures/outstanding loans in excess ofRs.200 Crores shall have independent directorson their Boards conforming to the provisions ofthe new Act even if not listed.

2. At least one independent director shall serve onthe CSR Committees.

3. The majority of the members of the AuditCommittee of the Board of such companies shallconstitute of Independent Directors.

4. In the case of listed companies one-half of themembers of the Nomination and RemunerationCommittee shall be Independent Directors.

5. There are provisions in the Act which set outclearly the qualifications, appointment andremuneration of the Independent Directors.

6. The Act also has a Schedule attached to it layingdown the code of conduct for IndependentDirectors, which,inter alia, also contains a clauseto evaluate the performance of eachIndependent Director.

Independence of Independent Directors:Some of the following salutary provisions dealing withIndependent Directors are worth mentioning:

1. An Independent Director shall be a person ofintegrity and shall possess relevant experienceand expertise.

2. A Director who has been or is a promoter or hisrelative of a company, its holding company or its

THE NEW COMPANY ACT 2013 - UPDATESBy Venkat R Venkitachalam

Company Secretary,

Article No. 2 – Independent Directors

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subsidiary shall not be considered as anIndependent Director.

3. He cannot have a pecuniary relationship with thecompany, its holding company or its subsidiaries.

4. A person would be considered independent onlyif he or his relatives have not been an employee,part of key managerial personnel for a period ofat least three previous years besides the year inwhich he is appointed.

5. A person ceases to be independent if he is apartner or employee of the company's legalfirms, auditors, company secretaries, costauditor.

6. A Director would not be considered asindependent if he together with his relatives hold2% of the shares of the company or is a Directoror CEO of a nonprofit organization which receivesmore than 25% of its revenues from thatcompany.

7. An Independent Directors entitled to only to feesfor attending Board meetings besidesreimbursement of out-of-pocket expenses toattend the meetings of the Board and itscommittees. They are not entitled to stock optionsof the company. They are, however, entitled toprofit related commissions as may be approvedby the members of the company.

8. The new Act is also gives powers to theIndependent Directors hold meetings of their ownwithout the presence of other directors to reviewthe performance of the company on whoseBoards they serve.

Tenure of Independent Directors:An Independent Director can be appointed for aconsecutive period of 5 years which can be extendedthrough a Special Resolution for another five years.An appointment beyond this period can be done onlyafter a waiting period of 3 years. Another provisiongiven in the Act is that the period he or she has servedas an independent director before the Act came intoforce would not be counted for the period of 5 or 10years as mentioned above.

Duties of Independent Directors:There are certain solemn duties which have to beperformed by the Independent Directors. The new

Act mandates that they shall scrutinise theperformance of the management and shall ensurethe integrity of the financial information at all times.They shall safeguard the interest of all stakeholdersof the company, especially those of the minorityshareholders.

The Talent Pool of Independent Directors in India:Given the qualifications and restrictions in theappointment of Independent Directors it is possiblethat there could be a paucity of talent forbeingappointed as Independent Directors. A largenumber of personnel will be needed to fil l thevacancies which have been created by the new Act,especially since some of the non listed companiesalso would be called upon to meet the requirementsin this regard within one year of the date of notificationof the Act. Central Government proposes to setup adatabase of eligible independent directors. Themaximum number of directorships has been peggedat 20 out of which the maximum allowed for a personis only 10 for public companies.The available numbercould also come down if one takes into accountthereservations on the part of many to act asIndependent Directors of unknown companies. Therewould also be this proverbial Damocles' sword hangingover their heads for the acts of omission andcommission of the companies' boards on which theyserve unless they can prove that they have alwaysacted in good faith and diligently.

Conclusion:Provisions relating to Independent Directors in theCompanies Act are integral and critical to the intentionof the legislature to transit from an era of merecompliance to higher levels of ethical governance. Therole a truly independent Director plays cannot be overemphasised. A new paradigm has been ushered inand new parameters of corporate governance havebeen put in place. One now hopes that all concernedin the corporate arena would live up to theexpectations of the new norms of doing business inIndia.

