Covers May 2013 - Bizsolindia Services Pvt.Ltd · Chhattisgarh referred to the practice of restatement of laws like that prevalent in the United States. In the US where judicial precedents

• ISSUE - IX • VOLUME - VIII • MAY - 2013

May - 2013

1

Bizsol UPDATE May - 2013

Etymologically it would be interesting to find out

where the phrase 'brownie points' came from.

There is a strong possibility that the phrase had

originated from the land of the brown people (read

India). Watch any national tragedy being reported and

discussed on television. You would end up with the

spokespersons of various political outfits going at each

other's throats even after each of the participants

swear not to make the issue political only to break it

in the next round. Contrast it with what happened at

Boston. Promptly after the shootout the investigating

agencies were on their job in hot pursuit of the

suspects. Before you could even breathe out one was

caught and the other shot. Imagine a similar incident

happening in India (there were plenty in the recent

past). Before even the suspects are identified, the

sound bytes on live television shows would have

completed a discourse on the shades of terror -

saffron, green or red. Catching the culprits, trying

them and bringing them to justice, if it happens, are

just by-products! So much for our TV-Justice system

kangaroo-style laced as it is with political colours.

Scoring brownie points is all that matters! Coming

back to Boston, the entire operation post shootout

would do a Hollywood movie proud.

A Pope at the ripe old age of 86 decided to call it a

day and asked for the appointment of another pontiff

creating a precedence of sorts. Such a thing has

happened in the Vatican only once before. The Dutch

Queen Beatrix abdicated her throne in favour of her

son Alexander paving the way for a King in Netherland

in over one hundred years! In India power appears to

be more addictive than elsewhere. What else explains

the desire of Man Mohan Singh to aspire for a third

term as the PM of the country? He was perceived as

a decent man in an indecent profession who would

quit honourably at the first available opportunity. No

such luck either for him or for the country. After every

new controversy and corruption allegation his desire

FROM THE DESK OF THE CHAIRMAN

to cling on to power appears to be getting stronger. It

is possible that having cohabited with hardcore

politicians all these years he must have understood

the power of position - not to use it perhaps; but not

be used against. He should know that once he is out

of power he would be made the fall guy for all the

murky dealings in Delhi which have taken place under

his watch over the last couple of years even in cases

where he had only been a mute spectator. Man

Mohan Singh has been an unmitigated disaster as a

PM and he is on mission to prove it all over again.

From being a burden on our conscience he has now

become an acute embarrassment. The Indian nation

had never been at the nadir where we find ourselves

in every aspect of governance - from foreign affairs

to domestic policies. Probity in public life may be a

rare qualification in public life in India; but it should

not be counted as an output in itself when it comes to

governance. So far it was a question of the PM looking

the other way when others were making money under

his watch. Now his office has been caught red handed

meddling with the independence of agencies like CBI.

When the PM addresses the captains of industry at a

meeting of the chamber of commerce on the subject

of corporate governance or talks about the need to

eradicate corruption at Bangalore he sounds hollow,

if not ludicrous. If George Bush showed aggressive

leadership shepherding America to the brink when

he was President, here is our PM taking the country

to a one-way-alley to disaster by simply abdicating

his responsibility to lead.

Last month witnessed some enduring paradoxes and

ironies. Margaret Thatcher was buried the other day

when she died at the age of 87. The former British

Prime Minister was known as the iron lady for the

way she led the nation during her tenure. She was

arguably the most famous British PM after Winston

Churchill. However, on the day of her funeral there

were celebrations of two kinds. In UK there are those

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who credit her for bringing back some part of the lost

glory of the Empire when she rebuilt the nation brick

by brick by breaking the back of the Unions which

she thought stood in the way of the country's

prosperity and also going to war over the sovereignty

of the British territory. In the process however, she

divided the British society as never before which was

evident when there were those celebrated her death

when the nation was celebrating her life on the day

she died. That is irony for you. Closer home is the

story of the life and death of Sarabjit Singh who was

condemned to the death row by a Pakistani court for

alleged spying. He was languishing in a prison in

Lahore for nearly three decades with politicians only

providing lip service to his cause. When he died, the

way he did, it shook the collective conscience of the

nation. There was a virtual stamped during his funeral

with so many political bigwigs not missing out on the

photo-op. Here is a case of a man condemned during

his life and made a martyr on death by the people of

his own country. What a paradox!

The city of Kolkata and the state of West Bengal were

in the news recently for all the wrong reasons. Mamata

Banerjee would have realised that it is easy to be

violent and vitriolic and organise protest rallies than

to run the administration of a state. If the death of a

young college boy called Sudipto Gupta sparked

spontaneous protests bordering on revulsion against

Mamata and her party of goons, Sudipta Sen, the

Chit Fund King has dented her carefully crafted image

of a non corrupt person. By a strange coincidence

both have homonymous first names! Judging by her

responses and reactions to the happenings in her

state, her position as a durable leader is indeed

suspect. When you do not feel genuine remorse at

the death of young boy in his teens even if you are

not responsible for it, something is amiss. Leadership

is all about empathy which comes from within

naturally and not about sympathy which prompts you

to dole out a few thousand rupees as compensation.

The Chit (read Cheat) Fund King is languishing in jail

as of now which is the only safe place for him to be in,

for if comes out, all those in Bengal who have no

option but to commit suicide after the failure of his

ponzie scheme would rather kill him before taking the

ultimate step of killing oneself. In this background the

blame game has already started with the Trinamool

blaming the Marxists for nurturing the chit-fund culture

in West Bengal. For economists, however, there is

an important lesson in this scenario. Chit Funds are

widely prevalent in large scale in three states, viz.,

West Bengal, Tripura and Kerala. Mamata says it is a

monetary mechanism designed by the Marxists. This

argument is disingenuous. No doubt, these states have

been ruled by left-leaning governments for so many

years and are fertile grounds for ponzie schemes for

obvious economic reasons. When you are

preoccupied with distribution of wealth before

generation, you have no option but to create (read

manufacture) wealth. The creation here is artificial

and is a bubble which floats as long as the chain

continues; but a bubble all the same. With the

communists preoccupied with distribution of wealth

and unable and unwilling to take steps to generate it,

artificial creation of wealth to meet the aspirations of

the states' population becomes a necessity. Realising

the inevitability of the situation, only the state of Kerala

has a reasonably robust system in place to regulate

chit funds in that state. Earlier the comrades like

Budhadeb and the quasi comrades like Mamata

understand this economic principle, the better it is for

them.

Recently the Supreme Court delivered a landmark

judgment in the case of Novartis. Though the judgment

was a bit nuanced, the impact of the apex court's

verdict was not lost anyone, especially the foreign

multinationals. Patents create short term monopolies

and justifiably so. But tinkering with the product with

cosmetic changes does not give the business such a

right which can only lead to blatant profiteering. The

Supreme Court did not question the patentability of a

product but it did make a distinction between invention

and tinkering. Contrary to the criticism in some quarters

that the verdict would discourage innovation, the

judgment on the other hand would help prevent

cosmetic changes masquerading as innovations. This

judgment in my opinion is a well conceived and a well

crafted one.

In another recent judgment, the High Court of

Chhattisgarh referred to the practice of restatement

of laws like that prevalent in the United States. In the

US where judicial precedents do not hold as much

weight as in India or the UK, the law is restated once

in ten or fifteen years taking into account all the

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relevant case laws on all possible topics. In India this

practice will be of immense value with the plethora of

cases from various Tribunals, Courts and the

Supreme Court judgments which have the force of

law. The Indian Law Institute has undertaken the

project and has released a few recently. A

restatement policy will help both the Bench and the

Bar besides the litigants.

As we go to press the traders are still continuing with

their protests against the newly proposed/enacted

Local Body Tax (LBT) in the state of Maharashtra.

LBT has been introduced in all the corporations in

the state barring a clutch of local bodies where it is

set to roll out shortly. For the city of Mumbai the D-

day is the first of October 2013. LBT is a tax on import

of goods into a municipal area like Octroi, but with a

difference. Octroi is collected by the corporation

whereas LBT is paid by a dealer on the basis of a self

assessment. There is an element of coercion and

indecency associated with the former whereas the

latter conforms to the existing revenue laws of the

land in terms of levy and collection of tax. Octroi dates

back to the Roman Empire as a means of revenue

mobilisation which in the hands of the Indians have

ended up as the most corrupt and least efficient

revenue generation mechanism, besides costing the

exchequer huge losses on account of wastage of

precious fuel and causing untold miseries to those

who run the trucking operations. In a civilised society

Octroi is an anachronism. Abolition of Octroi has

happened after 25 years of demands and protests

by the trade and industry and after 17 committees

having gone through the issue! Industry appears to

have accepted the alternate deal to Octroi as they

are fairly used to regulations requiring compliance

even as on today for Income Tax, Central Excise,

Customs, VAT, etc. For the trade it is a Hobson's

choice. They cannot openly want to go back to Octroi

but are unwilling to subject themselves to the rigours

the new tax regime demands. But the writing on the

wall is clear - it is not whether but when the new system

would get off the ground after the teething troubles.

We at Bizsol are ready with our training modules and

the software backup to help our clients to implement

LBT both in letter and spirit, compliance being our

watchword as always.

Thank you.

Venkat R. Venkitachalam

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CUSTOMS

Notifications

Anti Dumping

• Modification of rates of anti-dumping duty on

Carbon black used in rubber applications,

originating in, or exported from the People's

Republic of China, Thailand, Russia and Australia

which is valid up to the 29th July, 2014 and shall

be payable in Indian currency.[Notification No.

09/2013-CUS (ADD) Dated 26/04/2013]

• Imposition of definitive anti-dumping duty on

Plain Gypsum Plaster Board originating in or

exported from China PR, Indonesia, Thailand and

UAE for a period of five years from the date of

imposition of the provisional anti-dumping duty,

i. e. 7th June, 2012. [Notification No. 06/2013-

CUS (ADD) Dated 12/04/2013]

• Extension of anti-dumping duty imposed on

imports of 'Sulphur Black', Originating in or

exported from People's Republic of China for a

further period of one year i. e. up to and inclusive

of 10th April, 2014 [Notification No. 05/2013-

CUS (ADD) Dated 10/04/2013]

• Extension of anti-dumping duty imposed on

imports of 'Sodium Nitrite', originating in, or

exported from, European Union for a further

period of one year i. e. up to and inclusive of

10th April, 2014 [Notification No. 04/2013-CUS

(ADD) Dated 10/04/2013]

Safeguard Duty

• No New Notifications.

Tariff

• Basic Custom duty, additional custom duty(CVD),

Special additional duty (SAD) payment can be

effected through debiting the duty free scrip

under Focus Market Scheme, VKGUY Scheme,

Focus Product Scheme and such debit made on

such duty free scrip will be accepted as

compliance and recipient of service will be

entitled for availing Cenvat credit or availing

drawback. [Notification No. 24/2013-CUS

Dated 18/04/2013]

• Payment of Basic Custom duty, additional custom

duty(CVD), Special additional duty (SAD), when

goods are cleared against a Post Export EPCG

duty credit scrip issued by the Regional Authority

in accordance with paragraph 5.11 of the Foreign

Trade Policy. [Notification No. 23/2013-CUS

Dated 18/04/2013]

• New Notification is issued for import of capital

goods under ZERO duity EPCG scheme in line

with new provisions of Chapter 5 of Foreign Policy

announced on 18th April,2013. [Notification No.

22/2013-CUS Dated 18/04/2013]

• Exemption vide notification 12/2013 has been

further extended to the items Embroidery

threads, Sewing threads, Poly wadding materials,

Quilted wadding materials as well as Printed bags

inserted in entry No.284 and items PVC leather

cloth for inflatable balls or sports gloves, Latex

foam for shin guard or goal keeper gloves or

other sports gloves, PEVA / EVA foil for shin

guard or sports gloves, Stitching thread for

inflatable balls or sports gloves, Printing ink for

inflatable balls or sports gloves inserted in entry

No.521 as well as the Item 'Synthetic Rubber

bladder' substituted by item 'PVC / Synthetic

Rubber bladder for inflatable balls', Item 'PU

Leather Cloth/PU Laminated with cotton for

inflatable balls; has been substituted by item 'TPU

/ PU leather cloth or TPU / PU laminated with

cotton, for inflatable balls' [Notification No. 21/

2013-CUS Dated 18/04/2013]

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• 'Kattupalli (Tamil Nadu) port has been added in

the list of ports permitted for exports and imports

and accordingly notifications 53/2003, 54/2003,

90 to 97/2004, 32/2005, 41/2005, 89/2005, 40/

2006,73/2006, 90/2006, 91/2006, 14/2009, 91

to 104/2009, 112/2009, 05/2013 and 6/2013 has

been amended [Notification No. 20/2013-CUS

Dated 03/04/2013]

• Now the goods imported from Republic of Yemen

are also fully exempted except the goods listed

in Appendix I & II. [Notification No. 19/2013-

Cus dated 02/04/2013]

Non-Tariff

• Tariff value (US $ per Metric Tonne) of the goods

Crude Palm Oil, RBD Palm Oil, Others Palm Oil,

Crude Palmolein, RBD Palmolein, Others

Palmole in, Crude Soyabean Oil, Brass Scrap

(all grades), Poppy Seeds as well as Gold and

Silver has been revised. [Notification No.

51/2013-Cus (NT) Dated 30/04/2013,

Notification No. 39/2013-CUS (NT) Dated

17/04/2013 & Notification No. 38/2013-Cus

(NT) Dated 15/04/2013]

• Revised format of CA-3, CA-4 and CA-5 (format

of final appeals and cross objections before

Hon'ble CESTAT) have been revised w.e.f. 01/

06/2013. [Notification No. 37/2013-Cus (NT)

Dated 10/04/2013]

Circulars

• SAD debited through DEPB scrip was also entitled

for refund of SAD and procedure was prescribed

under Circular No 10/2012 which has been

further extended up to 30/09/2013 as final

extension. [Circular No. 18 /2013-Cus dated

29/04/2013]

• There is lack of uniformity in classification of Steel

Columns, poles, towers and articles of like nature

under the Customs Tariff Act (CTA), 1975. In

order to ensure uniformity in classification of

similar / identical goods the issue is clarified that

the appropriate heading for classification of

"octagonal steel columns for lamp posts", as steel

posts for outdoor lighting purposes (public street

lighting) and like products is in heading 73.08,

as steel structures, and more precisely in the

subheading 7308.90, tariff item 73089090, by the

application of the General Rules for the

Interpretation (GRI) of Import Tariff, Rules 1 and

6. [Circular No. 17 /2013-Cus dated 11/04/

2013]

• The facility-wise (Sea Port, Air Cargo Complexes,

Courier Terminals and Diamond Plaza) staffing

norms for the posting of Customs staff on cost

recovery basis as well as the norms for eligibility

for grant of exemption from payment of cost

recovery charges for such Customs staff are

declared. [Circular No. 16/2013-Cus dated 10/

04/2013]

• Import of pets upto 2 numbers per per passenger

will be permitted only to persons transferring their

residence to India after two years of continuous

stay abroad in terms of Baggage Rules 1998

subject to production of the required health

certificate from the country of origin and

examination of said pets by the concerned

Quarantine Officer at this end. This new

dispensation shall come into force with effect from

15th April 2013. Import of animals (pets) in

general would continue to be governed by DGFT

policy. [Circular No. 15/2013-Cus dated 08/04/

2013]

• Board has clarified that import of seconds/

secondary/defective/offcut Hot Dipped

Galvanized Steel sheets/coils are not permitted

as per the Quality Control Order of Ministry of

Steel. [Circular No. 14/2013-Cus dated 05/04/

2013]

• It has been clarified that The low-noise-block

(LNB) down converter would be appropriately

classifiable in heading 85.43, more specifically

in subheading 8543.70, tariff item 854370 99.

[Circular No. 13/2013-Cus dated 05/04/2013]

Instructions

• No New Instructions.

CENTRAL EXCISE

Notifications

Tariff

• Payment of Excise Duty, special additional duty

and Additional duties of Excise levied under the

6


(Textile and Textile Articles) Act 1978, when

goods are cleared against a Post Export EPCG

duty credit scrip issued by the Regional Authority

in accordance with paragraph 5.11 of the Foreign

Trade Policy. [Notification No. 14/2013- CE

dated 18/04/2013]

• Excise duty payment can be effected through

debiting the duty free scrip under Focus Market

Scheme, VKGUY Scheme, Focus Product

Scheme and such debit made on such duty free

scrip will be accepted as compliance and

recipient of service will be entitled for availing

Cenvat credit or availing drawback. [Notification

No. 15/2013- CE dated 18/04/2013]

Non-Tariff

• Revised format of EA-3, EA-4 and EA-5 (format

of final appeals and cross objections before

Hon'ble CESTAT ) have been revised w.e.f. 01/

06/2013. [Notification No. 06/2013- CE (NT)

dated 10/04/2013 and Circular No. Circular

No.969/03/2013-CX dated 11/04/2013]

SERVICE TAX

Notifications• Service Tax payment can be effected through

debiting the duty free scrip under Focus Market

Scheme, VKGUY Scheme, Focus Product

Scheme and such debit made on such duty free

scrip will be accepted as compliance and

recipient of service will be entitled for availing

Cenvat credit or availing drawback. [Notification

No. 6,7 & 8/2013 Dated 18/04/2013]

• Revised format of S.T.-5, S.T.-6 and S.T.-7

(format of final appeals and cross objections

before Hon'ble CESTAT) have been revised

w.e.f. 01/06/2013. [Notification No. 5/2013

Dated. 10/04/2013]

Order

• Last date of filing half yearly return ST - 3 (1st

October 2012 to 31st March 2013) has been

extended from 25th April, 2013 to 31st August,

2013 and it will be available online and the same

has to be filled online on ACES website around

31/07/2013.[Order No.03/2013-Service Tax

Dated.23rd April, 2013]

• The date of submission of the Form ST-3 for the

period from 1st July 2012 to 30th September

2012, had been extended from 15th April, 2013

to 30th April, 2013. [Order No.02/2013-Service

Tax Dated. 12/04/2013]

Circular

• Erection of pandal and shamiana by a service

provider will be considered as declared service

under Section 66E (8)(f) of Finance Act, 1994

as amended since, possession and control of

such Pandla and shamiana remains with service

provider. Clarification has been provided based

on ratio laid down by Hon'ble Supreme Court in

case of BSNL Vs. UOI [2006] 3 STT 245 and

hence service provider of pandal and shamiana

have to pay service tax. [Circular No. 168/3 /

2013 - ST Dated. 15/04/2013]

FOREIGN TRADE POLICYHon'ble Ministry of Commerce notified Foreign

Trade Policy =, Handbook Of Procedures

applicable w.e.f. 18/04/2013 on 18/04/2013.