Thank you

Venkat R. VenkitachalamCompany Secretary

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Central Excisev Cenvat credit can be availed on the strength

of Invoice only: Cenvat credit cannot be availedmerely when at the time of Cenvat verification,supplier of inputs was found not to havedischarged full duty liable for period coveredunder invoices. Inputs received by buyer aregoods on which appropriate duty of excise asindicated in documents accompanying goodshad been paid. It did not require verification fromdepartment whether duty was paid bymanufacturer. [2013 (295) E.L.T 177 (S.C)]

v Valuation: Levy of Excise under Section 3 ofCentral Excise Act, 1944 was on manufacture offinished product, it was quantified and collectedon value i.e. selling price. Assessee consistentlyfollowing valuation method "cost or market pricewhichever is lower". AO cannot concede inclusionof excise duty to income of assessee on groundof undervaluation of closing stock. [2013 (295)E.L.T 185 (S.C)]

v Appeal against CESTAT order waiving of pre-deposit after finding no prima facie case forconfiscation rejected. While admitting appeal,Court cannot record different fact findings evenon prima facie. [2013 (295) E.L.T 198 (Cal.)]

v No duty is required to be paid when goodscannot be marketed: Assessee undertook nomanufacturing activity to bring into existencegauze fabrics and before further process, suchfabrics could not be marketed. On such ground,assessee held that no duty is required to be paid.Assessee has not availed any Cenvat credit oninputs used. When such facts are justified to theauthorities, assessee held bona fide belief cannotbe faulted. Tax appeal is dismissed since noquestion of law arises. [2013 (295) E.L.T. 199(Guj.)]

v Duty not payable when supplier of goods tojob worker is not manufacturer &manufacturing activity is carried out by jobworker: Demand of duty when goodsmanufactured by job worker is not sustainableeven if supplier of raw material has supervisedthe manufacturing activity of job worker. Supplierof raw material not a manufacturer & goods aremanufactured by job worker. [2013 (295) E.L.T.211 (Tri.)]

v Activity of merely putting customer's logo ondial & change of strap of watch does notamount to manufacturing activity: There wasintermixing of various other parts and a particularpart which was originally with a particular watchmay find its place in another watch. This cannotbe made basis for holding that the activity amountto manufacture. No new product having differentname, use and character came into existence.Wrist watch remained wrist watch having beenembossed with customer's logo. [2013 (295)E.L.T. 254 (Tri.- Del.)]

v Authority may cause verification byaccounting experts from within departmentor outside instead of carrying physicalverification: Assessee submitted certificate ofChartered Accountant endorsing the correctnessof deduction claimed for valuation under CentralExcise. Adjudicating authority may causeverification by accounting experts from withindepartment or outside and not call for documentsto be produced before him instead of carryingout checks at the place where appellant maintainssuch records. [2013 (295) E.L.T. 257 (Tri.-Del)]

v Refund claim due to reduction of sellingprice: Refund claim is not admissible when therewas price reduction after clearance of goods onpayment of duty. Assessment was not onprovisional basis. Reduction of price at later date

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not to be made foundation for seeking refund.[2013 (295) E.L.T. 269 (Tri.-Mumbai)]

v Penalty for paying the duty from Cenvatcredit instead of account current: Assesseehas defaulted payment of duty. During defaultperiod, assessee continuing to pay duty fromCenvat Credit on monthly basis instead ofconsignment wise by debit from account current.As per Rule 8(3A) of Central excise rules, 2002,it was responsibility of assessee to pay duty fromconsignment wise from account current. Failureto follow procedure were deemed to be clearedwithout payment of duty and penalty is applicable.[2013 (295) E.L.T. 273 (Tri.- Ahmd.)]