Changes effected on said account have been

separately given in this Bizsol update issue.

Notifications• The quality parameters for allowability for imports

of following items has been notified.

Sr. Quality Parameter Value

No.

(i) Free fatty Acids: <0.10% (as Oleic Acod)

(ii) Moisture: <0.5%

(iii) Perozide value (PV): <10 milli equivalent/kg of oil

(iv) Eicosapentaenoic Acid Not less than 5% by weight

EPA + Docosaphexaenoic

Acid DHA:

(v) Trans fat: <0.1%

[Notification No 11 (RE-2013)/2009-2014,

Dated 22/04/2013]

7


• Since, the applicability of Policy Condition already

finds a mention against the relevant 8 digit codes.

Hence, the portion mentioned in the bracketed

portion is not required. [Notification No 10 (RE-

2013)/2009-2014, Dated 22/04/2013]

• Import policy has been revised for certain items

in Chapter 29 and Chapter 38 is revised from

'restricted' to 'free' as such items contains Ozone

Depleting Substances (ODS) and certain items

in Chapter 29 and Chapter 38 is revised from

'free' to 'restricted' as such items does not

contains Ozone Depleting Substances (ODS). A

revised list of countries which are parties to the

Montreal Protocol under Appendix IV to Schedule

1 is notified. [Notification No 09 (RE-2013)/

2009-2014, Dated 22/04/2013]

• Existing grievance redressal provisions specified

in para 2.49(2)has been replaced. Provision for

Personal Hearing has been made. Importers/

Exporters may make a specific request for

personal Hearing to DG if following conditions

are satisfied:

i. If an importer/exporter is aggrieved by any

decision taken by Policy Relaxation

Committee (PRC), or a decision/order by

any authority in the Directorate General of

Foreign Trade, and

ii. a request for review before the said

Committee or Authority has been filed,

iii. such Committee or Authority has

considered the request for a review, and

iv. the exporter/ importer continues to be

aggrieved.

The decision made in pursuance of such

Personal Hearing shall be binding and final.

However the opportunity for Personal Hearing

will not apply to a decision/order made in any

proceeding, including an adjudication proceeding

under the relevant provisions of F.T.(D&R) Act,

1992. [Notification No 08 (RE-2013)/2009-

2014, Dated 22/04/2013]

Public Notice

• The effective date of affixing barcodes on Primary

Level packaging from 01/07/2013 to 01/07/2014.

[Public Notice No. 53 (RE-2002)/2009-2014,

Dated 05/04/2013]

• Export of 8,587 MTs of raw cane sugar through

M/s. Indian Sugar Exim Corporation Ltd has

been permitted, out of non-levy(free sale) quota

under tariff rate quota(TRQ) to USA for the US

fiscal year 2013 (October 1, 2012 to September

30, 2013). [Public Notice No 53 (RE-2002)/

2009-2014, Dated 05/04/2013]

Trade Notice

• Alignment in the item description of Vishesh Krishi

and Gram Udyog Yojna, Focus Product Scheme

(FPS) and Market Linked Focus Product Scheme

with the ITC (HS)classification of export and

import item has been made and prepared a draft

corrected Appendices. The draft appendix will

be available on the website of DGFT

www.dgft.gov.in up to 17/05/2013. Feedback /

suggestion on the above draft has been

requested from all stakeholder. [Trade Notice

No 01/2013, Dated 18/04/2013]

SEZ

• Draft guideline to regulate functioning of Worn

and Used clothing and plastic recycling units in

SEZs have been put on the website

www.sezindia.nic.in.

INCOME TAX

Notifications• Agreement for Exchange of Information with

respect to taxes with Gibraltar under section 90

of the Income Tax Act, 1961 w.r.t Double

Taxation Agreement is made effective from 11th

march 2013. [Notification No.

28/2013[F.No.503/11/2009-FTD-I], Dated 1-4-

2013]

• The variation between the arm's length price

determined under transfer pricing provisions and

the price at which the international transaction

or domestic transaction has undertaken does not

exceed 1% of the latter for the whole sale dealers

and 3% of the latter for the others, the price at

8


which the transaction has been taken place shall

be considered as the Arm's Length Price for AY

2013-14. [NOTIFICATION NO. 30/2013

[F.NO.500/85/2011-FTD-I], DATED 15-4-2013]

• Officers of the rank of Joint Director and above

serving in Directorate of Enforcement,

Department of Revenue, Ministry of Finance,

Government of India, who are performing

functions under the Foreign Exchange

Management Act, 1999 and the Prevention of

Money Laundering Act, 2002, are notified for the

purpose of disclosure of information respecting

assesses u/s 138 of the Income Tax Act, 1961.

[NOTIFICATION NO. 32/2013 [F.NO.225/62/

2013-ITAT.II], DATED 18-4-2013]

• ISSUANCE OF TDS CERTIFICATE :- All the TDS

Certificates shall have a unique TDS Certificate

number. Form No. 16 shall be issued by all the

deductors, only by generating it through TRACES

Portal and after duly authenticating and verifying

it. [CIRCULAR 4/2013 -F.No 275/34/2011-IT(B)

DATED 17/4/2013]

MAHARASHTRA VATNo new notifications!!

COMPANY LAW

Notifications:

No new notifications!!

Circulars

• Time limit for filing & relaxation of additional fees

as provided vide General Circular No.03/2013

for filing of various forms with MCA for the forms

which have been ought to be filed post transition

of MCA-21 w. e. f. 17th January 2013 has been

extended up to 15th April 2013. [General

Circular No.08/2013 dated 20/03/2013]

LOCAL BODY TAX

Rules Description Earlier ProvisionAmendment- as per Notification No. LBT-2013/CR-39/UD-32 dated 25-04-2013

R 1 Change ofRule

Bombay Provincial Municipal Corporation (LocalBody Tax) Rules 2010

Maharashtra Municipal Corporations (Local BodyTax) Rules, 2013

R 3 Who isrequired to

obtainregistration?

A Dealer having A Dealer having

• A Dealer other than importer having • A Dealer other than importer having

• the turnover of sales / purchases is equal to ormore than Rs. 1 lac

No change in case of Population below20 Lakhs

Rs. 3 Lakhs, In case of Population is equal to ormore than 20 Lakhs ( As per Census 2011)

• the turnover of sales / purchases is equal to ormore than Rs.1.5 lacs

No change in case of Population below 20Lakhs

Rs.4 Lakhs, In case of Population is equal to ormore than 20 Lakhs ( As per Census 2011)

R 19 Dealer toMaintainCertainRegister

Dealers to maintain register of Purchase andreceipt of goods on transfer basis in Form D

Dealers to maintain register of Purchase andreceipt of goods on transfer basis in Form D,Provided that the dealer may maintain said registerin computerised form & in such case bound toproduce relevent documents maintained underMVAT Act 2002, when so demanded byCommissioner for examination.

R 28 Exemption • Grinding, dying, bleaching, painting, printing, finishing,stentering, embroidering, doubling, twisting, metalizing,electroplating, ii)building & mounting bodies of chassis overvehicle of all kinds and shall also include such otherprocess es as may be approved by the Commissionerfrom to time will only be considered as job work. Anddecision of Commissioner will be final

• The word "shall also include such otherprocesses as may be approved by theCommissioner from to time' is deleted & theword "any processes as may be approvedby the commissioner, from time to time" isadded.

9


Rules Description Earlier ProvisionAmendment- as per Notification No. LBT-2013/CR-39/UD-32 dated 25-04-2013

R 29 Submissionof Returns

• The dealer opting for lumpsum payment to fileonly Annual returns within 15 days

• The dealer opting for lumpsum payment shallbe exempted from submission of any return.

R 33 Assessmentof LBT

• Assessment case record shall be preservedfor TEN years

• Assessment case record shall be preservedfor FIVE years

R 40 Payment ofLBT

• Due date 10th day of subsequent month • Due date 20th day of subsequent month

R 45 Power towithholdRefund

Following sub section is added:-

1) "The Commissioner shall not accord hisapproval to withholding the refund only, if heis of opinion that on conclusion of such appeal,further or other proceedings, if it becomesnecessary to recover the amount of refund infull or in part then it may not be otherwisepracticle or possible so to do in any reasonableperiod of time: provided further that, no orderwithholding the refund shall be made after theexpiry of ninety days from the date of serviceof order giving rise to the said refund."

2) "Where refund is with held under sub-rule (1),the commissiner shall pay simple interest attwelve percent on the amount of refundultimately determined to be due to the personas a result of the appeal or further proceeding,or any other proceeding for the periodimmediately following the expiryof ninety daysfrom the date of service of the order referred insub section (1) to the date of reund"

R 48 Imposition ofpenalty andinterest in

certain cases

• Penalty for non- issuance of bill / invoice / cashmemo - Double the amount of LBT payable.

• Penalty for non- issuance of bill / invoice / cashmemo - Equal to the amount of LBT payable.