v Duty not warranted when semi-finishedgoods emerged by job worker: Assessee doingjob work out of raw material supplied by Principal.Assessee only carried out work of Filling & Sealingfor bottles provided by Principal. Product havingemerged as semi-finished goods cannot be heldto be excisable commodity so as to attract anyduty of excise. Principal manufacturer beingactual manufacturer of goods is liable to pay duty.Demand of duty from job worker is notsustainable. [2013 (295) E.L.T. 296 (Tri.-Ahmd.)]

v No interest can be claimed against defectiveapplication: Only on the date when defectiveapplication is rectified and a proper applicationcome into record, that date is relevant date forrefund with interest in case refund is delayed.Once the claim does not assume the characterof correct claim in the eye of law, no right accruesto the claimant from the date on which defectiveapplication was filed and an opportunity givenfor removal of defects in a course of naturaljustice to entertain proper application filed withinlimitations. [2013 (295) E.L.T. 313 (Tri.-Del)]

v Clubbing of Clearances: Merely because thereis door between two units and Power of Attorneystand given to husband to look after the job ofher units, by itself cannot be held to be a groundfor holding both the units as one. Admittedly,husband and wife are entitled to do their ownbusiness and if the husband is looking afterbusiness of wife that will not make the unit owned

by wife as a dummy unit. Prime requirement forclubbing the clearances of two units is not havingcomplete independent machinery andinfrastructure to manufacture the goods. [2013(294) E.L.T. 561 (Tri.-Del)]

v Demand of time barred duty: Once the periodaudit is done by the department & no objectionfor valuation of goods has been raised withrespect to value of inputs received free of costfrom the buyer and the amortization costs ontooling not included in the assessable value offinal product, suppression on the part of theassessee cannot be invoked. Demand beyondthe period of one year completely time barred.Order in original set aside on the ground of time-limitation. [2013 (294) E.L.T. 577 (Tri.-Del)]

v Cenvat credit on merger of company: Onmerger of companies, Cenvat credit lyingunutilized before change of status cannot becarried forward and set off in the hands ofamalgamated company. Merger diminishesstatus of amalgamating companies afteramalgamation. No right existing beforeamalgamation could be claimed to be a right afteramalgamation. [2013 (294) E.L.T. 583 (Tri.-Del)]

v Insurance cost not to be added for valuation:Assessee has received back damaged goodsand sold at much reduced value on payment ofduty accordingly. No provision of law requiringpayment of duty on insurance claim. Suchinsurance was given to the appellants in respectof goods which were damaged and not on otheraccount. [2013 (294) E.L.T. 602 (Tri.-Del)]

v Presumption of clearances made withoutpayment of duty: Documents only ProformaInvoice/ Consolidated invoice being replica oforiginal dispatch invoice, cannot be taken asdispatch document for determining value of totalclearances. No evidence of receipt of rawmaterial or clandestine manufacture/removal ofalleged excess clearances found. Demand ofduty has been set aside. [2013 (294) E.L.T. 608(Tri.-Del)]

v Freight on outward transport not includiblein the assessable value when place ofremoval is factory gate: Assessee sold the

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goods at the factory gate and freight from theirfactory to the destination is separately shown inthe invoices. No evidence on record to show thatunloading expenses, cartage etc. are not borneby the transporter. In the absence of any suchevidence it has been held that the entire elementof freight shown separately in the invoices isnothing else but freight charges. Any amountcollected separately as freight in the invoicecannot be included in the assessable value evenif certain amounts have been collected in excessof the actual transportation cost. [2013 (294)E.L.T. 613 (Tri.-Ahmd.)]

v No unjust enrichment in case of Exports:Provision of unjust enrichment does not apply ifthe refund pertains to credit of duty paid onexcisable goods used as inputs in themanufacture of goods that are exported. Sec 11Bprovides for grant of refund of excise dutyspecifically provides that in certain situations, theprovision of unjust enrichment shall not apply lawhas to be interpreted and enforce accordingly.[2013 (294) E.L.T. 637 (Tri.-Mumbai)]

v Cenvat Credit not permissible for setting up/assembling of manufacturing plant in foreigncountry without paying duty, using not unpackedor not tested and not transported in exactcondition along with machinery manufactured.Two conditions need to be satisfied for availingCenvat/Modvat credit - 1) Manufacturer musthave paid duty on inputs which must have beenused in process of manufacturing final productin their factory, 2) Excise duty must have beenlevied on final product.- [2013(295) E.L.T.353(S.C.)]

v Rebate cannot be claimed on export made basedon bogus bills, documents, fake non-existentsuppliers. Once it was found that severalsuppliers who claimed to have supplied the goodsto petitioner were either fake, bogus or non-existent, the petitioner cannot claim rebatemerely on the strength of exports made.Assessee cannot take shelter that it had noknowledge or claim total innocence. - [2013(295)E.L.T. 387 (Guj.)]

v Refund of mistakenly paid duty: Refund of

mistakenly paid duty amount possible if benefitpassed on to customer, thus, not passing on theburden of Excise duty and credit notes raisedthen refund is allowed.- [2013 (295) E.L.T. 392(Kar.)]

v Non-entering of production in RG-I registeris violation of Rule 10 of Central ExciseRules, 2002: Plea that for determining thequantum of redemption fine, only unaccountedstock can be taken into consideration andredemption fine could not have been imposedon duly accounted for purchases. Neither theadjudicating authority, first appellate authority northe tribunal have dealt with and examined thegrounds or answered the same - Matterremanded to the Tribunal for fresh decision.[2013-TIOL-750-HC-DEL-CX]

v The order which formed basis of the complaintin question has been set aside by the AppellateTribunal, therefore, continuation of criminalproceedings against the petitioner would benothing but an abuse of process of law. Criminalproceeding quashed. [2013-TIOL-749-HC-P&H-CX ]

v Adjournment of hearing: Argument that personlooking after tax matters is pre-occupied and alsosick at the same time cannot be appreciated.Revenue at liberty to enforce demand withoutwaiting for any decision on stay application.[2013-TIOL-1449-CESTAT-MUM]

v Excise duty liability on scrap & wastegenerated at job worker's premises: In Rule4(5)(a) of the CCR, 2004 nowhere envisagesthat the waste and scrap generated at the job-worker's premises should be brought back bythe supplier and if they are not brought back,the supplier of raw material is liable to dischargeexcise duty liability. What is envisaged is that theraw material sent for processing at the job-worker's end, the processed goods should bebrought back and if they are not so brought back,the appellant has to reverse the credit taken onthe raw materials supplied - liability to pay exciseduty arises not under the provisions of Rule4(5)(a) of the CCR, 2004 but u/s 3 of the CEA,1944 on the manufacture of a marketable

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commodity as specified in the CETA, 1985 - Inthe instant case, when the waste and scrap hasarisen in the job-worker's premises, the job-worker is the manufacturer of waste and scrapso generated and not the appellant, who is thesupplier of the raw material - prima facie strongcase in favour - pre-deposit waived and staygranted. [2013-TIOL-1447-CESTAT-MUM]

v Benefit of exemption under Notification No. 06/2002-CE denied on the ground that exemptionis only to the extent of pipes used upto the firststorage place and not for those used beyond thispoint. Notification merely talks about storagefacility and there is no restriction that the watershould be delivered only to the first storage point.Order set aside and appeal allowed. [2013-TIOL-1433-CESTAT-MUM]

v CENVAT on Outdoor Catering & GardenMaintenance service: Appellant has producedevidence with regard to the information given tothe Office of the Director of Industrial Health &Safety that the number of employees in thecompany at the material time was more than 250and hence as per the Factories Act, 1948providing canteen facility was a mandatoryrequirement. As regards gardening servicessame has a nexus with the business activity.Applicant has made a prima facie case forcomplete waiver of pre-deposit & Stay granted.[2013-TIOL-1431-CESTAT-MUM]

v Cenvat credit of banking services receivedfrom outside India: Appellant exporting BulkDrugs and availing the banking and financialservices of the banks situated outside India.Financial charges taken by foreign banks forcollecting and remitting the appellants' salesproceeds from foreign countries. Being a servicerecipient, appellant paying Service Tax andtaking CENVAT credit. As service is specificallycovered under the definition of 'input service' andhence CENVATABLE. [2013-TIOL-1416-CESTAT-MUM]