• On failure of obtaining registration - 10 timesof LBT payable

• On failure of obtaining registration - 5 times ofLBT payable

• Complying with the notices, Rs. 10,000 • Complying with the notices, Rs. 5,000

• failure to disclose the importation of goods, toclaim inaccurate deductions / refunds - 5 timesof LBT payable

• failure to disclose the importation of goods, toclaim inaccurate deductions / refunds -2 times of LBT payable

• Simple interest @ 2% per month for first 12months and 3% per month when personcontinues to make default

• The word "for first 12 months" is deleted. i.e.Simple interest @ 2% per month will beimposed when person continues to makedefault

• Knowingly issue or produces Bill/Cash Memoetc which is not true & not liable for payment ofLBT or LBT at lower rate. Penallty twice theamount of LBT due in case of first occasion &five times of LBT amount for second &subsequent occasion.

• Penallty "equal to the the amount of" LBT duein case of first occasion & "two times" of LBTamount for second & subsequent occasion.

• Wrong declaration, False certificate or falsedeclaration - 5 times of LBT

• Wrong declaration, False certificate or falsedeclaration - 2 times of LBT

• Contravention to provisions of 152G- Penaltynot exceeding "Double the amount of suchbill or Cash mEmemo should have beenissued.

Word double is deleted

1 0


Circular NumberDate of

IssueDepartment Subject Meant for

RBI Circulars April - 2013

FEMA / RBI

RBI/2012-2013/481A.P. (DIR Series)Circular No. 100

25.4.2013 Foreign ExchangeDepartment

Overseas Direct Investments- Clarification

All Category-IAuthorised DealerBanks

RBI/2012-2013/480A.P. (DIR Series)

Circular No. 99


Investment by Navratna PublicSector Undertakings (PSUs),OVL and OIL in unincorporatedentities in oil sector abroad

All Category - IAuthorised DealerBanks


Circular No. 98


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



Circular No. 97


Exim Bank's Line of Credit ofUSD 76.50 million to theGovernment of the Republic ofMalawi



Circular No.96


Memorandum of Instructionsgoverning money changingactivities

All Authorised Persons


Circular No. 95


Deferred Payment Protocolsdated April 30, 1981 andDecember 23, 1985 betweenGovernment of India anderstwhile USSR



Circular No.94


Foreign investment in India bySEBI registered FIIs inGovernment Securities andCorporate Debt



Circular No. 93


Exim Bank's Line of Credit ofUSD 15 million to theGovernment of the Republic ofBenin



Circular No. 92


Exim Bank's Line of Credit ofUSD 5 million to Banco ExteriorDe Cuba



Circular No. 91


Exim Bank's Line of Credit ofUSD 42 million to theGovernment of the Republic ofCameroon


RBI/2012-2013/461RPCD. RCB. RRB.AML. BC. No. 71/07.51.018/2012-13

1.4.2013 Rural Planningand Credit

Department

Know Your Customer (KYC)norms /Anti-Money Laundering(AML) Standards/ Combatingof Financing of Terrorism(CFT)/Obligation of banksunder Prevention of MoneyLaundering Act (PMLA), 2002- Simplifying norms for Self HelpGroups

The Chairmen / CEOs ofall Regional Rural Banks/State and Central Co-operative Banks

1 1


CBEC Notified Exchange Rate for Conversion of Foreign Currency w.e.f.3rd May, 2013 (Notification 52/2013-Customs (N.T.) dt. 02.05.2013)

SCHEDULE-I

S.No. Foreign Currency

Rate of exchange of one unit of foreign currency

equivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1. Australian Dollar 56.85 55.30

2. Bahrain Dinar 147.95 139.60

3. Canadian Dollar 54.25 52.90

4. Danish Kroner 9.65 9.35

5. EURO 71.90 70.05

6. Hong Kong Dollar 7.05 6.90

7. Kenya Shilling 66.80 62.65

8. Kuwait Dinar 196.20 184.80

9. New Zealand Dollar 47.00 45.75

10. Norwegian Kroner 9.45 9.15

11. Pound Sterling 84.85 82.95

12. Singapore Dollar 44.45 43.40

13. South African Rand 6.20 5.85

14. Saudi Arabian Riyal 14.85 14.05

15. Swedish Kroner 8.40 8.15

16. Swiss Franc 58.60 56.95

17. UAE Dirham 15.20 14.35

18. US Dollar 54.65 53.70

S.No. Foreign Currency

Rate of exchange of 100 units of foreign currency

equivalent to Indian rupees

SCHEDULE-II

(For Imported Goods) (For Export Goods)

1. Japanese Yen 56.05 54.60

1 2


New Business Strategy in the Era of NewNew Business Strategy in the Era of NewNew Business Strategy in the Era of NewNew Business Strategy in the Era of NewNew Business Strategy in the Era of New

FFFFForeign Toreign Toreign Toreign Toreign Trade Prade Prade Prade Prade Policyolicyolicyolicyolicy

By CMA Ashok NawalContact: +91 9890165001 • E-mail: [email protected]

Hon'ble Ministry of Commerce has announced New

Foreign trade Policy (FTP) which was long awaited

especially on the background of Budget speech

wherein Hon'ble Finance Minister P. Chidambaram

stated that:

Quote

I look forward to the changes that will be made to the

Foreign Trade Policy next month and I assure my

support to measures that will be taken to boost

exports of goods and services.

Unquote

It was expected by the Trade there will be substantial

benefits and incentives which will be offered to the

exporters. Moreover it was also expected that the task

force which was set up for revamping the EOU

scheme and recommendation were released by then

Secretary, Ministry of Commerce after acceptance will

find the place in the New FTP. It was also expected

that huge investments made in SEZ by FDI & Other

entrepreneurs who are almost idle will have green

signal and there will be promotion by withdrawing

certain provision like imposition of MAT and limitation

factor to start commercial production for availing

income tax exemption under Section 10AA of Income

Tax or 80IAB of Income Tax Act 1961.

However, marginal relief was given to the exporters

by way of enhancing the products in Focus Product

Scheme, including some countries in Focus Market

Scheme and extending the period till end of 2014 for

Incremental Export Incentivization Scheme.

Now, there is a need to focus Business Strategy for

enhancing exports through competiveness by availing

benefits offered through such schemes.

A. Procurement of Capital goods :

If maximum benefits needs to be achieved,

benefit under EPCG Scheme needs to be

availed. Major changes in the EPCG Scheme

are :

1. 3% EPCG Scheme has been dispensed with

and Zero Duty EPCG Scheme made

applicable for all products

2. No second hand capital goods can be

imported under EPCG Scheme

3. Imports of capital goods can be made within

18 months

4. Export obligations through alternate

products or export of Group companies not

permitted under EPCG

5. Textile units under Technology Up-

gradation Fund Scheme can also avail Zero

Duty EPCG Scheme

6. No motor cars / SUV can be imported under

EPCG Scheme by service providers

7. Reduced Export Obligation if goods

procured from Indian manufacturers against

invalidation

8. Reduced Export Obligation to the extent of

25% to the exporters of Jammu & Kashmir

It means benefit under Zero Duty EPCG Scheme

needs to be taken and save custom duty to the

extent of 3% which was otherwise payable.

However, no second hand capital goods can be

imported under EPCG scheme.

When procurement of capital goods is envisaged,

comparative benefit under Post Export EPCG

scheme also needs to be evaluated to avoid the

risk of achieving the export obligation since now,

export obligation through alternate product or

export of group companies will not be permitted

under EPCG Scheme. Unfortunately, EPCG

Authorization needs to be applied and obtained

prior to import of capital goods or spares or

domestic procurement thereof, since

corresponding notification 23/2013 CUS dated

18.04.2013 provides the pre-condition of

registration of such authorization prior to

procurement.

I strongly recommend to optimize the benefit

under EPCG Scheme no sooner Capital

1 3


Expenditure Budget (CAPEX) is finalised or

procurement of capital goods or indigenous are

planned. Fortunately, there is no change in

Chapter 8 of FTP, for extending deemed export

Benefit to the supplies against EPCG

Authorization. Such supplies will still be entitled

for :

1. Refund of terminal excise duty

2. Deemed export duty drawback

3. Import under Advance Authorization / DFIA

for free imports on raw materials,

components of capital goods thereby

reducing cost of such procurement.

Moreover, there will be reduced obligation to the

extent of 10% when goods are procured

ingeniously against EPCG Authorization.

B. Business expansion plan

Units located in Arunachal Pradesh, Assam,

Manipur, Meghalaya, Mizoram, Nagaland,

Sikkim, Tripura and Jammu & Kashmir, specific

EO shall be 25% of the EO, as stipulated in Para

5.1 or Para 5.2, as applicable. There shall be no

change in average EO as stipulated in Para 5.5,

if any

However, Cost benefit analysis of logistic cost

vis-à-vis reducing the export obligation can be

evaluated or if company having multiple units and

import capital goods in such area and after

completing export obligation can transfer such

goods to any other plant in India.

C. Marketing Focus

Following schemes are implemented under

Promotional measures:

1. Vishesh Krushi and Gram Udyog Yojana (

VKGUY) (Special Agriculture and Village

Industry Scheme)

2. Focus Product Scheme (FPS)

3. Focus Market Scheme (FMS)

4. Market Link Focus Product Scheme

(MLFPS)

5. Status Holder Incentive Scheme (SHIS)

6. Serve from India Scheme (SFIS)

7. Agri- Infrastructure Incentive Scheme (AIIS)

Government of India is focusing only on giving

some relief to such schemes which is mainly with

the object to have the level playing to the extent

of cost of market development and additional

logistic cost on account of distant market.

Therefore, in this year also, Ministry of Commerce

have enhanced the scope including number of

products and number of amrkets. Highlights are

given below:

1. Norway and Venezuela has been added

under Special Focus Market Scheme

2. 126 products including engineering,

electronics, chemicals, pharmaceuticals and

textile sectors have been added under

Focus Product Scheme

3. 47 new products from engineering, auto

components and textile has been added

and Brunei and Yamen has been included

in Market Link Focus Product Link

4. Additional incentive on export of High Tech

Products will be separately notified by

30.06.2013

5. Morbi (Gujarat) has been notified as Town

of Excellence for Ceramic Tiles and

Gurgaon, Haryana for Apparels Exports

Similarly, Incremental Export Incentivization

Scheme has been also made applicable for

exports to USA, European Union and ASIA and

extended for the year 2013-14 and calculation

will be done on annual basis. Additional 53

countries have been included in the Scheme

Duty Free Scrip availed from above schemes can

be utilized either for payment of custom duty

including basic custom duty, additional duty

(CVD), special additional duty (SAD) or payment

of Central Excise Duty on clearance of excisable

goods or payment of service tax and facility to

avail Cenvat Credit on such debits in duty free

scrip in also extended or drawback can also be

claimed against such debits made in Duty Free

Scrips, This will definitely help in better liquidity

in the hands of exporters.

D. Export Oriented Units (EOU) / Software

Technology Park Units (STP) / Electronic

Hardware Technology Park (EHTP) /

Biotechnology Park (BTP)

Lot of relief was expected but there was total

disappointment to all the units. There was high

expectation that there will be lot of changes with

the focus to revamp this scheme. However, they

1 4


are at the jolt on account of following

amendments:

1. Such units were earlier entitled to get refund of

central excise duty paid by their suppliers under

Chapter 8 of FTP. However, now they will not be

entitled for refund of terminal excise duty and

they will have to issue CT 3 without payment of

duty and therefore, there may be accumulated

Cenvat Credit which cannot be refunded under

Rule 5 of Cenvat Credit Rules, 2004 since Central

Excise Department is of the view that refund

under Rule 5 of Cenvat Credit Rules, 2004 can

be granted only against physical exports and not

against deemed exports even though there are

certain tribunal decisions to allow in case goods

are finally exported by EOU but it is the matter of

litigation therefore supplier to EOU may consider

this as a cost which will be included in the value

of goods supplied to EOU therefore defeating

the objective that taxes should not get exported

directly or indirectly.

2. Para 6.18(d) of FTP allows EOU to exit from EOU

Scheme, i.e. opt of debonding and an EOU//

EHTP/STP/BTP unit may also be permitted by

the Development Commissioner, to exit from the

scheme on payment of duty on capital goods

under the prevailing EPCG Scheme as a one

time option. This will be subject to fulfilment of

the eligibility criteria under that Scheme and

standard conditions indicated in Handbook

(Vol-I).

Now, Regional DGFTs have already started

rejecting EPCG authorisation to EOUs and

disallowing the benefit granted under Para 6.18

(d) of FTP o the ground that second hand goods

can be imported under EPCG Scheme. They

wrongly treat such conversion at par with fresh

imports and treat capital goods even though

these might have imported new in EOU Regime

and thereby adding to cost of exit from EOU, even

though such units are ready to take export

obligations.

However, some marginal relief has been given

to STPI units allowing Person(s)/employee(s)

authorized by a unit of (i) IT related EOU or (ii)

STP or (iii) EHTP or (iv) BTP may work from a

place outside the said unit, subject to the following

conditions:

(a) There must be an Authorization from the

unit specifying the duration of such

authorization.

(b) Responsibility for carrying out the work and

supervision, if any, is that of the unit, which

will be liable for any misuse.

(c) Export of the resultant products/ services

would take place only from the premises of

the unit

E. Interest Subvention Scheme has been

extended upto 31.03.2013 and additional 134

sub sectors of engineering have been added

and also continued for handicraft, handloom,

carpets, readymade garments, sports goods

and toys and processed agricultural

products

This benefit ought to have extended to all sectors

and it is expected RBI will issue necessary

notification to extend the benefit under Interest

Subvention Scheme,

F. Special Economic Zone (SEZ)

They were high expectations to extend income

tax benefit under section 10AA for those who are

planning to start commercial production on or

before 31.03.2016. At present, this benefit is

available only to those units who will start their

commercial production on or before 31.03.2014.

It was further expected that provisions of MAT

will be dispensed with or it will be reduced to 7.5%

than that of 18.5%, but only few changes has

been announced but still not notified even after

18 days of announcement.

1. Requirement of land for setting SEZ has

been made 50% of the existing minimum

limit

2. Sector specific SEZ can have the sectorial

Broad banding for similar and related area

3. Pre-existing structure not in commercial use

can be considered for notifying the SEZ

without any duty benefit thereon, i.e. existing

structure

4. Minimum land area of 10 hectors of IT &

ITES SEZ has been dispensed with

reduction in built up area by 50% in CLASS

B cities and 75% in CLASS C Cities

5. Exit Policy for SEZ Unit has been permitted

by way of transfer of ownership or sale

However, such type of small amendments may

not yield the positive result for re-surging the

economy and boost the export.

1 5


CENTRAL EXCISEv Pre-deposit during pendency of appeal can

be made from Cenvat account: Debit of pre-

deposit in cenvat account in pursuance of Stay

Order, recognized as valid pre-deposit by

Tribunal under Section 35F ibid. No objection

raised by revenue at that time nor later during

final hearing of appeals and also during Civil

Appeal before Apex Court, against acceptance

of debit in Cenvat account. Number of Tribunal

Decisions accepting pre-deposit through debit in

Cenvat Account. Assessee only carrying out

order of tribunal. Revenue should have raised

objection before Tribunal during course of

adjudication instead of issuing show cause notice

during pendency of appeals showing scant

respect for Tribunal's Orders. SCN and all

proceedings pursuant thereto set aside.

[2013(290) ELT 112 (Tri.-Bang.)]

v Cenvat Credit permissible even when

manufacturer issuing invoice not traceable:

Original manufacturer of Grey fabrics registered

with Central Excise authority and filing returns.

Impugned invoices signed by them and

accounted for in returns. However, department

inquiry revealing they never existed. No dispute

that purchaser from them had suffered duty and

paid the amounts through cheques. Purchaser

supplied goods to assessee for job work, who

took the impugned credit. It is held that impugned

invoices were genuine. They cannot be said to

be fake or fraudulent merely because

manufacturer could not be found. Credit taken

by assessee was not required to be reversed,

and more so as they were not even alleged to

be party to fraud. Once receipt of goods by person

taking credit was not disputed and necessary

invoices were issued, he is entitled to take credit

provided he had taken reasonable steps

described in Rule 7(2) of CCR 2004 ensuring

that goods are duty paid as indicated in

accompanying documents. [2013(290) ELT 61

(Guj. HC)]

v Endorsed Bill of Entry held valid document

for availing Cenvat Credit: CVD paid on goods

received from importer under endorsed Bill of

Entry. No Specific provision of law for

endorsement of Bills of Entry for availing Cenvat

Credit. No such provision under rule 9 of Cenvat

Credit Rules, 2004. [2013(290) ELT 108 (Tri.-

Bang.)]

v Delivery challans by job workers indicating

quantity dispatched is sufficient evidence of

receipt back of inputs into factory Cenvat

Credit cannot be denied: Inputs directly

delivered to job workers for conversion into

intermediate product. Evidence of receipt back

of inputs by assessee from job workers. Delivery

challans by job workers indicating quantity

dispatched to assessee are prescribed

documents and sufficient evidence of receipt back

of inputs into factory. Eligibility of Cenvat Credit

upheld. [2013(290) ELT 95 (Tri.-Ahmd.)]

v Mere shortages detected at the time of stock

verification as well as statement recorded

during survey is not a conclusive piece of

evidence for clandestine removal: Shortages

detected at the time of visit of the officers.

Managing director accepted shortages and paid

duty accordingly. No acceptance of clandestine

removal in the statement and shortages

attributed to the wrong reporting by unskilled

labour. Evidentuary value attached to said

statement has to be assessed in the light of other

corroborative evidences. No other evidence to

reflect upon the clandestine removal of the final

product. [2013(290) ELT 103 (Tri.-Ahmd.)]

v MRP based assessment not applicable for goods

supplied to institutional consumers / wholesale

packs. [2013(290) ELT 291 (Tri. Bang.)]

v Liability to duty cannot be fastened on

1 6


person who has nothing to do with impugned

transaction: Demand against High Seas seller

a partnership firm found to be stayed by Tribunal

on payment of entire duty. Held that buyer was

independent company whose goods could not

be detained for recovery from High Seas Seller

with which buyer has nothing to do. Legally there

was no demand, which could give jurisdiction to

department to detain goods imported by buyer

in High Sea Sell Contract. It was also

contemptuous and contrary to stay granted by

Tribunal. Department's plea that under High seal

Sales Contract, buyer had undertaken to clear

liability of High Sea Seller was misinterpretation

as buyer had undertaken to pa entire expenses

only for goods purchased under contract, which

could not mean payment of demand against its

vendor regarding other transactions. [2013(290)

ELT 195 (Mad HC)]

v Condonation of delay of 215 days allowed

as assessee is facing excessive / number of

litigation's: Explanation that it was due to

various litigation's, including criminal

prosecutions of Excise & Customs cases, which

had consumed considerable time. Appeal filed

within one month of receipt of recovery notice.