Customsv Recovery of drawback on the ground that the

exporter is not a manufacturer exporter: It is

clear from the impugned order as well as theorder passed by the first appellate authority andthe adjudicating authority that the petitioner hadnot used the word "manufacturer" or stated thathe had got the goods/garments manufacturedon job work. Thus, it can be argued that therewas no fraud, suppression of facts or mis-declaration by the petitioner. The word "supplier"used in the form clearly indicates that the goodswere purchased from third parties. The showcause notice itself records that the petitioner hadnot filed details of the job workers or evidence ofsupporting manufacturer, yet the claim wasaccepted and payment of drawback was made.Drawback is allowed. [2013-TIOL-708-HC-DEL-CUS]

v Recovery proceedings against defaulter:Properties in the name of wife and sons of thedefaulter cannot be attached: there is no vestedright in the Department to take over any of theproperties which are in the name of thedependents of the defaulter and the statute doesnot permit such a course of action. There is nopower conferred on the officer to adjudicate onthe ownership of a property held by another,deeming it to be ostensible ownership and findthe defaulter to be the real owner. [2013-TIOL-729-HC-KERALA-CUS ]

v Time limit for making application for SADrefund: In case of provisional assessments, theclaim for refund can be made within one year offinalisation of assessment: where the importedgoods are released on payment of CVD onregular assessment, the application seekingrefund can be made within one year of thepayment of the CVD in terms of the notificationdated 1st August, 2008 read with Circular No.23/2010-Custom dated 29th July, 2010. Wherethe goods are released on provisionalassessment followed by the final assessment,the application seeking refund can be madewithin the period of one year or six months, asthe case may be, of the final assessment asstipulated by Explanation II to section 27 of theAct or within the enlarged period of one year fromthe date of provisional release. [2013-TIOL-731-HC-DEL-CUS ]

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v If Combine imported good has no independentexistence at the moment one of it is etched. Thusthey are not separate and distinct. Entire goodclassifiable under same Customs Tariff-[2013(295) E.L.T. 412 (Tri.-Chennai)]

v Cenvat Credit can be availed on certifiedcopy of bill of entry: Triplicate copy of bill ofentry lost. However proper officer verified thecorrectness of Bill of Entry and certified it. Therewas no dispute that all particulars in Bill of Entryrelated to assessee, goods were duty paid,received in the factory and util ized in themanufacture of final product. Assessee is entitledto availed the credit on certified copy of BOE.[2013 (294) E.L.T. 636(Tri.-Del)]

Service Taxv Payment of service tax under wrong head

does not mean non-payment of Service tax:Assessee has provided the service for promotionof product by agreeing to act as model herself.Asssessee has appointed their agent to receivepayment of behalf of her and to discharge theservice tax liability on the above activity. TheAgent of the Assessee has paid the service taxunder the category of Advertisement AgencyService whereas Department is of the view thatAssessee should make payment of service taxunder Business Auxiliary Service. Mere payingservice tax under another head does not meanthat Agent has not paid service tax on behalf ofthe Assessee. [2013(31)S.T.R.670(Tri.Ahmd.)]

v Building a System cannot be considered tobe "Business Auxiliary Service": Assesseewas a contract to build a system for benefitingthe Regional Transport Authority and DistrictTransport Authority as well as to consumers.Nothing in the Contract to show that Assesseecarried out specific independent activities withdifferent kinds of remuneration package for suchwork. Composite contract to build a systemcannot be conceived to be Business AuxiliaryService. In this case Hon'ble CESTAT, New Delhihas held that the object of the Assessee was notprocurement of goods or services but to build asystem and building a system cannot be

conceived to be Business Auxiliary Service.[2013(31)S.T.R.727(Tri. Del.)]