Delay was due to excess load of various litigation

on appellant. It ought to be condoned as

explanation was reasonable. It was not case of

assessee abandoning the cause or deliberate

delay in filing of appeal. Delay was not so gross

or conduct of appellant so negligent that his

appeal involving revenue of nearly rupees 2

crores be dismissed without hearing on merits.

Delay of 215 days condoned. [2013(290) ELT

214 (Guj HC)]

v Pronouncement in open court cannot be

termed as decision or order or judgment of

the Tribunal: Pronouncement in open court

simply holding ' appeal allowed in the open court

without even the gist of the decision being

pronounced in the court, the pronouncement can

not be termed as decision or order or judgment

of Tribunal. [2013(290) ELT 202(Mad. HC)]

v Proof for clandestine removal: Shortage of

goods on physical verification detected on the

basis of average weight of finished goods and

raw material. No reasons for shortage advanced

by authorized representative. No admission that

shortages were on account of any clandestine

clearances of finished goods. No evidence on

record to allege any clandestine removal by

assessee. Therefore held that mere acceptance

of shortage at the time of visit of officers without

there being corroborative evidence cannot lead

to confirmation of demand of duty against

assessee. [2013(290) ELT 247(Tri. Del.)]

v Non receipt of unrelied upon documents cannot

be justification for not filing of SCN reply

[2013(290) ELT 249(Tri. Del.)]

v Strictures against Customs Officers:

Provisional assessment order in flagrant violation

of High Court order. An officer exercising quasi-

judicial jurisdiction is not expected to ignore or

show incompetence in understanding the clear

orders of the court. [2013(290) ELT 207 (P&H

HC)]

v Supplier firm not found on their address but

payment by them through account payee

cheques and ITR also filed by such firm, such

suppliers not treated as dummy units:

Supplier firm either not found or their addresses

were incomplete. However such supplier

maintaining lot register, entries on record

indicated that payments were received by

account payee cheques and supplier firms had

also filed income tax returns. Therefore held that

interference of revenue that supplier firms were

not in existence was not justified. Entries in record

were acceptable as payment was made by

account payee cheques. No findings could be

recorded against such supplier. Such supplier

would not be treated as dummy unit. [2013(290)

ELT 334 (Guj HC)]

v Shortage of one raw material not a sufficient

evidence of clandestine manufacture/

removal:

Shortage of raw material not sufficient to

manufacture quantity of final product allegedly

manufactured and clandestinely removed.

Demand based on shortage of only one raw

material, i.e. MC Powder not being main raw

material in production of Pan Masala. No

1 7


evidence of procurement of other raw materials

required for alleged manufacture. Demand

cannot be sustained. [2013(290) ELT 478 (Tri.

Del.)]

v Assessee not liable for misconduct of his

employee: Educational certificate of 'G' Card

applicant had genuineness of the same. No

circumstances or evidence suggesting that the

CHA had active involvement in questionable

educational qualification of applicant. Mala file

of CHA not brought to record in clear terms. Held

that in such case forfeiture of part of CHA security

amount is uncalled. There was no misconduct

of employee, which has direct nexus to

transaction of business. Supervision by CHA to

ensure proper conduct of their employee. It is

based on the Principal that Agent binds his

principal for all acts done by agent, if they are

within the knowledge of principal. Misconduct of

employee should have been direct nexus to

transaction of business. [2013(290) ELT 401 (Tri.

Del.)]

v Busyness of lawyer sufficient cause for

restoration of appeal: Counsel explaining that

when the matter was called and dismissed, he

was busy in another court. Explanation of the

counsel found to be acceptable and appeal

restored. [2013(290) ELT 431 (Tri. Del.)]

v Strictures against department: Casual

approach of Customs Authority, forfeiture of

security deposit of CHA for fake certificate

produced by their employee. Letter of verification

of certificate by CBEC received on 05.02.2009

but Show Cause Notice issued on 14.07.2009

and adjudication order passed one year

thereafter. No care taken to find if any loss to

revenue occurred by lapse of time as above.

Adjudication order not disclosing active

involvement of CHA, their mala fide or conscious

knowledge of fake certificate produced by his

employee and without proper examination of

Regulation 20 of CHA Licensing Regulations,

2004 forfeiture of security deposit as ordered.

Held that the approach of Customs Authorities

was very casual. They had not risen to the

occasion expeditiously.[2013(290) ELT 428

(Tri. Del.)]

v Certificate of CA should be accepted while

deciding the refund case: Chartered

Accountant who was also statutory auditor of

importer, certifying for specific bill of entry, that

burden of CVD /SAD was not passed on to buyer.

However refund rejected on analysis of balance

sheet on ground that impugned amount has been

debited in expenses accounts. Held that rejection

of refund was not proper. Certificate of CA should

have been accepted. [2013(290) ELT 386 (Tri.

Ahmd.)]

v Statement accepting shortages, cannot be

conclusive proof of clandestine removal:

Shortage of raw materials and finished goods,

panchnama did not show that all the stock was

actually weighted. No inventory of weighment

made by assessee. Statement accepting

shortages only to the extent recorded in

panchnama and no admission made that goods

were clandestinely cleared. Held that shortages

were detected on eye estimation. Statement

accepting shortages, cannot be conclusive proof

of clandestine removal. [2013(290) ELT 392 (Tri.

Del.)]

v Re-packing amounts to manufacture - Packing

from bulk to retail, Note 10 of Chapter 28 of

Central Excise tariff Bags of soda ash in bulk /

standard packages of 75/50 kgs meant for

industrial consumers, entitled to Modvat/Cenvat

credit. At behest of industrial consumer, these

bags torn and contents re-packed into smaller

packing of 500gm/ 1kg affixed with their brand

name meant for retail consumers, who were not

entitled to credit of duty. Held that re-packing

amounted to manufacture. Even if bags of 75/

50kgs were termed as 'Standard packs' they

were ' bulk packs'. As retail pack was meant for

a different market segment, re-packing enhanced

marketability of soda ash. It amounted to

manufacture within the meaning of section 2(f)

of Central Excise Act, 1944. [2013(290) ELT 467

(Tri. Kolkata)]

v Delay in filing of ER-1 return would attract penalty

under Rule 27 of Central Excise Rules, 2002 and

not under Rule 25 of Central Excise Rules, 2002.

[2013(290) ELT 412 (Tri. Del.)]

1 8


v Classification of 'Liril Active Shower Gel' as

Soap: 'Liril Active Shower Gel' is correctly

classifiable under heading 34.01 as 'Soap' and

not under heading 33.04 as Cosmetics as

contended by Revenue. Civil Appeals dismissed.

[2013-TIOL-27-SC-CX-LB]

v Sale of assets by the Bank under SARFAESI Act

to recover the loan. Dispute on first charge of

the property in bond, Whether bank has first

charge or the Customs. Since the matter is

pending before the DRT, it is for the Tribunal to

adjudicate the issue and pronounce the same.

Bank is permitted to sell the assets with a

direction to keep the required amount out of the

sale proceeds, in an interest bearing account,

pending adjudication by DRT. [2013-TIOL-347-

HC-KERALA-CX ]

v No distinction can be made between the

commission paid to the foreign agent and

the agents operating within the territory of

India because nature of services provided by

both the categories of the agents are same:

Commission agent is directly concerned with the

sales rather than sales promotion - services

provided by such commission agent would not

fall within the purview of the main or inclusive

part of the definition of input service as laid down

in rule 2(l) of the Rules - activity of commission

agent, therefore, should bear some similarity to

the illustrative activities given in rule 2(l). None

of the illustrative activities, viz.. "accounting,

auditing, financing, recruitment and quality

control, coaching and training, computer

networking, credit rating, share registry, and

security, is in any manner similar to the services

rendered by commission agents nor are the

same in any manner related to such services.

Under the circumstances, though the business

activities mentioned in the definition are not

exhaustive, the service rendered by the

commission agents not being analogous to the

activities mentioned in the definition, would not

fall within the ambit of the expression "activities

relating to business". Sales commission services

are not Input Services. CENVAT credit not

available. Revenue appeal allowed. [2013-TIOL-

680-CESTAT-AHM]

CUSTOMSv Certificate of CA should be accepted while

deciding the SAD refund case: The Chartered

Accountant Certificate, which is Bill of Entry

specific, has certified that the incidence of CVD/

SAD has not been passed on to the customer

and there is no unjust enrichment. Certificate of

Chartered Accountant who is a statutory auditor,

needs to be accepted. As the importer has

satisfied all the conditions required for claiming

refund of Special Additional Duty paid, refund is

to be allowed. [2013-TIOL-657-CESTAT-AHM]

v Though Duty paid after issue of Show Cause

Notice, assesse eligible for Drawback: Proviso

to Rule 3(1) of the Drawback Rules of 1995

prescribes that if the goods are produced or

manufactured from imported materials or

excisable materials on some of which only, duty

chargeable thereon had been paid and not on

the rest, the drawback admissible on the said

goods be reduced taking into account the lesser

duty paid or the rebate, refund or credit obtained.

In the present case, the petitioner used packing

material to manufacture and export of skimmed

milk powder, full cream milk powder, butter oil

etc. The aforesaid packing material was imported

by the petitioner. The petitioner deposited the

CENVAT credit and excise duty on the aforesaid

material. In such circumstances, the petitioner

is eligible to receive benefits of drawback in terms

of proviso to Rule 3 (1) of the Rules of 1995.The

argument of the revenue that since the petitioner

paid the excise duty or CENVAT credit

subsequently after issuance of show cause

notice, hence, the petitioner is not eligible for the

aforesaid benefit is not acceptable because there

is no such condition mentioned in the proviso to

Rule 3 (1) of the Rules of 1995. Petition allowed.

[2013-TIOL-329-HC-MP-CX]

SERVICE TAXv Cenvat Credit for cleaning / House -Keeping

service in factory permissible: Under Section

11 of Factories Act, 1948 factory owner is duty

bound to maintain cleanliness in factory. Hence

prima facie such services are incidental to

manufacture, and input service on which

1 9


assessee is entitled to take credit of service tax

paid. [2013(30) STR 205 (Tri. Del)]

v Distribution of credit allowed on the basis

of invoices of input services are in the name

of head office without registration as service

distributor: Invoices of input services in name

of head office, which distributed credit of service

tax paid thereon without registration as service

distributor. Identity of head office as service

recipient and provider as well as genuinely of

transaction not in doubt. Therefore held that

denial of cenvat credit only because of invoices

had name of head office, defeated object of

avoiding cascading affect. Also this was at initial

stage of implementation of law regarding

distribution of credit, when difficulties were being

experienced because of Registration and other

technical procedures involved, hence credit

allowed. [2013(30) STR 199 (Tri. Del)]

v There is no time limit prescribed for

availement of credit only condition to be

satisfied that payment of service tax should

be paid prior to availing the credit: Input

Service Distribution is a facility granted to a

manufacturer / service provider who operates

from a number of premises. No restriction under

the Cenvat Credit Rules, 2004 with regard to the

period for availing Cenvat Credit of Service Tax

paid. Only condition to be satisfied is that they

should have paid the Service Tax prior to availing

the credit. As this condition is satisfied, no time

limit prescribed in the Rule within which the cenvat

credit has to be taken. No reason why in the case

of ISD alone, restriction should be placed with

respect to availment of cenvat credit i.e. ISD is

permitted to distribute only taxes paid on or after

registration. Such a restriction is totally

unwarranted and is not provided for, in the law.

[2013(30) STR 206 (Tri. Mum)]

v Cenvat Credit on Rent-a-cab service is

allowed as service had nexus with business

of manufacture: Rent-a-cab service used for

transportation of employees from city to factory

in village, about 40 kms away, which did not have

adequate facility for employees. It is held that, to

get proper employees, it was necessary for

assessee to provide transportation facility from

nearest city. It was welfare measure, necessary

to ensure that manufacture tool place properly.

Service had nexus with business of manufacture.

Hence credit is admissible. [2013(30) STR 219

(Tri. Ahmd.)]

v Cenvat credit on GTA services: GTA services

availed for transportation of glass cullets and

since glass cullets are used in manufacture of

zinc oxide and lead oxide service tax in respect

of GTA services used for transportation of the

glass cullets cannot be denied. [2013(30) STR

193 (Tri. Del.)]

v Admissibility of Cenvat Credit on various

input services: Credit of service tax paid on

Advertising Agency Services, Business Auxiliary

Services, Business Support Services,

Management & Consultancy Services, Online

Information & Data Base Access Service, Port

Service, Maintenance & Repair Service,

Consulting Engineers Service, Security Agency

Service and Storage & Warehousing Service

admissible along with Credit on Service Tax paid

on Construction services in respect of office and

factory. Credit taken in respect of service availed

for housing colony or received other than for the

purpose of factory / office having been reversed.

[2013(30) STR 214 (Tri. Ahmd.)]

v Cenvat Credit of Service Tax paid on

Maintenance of SAP System: Invoice in the

name of Head Office. SAP system implemented

in three units of the assessee and credit taken in

one unit only. Head office not registered as ISD.

Assessee contending that there is no provision

in law for taking only proportionate credit.

Therefore held that, SAP system definitely

relatable to manufacture as it is implemented

right from raw material receipt to the clearance

of finished goods. Once credit is admissible any

unit can take the credit. [2013(30) STR 195 (Tri.

Ahmd.)]

v Clarification regarding taxability in case of

land owner transferring part of his right in

land to Developer for consideration in the

form of constructed flats received latter:

Demand for the period 16.06.2005 to 31.03.2007

'to be provided' introduced in Section 65(105) of

Finance Act, 1994 w.e.f 16.06.2005 Service Tax

2 0


(Determination of Value) Rules, 2006 notified on

19.04.2006. Held that amendment of Section

65(105) ibid does not mean that service provided

from that date was not taxable if consideration

was received earlier. New provision means that

prior to that date, no tax was to be paid at the

time when consideration was received but tax

was to be paid when service was provided. As

per section 67 prior to 18.04.2006, value of

taxable service was gross amount charged by

service provider, and after that date, where

consideration was not wholly or partly in money,

equivalent amount needed to be added in terms

of money. In that plea that consideration

received other than in form of money, was not

taxable before coming into effect of Service Tax

(Determination of Value) Rules, 2006 rejected.

[2013(30) STR 33 (Tri. Chennai)]

v Guest Houses for pilgrims liable to Service

Tax: Guest Houses for pilgrims entitled only to

exemption of 50% by Notification No.1/2006 ST

read with Notification No.34/2011 ST and not

having any absolute exemption. Therefore held

that it is liable to Service Tax under Section

65(105)(zzzzw) of Finance Act, 1994 and obtain

registration accordingly. [2013(30) STR 27 (A.P.

HC)]

v Amount collected as 'contingent liability'

cannot be treated as service tax: Appellant

constructing flats and entering into agreement

of sale with prospective buyers. Based on the

communication from DG, Directorate of Service

Tax they collected sums from prospective buyers

as 'contingent liability' towards payment of ST

but after clarification from Board on 29/01/2009,

they returned the amounts to the buyers with

interest. Department issuing notice u/s 73A(2)

of FA, 1994 for recovery of ST. Amount collected

as 'contingent liability' cannot be treated as

service tax per se. Provisions of S.73A are not

at all attracted to the case. [2013-TIOL-681-

CESTAT-MUM]

v Service Tax under reverse charge

mechanism paid after issue of Show Cause

Notice no penalty imposed: Understandably,

service tax paid on such services rendered would

be available to the appellant themselves as

CENVAT credit which can be utilized for discharge

of any excise duty on the final goods

manufactured and cleared by the appellant.

During the period service tax liability under

reverse charge mechanism was being disputed

at various forums and attained finality, after the

judgment of the High Court of Bombay in the case

of Indian National Ship Owners Association -

2008-TIOL-633-HC-MUM-ST - Penalty set aside.

[2013-TIOL-679-CESTAT-AHM]

v Clarification regarding Technical services

received from abroad: While discharging ST,

appellant committed an error of not including the

TDS deducted towards income tax in the value

of taxable service and upon pointing out by CERA

appellant paying the ST on the TDS amount of

Rs.85,81,111/- and also interest thereon. SCN

issued and equivalent penalty imposed. For

imposition of penalty u/s 78 there should be mens

rea. What is coming out is appellant made an

error in computing the value and there is no

intention to evade ST. penalty waived under the

provisions of s.80 of the FA, 1994 - appeal

allowed. [2013-TIOL-667-CESTAT-MUM]

v Appellant allowing another company to use its

plant, machinery and equipment by a conducting

agreement for the period September, 2004 to

July, 2005. Whether services are liable to tax

under 'support services of business or

commerce', for the subsequent period after the

insertion of clause 90(a) viz. 'renting of

immovable property' w.e.f 01.06.2007, the

petitioner has been paying service tax. Issue

involves a serious triable question. Petitioner

entitled to a complete waiver of pre-deposit.

[2013-TIOL-330-HC-MUM-ST]

v Cenvat Credit on Employee Group Insurance

services is allowed: The assessee is eligible

to avail CENVAT Credit of Service Tax paid on

the services rendered by insurance company on

the group insurance taken by them for their

employees. [2013-TIOL-650-CESTAT-AHM]

v Clarification in respet of supply of manpower

service: agreement has been entered by the

appellant directly with the sugar factory for

harvesting and cutting of sugarcane, and

transportation and to get the work done they are

2 1


engaging independent labour contractors,

consideration for the services rendered were also

received by the appellant, in the case referred

of Shri Mouni Maharaj Sevabhavi Vishwasta

Sanstha case (2013-TIOL-190-CESTAT-MUM),

the sanstha was only collecting the consideration

and crediting them to the accounts of the farmers/

transporters. In that situation it was held that the

sanstha was not providing any service relating

to supply of manpower. Facts obtaining in the

present case are different and distinguishable.