v TDS on Service Tax: There was an issuewhether TDS under Section 194-J of the IncomeTax Act, 1961 to be deducted on the amountpayable on account of Service tax or not. In thepresent case there was an agreement betweenthe parties wherein it was clearly mentioned thatthe of service tax was to be paid separately andwas not included in the fees for professionalservice or fees for technical service. Since, boththe authorities i.e. Appellate Authority andAppellate Tribunal has passed the ordersconsidering this facts, Hon'ble High Court hasdismissed the appeal filed by the Revenue asappeal non maintainable being not involved anysubstantial question of law. [2013 931) S.T.R.642(Raj.)]

v Dealers/Agents promoting sale of assessee'sproducts in Foreign countries not anadvertising Agency: Assessee has appointeddealers/Agents for promoting the sale of theirproducts in Ukraine. These appointed Dealers/Agents are not the Advertising Agency andactivities performed by them does not coveredunder the category of "Advertising AgencyService". [2013(31) S.T.R.(Tri.-Mumbai)]

v Cenvat credit on Insurance premium foremployees employed on contract basisadmissible: Assessee has availed the servicetax credit on the insurance premium for coveringthe risk of the employees employed in the factoryon contract basis. Previously Service tax creditwas denied on the ground that these employeeswere not working on the roles of the Assessee.Since it is statutory obligation on the assesseeto take insurance for care of persons working infactory, services availed for such insurance hasconsidered as Input service for manufacture andcenvat credit has been allowed. [2013(31)S.T.R.665(Tri. Del.)]

v Distribution of Input Service Tax to one unitwhen service actually rendered at anotherUnit: In this case there was undisputed fact thatno connection or nexus existed between servicesand activities undertaken at other unit. The ISD

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can distribute the Service tax paid on inputsservice amongst its various units only if suchservices are used among the units where thecredit is taken. The decision of Hon'bel SupremeCourt in the case of Maruti Suzuki Ltd. Vs. CCE,Delhi; 2009(240)E.L.T. 641(S.C.) also held thatunless and until the input service has nexusdirectly on indirectly, in or in relation to theManufacture of final products, the credit cannotbe availed. [2013(31)S.T.R.667(Tri. Mumbai)]

v Activity of arranging advertisements eitherdirectly by an advertiser or from anotheradvertising agency falls under advertisingagency: The assessee is a commercial concernengaged in providing advertisement services toa client, in relation to advertisement i.e. in relationto sale of space or time and was not charged forsale of space for advertisement in the print media- He receives requisitions for arrangingadvertisements either directly by an advertiseror from another advertising agency and is alsoengaged on occasions in passing on materialreceived from an advertiser directly without anyvalue addition, to the advertising medium or insome instances by making value additions byway of advertising inputs - The activity of thepetitioner falls within the taxable service of"advertising agency". [2013-TIOL-1385-CESTAT-DEL]

v Pipes or pipeline does not come under thecategory of plant, machinery or equipment' and,therefore, laying of pipeline does not come withinthe scope of Commissioning or InstallationService'. In any case, laying of pipelines hasbeen specifically covered under CommercialConstruction Service' which came into effectfrom 16/06/2005. [2013-TIOL-1370-CESTAT-MUM]

v Sale of ticket to service its customerswithout commission is trading activity:Appellant purchasing airline tickets from GSA/IATA to service its customers/air travellers.Record shows that the appellant has not receivedany commission from GSA/IATA but has sold thetickets to its passengers for a margin. Astransaction prima facie appears to be a mere

trading activity, service tax will not be applicable.[2013-TIOL-1369-CESTAT-DEL]

v No service tax when person acting as pureagent: Appellant collecting development andmaintenance fees from flat buyers to dischargepayments towards local taxes, water andelectricity charges. Appellant was acting as apure agent and was performing custodialfunctions. Demand of ST under 'Management,maintenance or repair services' does not appearto be sustainable. [2013-TIOL-1357-CESTAT-MUM]