No reason to modify stay order. Miscellaneous

application dismissed and appellant directed to

comply with stay order. [2013-TIOL-674-

CESTAT-MUM]

EOUv DTA clearances of EOU not deemed imports

into India: DTA clearances of EOU are not

deemed imports into India. Proviso to Section

3(1) of Central Excise Act, 1944 provides

measures of Central Excise Duty leviable on such

clearances. It is aggregate of duties of Customs

on import of like goods, into India, and if rate of

duty is ad valorem, duty is to be calculated on

value determined under Customs Act, 1962 and

Customs Tariff Act, 1975. It is Central Excise duty

and method of its recovery cannot alter its

character. [2013(290) ELT 372 (Tri. LB.)]

INCOME TAXv "export turnover", "total turnover": when

telecommunication expenses excluded from the

export turnover also needs to be excluded from

the total turnover for computing deducton u/s

10A. Further computer peripherals form an

integral part of the computer, eligible for the same

rate of depreciation as the computer. Expenses

incurred on training of employees has an

enduring benefit and thus, not allowable as a

revenue expenditure. Revenue's appeal

dismissed. [2013-TIOL-269-ITAT-DEL]

v As per Section 37, when all the manufacturing

expenses are not verifiable, any addition is

warranted in case of a fall in the GP rate then

the expenditure of penal interest is allowable u/s

37. - Assessee's appeal partly allowed. [2013-

TIOL-308-ITAT-RAJKOT]

Judgments against CBEC Circular No. 967/1/2013

dated 01.01.2013

v Recovery of Govt. Dues during pendency of

Stay Applications: Appeals filed with stay,

pending before Commissioner (Appeals),

prescription of initiation of recovery if stay was

not granted within 30 days of its filing. It is illegal

arbitrary, unjustified and hence set aside. Its

basis is unsustainable and misconceived.

[2013(290) ELT 3 (P & H HC)]

v Recovery of Govt. Dues during pendency of Stay

Applications not permissible and No coercive

action for recovery be initiated during pendency

of appeal [2013(290) ELT 161 (Guj HC)]

[2013(290) ELT 353 (Raj HC)] & [2013(290) ELT

362(Kar HC)]

2 2


i RBI walks cautiously; cuts repo rate by 0.25%

i SC grants stay on attachment of Sahara Group Chief's properties

i RBI projects 6% growth rate for current fiscal

i Monetary Policy Statement 2013-14 released

i Investments in Science & Technology accounts for 0.88% of GDP

i CBEC finally issues AGT order of 51 + 44 AC/DCs at All-India & local levels

respectively

i President Pranab Mukherjee asks CBDT to tackle issue of MNCs parking profits

in tax havens

i Commerce Minister launches 21 New Textile Parks, taking total tally to 61

i GST-in-the-making to incentivise States like Canada and Singapore; Delay is

because of differences with Centre over GST Design & CST compensation

package: Sushil Modi

i MAT on SEZs: Govt looks into industry demand but decides not to reconsider

same at present: Commerce Minister

i A cosmetic product can be imported into India only if that product is registered

w.e.f. 01.04.2013 with Drugs Controller General (I), the licensing authority under

Drugs & Cosmetics Act.

2 3


i Hon'bl Supreme Court upheld the conviction and setence of eight Mumbai policemen and

five Customs officials and said that but for their complicity in the conspiracy because of greed

and corruption, the 1993 serial blasts could have been averted.

i Hon'ble Delhi High Court rejects Anup Shrivastava, Ex-Excise Commissioner's plea to quash

proceedings.

i CBI caught the Assistant Commissioner, Customs Shiv Shankar Yadav, Customs

Superintendent Adesh Kumar and two inspectors Rakesh Kumar and Puneshwar Paswan

red handed while distributing Rs. 50,000/- among themselves.

i Two customs officials nabbed from kandla SEZ on charge of taking bribe.

i Central Excise Superintendent arrested by CBI in Ahemedabad.

i CBI raid at Jaipur International Airport over Customs duty evasion.

i Hon'ble Karnataka High Court directs Government to setup more Benches of CESTAT in

Andhra Pradesh, Karnataka and Kerala and report complaince by 03.06.2013.

i CBI probe reveals DRI officer shielded M.K.Alagiri and Stalin.

i CBI arrests Superintendent of Central Excise (Anti Evasion), Haldia Commissionerate, Kolkata

for demanding and accepting a bribe of Rs. 3.5 lakh from the complainant.

i CBI filed a FIR against a Superintendent of Customs Air Cargo Complex at Karipur Airport

and six others in a case related to the irregularities in the functioning of cargo wing at the

airport.

i The power supply to an office of the Central Excise and Customs Department, Gurgaon at

Udyog Vihar has been snapped after it failed to pay the rent dues of around 4.5 crores for a

period more that 2 years to Haryana State Industrial and Infrastructure Development

Corporation (HSIIDC).

2 4


Bizsolindia provides consultancy in the following areas throughassociate companies and professional firms of the Directors

Bizsolindia Services Pvt. Ltd. Consultancy & Audit in the area of

• Direct & Indirect Taxation,

• FEMA,

• Foreign Trade Policy,

• EOU,

• SEZ,

• Project Consultancy SEZ, EOU, STPI, Industrial Parks,Clusters etc.

• Internal Audit,

• Strategic Management Consultancy.

Bizsolindia Outsourcing Pvt. Ltd. Knowledge Process Outsourcing in the area of

• Indirect Taxation,

• Accounts,

• Inventory management,

• Fixed Assets Management.

Bizsolindia IT Services Pvt. Ltd. Specialised IT Consulting and Solutions / modules along with ERPIntegration and following areas,

• Specialized Software for EOUs and SEZs

• Expert in Application programming using Java andERP Connectivity / Data Migration

• Offers bucket of Add On Products for EXIM related solutionsfor the complete industry needs

• ERP Consulting / Implementation

Bizsol HR services Pvt. Ltd. Strategic Consultancy in the area of HR & Soft skills Training.

Bhagwati Shipping Pvt. Ltd Custom House Agent (11/578) Custom Clearance of Export andImport consignments.

A B Nawal & Associates, Practicing Cost Accountant, Cost Audit, Central Excise,Cost Accountants Adjudication matters upto CESTAT, VAT Audit.

Behede Joshi & Associates, Practicing Chartered Accountants, Statutory Audit & Tax Audit,Chartered Accountants VAT Audit, Transfer Pricing.

R. Venkitachalam, Practicing Company SecretaryCompany Secretary

Nawal & Sonaje Associates, Practicing Cost Accountant, Cost AuditCost Accountants

Bizsol Projects & Infrastructure Solutions LLP Infrastructure consultancy, project management services in respectof real estate solutions for Industrial, Residential, Trade andCommerce and Consultancy related to Finance and Investments

O U R S E R V I C E S

May - 2013

Glimpses of Local Body Tax (LBT) Seminar organized by Bizsolindia Services Pvt. Ltd. at YASHDA, Pune on 15/04/2013.

Mrs. Preeti Kulkarni, Manager- Operations, hosting the Seminar.Mrs. Monica Joshi, CEO-Pune, acquainting to delegates about "Bizsolindia Services Pvt. Ltd".

Mr. Manoj Behede, Joint Managing Director, enlightening on Concept & Provisions of LBT to the delegates.

Mr. Ashok Nawal, Managing Director, addressing on Specific Issues, Challenges & Compliances of LBT.

Mr.Pravin Arote, Vice President, explaining the Registration Procedure, Rates & LBT Zones.

Mr. Manoj Malpani, Manager- Operations, enlightening on important take away of LBT.

Delegates participated in the seminar organized by Bizsolindia Services Pvt. Ltd.

Panel Members addressing to the queries & doubts on LBT of delegates during the seminar.

May - 2013

Glimpses of Local Body Tax (LBT) Seminar at Nashik

CMA A. B. Nawal, Managing Director of Bizsolindia Services Pvt. Ltd. & CMA Vijay Joshi - Resident Director of Bizsolindia Services Pvt. Ltd. along with CMA V S Date, CMA Shrenik Shah, Dr. S. K. Pandey & CMA Samir Rakshit during the Cost Seminar - 2013 organized by Raipur Chapter of ICAI on 06/04/2013

Mr. Venkat R. Venkitachalam, Chairman of Bizsolindia Services Pvt. Ltd. enlightening to delegates on overview of Local Body Tax (LBT) at Seminar organized by Nasik Industries & Manufacturers' Association on 21/04/2013.

Mr. Venkat R. Venkitachalam, enlightening to delegates on overview of Local Body Tax (LBT) at Seminar organized by Indian Institute of Material Management on 28/04/2013

Mr. Ashok B. Nawal, Managing Director of Bizsolindia Services Pvt. Ltd. addressing to delegates on Practical Aspects of LBT & cares to be taken, at Seminar organized by Nasik Industries & Manufacturers' Association on 21/04/2013.

Mr. Arun P. Sawant, CEO - Nasik of Bizsolindia Services Pvt. Ltd. explaining basic provisions & Practical Aspects of LBT during the seminar organized by Indian Institute of Material Management on 28/04/2013.

Delegates asking queries on LBT to the Panel Members at Seminar organized by Nasik Industries & Manufacturers' Association on 21/04/2013.

Ms. Shweta Jagtap, Sr. Lead- Audit & Taxation, hosting the seminar organized by Indian Institute of Material Management on 28/04/2013.

Documents

Covers May 2013 - Bizsolindia Services Pvt.Ltd · Chhattisgarh referred to the practice of restatement of laws like that prevalent in the United States. In the US where judicial precedents