v Service tax is payable on Mandap KeeperService as Marriage is not religious function:Marriage as a social institution existed muchbefore the religions came into being and,therefore, it is futile to argue that the marriage isa religious function - law itself recognizesregistered marriage as a legally valid form ofmarriage and there is no religious sanctityattached to such registered marriages.Therefore, the mode of conducting the marriageseither by following religious rituals or otherwisedoes not make marriage a religious function'.explanation introduced by Finance Act, 2007 isonly by way of abundant caution and, therefore,insertion of the same does not affect the levy ofService Tax on Mandap Keeper Servicerendered in connection with marriages. [2013-TIOL-1351-CESTAT-MUM]

v Unless VCES application is considered anddecided, no proceedings under Section 87(Recovery). The object of the VCES may bedefeated, if the recovery is allowed to proceed.[2013-TIOL-741-HC-ALL-ST]

v Penalty applicable when interest not paidbefore issue of notice: Service Tax paid beforethe issue of Show Cause Notice. However partof interest not paid before the issue of notice.Waiver of penalty by the Commissioner(Appeals) is not correct. [2013-TIOL-1441-CESTAT-DEL]

Income Taxv Liability to deduct and pay TDS - The payment

made by the assessee to its MD for offering first

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right of refusal to assessee for 74 % of economicinterest in any new business initiative that maybe undertaken by MD during his lifetimeconstitutes 'royalty' within Explanation 2(v) toclause (vi) of section 9(1) and, therefore, theassessee-company is bound to deduct tax atsource from such payment. TDs is to bededucted either at the time of payment of creditof such payable to the books of assesseewhichever is earlier and in the case reffered tobooks of accounts of assessee were creditedearlier and at that point of time royalty and noncompeting fee were not in the purview of section194J. [2013-TIOL-819-ITAT-BANG]

v Will amalgamation without monetory saleConsideration will amount to Slumpsale andattract CG - when a running division of thebusiness is transferred to a Group company asper the amalgamation plan approved by the HighCourt and no monetory sale consideration isinvolved only shares are issued by theamalgamated company and some Investmentsare transferred to the amalgamating company,then such transfer does not gives rise to capitalgains taxable u/s 50B. [2013-TIOL-821-ITAT-HYD ]

v Test of enduring benefit alone not sufficientfor categorizing as Cap-Ex - The test ofenduring benefit alone is not conclusive fortreating any expenditure as capital expenditure.Allowability of a particular deduction depends onthe provisions of law relating thereto and not onthe basis of entries made in the books of account.The advertisement expenses which wereconsidered by the Revenue as revenueexpenditure cannot be disallowed merelybecause in the books of account the same were

considered by the assessee as deferred revenueexpenditure. [2013-TIOL-706-HC-ALL-IT]

v Depreciation on unused asset added toblock - Once the concept of block assessmenthas been brought in to the picture, identity ofany new asset merges into the Block. Therefore,even if some of the assets in the Block arefunctioning, the entire block gets depreciation.Therefore, use of an asset which is part of blockis not a condition precedent for claimingdepreciation on such asset.[2013-TIOL-813-ITAT-MUM]

v Can consultancy income be deducted u/s 80HHand 80I - there should be a direct nexus betweenthe profits and gains and the industrialundertaking whereas in the instant case, theincome derived from consultancy/profit soaccrued from consultancy has no direct nexusbut only an incidental and as such the Tribunalhas erred in law in extending the benefit of theprovisions of Section 80HH & 80-I to the profitsand gains from consultancy business. Theconsultancy charges are not exempted u/s 80HH& 80-I. [2013-TIOL-715-HC-ALL-IT]

v TDS u/s 194H - TDS under the said section isnot required to be deducted by the assessee onthe retention by banks/credit card agencies inrespect of ticket booked through credit cards.[2013-TIOL-800-ITAT-MUM]

EOU:v Cut flowers grown in India by 100% EOU and

cleared for DTA sales. As assessee is amanufacturer of non-excisable goods, demandraised under section 11A of the CEA is notsustainable. [2013-TIOL-1421-CESTAT-MUM]

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v Arun Sahu appointed as Member of Customs & Excise Settlement Commission

v Jaspal Singh appointed as Member of Income Tax Settlement Commission in Delhi

v SR Bansal appointed as Chairman & MD of Corporation Bank

v Rupee trades at 61.43 against Dollar

v Election Commission announces schedule for Assembly Polls in 5 States-Chhattisgarh tovote on 11th & 19th November-MP on 25th November-Rajasthan on 1st December-Delhi &Mizoram on 4th December-Counting of votes on 8th December

v Kusum Satpathy appointed as Chairperson of Customs & Excise Settlement Commission

v Service Tax freezes Bank Accounts of Varun Shipping for default in payment of service tax ofRs 7 Crore-Oil PSUs asked to pay money due to Varun Shipping directly to service tax

v RBI shocks investors by hiking Repo Rate by 25 BPS to 7.5 per cent-Sensex down by 600Points

v RBI lowers marginal standing facility rate by 75 basis points to 9.5 per cent-minimum dailymaintenance of the cash reserve ratio lowered 95 per cent

v Mumbai Service Tax Commissioner confirms demand of Rs 136 Crore against CIDCO andimposes penalty of Rs 136 Crore for non-payment of tax on leasing of Industrial Plots

v CESTAT asks Lawyers to submit the list of their cases which are covered by the decisions ofSupreme Court, High Courts or of a Larger Bench of CESTAT for listing and disposal on outof turn basis

v Suspected hair in Tablet cited in Import Alert by FDA in Ranbaxy case

v ITAT Member Pramod Kumar transferred from Kolkata to Agra-RS Syal moves from Mumbaito Delhi-B Ramakotaiah from Mumbai to Hyderabad-AK Garodia from Hyderabad to Lucknow

v Government starts selection process for the Post of ITAT President-Only a sitting or retiredHigh Court judge is eligible to be ITAT President

v GST Bill may be introduced in Winter Session of Parliament: Minister of State for Finance

v Birla buys Jaypee's Gujarat Cement Unit for Rs 3800 Crore- Jaypee sold it to reduce its debtby 15 per cent

v Govt okays 15 FDI proposals worth Rs 2000 Crore

v SC gifts negative voting option; Directs EC to provide 'None of the above options' on ballotpaper.

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v Baba Ramdev raided by Central Excise for allegedly evading excise duty of Rs 20 Crore oncosmetics manufactured in his factories

v Railways to hike freight rates by 1.7 per cent

v Ranbeer Kapoor fined by Customs for walking through Green Channel with dutiable goods atMumbai Airport

v Govinda raided by service tax for non-payment of service tax

v Comedian Kapil Sharma booked by service tax for evading service tax of Rs 65 Lakh inMumbai

v CBI arrests 2 Customs Officers of Marine & Preventive Wing in Mumbai for bribe taking inrelease of Mobile consignments

v Actor Vivek Oberoi booked by service tax for not paying service tax of Rs 50 Lakh even aftercharging the same from his clients-Vivek applies for service tax registration after search onhis premises

v Tayal Group Companies raided by Income Tax & Excise in Mumbai

v Film Producer & Director Ram Gopal Verma quizzed by Service Tax for non-payment of tax-Verma's company was not even registered with service tax

v Sunny Deol booked for non-payment of service tax of Rs 1.95 Crore-VCES Scheme Declarationof Sunny rejected by Department

v Jasjit Sawhney MD of Net4 India arrested by service tax in Delhi for non-payment of servicetax of Rs 9 Crore inspite of collecting the same from clients

v CBI arrests two Customs officials in Mumbai

v DGCEI raids premises of WWIL; suspects Rs 100 Cr Service Tax evasion; Rs 18 Cr deposited

v Central Excise Superintendent, Railway Protection Force Inspector and Deputy Chief TicketInspector sentenced in bribery cases.

v Goa's Commissionerate of Customs inactivity caused revenue loss